Thematic (Sector/Industry)

E-commerce platforms worldwide, including Chinese-owned fast-fashion rivals Shein and Temu, are embracing a novel business model that offers merchants the advantages of selling their goods overseas at a lower cost and higher convenience.

And mainland-based companies stand to benefit as the platforms come in search of reliable suppliers in China’s manufacturing hubs.

The model, known in China as the “full-service consignment model,” (全托管模式) sees online platforms take care of nearly all aspects of the selling process from setting the price of products and storing them to marketing, processing orders, and delivery.

• 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

• DRAM Q2’23 revenues amounted to ~$11 billion, up 14.6% sequentially but down 56% YoY.
• NAND Q2’23 revenues amounted to $9 billion, up 7.7% sequentially but down ~50% YoY.
• Despite the modest uptick in Q2’23, there’s a long and winding road back to sustainable profitability…

• Meituan/Ctrip.com/Atour: MCT announce the third batch of destination list for outbound group travel, bodes well for outbound travel recovery
• ZTO: Cainiao Guoguo launches RMB 1.3bn in logistics subsidies for new Taobao/Tmall SMEs (-)
• Tencent held the 2023 WeChat Advertising Ecology Partnership Conference (+)

• The re-emergence of AI as a topic of hype, caution and investment contains, in equal parts, the re-discovery of a pre-existing technology, but now on steroids, plus all the excitement of the race among the top 5 techs to invest enough in order to dominate the field .
• The 2000 Dot.com boom involved hundreds of IPOs of start-ups, all with the word “internet” in their names, except now the AI boom involves mostly buying up existing startups by the big Techs.
• The re emergence of AI will undoubtedly change a lot of the ways in which data are used and monetized, it will make Google search far more client-friendly and it will step up the capacity of software to program themselves. 

• OVERSEAS.  US Major Equity Indices fall over night with Tech leading the sell off; Oil prices (and Stocks) in the other direction; Negative China CPI-Deflation confirmed.
• JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 143.7;  China to allow Group Tours to Japan; EARNINGS: Positive Inpex and Nexon: Strong earnings and Buyback; Sony  earnings down on M&A hangover
• NUGGET. Yesterday’s CPI print confirmed that China in Deflation. Looking for more aggressive stimulus. Monetary unlikely to work. Looking for A BIG FISCAL STIMULUS(at some point). Remain cautious China related.

• 1810. HK: Takeaways for Xiaomi from Apple’s F3Q23 earnings (-)
• NIO:  local benchmarking platform revealed NIO phone’s core specs (+)
• LKNCY: Luckin Coffee sold 7.39mn cups on the Start of Autumn（+）

• Results for FY2022-23 provide a snapshot of winners and losers in Japan’s retail sector.
• The data shows a big improvement in performance for retailers with sales of ¥250 billion or more and the outlook is positive for most, particularly for profits.
• This also means that market concentration is intensifying, particularly in sectors like drugstores but also now in supermarkets. We highlight the winners in each sector.

• OVERSEAS. Moodies Downgrade of US banks drive Equity Sell off on concerns around the financial system, economy; Weak China Trade Data; NVIDIA introduces new AI chips – extending its lead
• JAPAN. Nikkei Futures -0.3% vs Cash; USDJPY 143.4;  Japan Current A/C surplus rises +ve; But Real Wages fall – not great for BOJ exit; Earnings: Beats from Asics, Shiseido.
• NUGGET.  China – are things worse than the data suggests ? Indications are that we are not out of the woods yet with China, and not at a turning point.

• 9950HK/BGNE: BioNTech signed another ADC from Durality, negative to RemeGen and BeiGene（-）
• 9926HK/BGNE/9995HK/ZLAB/1801HK/1877HK: National Audit Office’s special audit on auditing Guangdong’s pharmaceutical consumables showed breadth and depth of the current anti-corruption probe（+/+/-/-/-/-）
• BABA/SE:TikTok is in early talks with regulators to obtain a payments license in Indonesia.(-)

• Luckin Coffee: Luckin Coffee “store transfer” program achieved preliminary result
• CPNG/BABA: Statistics Korea published 2Q23 cross-border ecommerce data (- /+)
• 3690.HK: Douyin taking measures to boost local services business (-)

• LI: Li Auto adds L9 Pro trim to L9 series (+)
• BABA/JD：Cainiao started half day delivery in 8 cities（+ / -）
• 3690HK/TCOM: Meituan established a strategic partnership with Amadeus to expand the outbound travel market（+/-）

• Global semi sales for the month of June 2023 amounted to $41.5 billion, +1.7% MoM but still down ~17% YoY.
• Nanya reported monthly revenue for July 2023 of NT$ 2,437 million, a slight decrease MoM and still down 44.5% YoY:
• For the YTD through July, ASPEED’s revenue is down 47% YoY. This translates into a similar percentage decrease in global server sales YoY in 2023. 

