Emerging Market Skeptic

This week, we have included some useful charts from some PGIM Fixed Income and Invesco research pieces, including ones covering inflation rates, central bank rates (and rate predictions) and an Eastern European Union member country dividend yields within historical ranges chart.

Meanwhile, one Hong Kong based analyst has been quoted as saying:

“Many [investment] funds are… excluding… quitting China [equity] positions… [Among some investment funds…] “the whole China team has gone… that’s what we hear. So, actually Hong Kong financial markets are really scary these days…”

Some general emerging market investment advice from another research piece we note this week would also apply to China:

Investing in EM 2.0 necessitates laser focus on differentiation, diversification, income as a source of potential return and a preference for quality.

We will do fewer China stocks for our EM stock pick tear sheetsthan what was done last week which included some (mostly speculative and more geared for traders…) US-listed Chinese stocks mentioned in a FT-Asia Nikkei article as to having recently switched accountants to Public Company Accounting Oversight Board (PCAOB) approved ones (to ensure they can stay listed on US exchanges).

The other stock picks were Chinese semiconductor stocks who are said to be in position to benefit from the US-China chip war as they are being backed or subsidized by the Chinese government. They are also in position to gain local market share as their Chinese customers seek to nearshore and protect their supply chains from further conflict.

Finally, CMBI (part of China Merchants Bank) publishes a monthly research focus list of their best high conviction stock ideas (generally 20+ Chinese stocks). We have a post with the latest stock chart, company description, and data (or links to it plus the IR page) as a companion to the piece.

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Emerging Market Stock Pick Tear Sheets

$ = behind a paywall

• Fangdd Network (NASDAQ: DUO): Can the Online Marketplace Ride Out the Chinese Property Downturn?
• Mercurity Fintech Holdings (NASDAQ: MFH): Speculative Chinese Fintech, Blockchain and Bitcoin Stock
• ACM Research (NASDAQ: ACMR): Successfully Straddling the US-China Chip Conflict (So Far…)
• Legend Biotech (NASDAQ: LEGN): The J&J Partner Recently Surged on Leaked Data About It’s Multiple Myeloma Treatment
• Advanced Micro-Fabrication Equipment (SHA: 688012): China’s #2 Chip Tool Maker $
• Hua Hong Semiconductor (HKG: 1347 / FRA: 1HH / OTCMKTS: HHUSF): Plans a $2.6B Shanghai Share Sale to Fuel Expansion $
• NAURA Technology Group (SHE: 002371): A Potential US-China Chip Conflict Beneficiary $
• Semiconductor Manufacturing International Corp (SHA: 688981 / HKG: 0981 / FRA: MKN2): China’s Most Important Chipmaker $
• CMBI Research Focus List of China Stock Picks (May 2023) Mostly $
  • COVERS: Li Auto, Great Wall Motor, Zoomlion Heavy Industry, Yancoal Australia, CR Gas, Xtep, Yum China, Xiabu Xiabu Catering (XBXB), CR Beer, Tsingtao, Prada SpA, Kweichow Moutai, Innovent Biologics, AK Medical, AIA, Tencent, Pinduoduo, NetEase, Kuaishou, CR Land, BOE Varitronix, Wingtech & Kingdee

Emerging Market Stock Picks / Stock Research

$ = behind a paywall

Alibaba Cloud: Price War Rages as Nationalization Looms in China (Smart Karma) $

• The potential spin-off listing of Alibaba Group (HKSE: 9988) Cloud faces significant challenges from various factors, making the timing particularly challenging for the spin-off.
• The Cloud Business is experiencing intensifying price competition, while simultaneously facing substantial regulatory risks, particularly with the Chinese Government’s plans to nationalize the cloud computing market.
• Due to the ongoing price war and the potential risk of nationalization, we believe that Alibaba Group (NYSE: BABA) Cloud’s fair value is substantially below $10bn.

What exactly are TikTok, Shopee, Lazada all trying to copy from Temu? (Momentum Asia)

Sea Limited (NYSE: SE) ownsShopeewhile Lazada (Wikipedia entry) is privately held.

• “Fully managed” consignment model is deemed superior to marketplace model
• Temu, Pinduoduo (NASDAQ: PDD)’s cross border affiliate, has taken the global ecommerce market by a storm. In April, its 8th month since launching in the US market, Temu’s US GMV was approaching US$400m. The platform has also expanded to be available in 10 markets.
• Temu’s quick traction obviously drew a lot of attention from its peers and competitors, in a typical Chinese fashion. Many ecommerce platforms seem to have concluded that Pinduoduo’s “全托管”(“fully managed” or “all inclusive”) model is at least worth trying. 
• Under this model, sellers, manufacturers or brands will just need to agree on a price (to the platform), and ship the goods to the platform’s warehouses. The platform will handle everything else: front end marketing to consumers, logistics & fulfilment, as well as customer service. 

Dividend restart still far for Macau ops: JP Morgan (GGR Asia)

See our Macau ADRs list.

• “I am cautiously optimistic that cash rich companies may resume dividend for fiscal year 2023 to be paid in 2024″, he [DS Kim, head of Asia gaming and leisure research at JP Morgan] said. “But if we get lucky, they may resume with the interim one that is going to be paid or is going to be announced in August 2023. But I would assign higher likelihood on the final [2023 dividend]“.
• He added: “For those operators with net debt, given their current leverage, in our view, would need to manage their balance sheet before thinking about returning capital [to investors].”
• “The good thing is that the Macau stocks look a little too cheap and the [recovery] momentum, fundamentals, cash flow, everything looks much better, versus any other time in the past three or four years. We cannot believe that the multiples, the valuation will stay at current level forever. So, especially for the quality blue chip names, we want to use this as an opportunity to build long positions,” the JP Morgan analyst said.

Macau stocks tied to China outlook: Bloomberg analyst (GGR Asia)

• Macau stocks in likelihood “have been punished too much because of China sentiment,” suggested Angela Hanlee, an analyst at Bloomberg Intelligence.
• The Hong Kong-based analyst stated: “Many [investment] funds are… excluding… quitting China [equity] positions.”
• Among some investment funds, “the whole China team has gone… that’s what we hear. So, actually Hong Kong financial markets are really scary these days,” she added.

Redington India – An under the radar compounder (Unfair Advantage)

• Redington (NSE: REDINGTON / BOM: 532805) is an IT hardware distributor with operations across India, Middle East, Turkey and Africa. It has very low debt, grown FCF at 20% p.a for last 10 years and is currently trading at 6.5% FCF yield. They distribute laptops, PCs, mobiles, networking, datacenter hardware and tablets from all major brands (Samsung, Apple, Lenovo etc.) to both enterprises, re-sellers. This is a hard-to-enter business, mainly because: 1/ Building and maintaining relationships with marquee brands require trust, consistent performance & time. 2/ Running a distribution business at scale requires an efficient supply-chain and strong execution (which is much harder than it sounds).

New Investment – Anglo Eastern Plantations (AEP.L) (Deep Value Investments Blog)

• Brief summary, Anglo Eastern Plantations(LON: AEP) is a family holding company involved in palm oil plantations which has had a generational change of management, hopefully leading to a change in strategy. Lim Siew Kim held 51% and died on 14th July 2022. She was the daughter of the patriarch of the large Malaysian Genting Group (mostly hotels) [Genting Berhad (KLSE: GENTING / OTCMKTS: GEBHY) / Genting Singapore (SGX: G13 / FRA: 36T / OTCMKTS: GIGNF / GIGNY)].
• I believe the change in management will lead to a change in how the company operates to a more shareholder-friendly model. In their latest announcement they said they would consider buying back shares.
• One of the things I like is that the whole board only gets paid a few hundred k. I am very very sick of managements being ridiculously paid, whilst taking zero risk and adding very little. It shows the advantage of a strong, controlling shareholder – in preventing snouts going in the trough. Having said that corruption is a problem in Indonesia and in the palm oil sector more generally, though I have no evidence / specific suspicion Anglo Eastern is involved.

Zomato (ZOMATO IN) | The Big Picture (Zero Hedge) $

• The street is excited about Zomato Limited(NSE: ZOMATO)‘s profitability, we are not.
• Zomato’s execution is strong, driving improved profitability despite the margin-dilutive Gold offering.
• Caution warranted due to market dynamics: slow growth, margin pressure, and increased competition.

MORAM – The natural gas market explained + Investment thesis Maurel & Prom (Investment theses in Small Caps & Macroeconomic analysis)

Investment thesis – Maurel & Prom (EPA: MAU / LON: 0F6L / FRA: ETX / OTCMKTS: EBLMY)

• E&P company focused in Africa, but with additional interests in France, Italy, Colombia and Venezuela. 
• Combining some exciting prospects in Namibia with the upside from the sanction lifting in Venezuela plus an M&A halted in Nigeria pending resolution.
• We analyze in detail the three situations that can act as catalysts (Namibia, Nigeria and Venezuela) for the stock price and compare MAU with four of its peers (Vaalco, Panoro, BW Energy and Kosmos).

Further Suggested Reading

$ = behind a paywall

It’s Time to Disentangle from China (Yale Insights)

• As the risks of dependence on China become more apparent, a few companies are diversifying their supply chains. But inertia and short-term thinking are keeping many companies tethered to markets and suppliers in the world’s second-largest economy, write Yale SOM’s Jeffrey Sonnenfeld and Steven Tian and investor Kyle Bass.

The pulse on China’s economy and stocks (UBS AM)

• An uneven recovery has the potential to surprise on the upside
• More could be done to improve consumer and business confidence
• The impact of geopolitical tensions and trade sanctions
• The rotation toward state-owned enterprises (SOEs) due to low valuations
• The best time to invest has been when investors feel the most uncomfortable

How Taiwan became the indispensable economy (Asia Nikkei)

NOTE: Many good infographics and charts.

