Category

Thematic and Strategy

Brief Thematic: Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020 and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020
  2. Taiwan Banks: Not the Bargain They once Were
  3. Korean Value Stocks Portfolio Quarterly #1 (4Q19)
  4. South Korean Banks: Stuck in the Value Vault
  5. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

1. Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020

Exxon Mobil (XOM US) and partners awarded the key contracts for the Rovuma LNG project in Mozambique, which makes the project’s sanction almost certain. Despite this, it delayed the final investment decision (FID) until next year. Another bumper set of contract awards are going to TechnipFMC PLC (FTI FP), Jgc Corp (1963 JP) and Fluor Corp (FLR US). Yet another positive for the LNG contractor market. 

2. Taiwan Banks: Not the Bargain They once Were

Taiwan%20banks%20at%20q219 page 6

Given their stellar outperformance this year, we are now more cautious on Taiwan’s banks.

The sector is, one must not forget, still weighed down by Inefficiencies, Funding cost pressures, and low Profitability. Capital Adequacy could be better too. Having said that, Asset Quality is under better control than many other parts of Asia.

Similar to South Korea, though not as cheap, Taiwanese banks are the preserve of  a more value-centric mindset rather than the higher growth promise markets elsewhere. For value investors, this is a steady-state market, ripe for greater engagement on share price softness. The possibility of corporate activity may though keep investors on their toes.

We conduct  an analysis of financial strength, valuation, and fundamental trends at twelve listed banks and uncover Taichung Commercial Bank (2812 TT) in particular but also Entie Commercial Bank (2849 TT) as the best investment opportunities.

We do not include Fubon Financial Holding Co (2881 TT)Cathay Financial Holding Co (2882 TT) and Shin Kong Financial Holding (2888 TT) in our analysis given their non-banking mix though supplementary work that we have carried out does not indicate obvious opportunity at this current juncture.

3. Korean Value Stocks Portfolio Quarterly #1 (4Q19)

Koreanvalue 2

  • We are initiating a report called Korea Value Stocks Portfolio Quarterly. With this report, we plan to highlight some of the most noteworthy value stocks in Korea.
  • By highlighting a portfolio of value stocks on a regular basis, we hope to seek some interesting investment opportunities among the Korean value-oriented stocks. We have limited the market cap range to between about $200 million to $3 billion.
  • We plan to include more company-specific reports on some of these interesting, value-oriented stocks in the coming months. Many of these stocks tend to be turnaround plays but they also have some major catalysts that could help to sustain their companies’ turnaround. 

4. South Korean Banks: Stuck in the Value Vault

Sk%20korean%20banks%20at%20q219 page 7

South Korean bank shares continue to feature in the “value” vault. By FV, P/Book or Earnings Yield, bank shares do not seem expensive. Dividend Yields are not unattractive while payouts are on the rise.

They continue to feature in GEM portfolios though less so than in recent years.

News on the economy (semiconductor prices, falling exports) and geopolitical risks (China-US and SK-Japan) have dampened enthusiasm for assets.

From the eight banks that we cover here, Shinhan Financial Group Adr (SHG US) commands the most robust financial strength profile, ahead of Kb Financial Group Inc Adr (KB US) and Hana Financial (086790 KS), but is the most “expensive”. The weakest (riskiest) profile is at DGB Financial Group (139130 KS) which also happens to be the “cheapest”. Jb Financial Group (175330 KS) is the best combination of value, financial strength, and fundamental momentum.

5. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

Screenshot 1

The highlights for September are as follows:

Source: CapIQ

*Note: CVs- Commercial Vehicles

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020 and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020
  2. Taiwan Banks: Not the Bargain They once Were
  3. Korean Value Stocks Portfolio Quarterly #1 (4Q19)
  4. South Korean Banks: Stuck in the Value Vault
  5. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

1. Exxon’s Mozambique LNG Project Awards Service Contracts but FID Slips into 2020

Exxon Mobil (XOM US) and partners awarded the key contracts for the Rovuma LNG project in Mozambique, which makes the project’s sanction almost certain. Despite this, it delayed the final investment decision (FID) until next year. Another bumper set of contract awards are going to TechnipFMC PLC (FTI FP), Jgc Corp (1963 JP) and Fluor Corp (FLR US). Yet another positive for the LNG contractor market. 

