Insight #1 – Stock speculation is becoming popular among Korean teenagers
Speculation in Korean stocks is getting crazier by the day. Reuters interviewed a 12-year old trading guru called Kwon Joon who made a 43% return in 2020. His portfolio includes technology companies Samsung Electronics and Kakao as well as car manufacturer Hyundai Motor. Reuters also reported that teenage investors now make up 2/3 of total value traded among retail investors vs 2019’s 50%. In other news, ARK Invest’s founder Cathie Wood has started to become revered as a god, earning the nickname “Money Tree” (돈나무) due to her Midas touch when it comes to picking stocks. The big question is how long the current environment will last. A major challenge comes in May 2021 when short-selling will be allowed once again. It’s also possible that momentum could end on its own as fund flows start to reverse. We shall see. One early signs of weakening momentum is that the daily value traded in ARK’s most popular ETF “ARKK US” is no longer rising exponentially.
Insight #2 – Myanmar’s stock market has been surprisingly stable since the coup
The coup d’état in Myanmar has been on everyone’s mind here the past week. Not that Myanmar is an important stock market - the total market cap is less than 1,000 that of Thailand. It hardly has any foreign investors. And Bloomberg doesn’t provide pricing information on Burmese stocks. But Myanmar is important for what it could one day become, given its hard-working population of 54 million and its proximity to Thailand. The new military government has shut down the Internet and is introducing a new cyber security law enabling the government to collect any personal data. It’s becoming an authoritarian nation yet again. That’s why it’s surprising to see the Burmese market down just 3% since the end of January, with the Kyat down just another 6% against the US Dollar. Neither of the six listed companies dropped more than a few percent. While the military has been more or less in charge for over half a century, the coup really is a game changer. It means a permanent move away from a civilian government, less trading with Western nations and closer ties to the People’s Republic of China.
Insight #3 – India will the next frontier for online games
Bernstein predicts that India’s online gaming market will grow with a 37% CAGR over the period 2018-2022. Per capita incomes are obviously low, but then again India has a population of 1.4 billion people. At this point in time, India’s gaming market is only 1/7th that of China. The gap could easily narrow over time. The mobile gaming market is growing close to +45% per year and the real-money sports / card game market about 40% per year. In late 2020, the top grossing games list was dominated by Garena Free Fire: 3volution (owned by Sea Ltd), Clash of Clans (Tencent), Teen Patti (Sequoia Capital), Call of Duty: Mobile (Sea Ltd) and Lords Mobile: Kingdom Wars (IGG). The two major domestic gaming companies are Dream11 and Nazara, but unfortunately neither of them are listed.
Asian stock ideas
Asian Century Stocks on Malaysia Airports
Searching 4 Value on Japanese real estate developer Shinoken
Value Pendulum on Telkom Indonesia
Petra Capital on Korean tech companies Soulbrain and Daou Technology
Mittleman Brothers on Hong Kong-listed Greatview Aseptic Packaging
There is some evidence that China supported the coup in Myanmar. It’s possible that Min Aung Hlaing was driven by a need to protect his financial interests as he was nearing retirement age. Under civilian leader Aung San Suu Kyi, Myanmar reduced its dependence on China. With the military back in power it looks like that trend is going to reverse. Japan’s intelligence community thinks that Myanmar’s coup could increase China’s influence in the region. US sanctions are going to push Myanmar further into China’s sphere of influence.
Biden is toning down America’s approach to China and is launching a Pentagon review of its China strategy, reviving TikTok’s American operations and also allowing Chinese Confucius Institutes to operate on US soil again.
Exante Data’s makes the case that China’s balance of payments benefitted from COVID-19 through reduced outbound tourism, a shift in demand from services towards physical goods and the relatively successful containment of the virus. South China Morning Post is wondering why FX reserves didn’t rise more during 2020, however.
A network of fake social media accounts criticise the US response to COVID-19, the Capitol riots, praise China, attack Guo Wengui and question the safety of US-approved Covid-19 vaccines
NIFD reports that China’s local government and LGFV debt rose 20.2% in 2020, suggesting the recovery was not as “organic” as many commentators suggest
SWIFT sets up JV with China's central bank, perhaps to gain more control of global interbank payment market.
WHO thinks the “most likely” hypothesis is that COVID-19 arrived in China from another country via the importation of frozen animal meat. Matt Ridley, on the other hand, makes a compelling case that the virus originated from the Wuhan Institute of Virology.
Up to a million could be fleeing Hong Kong. The government has however said that they will not recognise dual nationalities. This could be a prelude to exit bans on those in Hong Kong holding dual passports.
I’m fascinated by Linda Jakobson’s predictions of a how a stealth take-over of Taiwan might take place. She predicts that Beijing will take many individual actions - but neither of which will cross the line of being an act of war. These actions include shutting down communication and the airspace and sending tens of thousands of civilian fishermen to Taiwan’s coasts. Peter Jennings thinks the CCP might use maritime blockades, closing airspace, cyber assaults, missile launchings and potentially seize offshore territories such as Kinmen, Matsu, Dongsha and Penghu islands.
A Japan Times editorial makes that case that unemployment in the wake of the COVID-19 recession might precede a new golden age for Japanese entrepreneurs.
On Vietnamese Vingroup’s new B2B2C e-commerce service VinShop
Gojek’s merger with Tokopedia will create an Indonesian tech powerhouse and I believe allocations in the IPO will be highly sought after across the region
Podcasts and videos
Andrew McDermott: Japan is “the ultimate undervalued investment opportunity
Will Inboden thinks PRC is becoming a decaying state
Robert Spalding on CCP’s quest to build an empire
Bill Tung: Is Fitness Fashion big in Japan and China?
Te-Ping Chen on NPR talking about her new book Land Of Big Numbers
Peter Martin of CSIS on China’s “Wolf Warrior” diplomacy
NYT The Daily: The end of democracy in Myanmar
Chart of the week – South Korea’s value traded per day has quadrupled since the start of the pandemic
Source: Mirae Asset
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