In today’s briefing:
- Ohayo Japan| Uncertainty Reigns in Equity World; NUGGET: Honda – A Bike Company that Makes Cars
- China Tourism Sector: Anticipating More Upward Strengths
- Weekly Stock Bullfinder – Week of 8/14
- The Future Directions of A-Share After the Tumble and the Opportunities Behind
Ohayo Japan| Uncertainty Reigns in Equity World; NUGGET: Honda – A Bike Company that Makes Cars
- OVERSEAS. Uncertainty reigns as SPX closed flat Friday; US Treasury Yields rise as Yield Curve flattens on strong producer price data; Headwinds Mount in China’s Economy; Oil Demand reach record.
- JAPAN. Nikkei Futures -0.1% vs Cash; USDJPY 145; Kishida Cabinet approval down; Wholesale prices slow; Japanese firms opt to go private rather than face activists; Inbound Boost from China.
- NUGGET. Honda has a robust earnings structure that we think will be resilient to the increasing investment spend on BEV, with motor bike profitability
China Tourism Sector: Anticipating More Upward Strengths
- China’s announcement of the third batch of international destinations for the resumption of outbound travel will serve as another important catalyst for the rebound of outbound tourism.
- The generally weak performance of tourism-related stocks YTD is unjustified. Fosun Tourism (1992 HK) and China Travel International (308 HK) have both issued positive profit alerts for 1H23.
- Air China Ltd (H) (753 HK) is also an important beneficiary as international passenger capacity recovers. The release of pent-up demand will have positive implications on passenger yield.
Weekly Stock Bullfinder – Week of 8/14
- The start of the second half of the year so far has seen a change in the market themes versus the first half of the year.
- Microsoft’s declaration in January 2023 that AI would emerge as the next computing platform coupled with Nvidia’s shocking earnings guide up last quarter, coupled with a weaker dollar and decline in bond yields, provided fuel in the first half of the year for the technology sector and garnered investor eyeballs to anything closely associated with AI.
- However, on Microsoft’s most recent earnings call on July 25th, CFO Amy Hood stated “Even with strong demand and a leadership position, growth from our AI services will be gradual as Azure AI scales and our copilots reach general availability dates. So for FY ’24, the impact will be weighted towards H2.”
The Future Directions of A-Share After the Tumble and the Opportunities Behind
- Lower-Than-Expected policy stimulus/disappointing financial data led to sharp decline in A-share. This is because China is in the midst of economic structural transition, from rent economy/real estate to digital economy.
- China has considered risk prevention, which is the golden time for investors to timely clean up assets under the old development model and allocate assets under the new economic structure.
- The risk of a financial crisis remains. Share price in A-share could continue to fall. Therefore, we suggest that investors wait for the bottom to appear. Rebounds would come next.
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