Daily Brief Thematic (Sector/Industry): Smartkarma Webinar | Japan Top Investment Picks and more

In the next installment of our Webinar Wednesdays, we are glad to welcome Smartkarma Insight Provider Shifara Samsudeen, ACMA, CGMA , as she takes us through her insights and top picks in Japan’s investment space. From bubbling trends, to what’s next in the space, do join us to get the full picture.

The webinar will be hosted on Wednesday, 03 May 2023, 17:00 SGT/HKT.

Shifara Samsudeen, ACMA, CGMA is a chartered management accountant with more than 10 years of rich experience in investment research and financial analysis. She has worked as an equity analyst for one of the world’s largest asset managers with USD2.5 trillion in AUM covering numerous sectors including chemicals, retail, tech, autos, telco, real-estate and banks, globally. She is experienced in fundamental equity research, industry research, commodity studies, forensic accounting, and due diligence reviews.

• SK Hynix reported a Q1’23 net loss of ~ US$1.9 billion
• As was the case with Micron, the company pegged Q1’23 as the trough for the current downturn and now expect quarterly revenues to grow sequentially
• Recovery may be nigh, but the macro outlook has actually worsened. The road to recovery will be a long and winding one. 

• Active China A-Share funds scale back Financials exposure to record lows.
• A-Share Financials are the largest sector underweight by some distance, held below benchmark by -8.6% on average
• Outside of 6 well held stocks, active A-Share managers are staying well clear of a long tail of companies that are well represented in the MSCI China A-Share benchmark.

• Demand for hotel rooms and air tickets during this year’s Labor Day holiday is on track to exceed pre-pandemic levels of 2019, industry data showed
• Many of the bookings were for destinations in the Yangtze River Delta region, Chongqing municipality, Chengdu and the Beijing-Tianjin-Hebei cluster
• The rebound in travel comes amid a broader recovery in tourism, with Qunar saying that tickets tourist attractions in Beijing, Shanghai, Nanjing, Guangzhou and Xi’an have been selling fast.

• The past three quarters have seen memory revenues collapse by 60%
• DRAM and NAND prices have reach cost, and the business should remain profitless for an indefinite time
• Management appears to have no idea when this situation will end

• Wealthy Japanese staying in Japan, more people acquiring wealth, a return of inbound tourists and better merchandising and store investment. 
• All combined to help department stores rebound strongly in 2022 but there has been a sharp shift in where department stores make their money.
• Further growth is expected but only for some, and in some product categories much more than others.

• BZ: Kanzhun Limited: China State Council issued a series of policies to stabilize employment market.(+)
• BILI/1024HK/3690HK: New Internet ads measures take effect since May 1(-/-/+)
• 3690 HK: RED preparing to launch group buying function (-)

• We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.
• Both US and China will develop respective partners to complete their ecosystems. We will soon have a world running on two sets of standards
• While the western world dominates the old order and the new frontiers, China is leading in the new order of energy, drug and manufacturing.

• Taiwan’s UMC, the world’s third largest foundry, reported Q1’23 revenues of NT$54.2 billion, a decrease of 20.1% QoQ and a 14.5% YoY, in line with expectations
• Q2’23 forecasted flat sequentially, outperforming TSMC’s outlook for a 6.5% QoQ decline
• Management foresees recovery being slower than previously anticipated and to admits to having very limited visibility into H2’23

• WTR-CMI last week. In what was a mixed week for the market, with the Russell 2000 appreciating 0.6% and the S&P 500 remaining virtually unchanged at (0.1%), our WTR-CMI index of 30 chemicals and materials technology stocks underperformed, declining 0.3%, as lithium stocks led by ALB suffered from Chile’s decision to nationalize its lithium mining industry, once existing contracts with private companies (mainly SQM and ALB) expire.
• SHW exits another paint market. When the company acquired Valspar, it did not only shore up its presence in the North American big-box distribution channel and expand its industrial coatings business, but it also gained exposure to non-North American paint markets, specifically China and Australia.
• SHW divested the Australian business two years ago and now has also found a buyer (Akzo) for its Chinese paint business, which may have contributed to SHW topping the list of WTR-CMI stocks appreciating last week.