In today’s briefing:
- Ohayo Japan | Quiet Start to the Week
- Dividend Stocks For Market Turbulence: Only Natural to Reduce Risk Exposure After the Week We Had!
- Japan Morning Connection: 3099 JP, 1911 JP, 5803 JP
- Dividend Stocks For Market Turbulence: Japan Market
- # 44 India Insight: CPP & ADB Investment in JBM, Vedanta Dividend, Indian Oil Capacity Expansion
- Dividend Stocks For Market Turbulence: Hong Kong H-Shares Market
- Normalization of Conditions Might Imply Lower Level for BDI
Ohayo Japan | Quiet Start to the Week
- US stocks ended mixed on Monday as investors prepared for a week of key economic data
- SMC reported a 7% decrease in net profit to 48.7 billion yen for April-June 2024. The decline was attributed to weak semiconductor-related investment
- Japanese automakers Honda and Nissan are developing supply chains for recycled plastic to meet potential European regulations requiring 25% recycled plastic in new vehicles by 2031
Dividend Stocks For Market Turbulence: Only Natural to Reduce Risk Exposure After the Week We Had!
- Market volatility has skyrocketed amid uncertainty over U.S jobs health, the systemic unwinding of JPY carry trade and the U.S. presidential race.
- The key takeaway is the cocaine like emotional roller coaster market, VIX spiked and plunged like never before in a week, indicating a bipolar market.
- Given many investors are holding on to handsome returns YTD, it is normal to be cautious to lock-in their performance bonus, and rotate to income-focused equities and bonds.
Japan Morning Connection: 3099 JP, 1911 JP, 5803 JP
- Watch for a ‘megaquake’ reversal after a big rotation for names deemed to be winners/losers on Friday on heightened expectations for a major Nankai Trough earthquake over the w/e
- Retail related should rebound sharply after a solid 1Q showing from 3099 Isetan Mitsukoshi, with several related names yet to rebound on concerns the stronger yen will curb tourist spending.
- 1911 Sumitomo Forestry business briefing Friday confirms the strength of its US housing business, with it likely to easily exceed its latest MTP.
Dividend Stocks For Market Turbulence: Japan Market
- Japan market had the most extreme market reaction due to surprise interest rate hike that prompted unwinding of the JPY carry trade.
- Nikkei 225 and TOPIX are 18% and 16% off its respective peak achieved in July 2024. Right now, they are only 5% and 4% up YTD.
- This is an unnerving plunge, investors will reduce risk exposure and rotate into dividend yielding stocks. Valuation wise, Japan is cheap trading 1-SD below its mean.
# 44 India Insight: CPP & ADB Investment in JBM, Vedanta Dividend, Indian Oil Capacity Expansion
- CPP and ADB are negotiating a $100 million investment in JBM Ecolife.
- Vedanta plans to allocate $2 billion for dividends in FY25, supported by strong cash flow.
- UltraTech Cement will launch an open offer on September 19 to acquire a 26% stake in India Cements.
Dividend Stocks For Market Turbulence: Hong Kong H-Shares Market
- Hong Kong is trading at cheap levels based on P/E, P/BV, and P/CF, both against its own history and the valuation gap against other major markets.
- Many companies are paying good dividends, the top-10 highest yielding stocks averages at 8.7%. Dividend cover is solid (>1x), and all are big MCAP with decent ADTV (>USD2m).
- Investors have been underweight China/Hong Kong for a long time. Even high quality blue chip stocks are trading at single-digit PE and paying dividends >6%.
Normalization of Conditions Might Imply Lower Level for BDI
- Baltic Dry Index (BDI)* settled at around ~1,808.00 points (USD) on July 29th, 2024 versus ~1,881.00 points (USD) on June 10th, 2024, which was the release date of our previous blog.
- The Index has been comfortably trading and with upward tendency within the historic average price range of 1,000 – 2,000 for most of the period starting January 2023 and up until today.
- BDI also surpassed the level of 2,000 in four notable occasions during the fourth quarter 2023, the first quarter 2024, the second quarter of 2024 as well as in July 2024, but all attempts were short-lived.
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