• Fearing a potential conflict in Asia, Western companies are looking to move production out of Taiwan. But severing ties with the self-ruled island will come at a high price for manufacturers.

Indonesian IPOs boom amid global volatility (The Asset)

• Growth prospects fueling activity, new economy, EV value chain attracting investors
• Companies listed in Indonesia raised around US$2.1 billion in IPO proceeds compared with US$1.2 billion during the same period last year. Indonesia is ranked second behind mainland China in terms of IPO proceeds in the Asia-Pacific region, ahead of markets such as Hong Kong, South Korea and India, according to data from Dealogic, May 2023 year to date.
• Just last month, Indonesian nickel company Trimegah Bangun Persada (Harita Nickel) raised 10 trillion rupiah (US$672 million) from its public offering. It was the largest IPO in 2023 so far for Indonesia. This was followed by Merdeka Battery Materials’ US$580 million listing that saw shares listed at the top of the offering range.
• The pipeline for IPOs in Indonesia, according to market reports, is expected to be robust, mostly coming from the consumer, technology and energy sectors. Some notable names include the upstream arm of Pertamina Hulu Energi, which plans to raise at least 20 trillion rupiah (US$1.36 billion) from investors, and state fertilizer firm Pupuk Kalimantan Timur.

Financial inclusion efforts in Mexico give way to new market highs (Franklin Templeton)

• Global investors might not be aware that Mexico’s stock market has been rising to new heights this year.
• Some consumer staples firms in Mexico’s stock market have been recent standouts. Tapping into the change that is underway in the payments space, some retailers are now playing a greater role in financial inclusion efforts through the rollout of alternative payment methods. For example, one of Latin America’s largest beverage and retail giants based in Mexico is leveraging access to customers of its ubiquitous convenience store chains with new digital debit cards that may help financial services penetration—a central government priority.
• Other new programs from Mexico’s retailers may offer products for remittances, loans to small businesses, and other traditional services. These efforts are widely seen as a positive for the country’s nascent digital economy. There is much room for growth, in our assessment, as only about 49% of individuals over the age of 15 held a bank account in 2022, up from 37% in 2017, according to the World Bank.

Emerging Markets 2.0: New Investment Mindset Required (Blackrock)

NOTE: Many good charts and graphics.

• Over the past 40 years, Emerging Markets (EM) have gone through a dizzying up and down. After being lauded as the new investment frontier,the asset class lost steam sometime after the Great Financial Crisis.
• We believe the loss of market momentum very much reflected a marked downshift in EM’s growth prospects. That, in turn, mirrored the plateauing of Chinese growth, de-globalization trends, rising EM indebtedness, and, like the advanced world, a sharp escalation in political polarization and volatility.
• The change in EM’s landscape does not mean the asset class is not attractive. EM still offers significant opportunities and value propositions. What it does mean is that EM 2.0 requires an entirely different investment mindset.
• Investing in EM 2.0 necessitates laser focus on differentiation, diversification, income as a source of potential return and a preference for quality. To successfully navigate the asset class, the investment process must rely on deep and rigorous investment research, employ the various asset allocation levers available to them, and, crucially, have sophisticated risk measurement and management tools.

A Brief History of Dollar Hatred (Money: Inside and Out Substack)

• The current wave of animosity towards the USD is not the first – and it will not be the last.
• Over the past 20 years, I have experienced 3 big waves of Dollar Hatred. I will discuss them below.
• And in the appendix, I will present some hard data pertaining to the current debate about de-dollarization.
• Animosity towards the dollar is elevated in 2023. But this is not in itself new, and the dollar is trading strongly, with price dynamics seemingly divorced from the media-narrative about de-dollarization. At least for now.

Assessing Central Bank Credibility In Emerging Markets (PGIM Fixed Income)

EM Local Markets: From Last Hike To First Cut (PGIM Fixed Income)

Eastern Europe: The Land Of The Rising Prices (Invesco)

EMD Quarterly Review Q1 2023 (Capital Group)

• Banking sector volatility didn’t prevent emerging market (EM) debt from rising over the quarter as investors focused on the macro tailwinds from China reopening alongside relatively strong fundamentals and high starting yields across many sovereign issuers.
• The sharp sell-off in EM debt in 2022 has resulted in attractive market valuations. We favour a tilt towards local currency markets, particularly across Latin America, where a slowdown in inflation coupled with expected policy easing will likely provide attractive total return opportunities.
• We currently see the most value in Latin American countries, such Colombia, Mexico and Brazil where interest rates have been raised early.

A New Era: How Critical Minerals are Driving the Global Energy Transition (Sprott)

• An overview of the critical minerals needed for the global energy transition to decrease our dependence on fossil fuels in favor of lower-carbon, renewable and nuclear energy sources

In Gold We Trust Report

Note: Many good charts…

• Since 2007, the annual In Gold We Trust report has been regarded as the standard work for every interested gold investor. But the In Gold We Trust report is much more.
• Each year we undertake a comprehensive macroeconomic analysis and examine the trends of the present, learn from the past with an eye on the future. To understand them, fundamental workings of the financial and economic system must be explored and critiqued. Every year, the In Gold We Trust report looks at the top issues in the financial world. In its method of analysis, it roughly follows the Austrian school of economics. 

Earnings Calendar

Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):

Economic Calendar

Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).

Election Calendar

Frontier and emerging market highlights (from IFES’s Election Guide calendar):

• TurkeyTurkish Presidency May 28, 2023 (t) Confirmed May 14, 2023
• Kuwait Kuwaiti National Assembly Jun 6, 2023 (t) Confirmed Sep 29, 2022
• Singapore Singaporean Presidency Jun 13, 2023 (t) Date not confirmed Sep 23, 2017
• Greece Greek Parliament Jun 25, 2023 (t) Confirmed May 21, 2023
• Uzbekistan Uzbekistani Presidency Jul 9, 2023 (t) Confirmed Dec 31, 2021
• Cambodia Cambodian National Assembly Jul 23, 2023 (d) Confirmed Jul 29, 2018
• Argentina Argentinian Presidency Aug 13, 2023 (d) Confirmed Oct 22, 2023
• Zimbabwe Zimbabwean National Assembly Aug 23, 2023 (d) Confirmed Jul 30, 2018
• Zimbabwe Zimbabwean Presidency Aug 23, 2023 (d) Confirmed Jul 30, 2018
• Pakistan Pakistani National Assembly Oct 1, 2023 (t) Date not confirmed Jul 25, 2018
• Argentina Argentinian Chamber of Deputies Oct 22, 2023 (d) Confirmed Oct 24, 2021
• Argentina Argentinian Senate Oct 22, 2023 (d) Confirmed Nov 14, 2021
• Argentina Argentinian Presidency Oct 22, 2023 (d) Confirmed Aug 13, 2023
• Ukraine Ukrainian Supreme Council Oct 29, 2023 (d) Confirmed Jul 21, 2019
• Poland Polish Sejm Oct 31, 2023 (t) Date not confirmed Oct 13, 2019
• Poland Polish Senate Oct 31, 2023 (t) Date not confirmed Oct 13, 2019

Emerging Market IPO Calendar/Pipeline

Frontier and emerging market highlights from IPOScoop.com and Investing.com (NOTE: For the latter, you need to go to Filter and “Select All” countries to see IPOs on non-USA exchanges):

Maison SolutionsMSS, 3.0M Shares, $4.00-4.00, $12.0 mil, 6/14/2023 Wednesday

Maison Solutions is a specialty Asian grocery retailer. (Incorporated in Delaware)

We are a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, in particular to members of Asian-American communities. We are committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which we operate. To achieve this, we are developing a center-satellite stores network. 

Our merchandise includes fresh and unique produce, meats, seafood and other groceries which are staples of traditional Asian cuisine and which are not commonly found in mainstream supermarkets, including a variety of Asian vegetables and fruits such as Chinese broccoli, bitter melon, winter gourd, Shanghai baby bok choy, longan and lychee; a variety of live seafood such as shrimp, clams, lobster, geoduck, and Alaska king crab, and Chinese specialty products like soy sauce, sesame oil, oyster sauce, bean sprouts, Sriracha, tofu, noodles and dried fish. With an in-house logistics team and strong relationships with local and regional farms, we are capable of offering high-quality specialty perishables at competitive prices.

(Note: Maison Solutions filed its S-1 on May 22, 2023, after submitting confidential IPO documents to the SEC on Dec. 23, 2022.)

AGIIPLUS INC.AGII, 4.5M Shares, $4.50-6.00, $23.6 mil, 6/19/2023 Week of

Note: AgiiPlus Inc., or AgiiPlus, is not an operating company but a Cayman Islands holding company with operations conducted by its subsidiaries, including subsidiaries in China. Investors in our securities are not purchasing equity interests in AgiiPlus’ operating entities in China but instead are purchasing equity interests in a Cayman Islands holding company. (Incorporated in the Cayman Islands)

AgiiPlus’ vision is to build the future of work and to connect businesses with technology, data, services, workspaces and more.

Through its subsidiaries, AgiiPlus is, according to the Frost & Sullivan Report, one of the fastest-growing work solutions providers with a one-stop solution capability in China and Singapore. By leveraging its proprietary technologies, AgiiPlus, through its subsidiaries, offers transformative integrated working solutions to its customers, including brokerage and enterprise services, customizable workspace renovations with smart building solutions, and high-quality flexible workspaces with plug-in software and on-demand services.

AgiiPlus has established an innovative business model called “S²aaS — Space & Software As A Solution,” which combines “Software As A Service”, or SaaS, and “Space As A Service.” This business model relies on proprietary technology, SaaS-based systems, and high-quality physical workspaces to provide customers with integrated work solutions for optimal work efficiency.

