Investment Ratings - Airlines: Industry View Attractive [2] - Marine Transportation: Industry View Cautious [2] - Diversified Services: Industry View No Rating [2] - Logistics: Industry View Attractive [2] - Tourism: Industry View In-Line [2] - Railways: Industry View In-Line [2] Core Insights - There is a strong interest from overseas institutional investors in railways and tourism, while airlines, logistics, and marine transportation attract relatively low interest [5][6] - Specific stocks such as JR Kyushu, JR East, Seibu HD, and Keisei Electric Railway are highlighted for their strong appeal among overseas investors [6] - Concerns regarding the performance of Fuji Kyuko and the potential for a rebound in tourism demand are discussed, indicating a cautious outlook [7] - Yamato HD and SG HD are noted for their underperformance, with no immediate catalysts for price recovery identified [8] Summary by Industry Airlines - The report indicates a rising certainty of yen appreciation and low oil prices, which could enhance investment appeal, but it is noted that this scenario is not yet priced in [11] Marine Transportation - Companies such as Kawasaki Kisen, Mitsui O.S.K. Lines, and Nippon Yusen are rated Underweight, indicating a cautious outlook for the sector [33] Diversified Services - Japan Post Holdings is rated Overweight, suggesting a positive outlook for the company [34] Logistics - Companies like Fukuyama Transporting and Yamato Holdings are rated Underweight and Equal-weight respectively, indicating mixed sentiments in the logistics sector [35] Tourism - Fuji Kyuko is rated Overweight, reflecting optimism about its potential for growth, while other companies like Oriental Land are rated Underweight [36] Railways - Central Japan Railway is rated Underweight, while Kyushu Railway and Tokyu are rated Overweight, indicating varied expectations across different railway companies [37]

Investment Rating - The industry investment rating is "In-Line" [5] Core Insights - CSH's 3Q24 recurring net profit was Rmb21.2 billion, representing a 288.57% year-over-year increase, largely meeting expectations [2] - J&T is on track to meet its full-year volume guidance despite a slowdown in 3Q24 volume growth compared to 2Q24 [3] - The application of technology, particularly AI, is expected to drive the next stage of competition in China's logistics industry [4] Summary by Sections 3Q24 Preliminary Results - CSH's implied 3Q24 minority interest was Rmb2.8 billion, up 250% year-over-year, attributed to improved earnings from OOIL [2] - The estimated dividend yield for 2H24 is 8%, with 3Q24 expected to be the peak quarterly earnings for 2024 [2] Volume and Traffic Updates - Average daily express delivery pickup volume increased by 28.4% year-over-year during the 2024 National Holiday, with parcel volume growth remaining robust [3] - Daily passenger traffic during the same period was 286 million, a 4% increase year-over-year [30] Market Observations - International air capacity reached 75% of the 2019 level, down from 77% the previous week [6] - Daily express delivery pickup volume averaged 447 million, a 13.7% week-over-week decrease but a 13.4% increase compared to October 2023 [10] Shipping and Freight Rates - The Shanghai Containerized Freight Index (SCFI) decreased by 9.8% week-over-week, indicating pressure on container shipping fundamentals [33] - The Baltic Dry Index (BDI) decreased by 7.2% week-over-week, reflecting ongoing challenges in the dry bulk shipping sector [33] Stock Performance - Aviation services outperformed the market with a -0.6% week-over-week change, while dry bulk shipping underperformed with a -9.6% week-over-week change [7][30]

M Update China/Hong Kong Consumer | Asia Pacific October 10, 2024 06:35 PM GMT 3Q24 Preview Summary: Onestop Shop for Forecasts We summarize our 3Q24 forecasts. Following the reductions after 2Q24 results, the magnitude of revisions into the 3Q results season was less. We do not expect major shifts in momentum in 3Q24 vs. 2Q24. Key Takeaways We highlight key trends for 3Q24 results vs. current consensus. Going into results, most stocks did not have further revisions. Those which did showed a mix of raises a ...