2. Taiwan Banks: Not the Bargain They once Were

Taiwan%20banks%20at%20q219 page 4

Given their stellar outperformance this year, we are now more cautious on Taiwan’s banks.

The sector is, one must not forget, still weighed down by Inefficiencies, Funding cost pressures, and low Profitability. Capital Adequacy could be better too. Having said that, Asset Quality is under better control than many other parts of Asia.

Similar to South Korea, though not as cheap, Taiwanese banks are the preserve of  a more value-centric mindset rather than the higher growth promise markets elsewhere. For value investors, this is a steady-state market, ripe for greater engagement on share price softness. The possibility of corporate activity may though keep investors on their toes.

We conduct  an analysis of financial strength, valuation, and fundamental trends at twelve listed banks and uncover Taichung Commercial Bank (2812 TT) in particular but also Entie Commercial Bank (2849 TT) as the best investment opportunities.

We do not include Fubon Financial Holding Co (2881 TT)Cathay Financial Holding Co (2882 TT) and Shin Kong Financial Holding (2888 TT) in our analysis given their non-banking mix though supplementary work that we have carried out does not indicate obvious opportunity at this current juncture.

3. Korean Value Stocks Portfolio Quarterly #1 (4Q19)

Koreanvalue 2

  • We are initiating a report called Korea Value Stocks Portfolio Quarterly. With this report, we plan to highlight some of the most noteworthy value stocks in Korea.
  • By highlighting a portfolio of value stocks on a regular basis, we hope to seek some interesting investment opportunities among the Korean value-oriented stocks. We have limited the market cap range to between about $200 million to $3 billion.
  • We plan to include more company-specific reports on some of these interesting, value-oriented stocks in the coming months. Many of these stocks tend to be turnaround plays but they also have some major catalysts that could help to sustain their companies’ turnaround. 

4. South Korean Banks: Stuck in the Value Vault

Sk%20korean%20banks%20at%20q219 page 3

South Korean bank shares continue to feature in the “value” vault. By FV, P/Book or Earnings Yield, bank shares do not seem expensive. Dividend Yields are not unattractive while payouts are on the rise.

They continue to feature in GEM portfolios though less so than in recent years.

News on the economy (semiconductor prices, falling exports) and geopolitical risks (China-US and SK-Japan) have dampened enthusiasm for assets.

From the eight banks that we cover here, Shinhan Financial Group Adr (SHG US) commands the most robust financial strength profile, ahead of Kb Financial Group Inc Adr (KB US) and Hana Financial (086790 KS), but is the most “expensive”. The weakest (riskiest) profile is at DGB Financial Group (139130 KS) which also happens to be the “cheapest”. Jb Financial Group (175330 KS) is the best combination of value, financial strength, and fundamental momentum.

5. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

Screenshot 1

The highlights for September are as follows:

Source: CapIQ

*Note: CVs- Commercial Vehicles

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: Biden Still the Candidate to Beat, for Both Democrats and Trump and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Biden Still the Candidate to Beat, for Both Democrats and Trump

1. Biden Still the Candidate to Beat, for Both Democrats and Trump

It is way too early to be judging the state of the 2020 presidential race, with nearly 5 months still to go before the first real contest of the long marathon — the Iowa caucuses on 3rd February 2020. But the polls show it is now a 4-horse race for the Democratic nomination — Biden, Warren, Sanders, Harris — with Elizabeth Warren the leading “socialist-wing” challenger to the centrist Biden, but with Sanders nipping at her heels. Despite Biden’s feeble performance in the first debate, he leads all the polls — by a wide margin in 4, and tied with Warren in 1 — but even the Fox News poll last month (16th August) showed all four leading Democrats handily beating Trump, and this even while the economy is robust (and any recession remains unlikely before 3Q 2020). 

