Thematic (Sector/Industry)

• In officially decided cases concerning dissentient shareholders in privatised US-listed China plays, the uplift to the merger price versus time value of money and legal costs, is less than ideal. 
• The outcome for each case will turn on the underlying facts. But it would appear iKang Healthcare Group (ADR) (KANG US) is following a similar trend.  
• Reportedly the uplift to the iKang merger price is just 10%. Dissenters can still lodge an appeal.

• Dow loses over 500 points, its biggest daily loss in over 10 months, as Treasury yields surged 14bps to 4.3%
• Shimano announces disappointing 2024 earnings guidance, well short of street estimates. Perhaps time to do more on capital allocation
• Sapporo looks like it is bowing to pressure from activist, 3D Partners, regarding a potential sale of non-core real estate

• In the second of our series of spotlights on psychedelic therapies, we look at 3,4-methylenedioxymethamphetamine (MDMA), a Schedule I substance that is leading the psychedelic charge to therapeutic legitimacy.
• MDMA, better known as ecstasy or molly, is a pure human- made synthesized compound that uniquely combines the characteristics of a stimulant with hallucinogenic properties.
• No other psychedelic shares those characteristics. The parallel release of dopamine and serotonin brings together a positive mood and prosocial effects. 

• S&P slips slightly on Monday after closing above 5,000 for the first time on Friday
• Diamondback Energy +9% after announcing tie-up with Endeavour worth over $50 billion
• Recruit reported Q3 results post close on Friday. US hiring remains in the doldrums, but cost cutting pushes EBITDA above expectations

• Welcome to this week’s earnings. My spark notes are the NXPI and IFX did better than I feared, but I continue to be unconstructive on automotive.

• Fabrinet and Coherent both achieved good results, but Fabrinet disappointed expectations for Nvidia’s pluggable revenue. Is this a weak read-through? Unlikely. Marvell should have an amazing year if Coherent’s TAM is remotely correct.

• MKSI put up the exact results I was looking for, and this continues to be my favorite idea. As WFE increases, inventory builds will happen, and then financial and operational leverage will take care of the rest.

• Mattress sales and companies tied to the mattress supply chain showed weakness in sales results reported last week.
• After market close on Thursday, supplier Leggett & Platt (LEG) reported 4QFY23 adjusted EPS of $0.26.
• On January 16, management disclosed a massive restructuring plan, causing analysts’ estimates to change before the “print”. 

• After five straight positive weeks, we were due for a pullback. The US cannabis MSOS ETF fell 5.68%, while the global YOLO ETF fell 3.95%. YTD, MSOS is +37.37% and YOLO is +20.86%.
• The potential for Schedule III and 280E removal is driving the outperformance of US names. For the week, MSOS had $44.07 million in inflows.
• Ascend (CSE: AAWH, OTCQX: AAWH) gained 11.41% this week and was finally added to the MSOS ETF. 

• The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points: Chinese CPI and PPI inflation data points.
• Companies mentioned:Hyundai Motor (005380 KS), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Tencent (700 HK), Taiwan Semiconductor (TSMC) (2330 TT), Baidu (9888 HK)

• JD/BABA/PDD : JD increases salaries for customer service staff (-)
• 700 HK: News has surfaced indicating that Tencent is in the process of developing a mobile game adaptation of “Elden Ring.” (+) 
• 700 HK/LKNCY: Tencent’s <Dream Star> has collaborated with Luckin Coffee for a co-branding initiative (+)

• The podcast features Lance Bronstein, head of Aladdin engineering at BlackRock, and Rob, discussing the impact of AI on business operations.
• They highlight the importance of using technology to amplify human capabilities and redefine roles, while also focusing on upskilling the workforce and recalibrating risk management and client interactions.
• They acknowledge that AI is not a new concept, but the recent advancements in data, compute power, and technology have enabled transformative changes in how people interact with computers, particularly through language and conversation.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• ATAT/TCOM: Tourism: Local government will issue RMB600mn travel consumption subsidies during CNY(+)
• 9995 HK/BGNE/9926 HK/1801 HK/1877 HK:The National Medical Insurance Administration issued new regulations on the initial price of newly launched drugs to protect the independent pricing of innovative drugs.(/)
• 300750 SZ：Porsche’s new Taycan doubles cruising range, uses CATL Shenxing battery(+)

• Chariot (CHAR LN)C; target price of £0.50 per share: Receiving EIA approval for onshore drilling in Morocco – Chariot has received approval for its EIA for a total of 20 well at Loukos, onshore Morocco.
• The approval covers the initial drilling campaign of two exploration wells (Gaufrette and Dartois) as well as 17 further well locations and the re-entry of an existing gas discovery.
• Operations are expected to start at the end of 1Q24 as indicated previously.

