Thematic (Sector/Industry)

• OVERSEAS.  SPX flat on the day as catalysts lacking; Tech down ahead Wed’s  CPI as momentum builds for rate hike;  Broad strength in cyclicals – underlying economic strength?
• JAPAN. NKY Futs +0.4% vs Cash; USDJPY  133.7;Buffet says he looking to raise Japan equity weighting; MHI awarded big defense contract for missiles: Denso gears up for EV transition
• NUGGET.  Toyota gets serious in BEVs – we are excited about the prospects for the supply chain, particularly Denso and Panasonic

• With food inflation exceeding 8% in December, prices have become the focus for all supermarket retailing. 
• This is good news for those that are set up for price competition but it presents a serious challenge to the majority of chains.
• The net result will be a widening gap in performance between the best and rest, with the former delivering both top line growth and rising margins.

• Semiconductor revenues remain in a decline, although that decline has slowed.
• Prices appear to have reached cost.  They should follow cost declines until a shortage returns.
• The timing of the next shortage is still in question.

• Just before Beijing lifted zero covid, proejctions for the 2023 year ranged from US$9B TO US$16B. Bothe have proven significantly below revised estimates now.
• Since the end of zero covid, JP Morgan and USB have lifted their Macu GGR projects to US$22b. Our analysis effective with end of 1Q23 ranges higher to ~US$24–US$25b.  
• Adding non-gaming revenue at 14% to expected GGR is above the historic 10% pre-covid. Moving more non-gaming revenue is mandated by Macau’s extension of concessions.

• Samsung’s Q1 2023 operating profit has collapsed to 0.6 trillion Korean won (TKW), down from 4.31 TKW in Q2 2022 and 14.12 TWK in Q1 2022
• A promise to “meaningfully lower” memory production sent competitor shares soaring, presumably in anticipation of a faster end to the current memory downturn.
• The memory production cut report is elusive and vaguely attributed. We don’t anticipate a return to meaningful profitability in the memory segment until Q1 2024. 

• BIDU ：More companies announce / release large language model projects（-）
• BABA / SE: Brazil cancels tax exemption for cross-border ecommerce (-)
• PDD: Shein begins inviting 3P merchants to its platform (-)

• 700.HK/ IQ： Tencent Video and Douyin reach strategic cooperation （+/-）
• NIO: NIO to allow consumers to lock in EC7 orders starting Apr 10 （+）
• ZLAB/1801HK: ZaiLab started FGFR2 mAb Phase III trial for Gastric Cancer in China (+)

• Rivals ByteDance Ltd.’s Douyin and Tencent Holdings Ltd. have reached a deal to collaborate on video content, marking the latest move toward reconciliation between the two Chinese tech giants that have been locked in copyright disputes for years.
• Under the agreement, Douyin — the Chinese version of TikTok — and Tencent Video will explore cooperating on areas including joint promotion of long and short videos as well as generation of secondary content, Douyin said in a statement on Friday.
• The short-video platform said that Tencent Video will authorize the use of its copyrighted long videos to Douyin, and that rules over the creation of secondary content and publication have been clarified.

• LKNCY: Luckin Coffee launch new flavor Mint Coconut latte, and co-brand with Doraemon, but with no expectation to be the next blockbuster(+)
• BGNE/9969HK:Abbview & J&J voluntarily withdrew two major indication of IMBRUVICA, a known positive to BeiGene but within our expectations (+)
• ZLAB: GSK’s court battle loss to AZ likely will not affect Zai Lab’s royalty obligation on Zejula (/)

• PDD / JD: PDD launches electronic product consumption promotion (-/-)
• JD: JD to implement new AI model for customer service (+)
• LI: Li Auto to unveil all-electric solution on Apr 18 (+)

• Stock indexes finished the holiday-shortened week almost exactly flat, as the MSCI World Index and the S&P 500 ended at 0.01% and -0.05%, respectively.
• Smalls caps followed suit, with the Russell 2000 down 0.01%.
• As has been the trend lately, cannabis stocks declined. The US cannabis-focused MSOS ETF dropped 6.36%, led by Curaleaf (CSE: CURA, OTCQX: CURLF), which was down 15.35%.