After her strong performance in the first debate — when she successfully ambushed Biden on the issue of race — Kamala Harris herself was ambushed by Tulsi Gabbard  in the second debate, and didn’t quite hold her own. The big winner of the second debate was Warren, while Biden was seen to have performed much better –although not “winning” his debate (which featured Booker and Harris flanking him, while Sanders and Warren debated the previous night). While the first two debates occurred over 2 nights (with 10 candidates each), the third debate (on 12th September) will feature just 10 candidates on one night: the top 4, alongside Mayor Pete Buttegieg (who is fifth in most polls), Cory Booker, Julian Castro, Amy Klobuchar, Beto O’Rourke and Andrew Yang.  

With the US economy likely to be in recession by September 2020 (see Recession Watch: Fluctuating Trade War on the Verge of Tripping up the World Economy ), Trump is vulnerable. The Democrats won the mid-term Congressional election by a record 8 percentage points — overcoming the hurdles of gerrymandering. Despite all this, a 77-year-old socialist, or a left-wing Senator (i.e., Sanders and Warren respectively) would face severe electoral challenges in the face of a general election, especially given the unpopular consequences of their “Medicare for All” proposal. Apart from Biden, the only other clear centrist (i.e., moderately liberal) candidates are Pete Buttigieg and Amy Klobuchar, with Kamala Harris relatively centrist. If any of these four is the Democratic nominee in a recession year, Trump will be toast. The debates matter, but for now will increase uncertainty and hence are likely to be a negative for the market — especially if Warren and Sanders do well in the third debate, and continue to gain in the polls. 

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: Taiwan Banks: Not the Bargain They once Were and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Taiwan Banks: Not the Bargain They once Were
  2. Korean Value Stocks Portfolio Quarterly #1 (4Q19)
  3. South Korean Banks: Stuck in the Value Vault
  4. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota
  5. HK Short Interest – Small Drop in September

1. Taiwan Banks: Not the Bargain They once Were

Taiwan%20banks%20at%20q219 page 5

Given their stellar outperformance this year, we are now more cautious on Taiwan’s banks.

The sector is, one must not forget, still weighed down by Inefficiencies, Funding cost pressures, and low Profitability. Capital Adequacy could be better too. Having said that, Asset Quality is under better control than many other parts of Asia.

Similar to South Korea, though not as cheap, Taiwanese banks are the preserve of  a more value-centric mindset rather than the higher growth promise markets elsewhere. For value investors, this is a steady-state market, ripe for greater engagement on share price softness. The possibility of corporate activity may though keep investors on their toes.

We conduct  an analysis of financial strength, valuation, and fundamental trends at twelve listed banks and uncover Taichung Commercial Bank (2812 TT) in particular but also Entie Commercial Bank (2849 TT) as the best investment opportunities.

We do not include Fubon Financial Holding Co (2881 TT)Cathay Financial Holding Co (2882 TT) and Shin Kong Financial Holding (2888 TT) in our analysis given their non-banking mix though supplementary work that we have carried out does not indicate obvious opportunity at this current juncture.

2. Korean Value Stocks Portfolio Quarterly #1 (4Q19)

Koreanvalue 2

  • We are initiating a report called Korea Value Stocks Portfolio Quarterly. With this report, we plan to highlight some of the most noteworthy value stocks in Korea.
  • By highlighting a portfolio of value stocks on a regular basis, we hope to seek some interesting investment opportunities among the Korean value-oriented stocks. We have limited the market cap range to between about $200 million to $3 billion.
  • We plan to include more company-specific reports on some of these interesting, value-oriented stocks in the coming months. Many of these stocks tend to be turnaround plays but they also have some major catalysts that could help to sustain their companies’ turnaround. 

3. South Korean Banks: Stuck in the Value Vault

Sk%20korean%20banks%20at%20q219 page 8

South Korean bank shares continue to feature in the “value” vault. By FV, P/Book or Earnings Yield, bank shares do not seem expensive. Dividend Yields are not unattractive while payouts are on the rise.

They continue to feature in GEM portfolios though less so than in recent years.