• China’s cloud software vendors are feeling the brunt of the sharpest drop in venture capital (VC) investment in the sector in a decade, with many rushing to cut prices or costs to tide them over.
• The country’s current 13 software as a service (SaaS) unicorns — startups valued at more than $1 billion — raised just 495 million yuan ($69 million) from investors last year, the lowest amount since 2014, according to ITjuzi, a domestic provider of data on tech companies and investments, based on announced deals.
• The amount pales in comparison to the peak of 9.3 billion yuan they raised in 2021, when the Covid pandemic boosted demand for digital services.

• Arm Holdings shares +47% on surprise earnings announcement, suggesting AI driving a recovery in the industry
• Shimizu Corporation, Taisei Corporation and Toray lowered their forecasts due to rising material costs and deteriorating market conditions. NTT reported lower than expected profits. 
• Subaru raised their forecast on higher US sales. Daifuku also revised up their forecast on strong EV investment.

• We highlight the latest policy developments with the wave of developer projects getting whitelisted for financing support.
• There is plenty of local news about city-level project approvals and a growing number of developers announced how many of theirs have been whitelisted.
• The big question is what proportion of the whitelisted projects will get the actual loans.

• US-domiciled Global Systemically Important Banks (G-SIBs) have seen their credit risk profiles improve over the last quarter of 2023 towards the median credit risk faced by all US- banks.
• The downward trend in the Criat Credit Cycle Index (CCCI) for G-SIBs was largely driven by improvements in their equity performance, which has improved their financial position comparative to its peers.
• As can be seen from Chart 1, although the G-SIB CCCI is trending lower since late September-2023, their aggregate credit profile is still close to the upper quartile credit risk of the US banking industry.

• In this webinar, part of Real Estate Foresight’s 12th annual China Property Outlook, we share our views on 2024 for the China housing markets
• We explore several themes, incl. the latest Whitelist approvals by local governments and a wave of related announcements
• The webinar presentation was recorded on Feb 6, 2024. You can also view this 3-minute version with a few highlights.

• China was the world’s top auto exporter last year, cementing its position after overtaking Japan as No. 1 earlier in 2023, thanks largely to strong demand for new-energy vehicles (NEVs), increased deliveries to Russia and escalating domestic competition that forced automakers to accelerate their overseas expansion.
• China’s auto exports surged 57.9% year-on-year to 4.91 million cars, as reported by the China Association of Automobile Manufacturers (CAAM) last month.
• By comparison, Japan exported 4.42 million vehicles in 2023, up 16% from a year earlier, according to data from the Japa

• We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.
• Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.
• WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.

• We argued in last follow-up note that property woes and challenging macro situation would keep pressuring China online marketplaces’ valuation despite their improving profitability and cashflow.
• The sector’s brutal de-rating since last 4Q has been pricing in a dire growth outlook and it is closer to the end of tunnel in our view.
• We expect a lackluster 4Q23 results season for the sector in general but also less share price volatility given extremely depressed valuation. Stay positive over 12-month time horizon.

