Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Commodities

<ul>
<li>A review of recent events and data impacting our investment themes and outlook</li>
<li>Japan and US Central Banks continue to add fuel to the monetary fire</li>
<li>China consumption weakness is likely to spur a tangible response in the New Year</li>
</ul>


A review of recent events and data impacting our investment themes and outlook
Japan and US Central Banks continue to add fuel to the monetary fire
China consumption weakness is likely to spur a tangible response in the New Year


Overview #44 – Not Too Hot, Not Too Cold

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>Looking ahead to 2026, we believe competition in the large language model (LLM) industry will further intensify, while monetization of AI applications in niche segments should see continued momentum.</li><li>We are optimistic about the further monetization potential driven by improved AI agent capabilities, as well as increased paid user penetration and monetization from advanced image editing and video generation LLMs.</li><li>We currently do not anticipate overinvestment risks among cloud service providers, and expect 2026 earnings growth of US-listed leaders to support their valuations. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Looking ahead to 2026, we believe competition in the large language model (LLM) industry will further intensify, while monetization of AI applications in niche segments should see continued momentum.We are optimistic about the further monetization potential driven by improved AI agent capabilities, as well as increased paid user penetration and monetization from advanced image editing and video generation LLMs.We currently do not anticipate overinvestment risks among cloud service providers, and expect 2026 earnings growth of US-listed leaders to support their valuations. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

US Internet & Software - 2026 outlook: AI applications to ramp up; eyes on AI investment return

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Japan has intentionally stepped into the middle of the geopolitical battle between the U.S. and China with Prime Minister Takaichi's policy-changing Taiwan comments to Japan's parliament.</li>
<li>China's retaliation has been swift and tactical, issuing travel warnings, high-level diplomatic reprimands, and conducting military exercises near the Senkaku Islands.  China has promised a continuing substantial and broad-based response.</li>
<li>We expect China's response to include rare earth export and Japanese trade restrictions and targeted boycotts of Japanese goods on the mainland.</li>
</ul>


Japan has intentionally stepped into the middle of the geopolitical battle between the U.S. and China with Prime Minister Takaichi's policy-changing Taiwan comments to Japan's parliament.
China's retaliation has been swift and tactical, issuing travel warnings, high-level diplomatic reprimands, and conducting military exercises near the Senkaku Islands.  China has promised a continuing substantial and broad-based response.
We expect China's response to include rare earth export and Japanese trade restrictions and targeted boycotts of Japanese goods on the mainland.


Japan Picks a Fight with China!! What Happens Now?

Writing about Companies with an Unfair Advantage, Unfair Advantage

Unfair Advantage

Writing about Companies with an Unfair Advantage

I write about companies that have an unfair advantage. I might invest in them as well.

<ul><li>Much has been written these days on the bloating AI capex spends across the tech majors.</li><li>A JP Morgan report said we need to create a stratospheric revenue number of $650B to justify a 10% IRR, given current AI capex levels.</li><li>Yet everyone agrees AI is a fundamental shift that is redefining business models across industries.</li></ul>

Much has been written these days on the bloating AI capex spends across the tech majors.A JP Morgan report said we need to create a stratospheric revenue number of $650B to justify a 10% IRR, given current AI capex levels.Yet everyone agrees AI is a fundamental shift that is redefining business models across industries.

<ul>
<li>Chinese AI model downloads have surpassed those of the U.S. putting at risk the valuations of the large hyperscalers in the U.S.</li>
<li>Chinese open-source AI models offer a more secure, efficient, and lower cost alternative to Chat GPT -5 , Claude 4.5 Sonnet, and other U.S. LLMs.  </li>
<li>We believe that there will be a turning point when investors will realize that the Chinese open-source AI models have undercut the premise of U.S. global dominance of AI.</li>
</ul>


Chinese AI model downloads have surpassed those of the U.S. putting at risk the valuations of the large hyperscalers in the U.S.
Chinese open-source AI models offer a more secure, efficient, and lower cost alternative to Chat GPT -5 , Claude 4.5 Sonnet, and other U.S. LLMs.  
We believe that there will be a turning point when investors will realize that the Chinese open-source AI models have undercut the premise of U.S. global dominance of AI.


CHINA'S AI COMMODITIZATION: Can Global AI Valuations Survive?

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOG US)

Overview #44 – Not Too Hot, Not Too Cold

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CMB International

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Japan is deploying missiles to an island near Taiwan in an escalation of its increased militarism toward China since the PM election last month....

David Mudd

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Unfair Advantage

CHINA'S AI COMMODITIZATION: Can Global AI Valuations Survive?

Chinese AI model downloads have surpassed those of the U.S. putting at risk the valuations of the large hyperscalers in the U.S.

David Mudd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)