The Must Read PSA Weekly Research Round-up (week to 04 Jan)

REPORTS OUT THIS WEEK: The 2019 Japan Perspective / MACRO: Weak economic data sends JGB yields negative…/ MARKET: Summary of the market’s moves from Dec 25 – 28 / Potential changes to TSE 1 listing / INDUSTRY / SECTOR THEMATIC INSIGHTS: Research to augment LiB capacity / Four defensive standouts in the chemical sector in 2018 / COMPANY INSIGHTS: What now for the iPhone and the supply chain? / Might activists start eyeing the performance of Sony’s Yoshida ? / A great start to the year for NEC

The Weekly Comment by Pelham Smithers

Is China’s Slowdown Starting to Snowball?
The Chinese stock market, though, suggested something different; between 8 Jun 2015 and 28 Jan 2016, the CSI300 went from 5,353 to 2,853 – a decline of 47%. Some, but not all, of that was due to the speculative run-up in the Spring, but even excluding that, the market was lower in Jan 2016 than at the end of 2014. At the same time as that happened, two other things happened; 1) The price of oil slumped, and 2) Chinese exports slumped.
Now China didn’t have a recession during this period because the data said it didn’t. Rather than say that it had a recession, then, let us say that China had a “situation”. This situation was an export-led situation which resulted in negative implications for China in terms of a falling stock market and declining profits (OP of the CSI300 fell 10% between 2014~2016). Externally, it resulted in a collapse in the oil price and a rise in the yen, which in turn led to a sell-off in Japanese equities and a negative interest rate crisis in Tokyo.
For some time, PSA has been saying that China is in another “situation”. We think this “situation” began around the end of 2017. This is when orders from China for Japanese machine tools, robots and robot parts started turning down. China smartphone shipments were not only down YoY (understandable, because 4Q 2016 was exceptional), but down QoQ, which is very unusual for the 4Q. Foreign car makers such as JLR started reporting collapsing sales, and then from January 2018, the stock market started slumping.

Reports / Flash Notes Published This Week: Headlines at a Glance

1. The Japan Perspective 2019

Company / Sector / Thematic Comments at a Glance

Technology

1. Tech Strategy: Thoughts on US and Japan Tech as we Begin the New Year
2. What Now for Japan iPhone Stocks?
3. Sony (6758 JT) Upping 3D Sensor Output
4. Sony (6758 JT): Might Activists Start Eyeing Yoshida’s Performance?
5. Nexon (3659 JT): CEO of NXC Corp Sells Shares / Developing New D&F Game
6. Sharp’s (6753 JT) Dilution Issues Come Home to Roost
7. Good Start for 2019 by NEC (6701 JT) / Acquires Denmark’s KMD, Extends European Operations

Chemicals / Materials

8. Hitachi (6501 JT) Cedes LiB Ownership to Maxell (6810 JT) and INCJ
9. Sumitomo Chemical Group’s New Life Science Projects
10. Research to Augment LiB Capacity
11. China’s EV Policies and the Battery Suppliers
12. Four Defensive Chemical Standouts in 2018

Auto Parts / Machinery

13. Hoshizaki (6465 JT) Releases Q3 at 12th Hour / Shares Rebound on First Day of Trading

Market Comments / Macro / Miscellaneous

14. Dec 28 Market Moves: Tokyo Holds 20,000 Level in Final Trading Day of 2018
15. Dec 27 Market Moves: Tokyo Delivers More Meaningful Rebound
16. Dec 26 Market Moves: Tokyo Rebounds, Sort of
17. Dec 25 Market Moves: Nikkei Back Below 20,000 on US, Yen
18. Weak Economic Data Sends JGB Yields Negative
19. Potential Changes to TSE 1 Listing
20. Japan Manufacturing PMI Remains High

PSA in the Press / TV Appearance

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