Thematic (Sector/Industry)

Market Watch: Topix Index gained 0.6% WoW, influenced by Treasury yields and interest rate discussions, while individual stock movements were largely impacted by earnings reports
Major Movers: Trend Micro surged 19.6% on strong Q3 results and a ¥140 billion total shareholder return plan. Screen and Mazda rose 15% and 13.5%, driven by positive profit outlooks
Activist Watch: Oasis Management surprises with a 6.42% stake in Itochu Techno Solutions despite Itochu’s TOB completion & Share consolidation announcement. Oasis likely to contest valuation in Court.

[Blue Lotus Daily]: BABA/JD/PDD/BILI/Tencent/700.HK/Kuaishou/1024.HK/DOYU/HUYA/ACMR

BABA/JD/PDD: Post Bureau publishes Parcel Volume Data for Double 11 Festival (-/+)
BILI/700.HK/1024.HK/DOYU/HUYA: Douyu CEO Chen Shaojie missing for 3 Weeks (+/+/+/-/+)
4689JP/PDD: LY C3Q23 result beat consensus on LINE advertising (/)

Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

By Andrew Lu

Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;
More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.
Automotive/Industrial lags only not beginning of the fall: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.

Shroom Shmooz – Psychedelics and the Hype Cycle – Where Does It Go in 2024 and Beyond?

Psychedelic stocks continue their bad trip despite the psychedelic renaissance.
The headlines flowing out of the psychedelics sector over the past year indicate that the psychedelic renaissance appears to be gaining momentum.
Clinical trials at various stages involving psychedelic substances, led by MDMA, psilocybin, ketamine, and DMT, have produced results showing clinical promise in a number of treatment- resistant mental health disorders.

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Nov 10

Daily Brief Thematic (Sector/Industry): [Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

[Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE
[Blue Lotus Daily]BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE
Ohayo Japan | Powell’s Concerns; Semiconductor Resurgence Through Strategic Subsidies
Affordable Luxury: A Look Into Chinese Luxury (Part II)
Earnings Season Post (ANET, AMKR, RMBS, LSCC, AMD, Advantest, SLAB, QCOM, QRVO, ENTG, SITM…)
[Blue Lotus Lodging Sector Update]: Dividend from Supply Shortage Can Continue into 2024
China Property Developers In Distress – Weekly News & Announcements Tracker | Nov 2-9, 2023

[Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE

By Ying Pan

BABA/PDD/JD/ZTO/1519.HK/: Express parcel volume grew +20% YoY during first week of 11.11 Shopping (+)
BEKE: Property Update – Mild recovery for existing home sales in October and 1st week of November
XPEV: Xpeng, Huawei dispute over Autonomous Emergency Braking (AEB) (-)

[Blue Lotus Daily]BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE

BABA/PDD/JD/ZTO/1519.HK/: Express parcel volume grew +20% YoY during first week of 11.11 Shopping (+)
BEKE: Property Update – Mild recovery for existing home sales in October and 1st week of November
XPEV: Xpeng, Huawei dispute over Autonomous Emergency Braking (AEB) (-)

Ohayo Japan | Powell’s Concerns; Semiconductor Resurgence Through Strategic Subsidies

Overseas: SPX -0.8%, Nasdaq -0.8%; All S&P sectors in the red; Walt Disney shares jumped 6.9% on a quarterly profit beat
Today: NKY Futs -0.4% v cash. JPY0151.4; BoJ preps market for higher rates. INCJ to sell shares in Renesas
JapanX: Japan’s semiconductor revival accelerates with $13.2 billion subsidies, global partnerships, and cutting-edge research, signaling a bold move to regain global dominance in chip production.

Affordable Luxury: A Look Into Chinese Luxury (Part II)

By Alexis Dwek

Thanks to the rapidly expanding middle class, increasing incomes, and a strong desire for luxury, Chinese consumers are often seen as the embodiment of the luxury industry’s promising future
However, the market has seen competition intensify: Not only are international brands competing against each other, but the rise of domestic brands has brought the competitive landscape to another level
Since this summer, investors have been concerned by a shifting Chinese landscape in the context of the current economic situation

Earnings Season Post (ANET, AMKR, RMBS, LSCC, AMD, Advantest, SLAB, QCOM, QRVO, ENTG, SITM…)

By Douglas O’Laughlin

Another week in earnings, the big theme I can point out is the continued and persistent weakness in the Industrial market.
Reminder: in a first-in-first-out (FIFO) framework, the first into the inventory correction were PCs and Smartphones.
Then, networking and data center, and we are now seeing Industrial start their inventory correction cycle. I don’t think this is the last we will hear about this.

