In today’s briefing:
- Ohayo Japan | Rising Recession Fears
- Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP
- China Strategy: Top 3 Ideas for the Rest of This Year
- Short Note: China Property Recovery Upcoming with Policy Support and Rate Cut
- GEMWeekly (2 Aug 2024): Alibaba Fee Change; China, South Korea Macro; Tencent, ByteDance
Ohayo Japan | Rising Recession Fears
- Stocks fell sharply on Friday due to a weaker-than-expected July jobs report, raising recession fears.
- Amazon slid 8.8% after missing revenue estimates, while Intel dropped 26% on weak guidance.
- Fast Retailing reported an 8.1% year-on-year increase in domestic same-store sales for UNIQLO in June, marking four consecutive months of growth
Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP
- 8697 Japan Exchange and retail facing brokers such as Matsui, SBI, and Monex may do better with Cboe +4.3% given the outlook for increased trading amid higher market volatility.
- Japanese MedTech firms Terumo, Asahi Intecc, and Olympus underperformed globally. While FX plays a role, lower rates boost elective surgeries, making them prime candidates for a rebound.
- NKY225 inclusion candidates 7453 Ryohin Keikaku and 7453 NRI look attractive as oversold longs as Index arbs will no doubt be rushing back as soon as the panic subsides.
China Strategy: Top 3 Ideas for the Rest of This Year
- Lonking Holdings (3339 HK)‘s 2H24 earnings will benefit from accelerated special purpose bond issuance and a low base. Potentially higher dividend payout is another attraction.
- Shenzhen International (152 HK) may realise a partial gain from South China Logistics Park transformation and lower interest expenses in 2H24. Rmb appreciation will help, too.
- Dongfang Electric (1072 HK) should witness stronger order momentum in 2H24 as demand from transmission and generation upgrades surges. Order backlog now covers 3.5x revenue.
Short Note: China Property Recovery Upcoming with Policy Support and Rate Cut
- In this insight, we look at the latest policy support in China property, as well as the latest rate cut from the Central Bank
- In the physical market, there are some signs of bottoming out, particularly in key cites such as Shanghai and Shenzhen. Secondary market is recovering
- If investors would like exposure in the sector, we recommend CRL (1109 HK) and COLI (688 HK), both are SOE names with almost zero bankruptcy risks
GEMWeekly (2 Aug 2024): Alibaba Fee Change; China, South Korea Macro; Tencent, ByteDance
- The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
- Macro data points: Chinese PMI, South Korean exports and inflation data.
- Companies mentioned:Alibaba Group Holding (9988 HK), Tencent (700 HK), ByteDance (1439927D CH)
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