In today’s briefing:
- Good Morning Japan |Powell Dishes Bitter Pill – Sparks Cross Market Chaos; NUGGET: CCUS Opportunity
- A Sharp Increase in Unsold Housing Units in Korea: A Trading Opportunity
- China Raw Milk Industry: Takeaways from AustAsia (2425 HK) Call
- China’s 2023 Government Work Report in 14th NPC – The Highlights and the Outlook
- Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend
Good Morning Japan |Powell Dishes Bitter Pill – Sparks Cross Market Chaos; NUGGET: CCUS Opportunity
- OVERSEAS. Powell Testifies. 50bp hike more likely as inflation higher than expected. Sparks repricing in markets: US Equities hit, UST dumped, USD rises – Choas all round.
- JAPAN. NKY Futs -0.4% vs Cash; USDJPY weakens to 137.1 as Powell tesimony digested; H3 failure-blow to JP space hopes; “My Number” Use expanded; Dentsu UK M&A; Many Rating D/Gs
- NUGGET. Carbon Capture is a key part of the decarbonization mix; Expect significant spend locally and globally. We look at the opportunity and the firms likely to benefit.
A Sharp Increase in Unsold Housing Units in Korea: A Trading Opportunity
- There has been a sharp increase in unsold housing units in Korea. There were 68k unsold housing units in Korea at the end of 2022, up 278% YoY
- Unsold housing units is likely to get worse in Korea in the coming months driven by higher housing units supply, stubbornly high interest rates, and increasing probability of global recession.
- We believe there is a sound trading opportunity of shorting a basket of large construction stocks including Hyundai E&C, GS E&C, and Daewoo E&C over the next 6-12 months.
China Raw Milk Industry: Takeaways from AustAsia (2425 HK) Call
- Disappointing FY22 result from raw milk company AustAsia Group (2425 HK) should be well expected, but the issue is its guidance that FY23 industry outlook will stay challenging.
- Raw milk price is still coming down and 1H23 dairy product demand recovery is slow. Capacity influx will disrupt demand-supply balance, but feed costs pressure seems to have moderated.
- Consensus profit projections for the sector are overly optimistic and there is earnings downgrade risk after FY22 result announcement. We will shy away in the near term.
China’s 2023 Government Work Report in 14th NPC – The Highlights and the Outlook
- China’s GDP growth target of 5% for 2023 is a “deliberate decision”.Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.
- If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors’ strategies and mentality may need to be changed in time.
- For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM.
Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend
- We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than-expected recovery in February.
- Among major advertisers, travel, local service, medical service, and eCommerce have better performances. Gaming, automobile, and FMCG remain weak.
- Tencent is still our top pick; maintain BUY to Baidu and Weibo; SELL to Kuaishou and BILI
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