[Blue Lotus Lodging Sector Update]: Dividend from Supply Shortage Can Continue into 2024

China hotel supply shortage haven’t fully recovered from Covid, the total hotel volume is still 11% lower than pre-Covid level in 2023, we expect a full recovery in 2024.
Due to the continue of hotel supply shortage, we think hotel groups in China can still enjoy the premium pricing in the next 6-12 months.
We think Atour has better fundamentals than Huazhu/Jinjiang/BTG, in terms of 1) hotel room scale leverage; 2) RevPAR quality; 3) upper midscale class positioning and less burden in legacy brands.

China Property Developers In Distress – Weekly News & Announcements Tracker | Nov 2-9, 2023

By Robert Ciemniak

A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
We do not verify the underlying data or provide any opinion, we only select and summarize the information; See direct links to sources

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Nov 09

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Losing Steam; Canon’s Nanoimprint to Disrupt Semiconductor Manufacturing and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Stocks Losing Steam; Canon’s Nanoimprint to Disrupt Semiconductor Manufacturing
[XPeng Inc. (XPEV US, BUY, TP US$18) Target Price Change]: Does Xiaopeng Need Xiaomi to Survive?
With No Surprise, Diodes Guides Automotive/Industrial Semi Demand to Fall over 20% Q/Q
Cannabis Catalysts – Five Factors That May Drive Change in 2024

Ohayo Japan | Stocks Losing Steam; Canon’s Nanoimprint to Disrupt Semiconductor Manufacturing

Overseas: SPX +0.1% , Nasdaq +0.1%; Stocks losing steam; WeWork goes bust; Roblox +12%, Upstart -27%, Toast -14%
Today: NKY Futs +0.5% v cash. JPY 151; New Nintendo movie; Mizuho increases stake in Rakuten Secs; Fuji Soft Group Reorganization
JapanX | Canon’s Nanoimprint Technology to challenge ASML Dominance and Potentially Disrupt Semiconductor Manufacturing

[XPeng Inc. (XPEV US, BUY, TP US$18) Target Price Change]: Does Xiaopeng Need Xiaomi to Survive?

The rapid ascending Huawei EV ecosystem is threatening everyone except BYD and Tesla. XPEV is the next in line after NIO;
We do view Xiaomi as offering an alternative to Huawei to present a unified IOT user experience. But now is too early to judge Xiaomi’s success and XPEV’s role;
We cut the TP from US$24.3 to US$18 and maintain BUY.

With No Surprise, Diodes Guides Automotive/Industrial Semi Demand to Fall over 20% Q/Q

By Andrew Lu

Like other automotive/industrial semi vendors, Diodes guides 4Q23 sales of 20% q/q and 35% y/y decline (miss by 21%) and weaker gross margin/operating margin of 35%/7% (miss by 5ppts).
The company sees 4Q23 sales decline of 20% mainly from 19% of automotive and 26% of industrial customers due to customer inventory cut coupled with year-end distributor inventory management.
We expect this adjustment for automotive/industrial IDMs to last for at least 6 months and suggest our clients to avoid these names unless valuation becoming attractive.

Cannabis Catalysts – Five Factors That May Drive Change in 2024

Cannabis is a state-led growth story with a series of hard-to-time political catalysts.
Slower-than expected state rollouts and a drought of political progress have contributed to the US cannabis MSOS ETF falling more than 90% since its peak on February 10, 2021.
Valuations are compressed and there are a series of potential new states and political catalysts ahead.

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Nov 08

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Winning Streak Continues; A Beneficiary of EV Battery Testing and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Winning Streak Continues; A Beneficiary of EV Battery Testing
Weekly Sustainable Investing Surveyor – Week Ended November 3, 2023

Ohayo Japan | Winning Streak Continues; A Beneficiary of EV Battery Testing

Overseas: SPX +0.3%, Nasdaq +0.9%; Lower Treasury yields boosted mega-cap tech stocks. Datadog +28% on earnings beat
Today: NKY Futs +0.6% v cash. JPY 150.4/$; Real wages remain weak; Yen record low vs Asian currencies
JapanX | A Small Cap Powering the EV Revolution with Environmental Test Chambers