Investment Rating - The industry view for China Healthcare is rated as Attractive [3][24]. Core Insights - Hong Kong retail sales from January to August 2024 declined by 8% year-over-year (YoY), with traditional Chinese medicine (TCM) sales down by 17% YoY [3]. - The performance of Tongrentang companies is affected by a weak local economy, including declining cross-border shopping from China and lower per capita spending [3]. - Beijing Tongrentang (600085-SH) and Tongrentang Tech (1666-HK) significantly rely on sales and profits from the Angong pill, with a notable portion of these sales coming from Hong Kong and Macau [3][4]. - A price increase of 20% for the Angong pill in Hong Kong and Macau has created a price differential, making it 35% more expensive than the mainland version, potentially deterring cross-border shopping [4]. Summary by Sections Hong Kong Retail Sales - In August 2024, overall retail sales in Hong Kong were HK$29.2 billion, with TCM sales at HK$386 million, reflecting declines of 10% and 12% YoY, respectively [2]. - The overall retail sales in Hong Kong from January to August 2024 showed a decline of 8% YoY, while TCM sales experienced a more significant drop of 17% YoY [3]. Tongrentang Companies - Beijing Tongrentang and Tongrentang Tech derive substantial profits from the Angong pill, with a significant fraction of sales coming from Hong Kong and Macau [3]. - The price hike for the Angong pill in Hong Kong and Macau has not been matched in mainland China, leading to a notable price gap [4]. Macau Retail Sales - Macau's overall retail sales in the second quarter of 2024 declined by 23.1% YoY, with pharmacy sales down by 7.4% YoY [6].

Investment Rating - The report indicates a positive outlook for China equity, with significant inflows from foreign funds, particularly passive funds, suggesting a favorable investment environment [1]. Core Insights - China equity saw a substantial inflow of US$6.3 billion from foreign domiciled funds between September 25 and October 2, 2024, primarily driven by passive funds [1] - Cumulative foreign passive flows have surpassed peak levels in 2024, returning to levels seen in October 2023, while active fund flows remain at historical lows since late 2022 [1] - Domestic China passive products received inflows of US$18 billion in September, mainly targeting China A-shares [1] Fund Flow Analysis - Foreign domiciled funds experienced strong inflows of US$6.3 billion, with passive funds contributing US$6 billion and active funds only US$0.3 billion during the specified period [1] - In September, foreign equity inflows from passive funds totaled US$3.8 billion, while active funds recorded outflows of US$1.1 billion [1] - Global funds are underweight in China by 1.1%, with AxJ funds underweight by 1.7% and EM funds by 2.3% [1] Sector and Company Positioning - Active fund managers increased their positions in Media & Entertainment and Real Estate sectors, while reducing exposure in banks, utilities, and energy sectors [1] - Notable companies added to portfolios include Tencent, Meituan, PDD, and CCB, while Trip.com and NetEase saw reductions in their positions [1] Short Interest Trends - A total of US$2.0 billion in short interest was added in China offshore/HK equities, with significant increases in Consumer Discretionary, Financials, and Real Estate sectors [1]

M Idea Hong Kong/China Insurance | Asia Pacific October 7, 2024 10:25 AM GMT How could market rally impact insurers' financial results? We see insurers' financial results as much more sensitive to the equity market under new IFRS9. If there's 10%+ equity return in insurance funds in 2H, we estimate most insurers could achieve triple-digit earnings growth in FY24, resulting in 15-25% FY24E ROE and higher growth in BV and EV. Despite some accelerated transition into FVOCI stock investment in 1H24, most insure ...

Investment Rating - The investment rating for Hirose Electric has been raised to Overweight (OW) as of July 9, 2024, while Ibiden's investment rating has been lowered to Underweight (UW) as of January 17, 2024 [2][6]. Core Insights - There is a shift in investor preference from themes linked to AI to a focus on earnings, with significant interest in the earnings outlook of specific companies such as TDK, Hirose Electric, and Murata Manufacturing [2][3]. - TDK is expected to report upbeat earnings for July-September 2024, driven by increased sales to North American high-end smartphone firms and a decline in cobalt prices for rechargeable batteries [3][5]. - Investors are skeptical about the earnings potential of BEV batteries, with concerns about the peak level of TDK's earnings due to anticipated shipment peaks and currency fluctuations [3][5]. - Hirose Electric has faced multiple downward revisions in its operating profit guidance, but there are expectations for a rebound in sales due to increased demand for connectors in North American smartphones [6][7]. - Murata Manufacturing is expected to maintain its earnings growth despite the inventory cycle, while Taiyo Yuden may struggle to meet its guidance due to market conditions [7][8]. - Ibiden is seen as an AI-related stock but is projected to experience profit declines due to rising depreciation costs and high market expectations that may not be met [10][14]. Summary by Sections Investor Meetings - 32 individual meetings were held with institutional investors in Singapore and Hong Kong, focusing on stock selection and earnings outlooks for July-September 2024 and the medium term from fiscal year 2025 [1]. Earnings Outlook - TDK's earnings are expected to peak in July-September 2024, with strong growth anticipated from rechargeable batteries and MEMS sensors, despite concerns about currency impacts [3][16]. - Hirose Electric's operating profit guidance has been revised downwards, but there are expectations for an upward revision in future guidance due to improved sales prospects [6][7]. - Murata Manufacturing is expected to sustain earnings growth, while Taiyo Yuden may face challenges in meeting its guidance [7][8]. Company-Specific Insights - TDK's capital investment for an EV battery plant in North America is estimated at $1.5-2.5 billion, with concerns about valuation and geopolitical risks [5]. - Ibiden is expected to face profit declines due to increased depreciation costs and a gap between market expectations and achievable earnings [10][14].

