Thematic (Sector/Industry)

• OVERSEAS: SPX down 3 in a Row as  Fed Hawks out in force; Oil bucks trend ;  P&G see weak sales; Musk makes it up on TESLA’s self driving
• JAPAN: Kishida Cabinet approval at record lows;  Activist ValueAct tgts S&i(3382); Spate of Street upgrades to BUY incl General Contractors at MS; Japan CPI on tap.
• DAILY NUGGET: Could be Nothing Burger but the costs of US default is rising as Debt Limit hit.

• Early indications that CNY arrivals will show a strong rebound from covid lows, green shoots are beginning to pop.
• Pent up demand estimates face their stiffest test over the CNY holiday when a surge of arrivals over the las three years is expected.
• Macau stocks have rebounded some, but CNY will be the biggest test of all.

• In 2022, Southeast Asia’s food delivery expenditure reached US$16.3 billion, growing by 5%, a report by Momentum Works showed.
• For the first time in three years, this growth was largely driven by smaller food delivery markets, namely the Philippines, Malaysia, and Vietnam.
• ‘Meanwhile, Singapore, Indonesia, and Thailand recorded a decline in gross merchandise value (GMV) in the past year.

• China’s game licensing regulator green-lit a fresh batch of titles for market for the third time in as many months
• January’s licenses are an upbeat sign from the NPPA, which follows regulatory signals in July that the permit process would be streamlined after years of uncertainty. 

• Games must have a license from the regulator before they can enter the market. Typically handed out monthly, licenses were issued just seven times last year after an eight-month freeze that ended in April.

• China’s major express couriers will charge more for their services over the Lunar New Year period

• Express couriers, which mainly serve e-commerce sellers, typically see a lower volume of packages over the Lunar New Year when those businesses shut down. 

• Consumers generally buy their new years goods around a month before the festival, when such firms plan for a rush.

• Take or pay contracts, inflation based price adjustments, excellent industry consolidation, diverse industry spread, lack of substitutes, stable margins defines much of the industrial gas sector. 
• The nature of capacity addition and contracts make the industrial gas industry is a “less cyclical cyclical” and is relatively stable even in times of severe downturns. 
• Linde PLC (LIN US)Air Liquide SA (AI FP)Air Products & Chemicals, Inc (APD US)  Nippon Sanso Holdings (4091 JP) are the leading players with almost 80% market share. 

• OVERSEAS: SPX snapp rally;  Eearnings refocus as GS misses; Tech bid continues;  TELSA +7% as analysts see merits of price cuts; Japan’s BOJ in focus.
• JAPAN: NKY Futs +0.4% vs Cash; USDJPY flat at 129.16. BOJ Day -this is all that matters.
• DAILY NUGGET: Sustainable Aviation Fuel thematic is ramping up. ANA and JAL recent annoucements highlight the commercial potential for the supply chain.

• More evidence is emerging that department stores will rely increasingly on wealthy VIP account holders to maintain sales in the future. 
• The wealthy are also getting younger and department stores are adapting, using digital services which are also cheaper to run.
• With luxury prices up and the inbound trade also coming back strongly, the outlook for the better stores is positive – even though the sector overall will continue to contract.

• 2023- Coming in With An Open Mind After an ugly 2022, it’s important to “clear the decks” and keep an open mind to what may or may not be working for 2023.
• Coming into this year, there is tremendous clamoring over recession fears given weakness in forward looking leading economic indicators, CEO/CFO surveys, and business media talking heads.
• As an investor, remaining open to different ideas, scenarios, and sectors is important as to not get tethered to siloed thinking.

• OVERSEAS:  US MLK Holidays – World markets directionless;  US Equity Futs flat; European Markets bid on Inflation peak;  BOJ decision to lead markets this week.
• JAPAN:  NKY Futures +0.2% vs Cash ; USDJPY flat at 128.52 ; BOJ speculation dominates local headlines;  Kuroda heads to Davos = no fireworks? ;  Dec Machine Tools orders +1%YoY
• DAILY NUGGET:  Fast Retailing and Sustainability: Set to introduce a new repair service in its domestic stores.

• Two US banks saw more than 80% of their net interest income delta erased by credit costs
• Many US banks are seeing sharply higher credit costs in 4Q22 from reversals a year ago
• Loan growth is decelerating in 4Q22 compared with 3Q22, not a positive outlook

In this next webinar we will speak to Smartkarma Insight Provider, Michael Causton about his top picks in the Japanese Retail and Consumer Market space. With the Japanese retail and consumer markets facing major catalysts for change like high levels of inflation, higher wages, and a labour shortage, what can we expect from the space, and what exactly it will take for Japanese retailers to thrive under these changes? 

