Daily Briefs

• Government policies compel Japanese companies to embrace shareholder-friendly practices, adherently engaging in regular dividend payments and executing share buybacks  
• The quick way to boost shareholder value is via share buybacks, but the efficacy diminishes as the price-to-book ratio increases, whereas the appeal of dividends continues to strengthen
• Japan is the BEST destination for sourcing high-quality blue-chip companies with promising prospects that consistently pay reliable and high dividends

• FT article uncovers other contributors to surging air freight rates—Chinese online brands Temu and Shein are flooding Western nations with fast fashion and inexpensive e-commerce goods  
• The biggest beneficiaries are Chinese carriers with significant air cargo exposure, and Cathay Pacific. This presents a potential catalyst for an earnings beat and a boost to the share price.
• Carriers from Taiwan and South Korea will benefit from supply tightness to the U.S.. Logistics providers are unlikely to benefit much due to tight margins and volatile high freight rates 

• Overseas: SPX +0.5%, M&A action drives market higher. Fed talks down interest rate cuts.
• Today: NKY Futs -0.1% v cash. JPY 142.9; Japan’s FSA wants to overhaul tender offer rules; Mit Elec to step up cross-share unwind
• Japan: Nippon Steel’s $15bn acquisition of U.S. Steel is a bold move; it secures a top-three global position & substantial share in the EV e-steel market.

• With Singapore bank’s negative credit growth now at -4.7% YoY in the latest available month of October, there is increased risk of worsening net interest income growth.
• Over the past several months the severity of worsening domestic credit growth in Singapore is acute moving from +8% YoY in May to -5% YoY in October.
• OCBC and DBS saw net interest income delta essentially flat YoY, while for UOB net interest income delta was well lower. 2H23 can be far worse for all.

• There is more optimism about headline inflation but for the average Japanese consumer, there are major concerns given the 9% spike in food inflation.
• Surveys suggest that households reduced shopping frequency for daily needs consumer goods by about 10% in the first nine months of 2023 alone.
• Retailers, meanwhile, are taking steps to reduce prices where they can, creating a widening gap between retailers with the capacity to lower prices and those that can’t.

• China hopes to establish the new before abolishing the old, which means after new industries bring new growth drivers to new economic structure, it’s time to abolish the old model. 
• China wouldn’t carry out aggressive stimulus, but attach importance to the quality and efficiency of policies. The country’s top leaders do not agree with the current phenomenon of so-called “deflation”.
• Expansion of effective demand will inevitably involve the reforms of tax/financial system and the role of national capital in development. The economic theoretical basis of China’s future development deserves attention.

• Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.
• The “rolling recession” rolled over the sector this year. Despite sales pressure, earnings improved for the best in the group, notably the commercial/contract names, residential manufacturers, and select retailers.
• Costco, which includes furniture in its broad merchandise mix, reported 1QFY24 revenue of $57.8 billion, matching estimates. 

• Housing is a permanent source of anxiety for everyone and a perennial source of interest.
• The current housing market is uncertain and facing long-term structural issues.
• The Fed’s attempt to cool down inflation by raising interest rates has impaired the supply side of housing and worsened housing affordability.

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• In a week with lower news flow and volume, cannabis stocks drifted lower.
• The US cannabis MSOS ETF dropped 10.86%, while the global YOLO ETF lost 8.23%. YTD, MSOS and YOLO are down 4.86% and 19.44%, respectively, indicating the relative outperformance of US cannabis stocks versus their global (primarily Canadian) peers.
• Glass House Brands (NEO: GLAS, OTCQX: GLASF) inched up 1.09% last week and is now +142.40% YTD.