In today’s briefing:
- China’s Real Estate Market Showed Beyond-Record Rebound in Year End…Will It Carry to 2025?
- Invest in China Growth Equity in High-Rate Environment
- Ohayo Japan | Dow Extends Losing Streak As Fed Cuts by 25bps
- China Online Game Grossing Monitor: October 10, 2024 – December 16, 2024
- Sustainable Aviation Fuel (SAF) And Low- Carbon Ethanol “Ready for Takeoff”
- Biopharma Week in Review – December 16, 2024
- Furniture/Furnishings Weekly – December 16, 2024
- WTR Small-Cap Spotlight Recap – Five Cannabis Trends for 2025
China’s Real Estate Market Showed Beyond-Record Rebound in Year End…Will It Carry to 2025?
- After 40 months of consecutive MoM decline, China’s real estate market is on the brink of a somewhat sustained recovery, with particularly, pricing improvement in November;
- Pricing is important because it entices buyers back to the market. Before that, transaction volumes have already seen meaningful rebound and the rebound has spread from existing to new homes;
- We maintain our view that China had a moderate property bubble in the tradable housing sector but not the overall housing sector. Long term growth potential is still bright.
Invest in China Growth Equity in High-Rate Environment
- Given Trump’s overhaul of US economy and world trade, US interest rate may stay high and Renminbi might depreciate further, both negative for our sectors from a foreign investor perspective;
- We expect China to respond strongly to Trump Tariff 2.0, which will necessitate bigger stimulus, leading to a scenario of a policy overdose;
- We look for: (1) high dividend yield, (2) US-dollar exposure, (3) policy overdose in stock selection. We add TRIP and ATAT to our DMC and reiterate our MMC portfolios
Ohayo Japan | Dow Extends Losing Streak As Fed Cuts by 25bps
- The Federal Reserve lowered its benchmark rate by 25 basis points as expected but tempered market hopes by reducing its 2025 rate cut forecast from four to two.
- Heiwa, a pachinko machine maker, announced it will acquire Accordia Golf, Japan’s largest golf course operator, for ¥510 billion
- Hon Hai Precision Industries, a Taiwanese electronics manufacturer, is interested in acquiring Nissan, potentially complicating Nissan’s integration talks with Honda
China Online Game Grossing Monitor: October 10, 2024 – December 16, 2024
- <Peacekeeper>’s more aggressive gameplay reforms and monetization changes have delivered better results, leading us to raise its 2024 annualized gross billings estimate slightly.
- <DnF Mobile>’s new version experienced a slight decline in player retention, though this is likely temporary. As a result, we have slightly lowered its 2024 annualized grossing estimates.
- NetEase’s <Eggy Party> received player feedback that fell slightly below expectations. The game continues to face considerable pressure for revenue recovery, prompting us to lower our full-year revenue estimate slightly.
Sustainable Aviation Fuel (SAF) And Low- Carbon Ethanol “Ready for Takeoff”
- We launched our inaugural WTR Symposium Series “Sustainable Aviation Fuel and Low-Carbon Ethanol Ready for Take-Off” on last week’s WTR Small-Cap Spotlight.
- We were joined by senior management of four leading companies operating in farm-to-fuel and waste-to-fuel supply chains.
- Our guests represented the following leading-edge companies: Continuum Ag (CEO Mitchell Hora), Gevo (VP Corporate Development Eric Frey), LanzaTech (CEO Dr. Jennifer Holmgren), and Synata Bio (CEO Tim Cesarek).
Biopharma Week in Review – December 16, 2024
- We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
- Last week, PBMs were targeted by Congress, NAMS had a CV outcomes preview, and CADL showed prostate cancer benefit.
- LLY partnered GLP-1 access with telehealth Ro and presented oral SERD data in breast cancer, rattling HIMS, LFMD, ARVN, and OLMA.
Furniture/Furnishings Weekly – December 16, 2024
- It was a mixed week for furniture and furnishings stocks, as earnings results and company-specific factors seemed to dominate trading for several issuers (LOVE, RH, BYON) while the market waits for the Fed’s next move.
- The WTR Commercial/Contract Furniture Index was down 3.7%, the Residential Manufacturers & Suppliers Index was down 4.8%, the Home Goods Retailers Index was up 1.3%, and the Mass Retailers Index was down 0.1% for the week, while the large-cap indexes were flat and the R2K was down 2.0%.
- RH up big after demonstrating market share gains in its latest quarter and accelerating demand trends in the core business.
WTR Small-Cap Spotlight Recap – Five Cannabis Trends for 2025
- Rescheduling Is the Single Biggest Catalyst for US Cannabis.
- It removes the 280E tax burden that prevents US plant-touching operators from deducting ordinary operating expenses, which in many cases doubles the effective tax rate.
- 280E only applies to Schedule I and II drugs, so the proposed move to Schedule III would remove 280E.
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