The webinar will be hosted on Wednesday, 25 January 2023, 17:00 SGT/HKT.

Michael is co-founder and partner at JapanConsuming. JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports and seminars on retail sectors and consumer trends, as well as telephone consulting/meetings with investors. All of JapanConsuming’s team are bilingual and bi-cultural, and the company’s research sources are: Direct meetings with retailers, wholesalers, distributors, trade body staff, govt., marketing firms, academics etc. Govt. data Trade association data Trade Press across all consumer sectors Unique Network of buyers/managers/marketing staff at retail, as well as wholesalers and trading firms. Editors/Journalists at publishing houses and PR/Ad firms. JapanConsuming was founded by Michael Causton and Roy Larke. Michael Causton set up and ran a consumer distribution business in Tokyo for 10 years and developed this into a business responsible for annual imports to Japan of several billion Yen, at the same time building up an inside knowledge of how Japanese distribution works and developing a network of contacts across the industry. Seeing the lack of quality market intelligence on Japanese markets, he co-founded JapanConsuming in 2000. He divides his time between Japan and Europe/US consulting for companies, governments and investors, including providing talks, seminars, and webinars as well as writing reports and books.

• OVERSEAS: SPX +0.4%DoD +2.7%WoW; Semi run continues with SOX +0.4%DoD +6.2%WoW; Beta and Growth the big WoW winners;  Fed’s Bostic leans to 25bp hike; Tesla cuts prices
• JAPAN:  NKY Futs -1.3% vs Cash;  JGB 10Yr Yld hits 0.512% despite BOJ 10trn yen buying; USDJPY up to127.87;  DECARBONIZATION: Resonac (Showa Denko) expansion; Toray  expansion; METI CCS roadmap
• DAILY NUGGET: Slowing EV sales in China ? Maybe, but its still the largest EV market in the world. We see Nidec as the best way to play.

• China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  “14th Five-year Plan” and the 20th National Congress report.
• We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.
• The Outline is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  

• We again write about one stock each from the large, mid and small cap portfolios, briefly giving the reasons for their inclusion.
• The three companies we write about this week are Bank Of America (BAC US)3M Co (MMM US) and SKF AB (SKFB SS)   
• For the eight weeks since inception ended 13 Jan the combined innovation portfolio was +4.2%, versus DJIA +1.7%, S&P500 +0.9%, Nasdaq -0.6%, Russell2000 +2%, MSCI-ACWI-ETF +3.2%, all in US$ terms

• The Saga surrounding Okada Manila and the efforts by a US-listed SPAC to bring the Philippines integrated resort operator public is one of the more unusual events concerning SPACs in recent memory.
• The deal, which was announced as far back as October 2021, valuing Okada at $2.6 billion, has been stuck in Limbo amidst a heated battle for control.
• After several twists and turns, the SPAC dealmakers & current management are still looking to close the deal, recently taking a one-year extension.

• The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points: Taiwanese exports, Indian GDP, Chinese inflation and trade data, South Korean interest rates
• Companies mentioned:Alibaba Group (9988 HK), Ant Financial Services Group (6688 HK), BYD (1211 HK), Tencent (700 HK)

• The Nikkei traded up half a percentage point this week, while the JPY strengthened 3% to Y127/$
• US stocks (and hence global) rallied after data showed that inflation cooled in December, easing pressure on the Fed. 
• Lower inflation, interest rates, and China’s reopening are providing a decent backdrop for Japanese equities

• OVERSEAS:  CPI slows, Fed Pause narrative strengthens; Yields fall; DXY weakens; Equity rally continues; TSMC Optimism add fuel Semis
• JAPAN: NKY Futs -1.0% vs Cash;  USDJPY ¥129.24; BOJ to end YCC narrative gather steam – Banks rally; Foreigners Selling JGBs; Earnings: Seven &I beats; Fasty misses;  We are bullish
• DAILY NUGGETS: Our meme below says it all – we leave it to the experts to breakdown the data but the evidence indicates  INFLATION DEFEATED.

• Consumption in China is expected to grow 6% to 7% in 2023 from the previous year on the back of reviving confidence and the release of pent-up demand after three years of stringent Covid restrictions
• For the first time since the pandemic hit, China’s consumption growth this year will outpace the country’s economic expansion, which is projected at around 5%
• The growing demand partly reflects Chinese households’ rising deposits during the pandemic, when restrictive measures reined in spending

• Airlines are struggling to keep up with surging demand for international travel after the Chinese government reopened the country’s borders and abolished the quarantine requirement for inbound travelers.
• The number of flights to and from the Chinese mainland rose to 273 on Wednesday from 205 on Sunday when quarantine requirements were lifted
• International flight tickets remain in short supply. Almost all direct flights throughout January from South Korea to China are sold out, according to state broadcaster CCTV

• Badan Pengawas Obat dan Makanan (BPOM), Indonesia’s national food and drug agency, told Tech in Asia that it holds the electronic pharmaceutical system operators – or PSEF – responsible for the sale of prohibited drugs on their platforms.

