Daily Brief Thematic (Sector/Industry): Japanese Semiconductor Stocks and AI “Winners” that Ain’t So and more

• Japan is the darling of the moment. To those who haven’t kept track of the story, a series of market reforms in January encourages companies with a price-to-book ratio below one to create a plan to achieve capital efficiency.
• Given that half of the companies at the time were trading below 1x P/B, this is a big deal.
• And this has driven a massive wave of buybacks and changes, leading to the Nikkei finally breaking a 30-year high.

In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Provider, Robert Ciemniak. Robert will be sharing with us his insights into China’s Real Estate Outlook. From trends picking up in the industry, its current opportunities, and insights to stay on top of, join us as we hear more from Robert.

The webinar will be hosted on Wednesday, 5 July 2023, 17:00 SGT/HKT.

Robert Ciemniak is the Founder-CEO & Chief Analyst of Real Estate Foresight Ltd (REF) (www.realestateforesight.com), an independent analytics, research, and consulting firm based in Hong Kong and focused on the Mainland China property markets. Since 2012, REF has been helping investors with market research, project due diligence, and strategy development. This has ranged from detailed assessments and estimates on distressed developers’ project portfolios to market due diligence on specific projects to macro-level questions linked to demand for commodities. The unique combination of the housing markets and developer data from data partner China Index Academy in Beijing, primary research, and technology-powered alternative data collection from public sources result in a valuable content set used in REF analytics and reports.

• OVERSEAS. SPX -0.4% down again; NASDAQ -1.4%  as hope for early rate cuts fade with sticky inflation;   Russian political drama continues spurring geopolitical uncertainty; Raft of Tesla -6% rating downgrades.
• JAPAN. NKY futs -0.4% vs Cash;  USDJPY 143.5 steady as Japanese officials start verbal intervention; BOJ official wants review of YCC; Deal effectively done JSR(4185) to be taken private
• NUGGET.  Japanese Auto majors are ramping up on software engineer headcount to respond to the critical software requirement of EVs.  Internal retraining is proceeded a pace, but the question remains..

• High-Frequency data for balance sheets of US banks is just released
• Contra-Asset account, loan loss reserves, rapid rise suggests far worse credit metrics 
• US banks can see hits on all fronts: volume, funding, credit costs, regulatory capital

• The latest commercial census published this Spring shows that Japan’s wholesale sector remains more dominant than in many other major economies, partly explaining the low margins in some retail sectors.
• Wholesale sales fell 8% between 2016 and 2021, but were still 10% higher than in 2012 due to survey changes over the previous decade.
• Consolidation of wholesaling into the hands of larger corporations, with correspondingly higher power within the supply chain, is increasing and opportunities for M&A and margin growth are significant.

• NTES：NetEase announced that the international version of “Harry Potter: Magic Awakened” on June 27
• 1024HK： Kuaishou E-commerce Platform will adjust its service fees for “Try Before You Buy” orders，which will have a positive impact on its profit（+）
• ZTO: MOT reports weekly express parcel volume for the period ending June 25, 2023 (+/+)

• Recently, many Chinese sellers on Amazon have reported a  decline in their store’s performance, including order volume and profits.
• According to their feedback, the adjustment of Amazon’s advertising rules, the use of AI, and competition from platforms like Temu are likely important reasons for this decline.
• We suggest the trend could be interpreted as something unfavorable for Amazon but beneficial for Temu/PDD.

• MUFG has assets of USD2,909,711m compared with USD471m at Mandala Multifinance
• MUFG’s profit is USD8,880m compared with USD44m at Mandala Multifinance
• There is nothing wrong with expansion outside Japan, but perspective is key

• Global equities finished the holiday-shortened week lower.
• The MSCI World Index declined 2.01%, while the S&P 500 fell 1.42%.
• This snapped a six-week winning streak for the S&P 500, which is still up 13.25% YTD.

• NTES/700.HK: China’s NPPA publishes list of 89 domestic game code approval
• 9995HK/1801HK：RemeGen explored ADC-PD1 combination theray for its RC88 and RC108 with Innovent (-)
• LKNCY/2150HK/ATAT/3690HK: Tourism spending maintain stable growth during Dragon Boat Festival, indicating sustainable recovery in service oriented consumption in China.(+)