In today’s briefing:
- Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
- Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
- US Defense Dept Designates Tencent and CATL as Military Companies – Impact on Korean Competitors
- Intel @ CES 2025. Doubling Down On The AIPC & Other Fantastical Tales
- Tech Supply Chain Tracker (08-Jan-2025): CES 2025: Dell switches to AMD, hurting Intel.
- LUNA Faces Nasdaq Delisting Amid Financial Restatement Delays and Strategic Review for Potential Sale
- EQD | S&P 500 (SPX Index) – An Options Strategy for 2025
- Semiconductors Re-Emerge as Leadership; $SPX $QQQ $IWM Outlook Remains Bullish
- Taiwan Tech Weekly: Latest TSMC Pricing for Apple Supports Bullish Margin Case; SK Hynix’s HBM Win
- Mitsubishi Research Institute (3636 JP) – 6 January 2025
Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
- The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
- There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
- If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.
Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
- Overnight, we got news that the JIC Consortium Deal for Shinko Electric Industries (6967 JP) was approved 27Dec2024. That was the last approval required (other than TSE TOB Launch approval).
- This is “on schedule” or slightly early from the previously-announced expected launch date.
- This morning, the stock is up sharply and is trading <0.75% from terms. Expect an announcement within two weeks. Current arb annualised at high 6% is OK. One could hold.
US Defense Dept Designates Tencent and CATL as Military Companies – Impact on Korean Competitors
- The U.S. Department of Defense announced that it has added numerous Chinese companies including Tencent and CATL as companies that work with China’s military.
- This is likely to negatively impact Tencent and CATL’s prices in the next several weeks but positively impact on some of the major Korean rechargeable battery and gaming stocks.
- The higher probability scenario at this point is for Tencent and CATL to be officially included in the Chinese Military Industrial Complex list in the coming weeks.
Intel @ CES 2025. Doubling Down On The AIPC & Other Fantastical Tales
- Intel is pinning much hope on the success of the AIPC, a venture in which they are tied at the hip with Microsoft, which calls it a CoPilot+ PC
- The AIPC/CoPilot+ PC concept is struggling to gain traction. They will sell in volume, but only because buyers will have limited alternatives available. Ultimately, we see AIPCs cannibalising non-AIPCs
- Intel’s performance was underwhelming to say the least, but at the same time, not in the least bit surprising. Earnings coming on January 23.
Tech Supply Chain Tracker (08-Jan-2025): CES 2025: Dell switches to AMD, hurting Intel.
- Dell’s switch to AMD processors for commercial PCs in CES 2025 poses a threat to Intel’s market dominance in the industry.
- MediaTek and Nvidia’s collaboration to develop advanced supercomputer chips at CES 2025 promises enhanced performance and capabilities.
- US DoD banning Tencent, CATL, and CXMT in response to escalating tech tensions, and Toyota’s inauguration pledge to Trump raising concerns.
LUNA Faces Nasdaq Delisting Amid Financial Restatement Delays and Strategic Review for Potential Sale
- LUNA stock faced a 57% decline due to Nasdaq delisting notice, with trading volume 25 times the average.
- White Hat Capital Partners invested $50m in December 2023 and increased the loan facility to $30m in October 2024.
- Luna Innovations specializes in fiber optic sensing solutions, with notable contracts in aerospace, automotive, and oil & gas industries.
EQD | S&P 500 (SPX Index) – An Options Strategy for 2025
- The Insight presents two S&P 500 INDEX (SPX INDEX) options strategies for 2025. Call overwriting can generate premium income and potentially enhance returns in a choppy but mildly positive market.
- The second strategy is a Risk Reversal, using the proceeds from a short call to buy a protective put option, providing downside protection while still allowing for some upside potential.
- Both strategies are designed to align with the expected market conditions, considering factors such as inflation, economic growth, and market volatility.
Semiconductors Re-Emerge as Leadership; $SPX $QQQ $IWM Outlook Remains Bullish
- The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.
- We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.
- Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218
Taiwan Tech Weekly: Latest TSMC Pricing for Apple Supports Bullish Margin Case; SK Hynix’s HBM Win
- Latest TSMC Price Hike — Introducing the $18,000 Wafer; Supports The Case That Management Margin Guidance is Overly Conservative
- Mover Over Apple, Nvidia Could Become TSMC’s Largest Customer in 2025E
- SK Hynix(000660.KS): Insisting on HBM Technology and Continuing to Surpass Samsung in Net Earnings
Mitsubishi Research Institute (3636 JP) – 6 January 2025
- Mitsubishi Research Institute (MRI) provides consulting services, as well as research and analysis, for the financial sector, government agencies, and the private sector.
- Profitability is poised to expand through acquiring new clients, growing recurring business, and focusing on profitable projects by moving up the value chain towards upstream consulting within the current medium-term plan (FY9/24-FY9/26).
- MRI aims to achieve 12% ROE by FY9/26 with such initiatives (7.5% FY9/24). Having a strong balance sheet with a net cash position, MRI plans to increase capital allocation to M&A, driving non-organic growth.
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