In today’s briefing:
- Ohayo Japan | Market Retreat Intensifies; Panasonic Plays the States
- 2024 High Conviction: Low Semiconductor Growth
- 2023 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe
- 112: More Thoughts On Banks’ HTM Portfolio; Boston Fed Paper
- GEM Banks; 2024 Conviction Calls
- Why Subsystems Now
Ohayo Japan | Market Retreat Intensifies; Panasonic Plays the States
- Overseas: SPX -1.5%; Stocks tumbled as investors locked in profits, ending the Dow and Nasdaq’s nine-day gains. FedEx’s disappointing outlook contributed to the index’s worst day since September.
- Today: NKY Futs -1.9% v cash. JPY143; Yamaha Motors faces slowdown in US; Toyota recall; Chugoku to sell excess Uranium
- Japan: Panasonic walked away from Oklahoma’s $698M battery offer, sparking concerns over megaproject subsidies and corporate gamesmanship.
2024 High Conviction: Low Semiconductor Growth
- Objective Analysis has released its 2024 semiconductor forecast, calling for growth of below 5%
- Other forecasters currently call for 11% to 17% growth, which would require another super cycle to accomplish
- We do not see any event that will drive a 2024 super cycle, even with the current rapid adoption of AI in the data center
2023 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe
- Despite ongoing recovery and fading effect of the COVID-19, 2023 was not a smooth sailing for the healthcare companies. All the countries and sub-sectors did not perform equally.
- As we are heading into 2024, let us look back on the performance of some of our global healthcare stocks recommended throughout 2023.
- LianBio (LIAN US) remained the best performer with 93% return in nearly eight months. Global Health (Medanta) (MEDANTA IN), top pick for March 2023, generated 79% return in nine months.
112: More Thoughts On Banks’ HTM Portfolio; Boston Fed Paper
- The Boston Federal Reserve put out a short white paper on the Silicon Valley Bank crash and the accounting for debt securities known as held-to-maturity or HTM.
- It’s a nice short read and got me thinking about this issue again, which I examined back in May in Issue #100 (link below).
- The question, which has not definitively resolved itself in academia or policy circles, centers around bank accounting and whether banks should be allowed to value bonds they’re not planning on selling (hence the term held-to-maturity) based on amortized cost.
GEM Banks; 2024 Conviction Calls
- Among bigger cap GEM banks, we pick four longs and one short as our conviction calls for 2024
- Our core buys are Bank Mandiri from Indonesia, KB Financial from South Korea, China Merchants Bank and Banco do Brasil
- Our key sell is Kotak Mahindra Bank from India which is richly valued, exposed to low prospective earnings growth and has low credit quality coverage
Why Subsystems Now
Semicap is strong, Subsystems are not. That will change.
- I think Mks Instruments (MKSI US), Ultra Clean Holdings (UCTT US), and Ichor Holdings (ICHR US) are likely good 12+ month longs as NAND spending increases, and they blow out estimates for multiple quarters in a row.
- The factor-driven size difference drives the opportunity, and they should benefit well on a relative basis next year.
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