Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Higher on Rate Expectations and more

• U.S. stocks closed mixed on Monday as expectations for a 50-basis-point rate cut by the Federal Reserve grew
• The dollar weakened as the yen hit a one-year high, with expectations growing for a significant Federal Reserve rate cut this week
• GU, Uniqlo’s sister brand, has opened a New York headquarters to oversee its U.S. expansion, coinciding with the launch of its first permanent U.S. store.

• AI has become a dominant topic of discussion among industry leaders, signaling a significant shift in focus over the past year
• Investment opportunities in AI extend beyond just a few mega cap stocks, with opportunities in chips, infrastructure, data and models, software applications, and services and solutions
• Tony emphasizes the importance of building a new computing infrastructure for AI, which is transforming industries and creating new opportunities for tech investors.

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• Granular data at Hang Seng Bank suggests a greater deterioration in both HK and China than is readily visible in headline numbers
• The bank’s China pre-tax profit is down 70% YoY in 1H24 and its total stage 3 loans are up 84% YoY in 1H24
• The bank’s credit-impaired loans for Hong Kong CRE rose from HKD1,081m to HKD13,485m, from 2H23 to 1H24

• Positive sentiment from Intel’s deal with AWS and extra Govt. backing may outweigh plans to delay its EU fab capex for JP SPE suppliers.
• Concerns iPhone 16 Pro preorders are below expectations to weigh on JP component suppliers, but can this be much of a surprise?
• The JP Govt. agreeing for 7&I to be designated as a ‘core’ company is not a show-stopper and may compel Couche-Tard to up their game.

• Adani Green and Adani Power secure 6.6 GW power supply deal, bolstering renewable and thermal capacity.
• Tata Electronics plans two more semiconductor fabs in Gujarat, enhancing India’s chip manufacturing capabilities.
• Reliance expands non-food retail space by 50%, focusing on boosting profitability and premium segments.

• Copper smelters are struggling for profitability but output is still rising, creating a relative concentrate imbalance in copper and zinc.
• Zinc mine output has declined year on year, leading to a tightness in concentrate supply and challenges for smelters.
• The electric vehicle market is facing challenges due to high costs and lack of policy support, especially in OECD markets, while China has a significant lead in the industry with lower costs and established supply chains.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Getting China property right is essential for investors who follow China equities because most companies, from cyclical to consumer, can’t be insulated from its downturn.
• China housing market is not collapsing as people feared; instead we see signs it is bottoming out with Xi’s pursuit of high-quality growth model starting paying off.
• We expect the sector’s strain on Chinese economy will ease moving into 2025/26, setting a favorable backdrop for most China’s consumer-oriented stocks.

• China M1 and M2 data disappoints and reinforces deflationary risks. Closely watched Consumer Sentiment barometer, new & used prices in top 70 cities, unequivocally weak
• . Rise in the dynamic of US auto delinquencies is cause for concern
• Corporate caution at investor conferences from Coca Cola Co (KO US) , Visa (V US), Mondelez International (MDLZ US), Wendy’s Co/The (WEN US), Dow (DOW US), 3M and Campari

• Apple iPhone 16 pre-orders weak and Questions on Apple Intelligence remain
• Big software investor days. Expect AI to feature big on hype, but what to expect from TAM to ARR to products?
• Semis: Samsung challenges, Intel relief but pressures remain, TSM momentum, this time with ByteDance 

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Last week started a busy season of medical and healthcare conferences, with obesity and cancer as major themes. SMMT led with Keytruda-beating (MRK) data in lung cancer, lifting TIL and BNTX with similar drugs.
• NVO boosted amylin class of obesity drugs with positive early data, including ZLDPF, GPCR, and VKTX.