Disclaimer: The following content is an archive of Substantive Research Discovery Trending Themes, as delivered as weekly insights to our paid subscribers. Links to gated content have been removed.

Blue Lotus Research: Game cannot break the tie of hardware but AI can (September 14)

Power, instead of computing, is now the bottleneck of games on mobile, says Tianli Wen at Blue Lotus Research. He says the current power constraint in smartphone offers the best environment for game engines. Hardware upgrades do not lead to better gaming experiences, adds Wen. He believes that is why Unity Software’s share price is rising, on which he has a buy rating and a $54.2 price target. Wen raises Unity’s 2024 revenue by $91.3m and operating profit by $101m. He also believes Unity’s price increase is positive for large game developers and therefore reiterates his buy rating on Tencent and NetEase. Click here for the full report. Click here if you would like to speak to the analyst.

Blue Lotus Research: China TMT (September 14)

In its latest report on the Chinese TMT sector, Blue Lotus Research notes Tencent’s new game “SYNCED” has yielded mediocre results, leaving players disappointed. The firm also reports Douyin has expanded its food delivery services to cover a total of 30 cities. At the same time, Douyin has introduced a “regional agent model” to recruit merchants, according to Blue Lotus. Elsewhere, the firm reports the photorealsitic rendering technology of Apple’s A17 Pro biochip could potentially usher smartphone gaming into the next generation. Click here for the full report. Click here if you would like to speak to the analyst.

Bank of America: Global Investor Survey: Powell bulls & panda bears (September 12)

From last week’s release of the BofA Global Fund Manager Survey, on Asia: China growth optimism has slumped back to lockdown lows, according to the survey. The bank says China growth expectations plummeted from 78% expecting a stronger economy in February 2023 to 0% in September 2023. BofA adds China growth optimism in the September 2023 survey is actually lower than in September 2022, just before the China reopening. In addition, the bank says China real estate has jumped to the number one most likely source for a systemic credit event, overtaking US commercial real estate, according to the survey. Click here if you would like to speak to the analyst.

SmartKarma: Taiwan dual listings monitor (September 18)

This report from SmartKarma highlights recent price action in Taiwanese dual-listed companies. Click here for the full report. Click here if you would like to speak to the analyst.

SmartKarma: SK Innovation – update on its rights offering subscription allocation (September 13)

On September 13, SK Innovation announced that the subscription rate for the rights offering allocated to ESOA and existing shareholders was 87.66%, according to SmartKarma. The firm says the rights offering price is 139,600 won, which is 12.7% lower than current price of 159,900 won. There is likely to be a strong demand for the subscription of rights offering forfeited shares for the general investors scheduled to take place on September 14 to 15, says SmartKarma. Click here for the full report. Click here if you would like to speak to the analyst.

Clocktower Group: Can Commodities “Survive” the China Malaise? (September 20)

The widening divergence between Chinese risk assets and commodities has been confusing to global investors, writes Clocktower Group, who say that the latest commodity strength – especially the oil rally – is mainly a reflection of US economic reacceleration. They suggest the divergence between Chinese equities and iron ore prices is more interesting and may mark a structural change in the economy. That’s because credit-lighter manufacturing is replacing credit-heavy property and infrastructure investment as the main consumer of steel, and so the macro relevance of steel demand to the Chinese economy has declined. Indeed, Clocktower reckon exports are set to pick up given the recovery of external demand, which may continue to offset the impact of property malaise and thus keep metal prices resilient. That won’t be enough to pull the economy out of the doldrums however. Clocktower say that an export-driven manufacturing recovery will not fundamentally solve China’s problem due to the sector’s inability to facilitate an effective credit expansion. Before the fiscal lever is pulled, the worst is likely yet to come for Chinese risk assets, concludes the report. Click here. 

Benchmark Minerals: Benchmark Magazine Q2 + Gotion follows CATL playbook into Nickel

Benchmark Minerals are specialists on new energy metals and batteries and so this includes coverage of several of the Asia players in the space and some of the stocks in your portfolio. This week we provide their most recent magazine edition, which includes some articles that may be of interest. 1) ”Chinese cathode makers continue overseas expansions”. 2) ”How big are CATL’s battery emissions?” 3) ”How much of the downstream value chain can Australia capture?” 4) ”How much of the downstream value chain can Australia capture?” You might also be interested in this recent piece BM published ”China’s Gotion follows CATL playbook with nickel investment.”

TS Lombard: Modi’s India ascendant amid China’s sour grapes excuses (September 18)

Larry Brainard says Indian Prime Minister Narendra Modi secured a major diplomatic success at the recent G20, while Chinese President Xi Jinping’s absence highlighted political turmoil in Beijing. He thinks last week’s India G20 will in hindsight be seen as marking an important inflection point for strategic positioning: India positive and China negative. The key to this judgment is politics, according to Brainard. India under Modi is moving to position the country as the fulcrum of a more fluid international order – one that is positive for foreign investors and out of the line of fire between the US and China, he says. Yes, says Brainard, India is far behind China in many ways economically, but the political boost Prime Minister Modi has received from the G20 should give investors confidence to take additional risk over a 10- to 20-year horizon. Click here for the full report. Click here if you would like to speak to the analyst.