News on the economy (semiconductor prices, falling exports) and geopolitical risks (China-US and SK-Japan) have dampened enthusiasm for assets.

From the eight banks that we cover here, Shinhan Financial Group Adr (SHG US) commands the most robust financial strength profile, ahead of Kb Financial Group Inc Adr (KB US) and Hana Financial (086790 KS), but is the most “expensive”. The weakest (riskiest) profile is at DGB Financial Group (139130 KS) which also happens to be the “cheapest”. Jb Financial Group (175330 KS) is the best combination of value, financial strength, and fundamental momentum.

4. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

Screenshot 1

The highlights for September are as follows:

Source: CapIQ

*Note: CVs- Commercial Vehicles

5. HK Short Interest – Small Drop in September

Kingsoft

We analyse the latest SFC data released last evening on short position reporting in Hong Kong for the week ended 27 September.

Total short notional in Hong Kong decreased from HKD 444.12bn to HKD 427.68bn over the week.

The largest short positions for the week were built in Xiaomi Corp (1810 HK), CSPC Pharmaceutical Group (1093 HK), CLP Holdings (2 HK) and Aac Technologies Holdings (2018 HK) while shorts were covered in Meituan Dianping (3690 HK), HKEX (388 HK), AIA Group Ltd (1299 HK), HSBC Holdings (5 HK) and CNOOC Ltd (883 HK).   

The largest short positions as a percentage of free float are Zhongsheng Group (881 HK), China Yuhua Education (6169 HK), BYD (1211 HK) and Maanshan Iron & Steel H (323 HK) while the stocks with the highest days to cover are Car Inc (699 HK)Regina Miracle International (2199 HK), Ping An Insurance (H) (2318 HK) and Gome Electrical Appliances (493 HK)

Big short covering for the week led by Financials (US$335m), Consumer Discretionary (US$125m) and Energy ($89m).

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: Korea Short Interest Outpacing the Index and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Korea Short Interest Outpacing the Index

1. Korea Short Interest Outpacing the Index

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The Korea Exchange (KRX) publishes outstanding short position data daily with a two day lag. The data below is of the close of 6 September.

Current short notional on the KOSPI market is KRW 12,004bn (US$10.07bn) with the largest short notionals in Celltrion Inc (068270 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS), Hyundai Motor Co (005380 KS), Samsung Biologics Co., (207940 KS) and Hyundai Mobis (012330 KS)

Stocks with the largest short percentage as a percentage of free float are Aekyung Industrial Co Ltd (018250 KS), Netmarble Corporation (251270 KS), Doosan Infracore (042670 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS) and Samsung Biologics Co., (207940 KS).

Stocks with the largest increase in short interest over the week were LG Display (034220 KS), Hyundai Motor Co (005380 KS), Celltrion Inc (068270 KS), Hyundai Mobis (012330 KS) and Fila Korea Ltd (081660 KS) while shorts were covered in Samsung Electro Mechanics Co, Ltd. (009150 KS), Samsung Electronics (005930 KS), Amorepacific Corp (090430 KS) and Kakao Corp (035720 KS)

We also take a look at how the short interest has evolved in a few large names over the last year.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: New J Hutton – Exploration Report (Weeks Ending 30/08/19) and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. New J Hutton – Exploration Report (Weeks Ending 30/08/19)
  2. The Pick-Up Game

1. New J Hutton – Exploration Report (Weeks Ending 30/08/19)

Figure%2033%20&%2034

2. The Pick-Up Game

  • lululemon: lululemon continues to leverage its cult-like following as it achieves 10% comparable-store sales and 30% e-commerce sales growth in Q2.
  • McDonald’s: The “McDonald’s to Go” concept store could offer a new distribution channel that could be a positive catalyst for McDonald’s.
  • WeWork: Our concerns for WeWork that we shared on August 20 were justified as WeWork is looking to cut its IPO valuation below $20B or shelve it.