Investment Rating - The report does not explicitly state an investment rating for the Hong Kong property sector, but it indicates a cautious outlook on residential and office segments due to ongoing price corrections and lack of recovery [5]. Core Insights - The Hong Kong property market is experiencing the longest home price correction since 2003, with secondary home prices down 29% over 165 weeks [7]. - Despite recent rate cuts, the report suggests that these measures may not effectively address the ongoing challenges in the housing market [20]. - The rental market is showing signs of recovery, with rental levels increasing, particularly in the luxury segment [12][42]. - There is a significant oversupply of residential units, with unsold units expected to remain high in the near term [25][28]. Summary by Sections Residential - Home prices in Hong Kong have corrected significantly, with a 29% decline in secondary home prices since 2021 [7]. - The report highlights that the current home price correction is the longest since 2003, indicating persistent downward pressure on prices [6]. - Rental levels are on the rise, suggesting a potential shift in demand dynamics [12]. Retail - The retail sector is witnessing a divergence, with staple goods outperforming discretionary items, reflecting changing consumer behavior [5]. Office - The office market is still struggling, with recovery not yet in sight, indicating ongoing challenges in this segment [5]. Mainland China Retail - Luxury sales in Mainland China are expected to slow down, which may impact related sectors in Hong Kong [5]. Share Price Review - The report includes a review of share prices related to the Hong Kong property sector, although specific details are not provided in the summary [5]. Results Review - The report does not provide specific results but indicates a general trend of declining prices and increasing rental yields [5].

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Investment Rating - The report emphasizes the potential for Hong Kong to become a regional hub for impact investing, highlighting its strategic advantages and the growing interest in sustainable finance [6][10]. Core Insights - The impact investing market has reached a size of approximately $1.2 trillion, reflecting increasing investor interest in addressing climate change, poverty, and inequality through capital allocation [6][19]. - Asia's impact investing capital flow is significantly increasing, with East Asia experiencing a 15% growth since 2017, indicating a burgeoning interest in the region [6][21]. - Hong Kong is positioned to bridge the funding gap needed for China's carbon neutrality goals, with annual investment needs estimated between RMB 2.6 trillion to 4.2 trillion, primarily from social capital [6][10]. Summary by Sections Overview of Impact Investing - Impact investing is defined as a sustainable investment approach that aims to generate positive social and environmental outcomes alongside financial returns, distinguishing it from traditional investments and philanthropy [12][14]. - The market value of impact investing was nearly $1.16 trillion in 2022, showcasing rapid growth and increasing recognition among investors [12][19]. Current State of Impact Investing in Asia and Globally - The global impact investing market is projected to continue growing, with an annual growth rate of approximately 18% from 2017 to 2022, and is expected to reach $6 trillion by 2031 [19][20]. - In Asia, the allocation of impact investing assets has increased significantly, with East Asia's asset management scale rising from $680 billion in 2017 to $1.79 trillion in 2022, reflecting a compound annual growth rate of 21% [21][27]. Challenges and Opportunities in Hong Kong - The report identifies several challenges faced by impact investors in Hong Kong, including limited awareness and education about impact investing, as well as a lack of projects with performance records [6][10]. - Recommendations include enhancing investor education, promoting government participation as a role model, and creating a supportive ecosystem for impact investing [6][10]. Policy Recommendations - The report suggests a multi-faceted approach to enhance impact investing in Hong Kong, including raising awareness, building capacity through education, and creating incentives for impact investments [6][10]. - Specific policy measures proposed include encouraging early adoption of impact frameworks aligned with sustainable development goals and relaxing establishment conditions for impact investment initiatives [6][10].