Daily Brief Thematic (Sector/Industry): Japan Morning Connection: 7&I Continues Restructuring Plan and more

• Tech largely down in the US after AMD’s AI event failed to impress with somewhat conflicting CPI and jobless data.
• A strong print for Fast Retailing will add to short-seller woes although some brokers have started cutting estimates after the outsized move.
• 7&I announced a flurry of restructuring initiatives aimed at raising corporate value and fending off Couche-Tard before its too late.

• Resourceful Auto’s IPO saw a staggering subscription of 400 times, but its current market price is half its IPO value, revealing a troubling trend in SME IPOs.
• Many SME IPOs exhibit a “subscription mirage,” creating misleading impressions of value, while underlying businesses often lack sustainable operations and liquidity.
• Investors must prioritize fundamental analysis and awareness of liquidity risks over hype, especially in a market increasingly resembling Ponzi-like characteristics.

• NIO US/XPEV US/1810 HK/LI US: Electric vehicle sales were strong during the two weeks of the National Day holiday, with NIO, Leap, Zeekr, Xiaomi and Tesla performing better(///////)
• Consumer sector: Steady Growth in Catering and Retail Consumption During the National Day Holiday(+)
• Consumer sector: WeChat reports 20% YoY increase in transaction volume during National Day Holiday (+)

• Transition from the Internet era of servers to the AI era of backend
• Software advancements are outpacing silicon capabilities
• Question raised about who will benefit from advances in AI technology, particularly in terms of hardware market competitiveness

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• We must recognize the wide variance in credit growth rates across Asian countries
• There are critical implications for differences in net interest income growth and profit
• Credit metrics also tend to move in tandem with loan growth rates, as does GDP growth

• One of the sectors we like for the next phase of the Japanese stock market
• The market is not giving the benefit of the doubt to monetisation of its property portfolio
• The core  railway business is back to pre-Covid 19  levels

• 3690 HK: Meituan’s Overseas Version, Keeta, Launches in Riyadh, Saudi Arabia(/)
• PDD US/BABA US/JD US: PDD to provide double compensation for overpriced product (//-/-)
• 700 HK/BABA US: Taobao now accessible through webpages in WeChat (+/+)