The pick-up game is changing the customer and structural capital landscape for companies. I’m excited about McDonald’s new “McDonald’s to Go” pick-up concept store that it is piloting in London as it represents a new distribution channel with promising returns. While the limited menu of “McDonald’s to Go” trades off variety of choice for convenience, lululemon’s order online/pick-up in-store service, which it has now rolled out to nearly all its stores in North America, offers its customers both convenience plus a wider variety of choice. In addition to being a much lower-cost distribution channel than delivery, in-store pick-up and return offers retailers the opportunity to directly interact with customers and enhance the emotional connection. This explains why Nordstrom is making a strange move testing accepting online returns from its rivals at its two new Nordstrom Local stores in NYC. Amazon Go stores are playing pick-up too as Amazon looks to leverage its physical structural capital by trialing pick-up and return options at select Amazon Go stores in NYC and San Francisco. And on a final note, even Facebook is playing the pick-up game — but in a different sense — as it just launched Facebook Dating in the U.S.!

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: Korean Value Stocks Portfolio Quarterly #1 (4Q19) and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. Korean Value Stocks Portfolio Quarterly #1 (4Q19)
  2. South Korean Banks: Stuck in the Value Vault
  3. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota
  4. HK Short Interest – Small Drop in September
  5. Korea Short Interest – Helixmith Plunges

1. Korean Value Stocks Portfolio Quarterly #1 (4Q19)

Koreanvalue 2

  • We are initiating a report called Korea Value Stocks Portfolio Quarterly. With this report, we plan to highlight some of the most noteworthy value stocks in Korea.
  • By highlighting a portfolio of value stocks on a regular basis, we hope to seek some interesting investment opportunities among the Korean value-oriented stocks. We have limited the market cap range to between about $200 million to $3 billion.
  • We plan to include more company-specific reports on some of these interesting, value-oriented stocks in the coming months. Many of these stocks tend to be turnaround plays but they also have some major catalysts that could help to sustain their companies’ turnaround. 

2. South Korean Banks: Stuck in the Value Vault

Sk%20korean%20banks%20at%20q219 page 4

South Korean bank shares continue to feature in the “value” vault. By FV, P/Book or Earnings Yield, bank shares do not seem expensive. Dividend Yields are not unattractive while payouts are on the rise.

They continue to feature in GEM portfolios though less so than in recent years.

News on the economy (semiconductor prices, falling exports) and geopolitical risks (China-US and SK-Japan) have dampened enthusiasm for assets.

From the eight banks that we cover here, Shinhan Financial Group Adr (SHG US) commands the most robust financial strength profile, ahead of Kb Financial Group Inc Adr (KB US) and Hana Financial (086790 KS), but is the most “expensive”. The weakest (riskiest) profile is at DGB Financial Group (139130 KS) which also happens to be the “cheapest”. Jb Financial Group (175330 KS) is the best combination of value, financial strength, and fundamental momentum.

3. EV Batteries Monthly: CVs Draw Attention; On HEVS- CATL/Bosch Teams Similar to Panasonic/Toyota

Screenshot 1

The highlights for September are as follows:

Source: CapIQ

*Note: CVs- Commercial Vehicles

4. HK Short Interest – Small Drop in September

China%20tower

We analyse the latest SFC data released last evening on short position reporting in Hong Kong for the week ended 27 September.

Total short notional in Hong Kong decreased from HKD 444.12bn to HKD 427.68bn over the week.

The largest short positions for the week were built in Xiaomi Corp (1810 HK), CSPC Pharmaceutical Group (1093 HK), CLP Holdings (2 HK) and Aac Technologies Holdings (2018 HK) while shorts were covered in Meituan Dianping (3690 HK), HKEX (388 HK), AIA Group Ltd (1299 HK), HSBC Holdings (5 HK) and CNOOC Ltd (883 HK).   

The largest short positions as a percentage of free float are Zhongsheng Group (881 HK), China Yuhua Education (6169 HK), BYD (1211 HK) and Maanshan Iron & Steel H (323 HK) while the stocks with the highest days to cover are Car Inc (699 HK)Regina Miracle International (2199 HK), Ping An Insurance (H) (2318 HK) and Gome Electrical Appliances (493 HK)

Big short covering for the week led by Financials (US$335m), Consumer Discretionary (US$125m) and Energy ($89m).