• OVERSEAS. All Major US Equity Indices rose: SPX +0.7%; Dow 1.2% after a last weeks sell off; US 10Yr yields rise on anticipated increased sales; Mgmt Transition worries at Tesla?
• JAPAN.  NKY Futures +0.5% vs Cash; USDJPY  142.5;  METI releases guidelines on developing AI HR; Toshiba tend to start (finally!); Broker upgrades to MHI(7011) (A bit late to the party)
• NUGGET. ENEOS to collaborate with Total Energy (France) to produce SAF. SAF has huge potential and we think its worth paying attention to as Japan pushes its carbon-zero agenda.

• We view the rallies in Chinese Internet and Consumer names to be sustainable in C3Q23 as regulatory environment to be both favourable and macro environment to be conducive; 
• Our China Internet top picks are Meituan and Tencent, and investors could buy PDD and NetEase after 2Q23 earnings. 
• Domestic consumption will also bottom out, but sustainability only confines to a few, our top picks in China consumer names are Miniso, Luckin Coffee, and Atour.

• Let’s first talk about Intel. Intel reported earnings last week, and what a surprise; they managed to have a beat and raise!
• I wrote about this in “Is this the Intel Inflection,” noting that, for once, they had low enough hurdles to jump over.
• Most of this quarter’s strength came from Client computing, while Datacenter looked better than feared. There is a slight restocking event with the back-to-school season, which implies that the worst is done for PC CPU inventories.

• OVERSEAS.  SPX500 fell on Friday, and closed -2.3%WoW;  July jobs report showed cooling in the labor market;  Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.
• JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan>  China;  Oasis’s Fischer says still more to be done with Governance.
• NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors.  With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.

• Retail results for FY2022-23 are now in and a summary analysis of all major retail sectors and retailers is available below. 
• The data shows a big improvement in performance for retailing overall, with the highest growth rates since 1990, even if some of this growth was thanks to higher prices.
• 2023 already looks like being another strong year across both consumer discretionary and staples.

• XPEV/NVIDIA: Xpeng ADAS head to join Nvidia ( – /+)
• Real Estate Industry Update: Zhengzhou announced 15 supportive policies on real estate industry, including suspending the home selling restrictions, and others. Minor positive: KE Holdings (BEKE US, BUY, TP US$22）
• ATAT: Popularity of summer vacation continued in July, and the supply shortage resulted in the surge of hotel ADR（+）

• A cautious BoJ has begun to tighten monetary policy, allowing bond yields to rise to 1%
• Even Toyota ( a famous laggard) is improving its Corporate Governance – selling off Y250b of its KDDI stock holdings
• For every two stocks that went up last week, three fell. It is all earnings related at the moment

• 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 exports, and inflation, Thailand interest rates.
• Companies mentioned:Hyundai Motor (005380 KS), Kia Corp (000270 KS)

• BoJ’s tweaking of yield curve controls places Japanese financials on a more positive investment footing, and given the modest valuations, there is healthy potential for further re-rating
• We assess the large-cap and select mid-cap Japanese commercial banks’ exposures to JGBs and foreign sovereign bonds and their loan books’ gearing to the prospect of higher rates
• We see value, in particular, in Resona, Mizuho and SMFG with attractive valuations supported by modest LDRs, good loan sensitivity to higher rates and relatively modest exposure to JGBs

• An inflection point for psychedelics. With the legalization of 3,4-Methylenedioxy- methamphetamine (MDMA) to treat post-traumatic stress disorder (PTSD) possibly less than 12 months away, acceptance of psychedelics as a viable option for more effective treatment of psychiatric disorders is a fast-approaching inflection point.
• In fact, some might argue that we are already at this point, with S-ketamine-based Spravato, the first psychedelic-like treatment to be FDA approved to treat a mental disorder, seeing explosive growth in uptake in recent quarters.
• Spravato has grown to be a near-$700 million market. As access and payor reimbursement for the treatment continue to expand, Spravato is on track to become a $1 billion-plus market in the not-too-distant future.

• OVERSEAS.  Ongoing Focus on Rising Yields As Equities fall(again); US10Yr hits 4.19% as US Gov ramps up borrowing; China continues to shore up Economy; Resilient Apple, Amazon Earnings.
• JAPAN. Nikkei Futures -0.5% vs Cash; USDJPY 142.5; BOJ Emergency Bond Buying to slow rapid yield rise; Nikkei sheds 1200 points in 2 days in risk off – still+23%YTD.
• NUGGET.  Another sign that Japanese investors are not standing still as domestic inflation takes hold – Record purchases of high-yielding (+high risk!) currencies in the first half of the year. 

• I spent the past few days in Manila, the capital of the Philippines.
• Since Southeast Asia’s borders opened up in 2022, it’s become easier to travel across the region.
• Not only am I now able to better understand the companies in my coverage universe. I’m also able to pass on any insights to you.

• OVERSEAS. Fitch downgrade spurs risk off as S&P 500 and Nasdaq 100 sold off;  US Treasuries sold off as well, but note new Treasury issuance are indeed coming
• JAPAN. NKY  Futures -1.1% vs cash; USDJPY 143.4;  Japan had most of the selling yesterday but could see some follow-through;  EARNINGS; TDK, Sumi Elect misses; TOB: Itochu takes CTC private
• NUGGET. ANA(9202) to begin offsetting GHG via the purchase of carbon credits. We estimate that if DAC  removes 10% of its emissions, 70% of OP will disappear!  Bears watching.