Weekly Sustainable Investing Surveyor – Week Ended November 3, 2023

The WTR Sustainable Index was up by 5.8% W/W versus the S&P 500 Index (up 5.9%), the Russell 2000 Index (up 7.6%), and the Nasdaq Index (up 6.5%).
Energy Technology (13.5% of the index) was up by 10.5%, while Industrial Climate and Ag Technology (48.7% of the index) was up 5.5%, ClimateTech Mining was down 1.3%, and Advanced Transportation Solutions was up 5.2%.
Top 10 Performers: LILM, HLGN, LICY, PEV, ARVL, FHYD, GMGMF, HASI, TMC, GCEI

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Nov 07

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Stocks, Yields, Oil Higher; SiC Chip Technology for Automotive Evolution
Furniture/Furnishings Weekly – Office Furniture Back in Focus After Strong HNI Quarter

Ohayo Japan | Stocks, Yields, Oil Higher; SiC Chip Technology for Automotive Evolution

Overseas: SPX +0.2% , Nasdaq +0.3%; Subdued start to the week after recent gains; Yields higher with 10Y at 4.65%
Today: NKY Futs -0.3% v cash. JPY 150/$; Ueda sees increasing chance of hitting 2% inflation goal
JapanX: Denso & Mitsubishi Elec Investing in SiC Chip Technology for Automotive Evolution

Furniture/Furnishings Weekly – Office Furniture Back in Focus After Strong HNI Quarter

The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.
The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.
HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.

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Nov 06

Daily Brief Thematic (Sector/Industry): Ohayo Japan | The Bulls Are Back; Toyota Navigating the EV Transition and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | The Bulls Are Back; Toyota Navigating the EV Transition
Interpretation of China’s Central Financial Work Conference – the Big Changes and the Outlook

Ohayo Japan | The Bulls Are Back; Toyota Navigating the EV Transition

Overseas: SPX +0.9% , Nasdaq +1.2%; US stocks up on lull in job market. Volatility recedes.
Today: NKY Futs +1.2% v cash. JPY 149.4/$; Japan approves Stimulus package to fight inflation; Honda China sales strong in Oct
JapanX: Toyota’s record profits, driven by a diversified drivetrain approach, will fund its shift to EVs

Interpretation of China’s Central Financial Work Conference – the Big Changes and the Outlook

By Xinyao (Criss) Wang

China holds tone-setting national financial work conference.It’s rare for the country’s top leaders to directly express a high level of dissatisfaction with the financial work of the past few years.
China emphasizes the “political stance” of financial practitioners, who (regardless of the industry/sector they belong to) would have to face “significant changes”, which are prompting investors to think ahead.
The era of finance as a profiteering has passed.It’s increasingly difficult to have excess returns under the banner of serving real economy, but some industries are still prioritized, indicating opportunities.

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Nov 05

Daily Brief Thematic (Sector/Industry): China Healthcare Weekly (Nov.3)-Share Price Correction and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

China Healthcare Weekly (Nov.3)-Share Price Correction,Valuable Shortcut,Globalization Vs Innovation
GEMWeekly (3 Nov 2023): China, South Korea, Taiwan Macro; Nvidia, Alibaba, Baidu, Tencent

China Healthcare Weekly (Nov.3)-Share Price Correction,Valuable Shortcut,Globalization Vs Innovation

By Xinyao (Criss) Wang

Globalization and innovation are two core paths for companies’ development, but with completely different effects.Instead of rushing to go global, it’s better to calm down to focus on R&D first.
Many domestic companies choose Me-Too strategy, which is considered a “shortcut”. However, Me-Too strategy is not always successful. We analyzed different scenarios to help investors better distinguish valuable Me-Too strategies.
There could be a potential short-term correction in healthcare sector. Since trading opportunities remain, rebound would come next, but stock-picking would not be the same as in the past.