5. Korea Short Interest – Helixmith Plunges

Celltrion

The Korea Exchange (KRX) publishes outstanding short position data daily with a two day lag. The data below is of the close of 4 October.

Current short notional on the KOSPI market is KRW 12,049bn (US$10.09bn) with the largest short notionals in Celltrion Inc (068270 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS), Samsung Biologics Co., (207940 KS), Hyundai Motor Co (005380 KS) and Hyundai Mobis (012330 KS)

Stocks with the largest short percentage as a percentage of free float are Netmarble Corporation (251270 KS), Doosan Infracore (042670 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS), Aekyung Industrial Co Ltd (018250 KS) and Samsung Biologics Co., (207940 KS).

Stocks with the largest increase in short interest over the last two weeks were Celltrion Inc (068270 KS), LG Chem Ltd (051910 KS), Fila Korea Ltd (081660 KS) and Hotel Shilla (008770 KS) while shorts were covered in Samsung Electronics (005930 KS), SK Hynix (000660 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS) and S Oil Corp (010950 KS)

Viromed Co Ltd (084990 KS) (now Helixmith) has dropped 60% in the last two weeks accompanied by some short covering.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: New J Hutton – Exploration Report (Weeks Ending 30/08/19) and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. New J Hutton – Exploration Report (Weeks Ending 30/08/19)
  2. The Pick-Up Game
  3. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted

1. New J Hutton – Exploration Report (Weeks Ending 30/08/19)

Figure%2033%20&%2034

2. The Pick-Up Game

  • lululemon: lululemon continues to leverage its cult-like following as it achieves 10% comparable-store sales and 30% e-commerce sales growth in Q2.
  • McDonald’s: The “McDonald’s to Go” concept store could offer a new distribution channel that could be a positive catalyst for McDonald’s.
  • WeWork: Our concerns for WeWork that we shared on August 20 were justified as WeWork is looking to cut its IPO valuation below $20B or shelve it.

The pick-up game is changing the customer and structural capital landscape for companies. I’m excited about McDonald’s new “McDonald’s to Go” pick-up concept store that it is piloting in London as it represents a new distribution channel with promising returns. While the limited menu of “McDonald’s to Go” trades off variety of choice for convenience, lululemon’s order online/pick-up in-store service, which it has now rolled out to nearly all its stores in North America, offers its customers both convenience plus a wider variety of choice. In addition to being a much lower-cost distribution channel than delivery, in-store pick-up and return offers retailers the opportunity to directly interact with customers and enhance the emotional connection. This explains why Nordstrom is making a strange move testing accepting online returns from its rivals at its two new Nordstrom Local stores in NYC. Amazon Go stores are playing pick-up too as Amazon looks to leverage its physical structural capital by trialing pick-up and return options at select Amazon Go stores in NYC and San Francisco. And on a final note, even Facebook is playing the pick-up game — but in a different sense — as it just launched Facebook Dating in the U.S.!

3. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted

The short notional in the market for the week ended 6 September is US$25.47bn with the largest short positions in Itochu Corp (8001 JP), Toyota Motor (7203 JP), Taiyo Yuden (6976 JP), Canon Inc (7751 JP),  and Sumitomo Mitsui Financial (8316 JP) . Most shorted stocks as a percentage of free float are Amazia, Taiyo Yuden (6976 JP), Leopalace21 Corp (8848 JP) and Extreme Co Ltd (6033 JP), while the stocks with the highest days to cover are Katakura Industries (3001 JP), Vital Ksk Holdings (3151 JP), Mirait Holdings (1417 JP) and J Trust Co Ltd (8508 JP)

The largest increases in short notional over the week were Softbank Corp (9434 JP), Terumo Corp (4543 JP), Pigeon Corp (7956 JP), Kikkoman Corp (2801 JP) and Toshiba Tec (6588 JP) while shorts were covered in Nippon Steel Corporation (5401 JP), Tokai Carbon (5301 JP), Yaskawa Electric (6506 JP) and Seven & I Holdings (3382 JP).   