AgiiPlus, through its subsidiaries, has created an integrated platform connecting onsite workspaces and digital services through technology. Through its subsidiaries, AgiiPlus offers office leasing and enterprise services under the brand “Tangtang,” and, through its subsidiaries, AgiiPlus maintains the Distrii app, the proprietary official app for workspace members, offering AgiiPlus’ workspace members a seamless experience beyond physical spaces with easy access to enterprise services offered by AgiiPlus’ subsidiaries. As of Dec. 31, 2021, AgiiPlus’ subsidiaries had 35,771 enterprise customers and 322,252 digitally registered members.

Founded in 2016, AgiiPlus has established a network of workspaces in China and Singapore through its subsidiaries. Through Shanghai Distrii Technology Development Co., Ltd., a PRC subsidiary, AgiiPlus offers enterprise customers flexible and cost-effective space solutions in centrally located business districts in tier-one and new tier-one cities in China and Singapore. As of Dec. 31, 2021, through its subsidiaries, AgiiPlus maintained a network of 61 Distrii workspaces that covered seven different cities, namely Shanghai, Beijing, Nanjing, Suzhou, Jinan and Xiong’an in China, and Singapore, with a total managed area of about 256,291 square meters (approximately 2.8 million square feet) and approximately 41,455 workstations in total.

In addition, AgiiPlus’ asset-light model offers design, build, management and operating services to landlords who bear the costs in building and launching new spaces. This asset-light model allows AgiiPlus’ subsidiaries to economically expand and scale up while enabling landlords to turn their spaces into revenue-generating properties backed by professional services offered by AgiiPlus’ subsidiaries and AgiiPlus’ brand image. As of Dec. 31, 2021, through its subsidiaries, AgiiPlus had eight workspaces under the asset-light model, with a total managed area of about 22,947 square meters (approximately 247,000 square feet) and approximately 4,161 workstations available for members.

**Note: Revenue and net loss figures are in U.S. dollars (converted from China’s renminbi) for the year ended Dec. 31, 2022.

(Note: AgiiPlus Inc. cut the size of its IPO by 40 percent in an F-1/A filing dated March 22, 2023: The number  of Class A ordinary shares was cut to 4.5 million shares – down from 8.7 million shares previously – and the price range was increased to $4.50 to $6.00 – up from $4.00 to $5.00 – to raise $23.63 million. The new terms cut the IPO’s estimated proceeds by 40 percent from the initial estimate of $39.15 million under the original terms – 8.7 million shares at $4.00 to $5.00 – that were disclosed in an F-1/A filing dated Nov. 7, 2022. The F-1 was filed on Sept. 16, 2022; confidential filing was submitted on June 17, 2022.)

Emerging Market ETF Launches

Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:

• 03/16/2023 – JPMorgan Active China ETF JCHI – Active, equity, China
• 03/03/2023 – First Trust Bloomberg Emerging Market Democracies ETF EMDM – Principles-based
• 1/31/2023 – Strive Emerging Markets Ex-China ETF STX – Passive, equity, emerging markets
• 1/20/2023 – Putnam PanAgora ESG Emerging Markets Equity ETF PPEM – Active, equity, ESG, emerging markets
• 1/12/2023 – KraneShares China Internet and Covered Call Strategy ETF KLIP – Active, equity, China, options overlay, thematic
• 1/11/2023 – Matthews Emerging Markets ex China Active ETF MEMX – Active, equity, emerging markets
• 12/13/2022 – GraniteShares 1.75x Long BABA Daily ETF BABX – Active, equity, leveraged, single stock
• 12/13/2022 – Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY – Active, fixed income, junk bond, emerging markets
• 9/22/2022 – WisdomTree Emerging Markets ex-China Fund XC – Passive, equity, emerging markets
• 9/15/2022 – KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV – Passive, equity, Asia, dividend strategy
• 9/15/2022 – OneAscent Emerging Markets ETF OAEM – Active, Equity, emerging markets, ESG
• 9/9/2022 – Emerge EMPWR Sustainable Select Growth Equity ETF EMGC – Active, equity, emerging markets
• 9/9/2022 – Emerge EMPWR Unified Sustainable Equity ETF EMPW – Active, equity, emerging markets
• 9/8/2022 – Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH – Active, equity, emerging markets, ESG
• 7/14/2022 – Matthews China Active ETF MCH – Active, equity, China
• 7/14/2022 – Matthews Emerging Markets Equity Active ETF MEM – Active, equity, emerging markets
• 7/14/2022 – Matthews Asia Innovators Active ETF MINV – Active, equity, Asia
• 6/30/2022 – BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD – Passive, fixed income, emerging markets
• 5/2/2022 – AXS Short CSI China Internet ETF SWEB – Active, inverse, thematic
• 4/27/2022 – Dimensional Emerging Markets High Profitability ETF DEHP – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Core Equity 2 ETF DFEM – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Value ETF DFEV – Active, equity, emerging markets
• 4/27/2022 – iShares Emergent Food and AgTech Multisector ETF IVEG – Passive, equity, thematic [Mostly developed markets]
• 4/21/2022 – FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM – Passive, equity, ESG
• 4/6/2022 – India Internet & Ecommerce ETF INQQ – Passive, equity, thematic
• 2/17/2022 – VanEck Digital India ETF DGIN – Passive, India market, thematic
• 2/17/2022 – Goldman Sachs Access Emerging Markets USD Bond ETF GEMD – Passive, fixed income, emerging markets
• 1/27/2022 – iShares MSCI China Multisector Tech ETF TCHI – Passive, China, technology
• 1/11/2022 – Simplify Emerging Markets PLUS Downside Convexity ETF EMGD – Active, equity, options strategy
• 1/11/2022 – SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG – Passive, equity, ESG

Emerging Market ETF Closures/Liquidations

Frontier and emerging market highlights:

• 06/23/2023 – Invesco PureBeta FTSE Emerging Markets ETF – PBEE
• 3/30/2023 – Invesco BLDRS Emerging Markets 50 ADR Index Fund – ADRE
• 3/30/2023 – Invesco BulletShares 2023 USD Emerging Markets Debt ETF – BSCE
• 3/30/2023 – Invesco BulletShares 2024 USD Emerging Markets Debt ETF – BSDE
• 3/30/2023 – Invesco RAFI Strategic Emerging Markets ETF – ISEM
• 2/17/2023 – Direxion Daily CSI 300 China A Share Bear 1X Shares – CHAD
• 1/13/2023 – First Trust Chindia ETF – FNI
• 12/28/2022 – Franklin FTSE Russia ETF – FLRU
• 12/22/2022 – VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
• 8/22/2022 – iShares MSCI Argentina and Global Exposure ETF AGT
• 8/22/2022 – iShares MSCI Colombia ETFI COL
• 6/10/2022 – Infusive Compounding Global Equities ETF JOYY
• 5/3/2022 – ProShares Short Term USD Emerging Markets Bond ETF EMSH
• 4/7/2022 – DeltaShares S&P EM 100 & Managed Risk ETF DMRE
• 3/11/2022 – Direxion Daily Russia Bull 2X Shares RUSL
• 1/27/2022 – Legg Mason Global Infrastructure ETF INFR
• 1/14/2022 – Direxion Daily Latin America Bull 2X Shares LBJ

Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).

I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.

Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.

Emerging Market Links + The Week Ahead (June 5, 2023) was also published on our website under the Newsletter category.

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Macau looks like it will recover much faster than China while Macau casino stocks could soon start paying juicy dividends again. Note that Las Vegas and Singapore casinos were open much sooner than their Macau counterparts.

South Korea could also be a stealth winner for EVs and EV batteries as it becomes a China alternative. The country already has three global battery makerswhile Hyundai and Kia already have successful EV brands.

Finally, in addition to our Emerging Market Stock Pick Tear Sheets (May 15-28, 2023) for the last two weeks, we have a number of other potentially interesting stock picks from other sources.

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Emerging Market Stock Pick Tear Sheets

$ = behind a paywall

• PKO Bank Polski (WSE: PKO / FRA: P9O): Poland’s Largest Bank That Also Owns a Bank in Ukraine $
• Pekao (WSE: PEO / FRA: BP1): Poland’s Second Largest Bank Positioned for a Polish Growth Slowdown $
• PZU (WSE: PZU / FRA: 7PZ / FRA: 7PZ0): Poland and the CEE’s Largest Financial Conglomerate $
• GeoPark Ltd (NYSE: GPRK): Positioned for a Latin American Oil Boom
• Vista Energy (NYSE: VIST): Has the Largest Shale Oil and Gas Play Under Development Outside North America
• Gran Tierra Energy (NYSE: GTE): Still Has Plenty of Exploration Opportunities in Colombia and Ecuador
• Frontera Energy (TSE: FEC / FRA: 3PY3 / OTCMKTS: FECCF): Hit By Colombia Unrest But Sees Coming Profitability and Operational Improvements
• CGX Energy (CVE: OYL / FRA: GXCN / OTCMKTS: CGXEF): A Speculative Guyana Oil Small Cap Stock Improvements

Emerging Market Stock Picks / Stock Research

$ = behind a paywall

SJM Holdings Ltd: Large Refi of Debt Buys Time for Grand Lisboa Palace to Prove Its US$3b Cost (Smart Karma) $

See our Macau ADRs list.

• Legacy concessionaire SJM Holdings (HKG: 0880 / FRA: 3MG1 / KRX: 025530 / OTCMKTS: SJMHF / SJMHY) needs a strong performance from its Cotai flagship to create positive cash flow to service debt and keep gains in mass market share.
• The company has closed 5 satellite casinos, a move that indicates a shift in strategic goals aimed at building out from its two IRs.
• Thus far, SJM has not fully participated in the  early Macau recovery cycle to make it a BUY but it needs to build on its 81% of mass revenue.

Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV (Smart Karma) $

• Dickson Concepts (International) (HKG: 0113 / OTCMKTS: DCOHF), an HK distributor of luxury goods, is a classic example of a Graham net-net with a [greater than] 40% discount to NCAV (Net Current Asset Value).
• The company has 4.7 bn HKD of cash against total liabilities of 2.3 bn HKD (on a market cap of 1.6 bn HKD), thus representing deep value.
• With an economic environment in HK for retail sales improving + an existing 8% dividend yield, we could make a case for higher dividend payments.

Consun Pharmaceutical (1681.HK) – Undervalued. Good Performance Growth Will Continue (Smart Karma) $

NOTE: Consun Pharmaceutical Group (HKG: 1681 / FRA: C1P / OTCMKTS: CPHGF), an investment holding company, researches and develops, manufactures, and sells Chinese medicines and medical contrast medium products in China. The company operates through two segments, Consun Pharmaceutical and Yulin Pharmaceutical.

• Despite unfriendly external environment in 2022, Consun Pharmaceutical (1681 HK) still achieved stable performance growth. The Company has maintained a consistently high level of dividend payout, which is commendable.
• The rapid sales expansion of commercialized products has laid the foundation for the high-quality growth of Consun, and the continuously improving profitability further confirms its growth certainty.
• Based on the current market value, we think Consun is undervalued considering its RMB3 billion cash balance by 2022. It is expected to usher in valuation repair in the future.

Wistron Corp: Valuations Stretched After a 96% Share Price Climb in 6 Months (Smart Karma) $

NOTE: Wistron Corp (TPE: 3231)is one of the world’s largest suppliers of information and communications products.

• Wistron Corp’s share price is up 96% in the past six months. Despite its outstanding results, a lot of the positives have already been reflected in its share price.
• We think a more likely scenario for the stock is to undergo a period of share price consolidation in the next several months.
• Its valuations also appear stretched, especially in terms of P/E and P/B valuation multiples as compared to their historical valuation multiples.

Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales (Smart Karma) $

NOTE: Classys Inc (KOSDAQ: 214150) has established a strong global presence in medical aesthetics technologies – something Korea is known for.

• Classys (214150 KS) reported solid performance in 1Q23, with double-digit revenue growth, driven by expansion of domestic consumables sales for Shrink Universe and growth in overseas device and consumables sales.
• Operating profit increased 19% YoY to KRW 19.9 billion, leading to 380 basis point margin expansion to 51%. Net profit increased 46% YoY to KRW 18.8 billion.
• Classys continues to strengthen its competitiveness through product line and geography expansion. The company has reiterated 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.

Major Cineplex update (MAJOR TB) (Asia Century Stocks) $

• COVID-19 earnings recovery on track, with the election unlikely to impact the business much.
• Major Cineplex (BKK: MAJOR / MAJOR-F / FRA: MJG1) is the market leader in Thailand’s cinema industry, with 815 screens under management and a market share close to 70%. The company is run by a hungry entrepreneur called Vicha Poolvaraluck, who built it from scratch. Historically, the company has earned a return on equity of close to 20%.
• Major Cineplex’s share price was mostly steady throughout 2021 and 2022. In the past few weeks, the share price has slumped. Investors are scratching their heads to figure out why.
• But I think the share price slump is more likely related to Thailand’s lower house election, which took place on 14 May 2023. The election result surprised everyone, with the Move Forward Party – led by Harvard-educated Pita Limjaroenrat – gathering the most votes of any party. One of their campaign promises is to break up monopolies, and some fear that Major Cineplex might be one of the companies targeted by a new government.
• On the other hand, the Move Forward Party coalition only has 313 seats out of the 376 necessary to gain government control. Campaign promises will have to be diluted. Compromises will need to be made. And it’s not even clear to me that Major Cineplex represents a monopoly in the eyes of the coalition.
• The COVID-19 recovery story remains in place, however, with a strong pipeline of movies for the remainder of 2023.
• In a full recovery scenario, I foresee a 2025e P/E of 12.9x and a dividend yield of 7.0% — low numbers in the context of an expensive overall Thai stock market.

Chinese supermarket chains hit speed bumps in post-pandemic recovery (Caixin) $

• Seven out of the 14 publicly traded supermarket chains reported year-on-year declines in first-quarter sales, according to their financial reports. Four of them posted a net loss during the first three months, compared with nine that were in the red for all of 2022.

Checkout This Brazilian Grocery Chain (ASAI) (Seeking Alpha)

NOTE: Sendas Distribuidora S.A. (NYSE: ASAI) is a major grocery store chain and food wholesaler through the “Assai Atacadista” brand, recognized as Brazil’s second-largest retailer.

• ASAI is generating strong growth during an accelerated expansion phase.
• The company may benefit from a resilient Brazilian economy and solid consumer spending trends.
• ASAI looks interesting following the recent selloff.

Further Suggested Reading

$ = behind a paywall

Macau catalysts distinct from other China sectors: MS (GGR Asia)

See our Macau ADRs list and Galaxy Entertainment (HKG: 0027 / OTCMKTS: GXYEF): Macau’s Best Casino Stock Positioned for Growth:

• Morgan Stanley highlights as positives for the Macau casino sector,first: upward revisions for industry earnings, provided by a number of institutions. Morgan Stanley’s own estimates on operator earnings before interest, taxation, depreciation, and amortisation (EBITDA) are “10 percent to 20 percent higher than Refinitiv consensus for 2023 and 2024, suggesting more upside,” said the banking group.
• The second Macau-market upside in the view of Morgan Stanley, is that the city’s recovery is “behind other markets” for gaming such as Las Vegas, Nevada in the United States, and Singapore – both of which eased Covid-19-related restrictions before Macau.“We expect Macau to catch up over the next few quarters, which is not in consensus numbers, we believe,” added Morgan Stanley.
• A third positive, said the institution, was that higher financial leverage in an ‘up’ cycle was actually a positive factor for Macau gaming stocks.
• “While Macau gaming stocks stopped paying dividends during Covid, we expect they will start paying after deleveraging,” they added. “Macau gaming could provide one of the highest dividend yields (6.8 percent) if the industry resumes dividends, which could come earlier if recovery momentum continues to hold up strongly.”

South Korea Can Be Stealth Winner In EV Arms Race (Robecco)

The article also includes some good charts.

• US geopolitical rivalry with China is complicating the situation with political and legislative moves to onshore manufacturing of key technologies, or at least source from outside China.
• This could make South Korea, which boasts three global battery makers, and successful EV brands in Hyundai and Kia, a key swing supplier for the whole EV industry, a possibility we believe has been undervalued by investors.
• From January 2023, the Chinese government has ended EV subsidy program which began in 2010 with the value proposition of EVs now well established. EV subsidies in many European counties have also been reduced or eliminated.
• This is in contrast with the US market, which is just beginning its electrification subsidy efforts and rolling out tax credits thanks to the Inflation Reduction Act (IRA) which became effective in August 2022.

How Erdoğan beat the odds: Turkey’s election in charts (FT)

• President held together a coalition of conservative voters despite problems with economy.

Saudi banks are safe at a time of turmoil in the US and Europe (Macrobond)

We have covered some Saudi banks in our fund posts.

• How metrics of capital, bad loans and profitability support a positive outlook for the banking sector.
• In summary, don’t look for contagion to spread to Saudi Arabia. Its banks are well-positioned to withstand a potential downturn this year, despite the significant rise in local interest rates and fluctuating oil prices. The sector remains a reliable haven for both depositors and investors, helped by the strong oversight of the central bank and a strong local macroeconomic environment. 

Growth and Economic Complexity (The Emerging Markets Investor)

• The work of the AEI was summarized in the 2011 book The Atlas Of Economic Complexity: Mapping Paths To Prosperity,  By Ricardo Haussman and Cesar Hidalgo, and it is  periodically updated by the Harvard Growth Lab (link) and the Observatory of Economic Complexity (link).
• Although the list is relatively stable, there are five changes: five entrants, China, Malaysia, Mexico,  Taiwan and Romania,  replacing  Canada, Norway, Spain, Netherlands and Brazil.
• All of the new entrants are countries well integrated into regional or global trade value chains that import almost all their commodity needs, while five of the departees (Canada, Brazil, Norway) are commodity producers. 

Earnings Calendar

Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):

Economic Calendar

Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).

