Daily Brief Thematic (Sector/Industry): Postcard from HK SG | "The Frog in the Well" and more

In today’s briefing:

Postcard from HK <> SG | “The Frog in the Well”
Japan Weekly | Nikkei +4.8% to 31 Year High, Advantest, Recruit, Makita
Korean Banks: Sharp Rise in Delinquency Ratios in 1Q 2023 & Inverted Yield Curve

Postcard from HK <> SG | “The Frog in the Well”

Over the last week, we engaged in fruitful interactions with fellow analysts and portfolio managers in Hong Kong and Singapore.
In this insight, we share perspectives we picked up on India as a market, along with regional market dynamics.
The way ahead involves embracing a glass well approach, combining our deep focus on Indian equities with a broader understanding of regional markets and consumer trends.

Consumption is on the rebound as pandemic restrictions are lifted. Inflation has been higher than the 2% goal, but still not entrenched according to the BoJ.
JGB yields drifted lower despite higher consumer inflation. Lower producer prices may hint that supply issues are normalizing. Stocks are on fire
Bulls adding to Japanese semiconductor equipment names. Global backdrop of AI but Japan also benefits as a “safe haven” destination for new capital investments

We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising delinquencies.
The major reasons for higher loans and cards delinquency ratios include higher interest rate burdens, higher inflation rates, inverted yield curve, weakening economy, and pressures on disposable income.
The delinquency ratios of the largest nine banks in Korea all worsened in 1Q 2023 (for both banks and credit cards).

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