In today’s briefing:
- Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities
- China Makes U-Turn on COVID Policy – Here Are the Direct Impacts and Investment Opportunities
- China Private Higher Education Sector Is Recovering
- China COVID Policy: Near-Term Pains for Consumer Discretionary
- The Innovations Portfolios – Week Four
Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities
- OVERSEAS: WCUP: Argentina/Messi prevail; SPX -2.1%WoW on recession narrative; SPX option expiry exacerbates moves; Calls for new TESLA CEO; GS to cut 8% of workforce; Covid spreads in China
- JAPAN: NKY Futs at -0.9% vs Cash; Defense Bill Approved – no tax hike till 2024; Lawson’s Seijo Ishii IPO postponed; Renesas suspends China ops on Covid; Decarbonization-related investments unabated
- DAILY NUGGET: We look a the another attempt of the Japanese government at regional revitalization. Smells of pork barrel spending to us.
China Makes U-Turn on COVID Policy – Here Are the Direct Impacts and Investment Opportunities
- China’s relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term.
- We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.
- With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change.
China Private Higher Education Sector Is Recovering
- On December 14, the CPC Central Committee and the State Council issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), supporting private education in China.
- Private higher education is a necessary complement to the public higher education in China.
- Private higher education sector is an attractive sector for investing now.
China COVID Policy: Near-Term Pains for Consumer Discretionary
- While China’s U-turn on COVID policy is expected to bring consumption rebound in 2023, the near-term surge in infections will weigh negatively on retail sales in Dec and Jan.
- Residents are spending more time at home in the first wave, with subways and shopping malls empty. We think this will cast negativity on 4Q22 and 1Q23 consumer discretionary profit.
- It is prudent to take some monies off the table, particularly F&B stocks like Haidilao (6862 HK), Xiabuxiabu (520 HK) and Helen’s (9869 HK) which have almost doubled from trough.
The Innovations Portfolios – Week Four
- We again write about one stock each from the large, mid and small cap portfolios, briefly giving the reasons behind their inclusion.
- The three companies we write about this week are Mastercard (MA US) , Vertex Pharmaceuticals (VRTX US) and Pearson Plc (PSON LN)
- For the four weeks ended 16 Dec the combined innovation portfolio was -1.1%, versus DJIA -2.4%, S&P500 -2.8%, Nasdaq -4.0% & MSCI-ACWI-ETF -2.3%, all in US$ terms.
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