• Licensed online pharmacies are accountable because they have “full control over the content and products that are displayed,” the regulator said.

• This implies that as a marketplace, Halodoc is not responsible for the sale of any restricted drugs, but BPOM’s responses indicate otherwise.

• We highlight five stocks that we have talked about in the past year
• We continue to like small cap GROWTH and we think that decarbonization will remain a key thematic
• NEC is a standout value name where we see a potential catalyst over the coming year in Open RAN

In this next webinar we will discuss Smartkarma Insight Provider, Tina Banerjee‘s high conviction ideas from Indian healthcare sector, with solid fundamental profile and strong growth prospects. Nifty Pharma index plunged ~6% from its recent peak in November. With COVID-related high bases gradually behind us, lesser pricing pressure in the U.S. market, new product launches gaining momentum, and continuous recovery in the domestic healthcare market, we expect recent pullback offers attractive entry opportunities for long-term investors. 

The webinar will be hosted on Wednesday, 18 January 2023, 17:00 SGT/HKT.

Tina Banerjee is an equity research analyst with more than 15 years of experience, and an interest in fundamentally strong global healthcare companies. She has been helping investors to find future winners in healthcare space to grow their wealth by focusing on the strength and potential of the business models of the companies. Her initiating coverage reports and pitch help investors to know ‘what to buy’, ‘why to buy’, and ‘when to buy’. Tina’s clients always remain on top of the sector with the help of her timely and detailed notes on earnings or any news update. Tina also provides a broader view on the entire healthcare sector through periodic thematic reports.

• OVERSEAS: SPX +1.3% SOX +1.3%; Optimism on soft inflation print drives stocks; Consumer+Tech lead; Apple to introduce touch screens for Mac; Off-Shore Wind Giant Vesta leads in Europe
• JAPAN: NKY Futs +0.3% vs Cash; USDJPY steady at ¥132.45; Biz lobby urgest firms to lift wages above inflatio;  Buy U/G in Lastertec, TEL,  Nexon and D/G to Nintendo
• DAILY NUGGETS:  Fast Retailing has raised the bar for corporate Japan with with their wage hikes.

• The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.
• In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.
• We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.

• Within three months, Tesla cut its car prices twice in China.
• We believe this indicates demand in China’s auto demand might be much weaker than expected until Covid impact is eased
• Model Y’s price cuts may only hurt AITO M5. While Model 3 may challenge customers’ interest on Xpeng P7, BYD Seal and Ora Lightning Cat.

• We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&Ps, and pricing power leading to margin expansion 
• Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples In order to end the oil supply deficit, additional rigs are required to be deployed; providing organic growth and pricing power for oilfield service names.
• This will create another year of margin expansion for oilfield service stocks as they take advantage of operating leverage.

• OVERSEAS: SPX +0.7%  SOX +1.35; Beta rally continues on lower CPI print expectations;  Cyclicals lead 10/11 SPX Sectors positive; MSFT considers $10bn OPEN AI investment; Record Boeing orders in 2022.
• JAPAN: NKY Futs +0.3% premium to Cash; USDJPY steady ¥132.1; Hot Tokyo CPI print; Big wage hikes at Fast Retail;  Travel – China strikes back; +ve JP Boeing supply chain.
• DAILY NUGGETS: Hydrogen – a clean alternative. Japan is set to lead as companies ramp up R&D protection with a view to commercialisation.

• At the dawn of the EV-revolution, Bolivia is at risk of being the first failed lithium state. 
• Elon Musk has been pointed out as one of the key suspects behind political crisis in the country.
• Read why there is still a bullish case for Bolivian lithium.

• Estimates of total GGR for the first recovery year ahead vary from a low of US$9b to US$18b.
• Starting with baseline 2023 shares of market we project projected revenue for 2023.
• Non-Gaming revenue was 10% pre-pandemic. Macau official goal is 20% of GGR, not likely in 2023 but some properties will gain share because of room capacity.

• Government-Owned companies contributing to overall banks’ loan growth as growth rate is higher as compared with the private sector companies
• Loan growth of private sector companies appears mainly for working capital purposes
• Fresh private sector investment to stimulate the economy appears unlikely on account of poor future demand