Election Calendar

Frontier and emerging market highlights (from IFES’s Election Guide calendar):

• Turkey Turkish Presidency May 28, 2023 (t) Confirmed May 14, 2023
• Kuwait Kuwaiti National Assembly Jun 6, 2023 (t) Confirmed Sep 29, 2022
• Singapore Singaporean Presidency Jun 13, 2023 (t) Date not confirmed Sep 23, 2017
• Greece Greek Parliament Jun 25, 2023 (t) Confirmed May 21, 2023
• Uzbekistan Uzbekistani Presidency Jul 9, 2023 (t) Confirmed Dec 31, 2021
• Cambodia Cambodian National Assembly Jul 23, 2023 (d) Confirmed Jul 29, 2018
• Zimbabwe Presidency of Zimbabwe Jul 31, 2023 (t) Date not confirmed Jul 30, 2018
• Zimbabwe Zimbabwean National Assembly Jul 31, 2023 (t) Date not confirmed Jul 30, 2018
• Argentina Argentinian Presidency Aug 13, 2023 (d) Confirmed Oct 22, 2023
• Pakistan Pakistani National Assembly Oct 1, 2023 (t) Date not confirmed Jul 25, 2018
• Argentina Argentinian Chamber of Deputies Oct 22, 2023 (d) Confirmed Oct 24, 2021
• Argentina Argentinian Senate Oct 22, 2023 (d) Confirmed Nov 14, 2021
• Argentina Argentinian Presidency Oct 22, 2023 (d) Confirmed Aug 13, 2023
• Ukraine Ukrainian Supreme Council Oct 29, 2023 (d) Confirmed Jul 21, 2019
• Poland Polish Sejm Oct 31, 2023 (t) Date not confirmed Oct 13, 2019
• Poland Polish Senate Oct 31, 2023 (t) Date not confirmed Oct 13, 2019

Emerging Market IPO Calendar/Pipeline

Frontier and emerging market highlights from IPOScoop.com and Investing.com (NOTE: For the latter, you need to go to Filter and “Select All” countries to see IPOs on non-USA exchanges):

ALE Group Holding LimitedALEH, 1.3M Shares, $4.00-6.00, $ 6.3M, 5/29/2023 Week of

We are a holding company incorporated in the BVI with all of our operations conducted in Hong Kong by our wholly owned subsidiary, ALE Corporate Services Ltd., also known as ALECS. (Incorporated in the  British Virgin Islands)

We provide accounting and corporate consulting services to small and medium-sized businesses. Our services include financial reporting, corporate secretarial services, tax filing services and internal control reporting. Our business is operated through our wholly owned subsidiary, ALE Corporate Services Ltd. (ALECS), a Hong Kong company incorporated on June 30, 2014. Our goal is to become a one-stop solution for all the accounting, corporate consulting, taxation and secretarial needs of small and medium enterprises operating in Asia and the U.S.

**Note: Net income and revenue figures are in U.S. dollars (converted from Hong Kong dollars) for the fiscal year that ended March 31, 2022. 

Emerging Market ETF Launches

Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:

• 03/03/2023 – First Trust Bloomberg Emerging Market Democracies ETF EMDM – Principles-based
• 1/31/2023 – Strive Emerging Markets Ex-China ETF STX – Passive, equity, emerging markets
• 1/20/2023 – Putnam PanAgora ESG Emerging Markets Equity ETF PPEM – Active, equity, ESG, emerging markets
• 1/12/2023 – KraneShares China Internet and Covered Call Strategy ETF KLIP – Active, equity, China, options overlay, thematic
• 1/11/2023 – Matthews Emerging Markets ex China Active ETF MEMX – Active, equity, emerging markets
• 12/13/2022 – GraniteShares 1.75x Long BABA Daily ETF BABX – Active, equity, leveraged, single stock
• 12/13/2022 – Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY – Active, fixed income, junk bond, emerging markets
• 9/22/2022 – WisdomTree Emerging Markets ex-China Fund XC – Passive, equity, emerging markets
• 9/15/2022 – KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV – Passive, equity, Asia, dividend strategy
• 9/15/2022 – OneAscent Emerging Markets ETF OAEM – Active, Equity, emerging markets, ESG
• 9/9/2022 – Emerge EMPWR Sustainable Select Growth Equity ETF EMGC – Active, equity, emerging markets
• 9/9/2022 – Emerge EMPWR Unified Sustainable Equity ETF EMPW – Active, equity, emerging markets
• 9/8/2022 – Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH – Active, equity, emerging markets, ESG
• 7/14/2022 – Matthews China Active ETF MCH – Active, equity, China
• 7/14/2022 – Matthews Emerging Markets Equity Active ETF MEM – Active, equity, emerging markets
• 7/14/2022 – Matthews Asia Innovators Active ETF MINV – Active, equity, Asia
• 6/30/2022 – BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD – Passive, fixed income, emerging markets
• 5/2/2022 – AXS Short CSI China Internet ETF SWEB – Active, inverse, thematic
• 4/27/2022 – Dimensional Emerging Markets High Profitability ETF DEHP – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Core Equity 2 ETF DFEM – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Value ETF DFEV – Active, equity, emerging markets
• 4/27/2022 – iShares Emergent Food and AgTech Multisector ETF IVEG – Passive, equity, thematic [Mostly developed markets]
• 4/21/2022 – FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM – Passive, equity, ESG
• 4/6/2022 – India Internet & Ecommerce ETF INQQ – Passive, equity, thematic
• 2/17/2022 – VanEck Digital India ETF DGIN – Passive, India market, thematic
• 2/17/2022 – Goldman Sachs Access Emerging Markets USD Bond ETF GEMD – Passive, fixed income, emerging markets
• 1/27/2022 – iShares MSCI China Multisector Tech ETF TCHI – Passive, China, technology
• 1/11/2022 – Simplify Emerging Markets PLUS Downside Convexity ETF EMGD – Active, equity, options strategy
• 1/11/2022 – SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG – Passive, equity, ESG

Emerging Market ETF Closures/Liquidations

Frontier and emerging market highlights:

• 06/23/2023 – Invesco PureBeta FTSE Emerging Markets ETF – PBEE
• 3/30/2023 – Invesco BLDRS Emerging Markets 50 ADR Index Fund – ADRE
• 3/30/2023 – Invesco BulletShares 2023 USD Emerging Markets Debt ETF – BSCE
• 3/30/2023 – Invesco BulletShares 2024 USD Emerging Markets Debt ETF – BSDE
• 3/30/2023 – Invesco RAFI Strategic Emerging Markets ETF – ISEM
• 2/17/2023 – Direxion Daily CSI 300 China A Share Bear 1X Shares – CHAD
• 1/13/2023 – First Trust Chindia ETF – FNI
• 12/28/2022 – Franklin FTSE Russia ETF – FLRU
• 12/22/2022 – VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
• 8/22/2022 – iShares MSCI Argentina and Global Exposure ETF AGT
• 8/22/2022 – iShares MSCI Colombia ETFI COL
• 6/10/2022 – Infusive Compounding Global Equities ETF JOYY
• 5/3/2022 – ProShares Short Term USD Emerging Markets Bond ETF EMSH
• 4/7/2022 – DeltaShares S&P EM 100 & Managed Risk ETF DMRE
• 3/11/2022 – Direxion Daily Russia Bull 2X Shares RUSL
• 1/27/2022 – Legg Mason Global Infrastructure ETF INFR
• 1/14/2022 – Direxion Daily Latin America Bull 2X Shares LBJ

Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).

I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.

Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.

Emerging Market Links + The Week Ahead (May 29, 2023) was also published on our website under the Newsletter category.

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Emerging Markets Investing Tips + Advice

Emerging Market Skeptic (Website)

Website List Updates + Site Map

EM Stock Pick Tear Sheets

EM Fund Stock Picks

Stocktwits @EmergingMarketSkptc

Twitter @EmergingMrktSkp

For this week, we have a number of new Tear Sheets plus stock picks from other sources. And while I am not a fan of Insider due to Henry Blodget being it’s CEO, they recently had an interesting article about Chinese Gen Z complaining and posting about being broke on Wiebo. We also have a list of China’s top 15 electric vehicle companies and a research article about the Chinese challenge to the European automotive industry.

Meanwhile, if you want to know what a “state collapse” looks like (and what the near future might hold for places like California and many American cities experiencing similar problems), a South African Financial Mail journalist has detailed how South Africa has experienced structural decline, deindustrialization, and economic growth collapse since 2009 (or roughly the last 15 years). She says the role of the South African state will dwindle until its little more than a tax and transfer agency supporting social grants.

The good news? The private sector and civil society is well positioned to take up the slack and are already doing so (e.g. by going off the grid, taking up government roles like fixing potholes, etc) plus many South African companies have expanded their operations abroad (e.g. see our South African stock tear sheets for some South African stock ideas – all of whom have successfully expanded abroad). Likewise, Western Cape province and other local jurisdictions still have functioning governments.

All the South African professionals I have met in Asia have been very professional while South African businesses (even the few here in Asia) seem well managed with management teams focused on what matters for the business. In South Africa, that means keeping the electricity on and NOT getting involved in extraneous political or cultural issues/controversies that many American companies/brands (e.g. Bud Light, Disney, etc.) have managed to deeply mire themselves in.

Finally, its also worth remembering that Carlos Salim’s (the richest man in Mexico) fortune was helped in part by his father buying up valuable commercial properties in Mexico City during the Mexican Revolution – when there were no other buyers around…

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Emerging Market Stock Pick Tear Sheets

$ = behind a paywall

• Airtel Africa (LON: AAF / FRA: 9AA / OTCMKTS: AAFRF): A Telco Who’s Performance Rides on Oil Prices
• OCBC Bank (SGX: O39 / FRA: OCBA / OCBB / OTCMKTS: OVCHY): Record Profits as Money Flows to Singapore
• Americana Restaurants International PLC (TADAWUL: 6015): Expansion Plans Include 250-300 New Restaurants a Year $
• DBS Group (SGX: D05 / FRA: DEVL / DEV / OTCMKTS: DBSDY / DBSDF): Record Earnings But Profit Margins From Higher Rates Have Peaked
• United Overseas Bank (SGX: U11 / FRA: UOB / UOB0 / OTCMKTS: UOVEY / UOVEF): Betting on ASEAN Growth With 2M New Citibank Clients
• World’s Safest Banks Rankings & List (From Late 2022)
• Quálitas Controladora (BMV: Q): A Potential NAFTA and Mexico Nearshoring Play $
• EV Battery Maker Market Share Chart & Stock List (China, Japan & South Korea Stocks)
• Public Bank (KLSE: PBBANK / OTCMKTS: PBLOF): Consistently Strong Financial Performance & Prudent Management $
• Investec Group (LON: INVP / JSE: INL / INP): Robust Results While Growing It’s UK Wealth Business $

Emerging Market Stock Picks / Stock Research

$ = behind a paywall

China’s top 15 electric vehicle companies (The China Project)

• The future of road transport is being forged in China. These are its leading electric vehicle companies that are ready to take on the world.

