In today’s briefing:
- Good Morning Japan |SPX Holds On..barely; Powell Testimony in Focus; NUGGET: AI & Japan Big Pharma
- China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending
- Aviation, Should One Buy the Profit Recovery?
- Weekly Sustainable Investing Surveyor: Week Ended March 3, 2023
Good Morning Japan |SPX Holds On..barely; Powell Testimony in Focus; NUGGET: AI & Japan Big Pharma
- OVERSEAS. SPX Clings to Positive gains – barely; Powell Testimony in Focus; Commodities Weak on dissappointing China growth target; GS upgrade Apple to BUY; Telsa cuts prices (again)
- JAPAN. NKY Futs Flat vs Cash; USDJPY 136; Progress on Japan-S.Korea Relation normalization; Public increasingly supports nuclear restarts; Toyota rolls out BEV in China; Win for Rakuten in “Open Ran”
- NUGGET. AI Development platforms are being rolled around across Japan’s manufacturing sector to improvement R&D efficiency. This has the potential to drive significant value, especially in Japan Big Pharma
China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending
- China’s defense budget will reach Rmb1.55trn in 2023, a 7.2% YoY increase and up from 7.1% in 2022. This also equals to 1.22% of GDP, vs. 1.2% in 2022.
- AviChina Industry & Technology H (2357 HK) has the most direct exposure to China’s aerospace and defense developments given its holdings in A-share defense stocks.
- Avic Shenyang Aircraft (600760 CH) will benefit from its unique position as the key manufacturer of aircraft, parts and components for China’s combat fighter fleet.
Aviation, Should One Buy the Profit Recovery?
- Indigo and Spice Jet have turned to profits in Q3FY23.
- Indian Aviation sector is at infancy and the large market is consolidating.
- However, rising ATF costs may restrict profit recovery, thus while valuations are reasonable and there is a long runway, it’s not yet the time to go aboard.
Weekly Sustainable Investing Surveyor: Week Ended March 3, 2023
- WTR Sustainable Index: During the week ended March 3, 2023, the WTR Sustainable Index performed in line with the broader market, rising 2.0% W/W versus the S&P 500 Index (up 1.9%), the Russell 2000 Index (up 2.0%), and the Nasdaq Composite Index (up 2.6%).
- Energy Technology (8.5% of the index) drove the index performance, rising 4.4%, while Advanced Transportation Solutions (69.6% of the index) was up 1.2% and Industrial Climate and Ag Technology was up 3.4%.
- Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 25.0x versus 18.3x for the S&P 500.
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