In this briefing:
- This Week in Blockchain & Cryptos: Where Is Bitcoin Headed to in 2020?
- Z & LINE: Softbank Strikes Again in Digital Zaibatsu Battle for Hegemony
- The Week That Was in [email protected] – Indonesia’s Deficit, Slowing Staples, and Bangkok Bank
- Fujitsu Frontech – Company Call Confirms Importance of Fujitsu Relationship
Going into 2020, we believe Bitcoin (XBTUSD CURNCY) is still “Caveat Emptor” – buyer beware. The bull thesis for Bitcoin is still “theoretically” quite strong with room for massive gains once institutional capital flows into the market. However, this has been a long-time coming and the recent (rather underwhelming) performance of Bakkt shows that the institutional interest is still very poor. That being said, the fact that around 20% of the total supply has been unmoved for the past five years shows that there is still strong hope among the bulls. The block reward halving scheduled for next year will be one of the key short-term catalysts to watch out for, simply because of its historical significance.
The deal will further fuel the battle with Rakuten Inc (4755 JP) for hegemony in digital consumption across payments, loyalty points and e-commerce.
The battle for supremacy in payments is already proving expensive – Softbank Group (9984 JP) and Z’s PayPay service alone posted net sales of ¥600 million last year but SG&A costs of ¥37 billion – but this new alignment will lead to a further incentives race, meaning more costs for the big players in the next two to three years.
While the potential synergies are obvious, the real question is whether Softbank can make the integration work.
This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights. Please find a brief summary below, with a fuller write up in the detailed section.
In CrossASEAN Indonesia Strategy – A Very Significant Policy Move Afoot?, CrossASEAN Insight Provider Angus Mackintosh comments on the speculation that the government may remove its legal Budget Deficit, which has since been denied, at least for the moment. He also lays out his top picks for the coming year in Indonesia.
In Labor Omnibus Prep / Bandung Unions Fight / Garuda Saga Tests Erick / WB on Econ / KPK on Riady, CrossASEAN Insight Provider Kevin O’Rourke comments on the most important political and economic developments over the past week, including the far-reaching proposed Omnibus Law.
Equity Bottom-Up Insights
In Sarimelati Kencana PT (PZZA IJ) – Serving Up the Nation, CrossASEAN Insight Provider Angus Mackintosh circles back the operator of Pizza Hut in Indonesia and finds an interesting small-cap idea.
In Bangkok Bank To Buy Permata Means a Medium-Term Floor, events specialist, Travis Lundy zeros in on Bangkok Bank Public (BBL TB)’s purchase of Bank Permata (BNLI IJ), which should have a positive impact on the acquirer.
In Creative Tech: Rally in 1Q 2018 & 2019; Will We See a 1Q 2020 Rally Once Again? Cash = 57% Mkt Cap, Nicolas Van Broekhoven resists this tech innovator, which has done extraordinarily well with its groundbreaking sound system.
In Sembcorp: Can a Keppel Merger Unlock Capacity Reduction?Mio Kato, CFA notes that Temasek’s bid to raise its stake in Keppel Corp above 50% has fanned the flames of consolidation speculation regarding the O&M segment of Keppel Corp with Sembcorp Marine.
In Snippets #33: Symptoms of Downturn, Bangkok Bank Goes Indonesia, our Thai guru Athaporn Arayasantiparb, CFA comments on the five most significant trends of developments affecting the Thai market over the last week.
Sector and Thematic Insights
In When Indonesian Billionaires List Outside Jakarta: Minority Shareholders Should Think Twice,Nicolas Van Broekhoven explores to trials and tribulations of investing in the companies of Indonesian billionaires listed in overseas markets.
At CrossASEAN Research we strive to produce unbiased and differentiated on the ground Insights on companies, economies and stock markets across South East Asia exclusive to Smartkarma. Our research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long-term vision and strategy of the companies we cover. We offer bespoke work, company visits and tailor-made trips across South East Asia to our clients through Premium Services on Smartkarma.
Following on from our quick analysis of Fujitsu’s four listed subsidiaries that could either be bought in or sold out, we spoke to Fujitsu Frontech today to understand the company’s business and the degree of attachment to Fujitsu. Details below.
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