1. BYD 比亚迪
2. SAIC-GM-Wuling 上汽通用五菱 (joint venture)
3. Tesla 特斯拉
4. Geely 吉利汽车
5. GAC Aion 广汽埃安
6. Chery 奇瑞汽车
7. Changan 长安汽车
8. Hozon Auto 合众汽车
9. Li Auto 理想汽车
10. Great Wall Motors 长城汽车
11. NIO 蔚来
12. XPeng 小鹏汽车
13. Leapmotor 零跑汽车
14. FAW VW 一汽大众 (joint venture)
15. SAIC VW 上汽大众 (joint venture)

Oriental Watch: HK Sales Recovery Continues for Q1 2023,14% Dividend Yield, >50% of Mkt Cap in Cash (Smartkarma) $

• Q1 CY23 watch and jewelry sales for HK were up 88% YoY. HK sales for Oriental Watch (HKG: 0398) (30% of revenues but less volatile) will benefit from the recovery in HK.
• We estimate China sales will continue to remain resilient as cross-border travel is yet to pick up in a big way.
• Trading at 7.5x FY23e and a 14.2% dividend yield, with more than 50% of the market capitalization in cash, the company can pay solid future dividends despite weaker earnings.

Can Vingroup Upgrade Vietnam’s Auto Industry? (Asianometry Substack)

Also see: The VinFast VF8 Is Simply Not Ready for America (Jalopnik)

• I think it makes sense to release this one considering the recent news that Vinfast, the Vingroup EV subsidiary is doing a huge SPAC deal to give it an enterprise value of $27 billion.
• I was quite charitable in the video, but I think that the company faces difficult odds when it comes to the global EV industry. Vingroup is a real estate developer. Critical success factors for real estate development is how close you are with the local government. How well does that translate to being a product-oriented electronics company? They need a hit and need it fast.

Sea: Another step on the profitability pathway (The Wolf of Harcourt Street)

Also see: Making Sense of Delivery Platform Stock Metrics and Financials

• Sea Limited (NYSE: SE) Q1 2023 Earnings Analysis
• E-commerce and Digital Financial Services continue to remain extremely resilient. Operating margins for both have improved enormously, swinging negative to positive while revenue continues to grow at above average rates.
• Digital Entertainment is a real worry. Management have tried to draw attention to the fact that QAUs have increased 1% QoQ but what really matters is that QPUs continue to fall QoQ which has resulted in revenue and crucially margins declining further. Not so long ago this segment was referred to as a cash cow but while still profitable has turned into the problem child in my eyes. Management have referenced actions to optimise Garena and I expect to see some sort of results next quarter.

Our thoughts on Sea Group’s 2023 Q1 results & Our thoughts on Grab’s 2023 Q1 results (Momentum Works)

• Sea continues to be profitable, while Grab Holdings Limited (NASDAQ: GRAB) has made significant progress towards breaking even. 
• However, both stocks dropped significantly during the 1st full trading day after the release (14.66% and 14.75% respectively) – for different reasons. Investors are concerned about the continuous slump of Garena – Sea’s gaming and entertainment business; the concern about Grab is more about the slight drop in GMV of its deliveries segment. 
• Both companies have made some changes to how they report their financials: 
  • Sea Group stopped reporting the GMV of its ecommerce platform Shopee
  • Grab stopped reporting the commission rates it charges the ecosystem 

Aneka Tambang (ANTM.JK) – Indonesian Nickel and Gold Producer Poised to Cash in on EV Thematic and Onshoring of Metals Supply Chain (Pyramids & Pagodas)

NOTE: Also includes a 40:35 minute podcast about the stock. Aneka Tambang Tbk PT (IDX: ANTM / ASX: ATM / FRA: AKTA).

• ANTAM is a state-owned gold and nickel miner in Indonesia, which has the largest nickel deposits in the world. The Company has the largest nickel reserves among its local peers.
• ANTAM listed on the Indonesian Stock Exchange (IDX) in 1997, selling 35% of its shares in the process. It also listed its shares on the Australian Stock Exchange (ASX) as a foreign exempt entity in 1999 before abiding it status by the more stringent ASX listing in 2002. The business was initially involved in other minerals including bauxite, coal, mineral sands, but over the past five years the company has largely cleaned up its unprofitable businesses and now mainly focuses on nickel and gold mining.

Zydus Lifesciences (ZYDUSLIF IN): Strong Q4 Result Driven by US Business; Forward Growth to Moderate (Smart Karma) $

An Indian MNC primarily engaged in the manufacture of a wide range of generic drugs. It also produces the generics for hepatitis C treatment.

• Zydus Lifesciences (NSE: ZYDUSLIFE / BOM: 532321) recorded 32% growth in revenue to INR50B in Q4FY23, driven by 58% YoY growth in US formulation business. India business revenue grew 11% YoY.
• US business growth was driven by volume expansion in existing products and new launches. The company has launched eight new products in the US during the quarter.
• Going ahead, growth is expected to moderate, due to high base effect. The company expects single-digit growth in the US business in FY24, slower than 28% growth recorded in FY23.

AngloGold Ashanti moving its corporate home and primary listing out of SA (IOL)

• “The review concluded that the most appropriate corporate structure for AngloGold Ashanti (NYSE: AU) group is a UK corporate domicile with a US primary listing on the New York Stock Exchange and secondary listings on the JSE and A2X Markets in South Africa and the Ghana Stock Exchange in Ghana,” it said.
• “The company has a long-standing and growing presence in the US and no longer has operating assets in South Africa…”
• “On June 27, ANG (AngloGold) will also delist from the Australian stock exchange. A primary listing in the US may improve access to capital pools and the liquidity of shares. As a result of a US primary listing, ANG expects higher stock performance and a higher share value than its more liquid, higher-valued North American peers. ANG’s move is estimated to cost around 5% of its market capitalisation, primarily to cover tax obligations in South Africa,” he [Anchor Capital investment analyst Stephan Erasmus] said.

Further Suggested Reading

$ = behind a paywall

The Chinese challenge to the European automotive industry (Allianz SE)

• The shift to battery electric vehicles is a game changer for the European automotive industry. Alternative energy vehicle sales reached a record-breaking 4.4mn units in 2022, representing 47% of all new vehicle registrations in Europe…
• But the number one risk is China. Having recognized the potential of electric vehicles 15 years ago, China has since invested vast resources in building a competitive electric vehicle ecosystem. As a result, it now leads the global EV landscape, selling over double the number of BEVs in 2022 compared to Europe and the US combined, while also holding a competitive edge in nearly all aspects of the BEV value chain…
• European carmakers could collectively lose more than EUR7bn in annual net profit by 2030. If Chinese manufacturers increase their domestic market shares to 75% by 2030, total sales in China by European carmakers would fall by -39%, with local production falling from an estimated 4.4mn units to 2.7mn in 2030…
• What can policymakers do?

The Chinese Dream is dead because China’s Gen Z is flat broke, and they have the receipts to prove it (Insider)

I am not a fan of Insider due to Henry Blodget being it’s CEO, but this is interesting:

• China’s Gen Z is broke, and they have the receipts to prove it.
• Hundreds of 26-year-olds took to social media to share screenshots of their bank accounts.
• Some saved less than $1, others crossed the $1,000 mark. But something they all have in common is: They’re angry.

Asia: A once-in-a-decade opportunity (Robeco)

The long-term opportunity to gain exposure to Asia-Pacific equities is currently being obscured by a resilient US dollar and geopolitical worries which ignore the region’s solid macroeconomic advantages.

1. Valuation gap with US still enormous and contrary to macro fundamentals with reopening occurring
2. Asia ex-China economies can benefit from China offshoring, and remain key US trade partners
3. Asia-Pacific investment universe offers unrivalled combination of diversity, value and growth potential

On stranger tides: Southeast Asia tech investment in 2023 (Momentum Works)

• You can get a copy of the full presentation deck here. You can also read the transcript of the presentation here. We have also summarised the the talk in the following articles: 
  • Stranger tides of Southeast Asia tech investment Part 1: Gradually then Suddenly 
  • Stranger tides of Southeast Asia tech investment Part 2: When the party’s over
  • Stranger tides of Southeast Asia tech investment Part 3: Forgotten sage
  • Stranger tides of Southeast Asia tech investment Part 4: New rules of the game
• The following slide used in the sharing summarises the past decade of tech development and investment in the region: 

Insurmountable challenges ahead for a new Thai government (Murray Hunter Substack)

• Pita as PM far from a foregone conclusion

Building Bridges To India’s Future Investment Opportunities (Amundi)

• India’s macro fundamentals are well positioned for a multi-year improvement in economic output and earnings. Beyond the long-standing strength of its demographics, urbanisation and rising middle class, new factors are emerging that will accelerate investment opportunities in the country. Indian corporates have deleveraged and now sit on strong balance sheets, banks have strong capital adequacy ratios, and the government has plugged loopholes in the real estate sector. Future policy efforts should focus on green-field investments in newer sectors and industries and should propel the growth of corporate capital expenditure which has lagged in the past decade. The overall outlook for the next ten years is positive, but there are risks to be aware of, particularly regarding politics and policy, geopolitical developments and the evolution of commodity prices.