• Q1 2023 revenue of ~US$16.7 billion was at the bottom end of the guided range 
• Despite the inauspicious start, Q1 revenue still represents sequential growth of 3.6% year on year.
• TSMC’s earnings commentary on April 20 next will set the stage for how recovery looks across the broader semiconductor industry

• WTR Sustainable Index: During the week ended April 7, 2023, the WTR Sustainable Index underperformed the broader market, falling 9.0% W/W versus the S&P 500 Index (down 0.1%), the Russell 2000 Index (down 2.7%), and the Nasdaq Composite Index (down 1.1%).
• Advanced Transportation Solutions (70.0% of the index) contributed to the index underperformance, falling 10.4%, while Industrial Climate and Ag Technology (22.3% of the index) was down 4.5% and Energy Technology was down 8.9%.
• Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 26.6x versus 18.8x for the S&P 500.

• OVERSEAS. Good Friday holidays. US Economy proving to be pretty resilient. Non-farm payrolls showed hiring continued to be strong in March. NFP was 236k vs Cons 230k. Telsa cuts prices(again)
• JAPAN. NKY Futs +0.5% vs Cash as US Equity(Cash) markets closed. USDJPY 132.2. Likely see some beta led reversals of losses seen in the latter half of last week.
• NUGGET.  Kuroda bids Farewell after 10 years as BOJ Governor. He created a new playbook on monetary policy that will be studied for years. Net-net, positive outcome.

• Investors should note that even when there’re technical bottlenecks and domestic enterprises’ products are not yet mature, the government would still start centralized procurement, such as cardiac pacemaker.
• The FDA has changed game rules and tighten the standards for accelerated approval. Together with the IRA, will the US really start limiting drug prices due to economic/financial pressure?
• The relationship between fundamentals and stock prices is complicated. Beta would disappear without fundamentals, because fundamentals include not only objective facts, but also those generated by consensus brought by cognition.

• February 2023 effectively marked the 13th consecutive month of declining semi sales making it one of the most protracted downturns of the past two decades. 
• However, we are beginning to see green shoots of recovery from the likes of Foxconn, Asus and Nanya
• We predict semi sales will trough in Q2 2023 and begin a gradual recovery through H2 2023

• JD: Douyin new merchant services aims to improve eCommerce quality (-)
• BABA/PDD: Taobao begins to roll out “99 Bargain” portal (-)
• 1024HK / 3690HK: Kuaishou resumes exploration of local services (+/-)

• BILI: Some BILI content creators reportedly cease to upload videos due to monetization(-)
• BEKE: Housing transaction volume continue ramp up in March 2023(+)
• 9995HK: BioNTech signed ADC license deal with a Chinese startup (-)

• JD: JD plans listing of its MRO distributor subsidiary JD Industrials (+)
• PDD: Reports indicate that small merchants rebel against PDD policies (-)
• 981HK/1347HK/650HK/ACMR: Japan announces restrictions on exports of semiconductor equipment (+)

• 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: Asian PMI data, South Korea exports and inflation, Thailand inflation, Philippines inflation, China Caixin PMI
• Companies mentioned:SK Hynix (000660 KS), NCSOFT Corp (036570 KS), Kakao Corp (035720 KS)

• It appears as though off balance sheet lines are moving on balance sheet
• We should not confuse loan growth from off balance sheet as positive
• Credit costs can now rise from a myriad of factors, including off B/S

• OVERSEAS.  Bullard Calms Recession fears; SPX stabilizes; 2Yr Yields Rise: Non Farm Payrolls in Focus ahead of Good Friday Holidays
• JAPAN. NKY Futs +0.5% vs Cash; USDJPY 131.7; ex-IMF Chief Economist Blanchard says BOJ to remain accomodative;  JP Corporates doubles buying of own stocks in 2022; Point 72 JP expansion
• NUGGET.  KEPCO reconfirmed its plan to bring 2 addl Nuclear power plans online in a few months. The profit uptick will be considerable. We maintain KEPCO as a TOP PICK.