Sectorally, new short positions were built in Communication Services and Consumer Discretionary, while shorts were covered in Information Technology and Materials.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Thematic: The Pick-Up Game and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. The Pick-Up Game
  2. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted

1. The Pick-Up Game

  • lululemon: lululemon continues to leverage its cult-like following as it achieves 10% comparable-store sales and 30% e-commerce sales growth in Q2.
  • McDonald’s: The “McDonald’s to Go” concept store could offer a new distribution channel that could be a positive catalyst for McDonald’s.
  • WeWork: Our concerns for WeWork that we shared on August 20 were justified as WeWork is looking to cut its IPO valuation below $20B or shelve it.

The pick-up game is changing the customer and structural capital landscape for companies. I’m excited about McDonald’s new “McDonald’s to Go” pick-up concept store that it is piloting in London as it represents a new distribution channel with promising returns. While the limited menu of “McDonald’s to Go” trades off variety of choice for convenience, lululemon’s order online/pick-up in-store service, which it has now rolled out to nearly all its stores in North America, offers its customers both convenience plus a wider variety of choice. In addition to being a much lower-cost distribution channel than delivery, in-store pick-up and return offers retailers the opportunity to directly interact with customers and enhance the emotional connection. This explains why Nordstrom is making a strange move testing accepting online returns from its rivals at its two new Nordstrom Local stores in NYC. Amazon Go stores are playing pick-up too as Amazon looks to leverage its physical structural capital by trialing pick-up and return options at select Amazon Go stores in NYC and San Francisco. And on a final note, even Facebook is playing the pick-up game — but in a different sense — as it just launched Facebook Dating in the U.S.!

2. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted

The short notional in the market for the week ended 6 September is US$25.47bn with the largest short positions in Itochu Corp (8001 JP), Toyota Motor (7203 JP), Taiyo Yuden (6976 JP), Canon Inc (7751 JP),  and Sumitomo Mitsui Financial (8316 JP) . Most shorted stocks as a percentage of free float are Amazia, Taiyo Yuden (6976 JP), Leopalace21 Corp (8848 JP) and Extreme Co Ltd (6033 JP), while the stocks with the highest days to cover are Katakura Industries (3001 JP), Vital Ksk Holdings (3151 JP), Mirait Holdings (1417 JP) and J Trust Co Ltd (8508 JP)

The largest increases in short notional over the week were Softbank Corp (9434 JP), Terumo Corp (4543 JP), Pigeon Corp (7956 JP), Kikkoman Corp (2801 JP) and Toshiba Tec (6588 JP) while shorts were covered in Nippon Steel Corporation (5401 JP), Tokai Carbon (5301 JP), Yaskawa Electric (6506 JP) and Seven & I Holdings (3382 JP).   

Sectorally, new short positions were built in Communication Services and Consumer Discretionary, while shorts were covered in Information Technology and Materials.

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Brief Thematic: The Pick-Up Game and more

By | Daily Briefs, Thematic and Strategy

In this briefing:

  1. The Pick-Up Game
  2. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted
  3. Vietnam Market Update: September 2019

1. The Pick-Up Game

  • lululemon: lululemon continues to leverage its cult-like following as it achieves 10% comparable-store sales and 30% e-commerce sales growth in Q2.
  • McDonald’s: The “McDonald’s to Go” concept store could offer a new distribution channel that could be a positive catalyst for McDonald’s.
  • WeWork: Our concerns for WeWork that we shared on August 20 were justified as WeWork is looking to cut its IPO valuation below $20B or shelve it.