Macro Monthly: Positioning for a “slow” slowdown (UBS Asset Management)

How to invest for the possibility of a failed state (Daily Investor)

• However, if such warnings are now raised in the trusted business journal Financial Mail, by award-winning journalist Claire Bisseker, maybe it is time to take note.
• A cover page feature she wrote titled SA’s Doomsday Clock sent shockwaves through the investment community, and suddenly the topic was in sharp focus, begging the question – what are ordinary investors to do if that possibility is beginning to look like a certainty?
• The Financial Mail article provided a detailed analysis of the underlying economic and financial trends in SA, especially the past 13 years of deterioration since especially 2010.
• Former editor of Business Day and Financial Mail also raised the issue. In a recent column, Bruce said “it is going to get worse before it gets worse”.

Watch: Has SA run out of time on the doomsday clock? (Youtube) 8:07 Minutes

• Transition point. Private sector and civil society are well positioned to take up the slack (e.g. neighbourhood associations are filling potholes in local neighbourhood).
• Private sector increasingly taking over gov’t roles. But if you live in a remoter area or places without much of a private sector, things will get harder.
• Few very tough and nail-biting years ahead…
• Structural decline and economic growth collapse since 2009 or last 15 years. Even if you fix Eskom etc, de-industrialization trends won’t change. Where will the growth come from due to structural collapse? Low investment and low growth for a decade.
• Basic social contract is collapsing. The role of the state will dwindle until its little more than a tax and transfer agency supporting social grants.
• She thinks they can muddle through and avoid a catastrophic blow-up.
• 2024 elections and the coalitions that form may drive the future.

Earnings Calendar

Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):

Economic Calendar

Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).

Election Calendar

Frontier and emerging market highlights (from IFES’s Election Guide calendar):

• ThailandThai House of Representatives May 14, 2023 (t) Confirmed Mar 24, 2019
• TurkeyGrand National Assembly of Turkey May 14, 2023 (d) Confirmed Jun 24, 2018
• TurkeyPresidency of Turkey May 14, 2023 (d) Confirmed Jun 24, 2018
• Greece Greek Parliament May 21, 2023 (d) Confirmed Jul 7, 2019
• Kuwait Kuwaiti National Assembly Jun 6, 2023 (t) Confirmed Sep 29, 2022
• Singapore Singaporean Presidency Jun 13, 2023 (t) Date not confirmed Sep 23, 2017
• Uzbekistan Uzbekistani Presidency Jul 9, 2023 (t) Confirmed Dec 31, 2021
• Cambodia Cambodian National Assembly Jul 23, 2023 (d) Confirmed Jul 29, 2018
• Zimbabwe Presidency of Zimbabwe Jul 31, 2023 (t) Date not confirmed Jul 30, 2018
• Zimbabwe Zimbabwean National Assembly Jul 31, 2023 (t) Date not confirmed Jul 30, 2018
• Pakistan Pakistani National Assembly Oct 1, 2023 (t) Date not confirmed Jul 25, 2018
• Argentina Argentinian Presidency Oct 22, 2023 (d) Confirmed Oct 27, 2019
• Argentina Argentinian Chamber of Deputies Oct 22, 2023 (d) Confirmed Oct 24, 2021
• Argentina Argentinian Senate Oct 22, 2023 (d) Confirmed Nov 14, 2021
• Ukraine Ukrainian Supreme Council Oct 29, 2023 (d) Confirmed Jul 21, 2019
• Poland Polish Sejm Oct 31, 2023 (t) Date not confirmed Oct 13, 2019
• Poland Polish Senate Oct 31, 2023 (t) Date not confirmed Oct 13, 2019

Emerging Market IPO Calendar/Pipeline

Frontier and emerging market highlights from IPOScoop.com and Investing.com (NOTE: For the latter, you need to go to Filter and “Select All” countries to see IPOs on non-USA exchanges):

ALE Group Holding LimitedALEH, 1.3M Shares, $4.00-6.00, $6.3M, Week of 5/22/2023

We are a holding company incorporated in the BVI with all of our operations conducted in Hong Kong by our wholly owned subsidiary, ALE Corporate Services Ltd., also known as ALECS. (Incorporated in the  British Virgin Islands)

We provide accounting and corporate consulting services to small and medium-sized businesses. Our services include financial reporting, corporate secretarial services, tax filing services and internal control reporting. Our business is operated through our wholly owned subsidiary, ALE Corporate Services Ltd. (ALECS), a Hong Kong company incorporated on June 30, 2014. Our goal is to become a one-stop solution for all the accounting, corporate consulting, taxation and secretarial needs of small and medium enterprises operating in Asia and the U.S.

**Note: Net income and revenue figures are in U.S. dollars (converted from Hong Kong dollars) for the fiscal year that ended March 31, 2022. 

Emerging Market ETF Launches

Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:

• 03/03/2023 – First Trust Bloomberg Emerging Market Democracies ETF EMDM – Principles-based
• 1/31/2023 – Strive Emerging Markets Ex-China ETF STX – Passive, equity, emerging markets
• 1/20/2023 – Putnam PanAgora ESG Emerging Markets Equity ETF PPEM – Active, equity, ESG, emerging markets
• 1/12/2023 – KraneShares China Internet and Covered Call Strategy ETF KLIP – Active, equity, China, options overlay, thematic
• 1/11/2023 – Matthews Emerging Markets ex China Active ETF MEMX – Active, equity, emerging markets
• 12/13/2022 – GraniteShares 1.75x Long BABA Daily ETF BABX – Active, equity, leveraged, single stock
• 12/13/2022 – Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY – Active, fixed income, junk bond, emerging markets
• 9/22/2022 – WisdomTree Emerging Markets ex-China Fund XC – Passive, equity, emerging markets
• 9/15/2022 – KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV – Passive, equity, Asia, dividend strategy
• 9/15/2022 – OneAscent Emerging Markets ETF OAEM – Active, Equity, emerging markets, ESG
• 9/9/2022 – Emerge EMPWR Sustainable Select Growth Equity ETF EMGC – Active, equity, emerging markets
• 9/9/2022 – Emerge EMPWR Unified Sustainable Equity ETF EMPW – Active, equity, emerging markets
• 9/8/2022 – Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH – Active, equity, emerging markets, ESG
• 7/14/2022 – Matthews China Active ETF MCH – Active, equity, China
• 7/14/2022 – Matthews Emerging Markets Equity Active ETF MEM – Active, equity, emerging markets
• 7/14/2022 – Matthews Asia Innovators Active ETF MINV – Active, equity, Asia
• 6/30/2022 – BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD – Passive, fixed income, emerging markets
• 5/2/2022 – AXS Short CSI China Internet ETF SWEB – Active, inverse, thematic
• 4/27/2022 – Dimensional Emerging Markets High Profitability ETF DEHP – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Core Equity 2 ETF DFEM – Active, equity, emerging markets
• 4/27/2022 – Dimensional Emerging Markets Value ETF DFEV – Active, equity, emerging markets
• 4/27/2022 – iShares Emergent Food and AgTech Multisector ETF IVEG – Passive, equity, thematic [Mostly developed markets]
• 4/21/2022 – FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM – Passive, equity, ESG
• 4/6/2022 – India Internet & Ecommerce ETF INQQ – Passive, equity, thematic
• 2/17/2022 – VanEck Digital India ETF DGIN – Passive, India market, thematic
• 2/17/2022 – Goldman Sachs Access Emerging Markets USD Bond ETF GEMD – Passive, fixed income, emerging markets
• 1/27/2022 – iShares MSCI China Multisector Tech ETF TCHI – Passive, China, technology
• 1/11/2022 – Simplify Emerging Markets PLUS Downside Convexity ETF EMGD – Active, equity, options strategy
• 1/11/2022 – SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG – Passive, equity, ESG

Emerging Market ETF Closures/Liquidations

Frontier and emerging market highlights:

• 06/23/2023 – Invesco PureBeta FTSE Emerging Markets ETF – PBEE
• 3/30/2023 – Invesco BLDRS Emerging Markets 50 ADR Index Fund – ADRE
• 3/30/2023 – Invesco BulletShares 2023 USD Emerging Markets Debt ETF – BSCE
• 3/30/2023 – Invesco BulletShares 2024 USD Emerging Markets Debt ETF – BSDE
• 3/30/2023 – Invesco RAFI Strategic Emerging Markets ETF – ISEM
• 2/17/2023 – Direxion Daily CSI 300 China A Share Bear 1X Shares – CHAD
• 1/13/2023 – First Trust Chindia ETF – FNI
• 12/28/2022 – Franklin FTSE Russia ETF – FLRU
• 12/22/2022 – VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
• 8/22/2022 – iShares MSCI Argentina and Global Exposure ETF AGT
• 8/22/2022 – iShares MSCI Colombia ETFI COL
• 6/10/2022 – Infusive Compounding Global Equities ETF JOYY
• 5/3/2022 – ProShares Short Term USD Emerging Markets Bond ETF EMSH
• 4/7/2022 – DeltaShares S&P EM 100 & Managed Risk ETF DMRE
• 3/11/2022 – Direxion Daily Russia Bull 2X Shares RUSL
• 1/27/2022 – Legg Mason Global Infrastructure ETF INFR
• 1/14/2022 – Direxion Daily Latin America Bull 2X Shares LBJ

Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).

I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.

Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.

Emerging Market Links + The Week Ahead (May 22, 2023) was also published on our website under the Newsletter category.

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China is in focus this week starting with a hilarious 13 minute Friendly Bear Research podcast interview where the Dan McClory, Head of China at Boustead Securities, discussed recent Chinese Cayman Island IPOs. The interview quickly went off the rails when the interviewer insisted on discussing Chinese stock frauds and pump and dumps… 😀😀😀 (NOTE: Several of the recent Chinese IPOs listed in our Emerging Market IPO Calendar/Pipeline section from IPOScoop.com tend to be from Boustead Securities…)

A latter interview by the same podcaster with short-seller Grizzly Research about Chinese stock frauds (“Almost like Chinese stocks are like trading tokens…”) is also worth listening to.