• This note addresses the Business Institutional Furniture Manufacturers Association’s (BIFMA) Monthly Market Pulse (MMP) of incoming orders and sales for February 2023.
• About 50+ BIFMA member companies voluntarily submit monthly sales and orders to a national accounting firm that aggregates and reports composite data.
• Neither BIFMA nor any individual member has access to the raw data.

• OVERSEAS. SPX -0.2% as Equities continued with Recession trade overnight with Defensive >Cyclicals;  Tech, Discretionary, Industrials stocks hit;  ADP Employment+Services PMI add fuel to Recession narrative; Next up: Non-Farm Payrolls
• JAPAN. NKY Futs -0.4% vs Cash; USDJPY 131.4; As US recession narrative strenghtens, expect selling of US exposed Discretionary; China weighs export ban on Rare earths;Rakuen cuts Bank IPO price
• NUGGET. Panasonic+Stellantis=Expansion of Battery Profits.  IF Panasonic and Stellantis can agree, it could mean significant share price upside.

• OPEC’s sudden oil production cut stunned the world on Sunday
• Who drove the decision and what does this tell us about OPEC’s future?
• What is the dynamic and role between Xi Jinping and Mohamed bin Salman?

• The precious metals and mining market significantly outperformed broader indices in the month of March with the GDX rising 15% versus the TSX being down slightly 
• Gold rallied heavily following the collapse of several major banks and the U.S. Fed guiding for a pause on rates in the near term
• This month only strengthens our confidence that 2023 will be a standout year for both precious metals and base metals and encourage investors to position themselves accordingly Gold rose 7.2% in the month to $1,969.7/oz, silver rose 14.5% to $24.0/oz, and copper sat flat, down just 1.8% to $4.10/lb.

• The worlds #1 producer of automotive MCUs has already launched a series of RISC-V solutions which replace Arm as the core ISA 
• A leading US semiconductor manufacturer has designed an FPGA based on RISC-V which has been chosen by NASA for use in the International Space Station
• RISC-V has the potential to be seriously disruptive in the Automotive & FPGA segments, and that’s just for starters.

• OVERSEAS. SPX broke 4 day winning streak as JOLTS data showed slowing labor market; UST Ylds fell, with 2Yr hitting 3.82% – inflation beaten?; Jamie Dimon offers downbeat outlook
• JAPAN. NKY Futs -0.7% vs Cash; USDJPY 131.7;  Strong Mar SSS continue from JP retail – Fast Retailing 11.9% as Inbound demand recovers; Japanese Co’s sorely lagging in Cybersecurity
• NUGGET. Japan is fighting a losing battle for STEM talent. Demand is there – companies can pay, but legacy rigidities are hindering change and threatening the very survival of firms.

• OVERSEAS. SPX rose +0.4% lead by gains in Energy, which was well bid on OPEC+ surprise cut; ISM Manf  PMI print weaker; Rates retreat as US 2Yr dips below 4%
• JAPAN. NKY Futs +0.1% vs Cash; USDJPY 132.4; BOJ Tankan reading points to weaker manufacturing; Potentially complicates BOJ exit; Activist ValueAct Presses Seven & I
• NUGGET. Watch FY3/24  Japan Total Payout Ratios – The Heat is On ! as JP Corporate significantly lags in Total Payout Ratios, while also sitting on ¥100 trn of cash.

• China online marketplaces are entering maturity phase of slow but steady growth. While markets have lingering concern about competition intensifying, we see the landscape stabilizing rather than deteriorating.
• Early yet clear signals are flashing that incumbents like Alibaba are regaining footing whereas challengers such as PDD and Douyin are losing momentum.
• Alibaba is our top pick for its improving fundamentals and discounted valuation. We are positive on Meituan for the near term but underweight PDD and see JD fairly priced.