The pick-up game is changing the customer and structural capital landscape for companies. I’m excited about McDonald’s new “McDonald’s to Go” pick-up concept store that it is piloting in London as it represents a new distribution channel with promising returns. While the limited menu of “McDonald’s to Go” trades off variety of choice for convenience, lululemon’s order online/pick-up in-store service, which it has now rolled out to nearly all its stores in North America, offers its customers both convenience plus a wider variety of choice. In addition to being a much lower-cost distribution channel than delivery, in-store pick-up and return offers retailers the opportunity to directly interact with customers and enhance the emotional connection. This explains why Nordstrom is making a strange move testing accepting online returns from its rivals at its two new Nordstrom Local stores in NYC. Amazon Go stores are playing pick-up too as Amazon looks to leverage its physical structural capital by trialing pick-up and return options at select Amazon Go stores in NYC and San Francisco. And on a final note, even Facebook is playing the pick-up game — but in a different sense — as it just launched Facebook Dating in the U.S.!

2. Japan Short Interest – Feels like a Squeeze; Softbank Corp Most Shorted

The short notional in the market for the week ended 6 September is US$25.47bn with the largest short positions in Itochu Corp (8001 JP), Toyota Motor (7203 JP), Taiyo Yuden (6976 JP), Canon Inc (7751 JP),  and Sumitomo Mitsui Financial (8316 JP) . Most shorted stocks as a percentage of free float are Amazia, Taiyo Yuden (6976 JP), Leopalace21 Corp (8848 JP) and Extreme Co Ltd (6033 JP), while the stocks with the highest days to cover are Katakura Industries (3001 JP), Vital Ksk Holdings (3151 JP), Mirait Holdings (1417 JP) and J Trust Co Ltd (8508 JP)

The largest increases in short notional over the week were Softbank Corp (9434 JP), Terumo Corp (4543 JP), Pigeon Corp (7956 JP), Kikkoman Corp (2801 JP) and Toshiba Tec (6588 JP) while shorts were covered in Nippon Steel Corporation (5401 JP), Tokai Carbon (5301 JP), Yaskawa Electric (6506 JP) and Seven & I Holdings (3382 JP).   

Sectorally, new short positions were built in Communication Services and Consumer Discretionary, while shorts were covered in Information Technology and Materials.

3. Vietnam Market Update: September 2019

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Vietnam is in an FDI sweet spot: Vietnam has been able to diversify its export structure in recent years, and there is still room for the country to attract additional FDI in the coming years. FDI as a % of GDP in Vietnam recently reached 7.8%, which was much higher than the levels seen in other markets such as Sri Lanka ( 1.8%), Pakistan ( 0.9%), Egypt (3.1%), Kenya (0.9%), Romania (2.9%), and Bangladesh (0.9%).

Vietnam has consequently been a major beneficiary of the US-China trade war, and has seen a strong inflow of FDI from China, which has made China one of the largest investors in Vietnam this year.  Moving forward, other markets such as Bangladesh, Myanmar and Sri Lanka would need to compete by increasing the sophistication of their export structures. Furthermore, it is imperative to note that Vietnam alone is too small to absorb a significant amount of China’s economic activity, and the country also has challenges such as lower labor productivity and higher cost of materials due to the reliance on imports. 

Vietnam’s growth has been hinging upon strong manufacturing oriented growth, as manufacturing exports account for 85% of total exports, compared to only 65% in 2010. Vietnam’s GDP grew by 7.1% in 2018, which was the highest growth rate experienced in a decade, and well above other regional peers, with the exception of India. Vietnam has been able to move up the value chain by manufacturing higher value exports such as phones, computers, cameras and electronics, as countries such as South Korea have been using Vietnam as a low cost hub for electronics manufacturing. 

One key attractive factor of Vietnam includes its relatively stable political and macro picture, which makes it a key stand out within other frontier and smaller emerging markets. Nearly every market in this space has experienced some type of adversity within the past two years, yet Vietnam has had a very stable and improving investment narrative since 2015.  Investors that have considered other alternatives have had to stomach notable macro and geopolitical risks.

Vietnam has been befitting from favorable trade relations with the United States, and the country has already taken very strategic steps to diversify its trade, through trade agreements with Asian and European countries.

Vietnam easily has the most stable and attractive investment narrative within MSCI frontier markets, and it still remains strategically positioned within “frontier and emerging market purgatory”.

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