• CMA shows how the profile of net interest income can weaken considerably with rising funding costs and risk aversion
• Criticized assets are rising substantially and even so, the bank has not taken a higher provision expense in the quarter – this can be yet to come
• CRE loans are growing faster than other loan, at a time when New York Community Bank (NYCB US) shows the current risks on these loans

• BABA/CPNG/PDD: AliExpress offering 0% commission to sellers of Korean brand products (+/-/-)
• 700 HK/NTES:NPPA has released the latest approvals for imported games, and Tencent’s highly anticipated <DNF Mobile> has received approval(+)
• 3690 HK: Meituan changed organizational structure by consolidating In-store and food delivery business(+)

• LKNCY: Luckin Coffee further raised subsidy to franchisees in winter season(-)
• XPEV/LI/NIO/1211 HK:Deliveries of new energy vehicles generally continued to pick up in the last three days of January, except for NIO(+/+/-/+)
• 300750 CH: EVE’s large cylindrical battery in production, increasing the threat to CATL a little bit(-)

• As I reflected on my performance in 2023, I was reminded that benchmarking can be a brutal process.
• But it keeps you humble. I don’t spend a lot of time thinking about my chosen benchmark, the S&P 500.
• I occasionally think as an international investor I should change it.

• The WTR Sustainable Index was up by 1.0% W/W versus the S&P 500 Index (up 1.4%), the Russell 2000 Index (down 0.8%), and the Nasdaq Index (up 1.3%).
• Energy Technology (13.9% of the index) was up by 5.1%, while Industrial Climate and Ag Technology (54.5% of the index) was up 1.1%, ClimateTech Mining was down 5.4%, and Advanced Transportation Solutions was up 0.1%.
• Top 10 Performers: EVTV, PLUG, JEV, NXT, VIEW, PGTK, LCID, NAAS, ANRG, ELBM

• LKNCY: Luckin Coffee will launch Moutai flavored chocolate milk on next Monday, purposing at destocking(+)
• MNSO: Takeaways from Miniso Investor Day, “IP” is the key term(+)
• 300750 CH: CATL’s Shenxing Long Life took marke share from SVOLT to win NETA L series of Hozon(+)

• TCOM/1024 HK/3690 HK/780 HK: Ctrip cooperate with Kuaishou to promote traveling products(+/+/-/-)
• PDD/ZTO/1519 HK: PDD partners with ZTO and J&T for upcoming “Open during Spring Festival” event (+/+/+)
• PDD/ SHEIN/ AMZN/ SE/ CPNG/ MELI: Temu planning to add 3P model (+/-)

• Shopping malls are now trading at pre-pandemic levels again and developers and tenants alike are much more upbeat and optimistic about the future. 
• The pandemic, alongside competition from e-commerce, has left its mark but this has mostly been a good thing, forcing more proactive management of malls.
• Profitability remains a concern but rents are up for some and more efficiencies are being introduced through digitisation.

• Last week, stocks surged, propelling the S&P 500 and Dow Jones to record highs. Positive economic data and consumer sentiment overshadowed a decline in existing home sales.
• This week, CB meetings in the eurozone, Canada, and BoJ (Tues) will shape market expectations. US earnings will further contribute to a dynamic week.
• Japan’s equity market remains popular, but divergence from the PMI output index raises concerns of overheating. A flash PMI (Wed) report will provide insight into Japan’s growth conditions.

• For 2023, Smartphone unit shipments amounted to 1.17 billion units,  a 3.2% YoY decline, far better than we expected at the beginning of last year.
• For 2023, PC unit shipments amounted to 241.8 million units, a 14.8% YoY decline, worse than expected. Last time annual shipments fell below 250 million units was in 2006.
• The weaker than anticipated PC TAM is a headwind for Intel heading into earnings and Q124 guidance on January 25

• One would meet here people from all walks of life, interests, subject of study, leisure reading, university studying, work etc.
• One can meet a 20-year youngster that dropped from university and works 10-12h/a day on his app which already works very very well, to a 45-year chap that has been devoting his last 5 years to give Shakespeare a new novel interpretation … which makes me tell myself and my friends many times that our single focused interests, opinions, biases and views about the world might be quite narrow and 100,000 miles apart from somebodies else’s.
• It’s not about being ‘right’ or ‘wrong’, but about the fundamental aspect to remain open minded … .

• Private brands developed and managed by retailers themselves offer plenty of price and marketing flexibility during these inflationary times.
• But it is not only their popularity as cheaper alternatives that is growing, so too are pack sizes, as consumers increase shopping volume and reduce shopping trip frequency.
• The trend is another sign of why investors should look out for retailers with good private brands, given the impact on both sales and margin growth.