• Membership of RISC-V International grew 26% in 2022 and there are now over 3,180 members across 70 countries. 
• There are more than 10 billion RISC-V cores in the market and there are tens of thousands of engineers working on RISC-V initiatives globally. 
• Most RISC-V ventures remain pre-IPO, making investment in the future of RISC-V difficult. However, there is one publicly listed company that may provide a solution.  

In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Provider, Pyari Menon as he will be sharing with us his top stock picks based on data mining. Join us as we hear his insights about his stock picks, as well as his methods on determining his choices. From the current trends, to what’s coming next, join us in this installment as we hear more from Pyari.

The webinar will be hosted on Wednesday, 12 April 2023, 17:00 SGT/HKT.

Pyari Menon has over twenty years of experience in the industry, having worked on both the buy and sell-side including at Goldman Sachs, Credit-Suisse, Deutsche Bank, Intellectual Ventures, Tano Capital, and Franklin Templeton. His coverage has been in technology and mid-caps across various geographies including Taiwan, ASEAN, India, the US, and Europe.

• Global stocks rose again this week, with the MSCI World index and the S&P 500 gaining 3.61% and 3.33%, respectively.
• The small-cap Russell 2000 gained 3.71% and the NASDAQ was up a similar 3.36%.
• Cannabis stocks as represented by the MSOS ETF fell 2.28% on the week.

• OVERSEAS. Strong close to SPX on Friday +1.4% on the Day; 3.5%WoW; +7.0%QTD; Light Macro calender this week with Job report Key; OPEC+ surprise cut; Tesla Misses 1Q
• JAPAN.  NKY Fut +0.7% vs Cash; USDJPY 132.9; At the start of the new fiscal year, strong tailwinds ahead for Japan: BOJ normalization; Shareholder AGMs; Shareholder returns improvements; Bullish !
• NUGGET. Labor Mobility Needed for Sustainable Wage Growth in Japan. This is essential to extend the gains made this year, or we risk reverting to the status quo.

• The three companies we write about this week are Tata Consultancy Svcs (TCS IN) , LG Chem Ltd (051910 KS) and CJ Cheiljedang (097950 KS)   
• For the nineteen weeks since inception ended 31 March the combined innovation portfolio was +2.4%, versus DJIA -1.4%, S&P500 +3.6%, Nasdaq +9.7%, Russell2000 -2.6%, MSCI-ACWI-ETF +4.9%, all in US$ terms
• For the nineteen since inception ended 31 March the small cap portfolio was up 8.0%, the mid cap portfolio was up 3.2% and the large cap portfolio was up 2.1%

• While other market narratives are swirling including inflation trends, regional bank contagion risks, and Fed Chair Powell’s next move, not enough attention is getting paid to background maneuvering by China and Russia and other “BRIC” alliance members to attempt to slowly erode and undermine the role of the US dollar in the global financial system.
• BRICS stands for the group of five nations: Brazil, Russia, India, China, and South Africa, with poised expansion via rumored applications from Saudi Arabia, Turkey, and Egypt.
• President Nixon took the U.S. dollar off the gold standard in 1971 – the end of the era of commodity-based money and replaced it with “inside money” or Treasuries which removed the limit on the amount of currency that could be printed. 

• Gordon Moore, co-founder of Intel in 1968, has died at the age of 94
• Arthur Rock raised $2.5 million to kick-start Intel in a single day. He did so without any formal business plan from the founding duo. He’s still alive to this day. 
• While Noyce was charismatic and loved the limelight, Moore was the quiet revolutionary in the background who nurtured Intel to become the most important semiconductor company on the planet

• 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:South Korean retail sales, Malaysian GDP growth expectations, Chinese PMI data.
• Companies mentioned:Baidu (9888 HK), PDD Holdings Inc (PDD US), Saudi Aramco (ARAMCO AB), Alibaba Group (9988 HK), SK Hynix (000660 KS), JD.com Inc. (9618 HK)