GEMWeekly (3 Nov 2023): China, South Korea, Taiwan Macro; Nvidia, Alibaba, Baidu, Tencent

By Wium Malan, CFA

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: China PMI data, South Korea trade and inflation data, Taiwan GDP growth.
Companies mentioned:NVIDIA Corp (NVDA US), Alibaba Group Holding (9988 HK), Baidu (9888 HK), Tencent (700 HK)

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Nov 04

Daily Brief Thematic (Sector/Industry): Not Every Cloud Has A Silver Lining: Some Cloud Offerings Are Set To Soar Despite Slowdown and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Not Every Cloud Has A Silver Lining: Some Cloud Offerings Are Set To Soar Despite Slowdown
Japan Equities | Stocks Surge; Food & Tech Sectors Rally
More Signs of Fab Utilization Recovery Starting Mid-2024 Post Current MOI Correction
More China-U.S. Flights Unlikely to Bring Down High Ticket Prices

Not Every Cloud Has A Silver Lining: Some Cloud Offerings Are Set To Soar Despite Slowdown

By Pranay Yadav

Amazon’s cloud market share is roughly the sum of Microsoft and Google market share put together. Microsoft’s market share is twice that of Google.
After stupendous growth over the last five years, cloud business continues to grow but at a slowing pace. Amid tech spend cuts, not every cloud vertical is set to grow.
Those cloud providers enabling AI workloads are primed to soar despite shrinking cloud budgets.

Japan Equities | Stocks Surge; Food & Tech Sectors Rally

Market Watch: Japanese surge as the US maintains interest rates and Bank of Japan only makes minor adjustments to YCC
Major Movers: Food companies were the big winners this week with all benefitting from strong overseas earnings
Activist Watch: Strategic Capital lift their stake in Toa Road by 1pt to 10.3%

More Signs of Fab Utilization Recovery Starting Mid-2024 Post Current MOI Correction

By Andrew Lu

During MOI correction period, global semi equipment and manufacturing vendors might under-perform semi product companies on sales/earnings and share price performance in next 6 months given utilization remains below 80%.
A healthy MOI correction in PC/smartphone semi might result in global logic MOI to fall to 3.7-3.8 months in 3Q23, down 15% q/q and 8% y/y, heading to historical low.
China fabless reduced MOI to 6.4 months in 3Q23, down 16% q/q and 26% y/y. Although 2x over 3.5 months low, we expect 4-5 months in future due to restrictions.

More China-U.S. Flights Unlikely to Bring Down High Ticket Prices

By Caixin Global

The number of weekly flights between China and the U.S. will increase again next month, sparking hopes that more supply will put downward pressure on sky-high ticket prices.
But industry insiders warned that the cost of a ticket won’t drop significantly anytime soon, as low travel demand means American airlines are taking a “cautious” approach to resuming operations.
From Nov. 9, Chinese carriers will be able to operate 35 weekly round-trips to the U.S., according to a U.S. Department of Transportation order issued Friday.

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Nov 03

Daily Brief Thematic (Sector/Industry): Affordable Luxury: A Look Into Chinese Luxury (Part I) and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Affordable Luxury: A Look Into Chinese Luxury (Part I)
China Property Developers In Distress – Weekly News & Announcements Tracker | Oct 27 – Nov 2, 2023
US Banks – New Weekly Balance Sheets: C&I Loan Growth Turns Negative | Cash +15% | All Loans +1%

Affordable Luxury: A Look Into Chinese Luxury (Part I)

By Alexis Dwek

Thanks to the rapidly expanding middle class, increasing incomes, and a strong desire for luxury, Chinese consumers are often seen as the embodiment of the luxury industry’s promising future
However, the market has seen competition intensify: Not only are international brands competing against each other, but the rise of domestic brands has brought the competitive landscape to another level
Since this summer, investors have been concerned by a shifting Chinese landscape in the context of the current economic situation

China Property Developers In Distress – Weekly News & Announcements Tracker | Oct 27 – Nov 2, 2023

By Robert Ciemniak

A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
We do not verify the underlying data or provide any opinion, we only select and summarize the information; See direct links to sources

US Banks – New Weekly Balance Sheets: C&I Loan Growth Turns Negative | Cash +15% | All Loans +1%

By Daniel Tabbush

New weekly balance sheets for US large banks shows C&I loan growth turning negative. De-risking continues with cash balances up 15.1% YoY, the fourth week of double digit growth.
Total loan growth is nearly negative with the most recent week’s release showing further slowing to 1.11% YoY in week to18 October.
With all of this, US large banks are accelerating their more expensive jumbo time deposits, with growth now at 115% YoY and adding USD26bn in the week.

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Nov 02

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Rally After Fed Decision; Toyota Funding Japan’s Hydrogen-Powered Future and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Stocks Rally After Fed Decision; Toyota Funding Japan’s Hydrogen-Powered Future

Ohayo Japan | Stocks Rally After Fed Decision; Toyota Funding Japan’s Hydrogen-Powered Future