In other China news, they have raided multiple offices of international consultancy Capvision, are expanding the use of exit bans, and is continuing to crackdown on banks. LinkedIn (or rather it’s owner Microsoft) has thrown in the towel and will close down their remaining China operations (basically a job board) plus their former China CEO has explained why they failed in China (HINT: Laziness and a stubborn refusal to make the product better or copy Chinese rivals who have better product ideas…).

In addition, both Turkey and Thailand had elections this weekend with the former looking set to go to a run-off while the populist opposition picked up the most seats (at the expense of the military-royalist government) in the latter, but a government still must be formed.

Finally, we have more tear sheets plus a number of emerging market stock pick research pieces from other resources plus a summary post for the last 2 weeks: Emerging Market Stock Pick Tear Sheets (May 1-14, 2023)

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Emerging Market Stock Pick Tear Sheets

$ = behind a paywall

• PKN Orlen (WSE: PKN / FRA: PKY1): Russian Oil Sanctions Bite But Looks to Expand in Germany Plus Pays Record Dividends
• Kweichow Moutai (SHA: 600519): China’s Communist Spirit and Most Valuable Company $
• ZJLD Group (HKG: 6979): IPO of the First Baijiu Maker to List Outside of China Flops
• Redefine Properties Ltd (JSE: RDF / BLN: R7H1): Load Shedding Hits Earnings-Dividends But There is Growth in Poland $
• Tecnoglass (NYSE: TGLS): An Architectural Glass Stock With an Unbreakable Recent Performance
• Narayana Hrudayalaya (NSE: NH / BOM: 539551): Has Profitably Mastered the Affordable Health Care Business Model $
• Top 10 Chinese Automakers By Electric Vehicle Sales Stock List & Graphic

Emerging Market Stock Picks / Stock Research

$ = behind a paywall

Alibaba (9988 HK): Chinese Authorities Turning Opposite to Encourage Non-State-Owned Companies (Smart Karma) $

This is interesting:

• Chinese authorities have begun to ban public opinion against non-state-owned companies.
• These actions were the opposite to what the authorities did in past years.
• We believe the authorities need non-state-owned companies to bail the unemployed young people out of the weak job market.

Grupo Mateus – LATAM Stocks Investment Analysis #15 (LATAM Substack)

• Grupo Mateus (BVMF: GMAT3) is the 4th largest retail company in Brazil and the largest in the Northeast region.
• Grupo Matheus is interesting for a few reasons.
  • First, they are exclusively focused on the Northeast region of Brazil. This region is underserved and under invested. There are very few large public companies focused exclusively on this region of the world, so Grupo Mateus stock is unique from that perspective.
  • Second, they are effectively growing their wholesale retail brands in Brazil in a financially disciplined manner. Wholesale (Atacado in Portuguese) has been a mixed bag in Brazil. Walmart recently divested from their Brazilian operations, selling their assets to Carrefour. The Sam’s club model never really caught on in Brazil the way many expected it would when they opened their first store in 1995.

Naver (2023 High Conviction Update): Poshmark & Gen Z – Key Drivers of Higher Sales in North America (Smart Karma) $

NOTE: Diversified Korean internet entertainment and e-commerce company Naver (KRX: 035420) has come up in our Fund posts. They operate South Korea’s number one search portal “NAVER” along with Poshmark – a social commerce marketplace where users can buy and sell new and secondhand fashion, home goods, and electronics.

• In this insight, we provide an update of Naver Corp which is our 2023 high conviction stock. Naver’s shares are up 19% YTD, outperforming KOSPI which is up 12% YTD. 
• The total transaction amount of Naver Commerce was 11.6 trillion won (up 19.7% YoY) in 1Q 2023. Poshmark also generated positive EBITDA in 1Q 2023. 
• Naver plans to cancel about 1.6 million treasury shares per year (1% of outstanding shares) in the next three years (for a combined 3% of outstanding shares). 

Why Leading EM Banks Don’t Present the Same Risks as SVB and Credit Suisse (Sands Capital)

See: “Why We Prefer EM Banks Over Their DM Peersin which we explore how leading EM banks can create a foundation for sustainable earnings growth simply by focusing on core banking functions of taking deposits and issuing credit.”

NOTE: Covers India’s HDFC Bank Limited (NYSE: HDB), Indonesia’s Bank Central Asia (BCA) (IDX: BBCA / FRA: BZG2 / OTCMKTS: PBCRF) & Brazil’s Nubank (BVMF: NUBR33).

1. A Diversity of Funding Sources
2. Diversified Assets with a Higher Loan Mix
3. Significant Capital and Liquidity Positions

Discover the fastest-growing Southeast Asian businesses (The International Investor)

Covers:

• Indonesia:Map Aktif Adiperkasa, Kencana Energi Lestari & Bank Jago
• Thailand: Asia Aviation, Airports of Thailand & Royal Plus
• Singapore:LHN Logistics, Jumbo Group & Seatrium
• Malaysia: Sunview Group Berhad, SFP Tech Holdings Berhad & LGMS Berhad
• Philippines:AyalaLand Logistics Holdings, Bloomberry Resorts & RL Commercial REIT
• Vietnam: Ha Do Group, Taseco Air Services & VietJet Aviation

Gemfields Group Limited: A Gem of a Company (Breeley Capital: Thursday Think Tank)

Gemfields Group Limited (LON: GEM / JSE: GML / FRA: 5PH / OTCMKTS: PLLHF)

• A former private equity spin-off, Gemfields Group (Gemfields) is the world’s largest miner of colored gemstones. Headquartered in Guernsey, a small British island off the coast of England, the company dominates the industry in which it operates, has various competitive advantages, and on a quantitative basis is shockingly cheap. That said, Gemfields’ primary operations are in Mozambique and Zambia– not exactly countries known for political stability. Still, I believe that a combination of excellent management, the national importance of its assets, and, of course, price, makes Gemfields an attractive opportunity.

Further Suggested Reading

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Dan McClory – Head of China at Boustead Securities Discusses Chinese Cayman Island Recent IPOs (Youtube) 12:53

This interview quickly went off the rails… Listen for yourself… TOP Financial Group (NASDAQ: TOP) also came up (See: TOP Financial Group (NASDAQ: TOP): Hong Kong’s Latest Crazy Meme Stock):

Siegfried Eggert – CEO of Grizzly Research Discusses Chinese Stocks (Youtube) 20:29

A good follow-up to the previous interview with short-seller Grizzly Research:

• You will never be allowed to own Chinese assets directly (hence, the use of legal structures involving the Cayman Islands).
• “Almost like Chinese stocks are like trading tokens…” There is or should be a discount associated with this.
• As if the Chinese have managed to turn the stock market into crypto…
• No legal framework to enforce rules or punish Chinese white-collar crime as they won’t be extradited to the USA. Alot of incentives to commit white collar crime as there are no repercussions…
• Your rights end at the Chinese border. As a creditor, you will never touch the assets on the ground in Chinese.
• Chinese margin loan scams were discussed… A game with many shady characters…
• So-called “market cap management” companies aka “pump and dump” service providers…
• How Grizzly Research investigates companies with private investigators-detectives who work for them exclusively.

China raids multiple offices of international consultancy Capvision (FT) and China’s consultancy crackdown is scaring away foreign investors, experts warn (SCMP) + Capvision raids compound concern in China over consulting clampdown (SCMP)

• Investigations into global advisories such as Capvision Partners have ‘sent a warning signal’ to the whole industry, one consultancy CEO says.
• The disappearance of these consultancy services, along with rising US-China tension, will deter foreign investments, a venture capitalist says.

China’s exit bans multiply as political control tightens under Xi (Reuters) and New Report: Trapped – China’s Expanding Use of Exit Bans (Safeguard Defenders)

• Scores of Chinese and foreigners have been ensnared by exit bans, according to a new report by the rights group Safeguard Defenders, while a Reuters analysis has found an apparent surge of court cases involving such bans in recent years, and foreign business lobbies are voicing concern about the trend.
• “The uncertainty is huge,” said Jorg Wuttke, head of the European Union Chamber of Commerce in China. “Can you do due diligence? Clarity has to come.”
• The EU chamber told Reuters in a statement: “At a time when China is proactively trying to restore business confidence to attract foreign investment, the exit bans send a very mixed signal.”

China banks: crackdowns pose risk to profits from deposit rate relief (FT)

• On Monday, news that more local lenders will do so prompted some of the sharpest gains for bank shares in almost a decade. That will distract investors from the current crackdown on the Chinese banking sector — the third largest by market weighting.
• Chinese banks have struggled to maintain profitability. Policymakers pushed state lenders to provide cheap loans to small businesses and home buyers. Non-performing loans, which hit a record of Rmb3tn ($434bn) last year, are growing. The four largest banks have a Rmb3.7tn shortfall on total loss-absorbing capital. Net interest margins shrank last year as earnings fell.
• When crackdowns on the local tech groups started in late 2020, sector profit margins were robust. What followed was a years-long decline in their shares. What Beijing gives with one hand, it can take away with the other. Chinese banks remain a risky choice.

LinkedIn shuts down last China app amid global job cuts, ending a platform that trailed far behind domestic rivals (SCMP)

• InCareer is shutting down as LinkedIn cuts more than 700 jobs globally and turns its China focus to cross-border hiring.
• LinkedIn joins peers like Google, Facebook and Twitter without a platform in China, after shutting down its main social network there in 2021.

LinkedIn China: exit saves owner Microsoft political grief (FT)

• LinkedIn’s withdrawal from China should benefit Tencent’s WeChat and smaller rivals such as Zhaopin and Maimai.