Insight #1 – Malaysian retail speculation
GameStop-related speculation also reached Asia last week. In Malaysia, a reddit group called Bursabets were inspired by WallStreetBets to push glove manufacturers Top Glove and Hartalega. Both of these stocks rose double digit percentages on Friday. But since short selling on Bursa Malaysia is restricted to 4% of outstanding shares, the Redditors didn’t manage to achieve a short squeeze anywhere near that of GameStop. Malaysian stocks are almost as bubbly as Korean and Taiwanese at this point, with retail participation rising from 18% to 33% since COVID-19 related cash hand-outs gave them money to play with. Search queries for one of the most popular trading platforms “Rakuten Trade” peaked in August but remains at elevated levels. It’s hard to say whether Asian retail speculation has peaked or will get crazier still.
Insight #2 – Chinese REIT reform will follow the Singapore precedent
China has been inspired by Singapore for its government policies from Deng Xiaoping onwards. Now, it looks like China is trying to develop a functioning REIT market, following Singapore’s success in REITs since the early 2000s. The pilot program for domestic REITs was unveiled in mid-2020 and remains in an embryonic stage. The assets that will be eligible for REITs include data centres, toll highways, sewage systems. Property is initially excluded from the pilot program due to the regulator’s fear of stoking an asset bubble. In a report, Goldman Sachs estimated that the China REITs market could eventually reach US$3 trillion, easily surpassing the US REIT market. Eventually, I think REITs will help unlock value for many listed Chinese property developers, especially those focusing on the ownership of commercial property such as Longfor and China Resources Land.
Insight #3 – Asia’s second-hand goods platforms have gone mobile
After selling some personal items the other week, I’ve spent time studying the market for trading of second-hand goods. A new trend that is showing no signs of stopping. A few years ago, Gumtree, Craigslist and 58.com dominated the market, but these days the top platforms are all mobile-only. Just snap a photo with your phone, and the app will recognise what you’re trying to sell and even suggest a price. Naspers-backed (NPN SJ) Carousell is today #3 among iOS shopping apps in Singapore and big in other Southeast Asian countries as well. In Japan, second-hand trading mobile app Mercari (4385 JP) has benefitted from the pandemic, taking market share from Yahoo Auctions, Rakuma and Fril. In China, the second-hand goods market is known as the “re-commerce market” and dominated by Alibaba’s Idle Fish (Xianyu) and Tencent-backed Zhuanzhuan.
Asian stock ideas
Lilian Li on Alibaba
Kerrisdale Capital on Tiger Brokers, China’s version of Robinhood
Teddy Okuyama on Japanese software stock AI Inside
Reperio Capital on Indonesian dairy producer Ultrajaya Milk Industry
Macro Ops on Malaysia’s Top Glove
Jonah Lupton on Indian online travel agent MakeMyTrip
Bull, Bear and Value blog on investment company New Century Group HK
Redditor “Sir_Meowstro” on live streaming platform Huya
Jason Goepfert on recent speculation in the options market
Open Insights on delayed recovery of the crude oil market
Bloomberg: the world is dangerously dependent on Taiwan for semiconductors
Mule on TSMC’s record capex guidance, which is greatly benefitting global semicaps
South Korea to allow short selling from May, which I think will probably be a net negative for the market just as work-from-home demand for electronics starts to reverse.
In the Economist article Can China’s property boom hold? they make the case that China’s property market is bifurcated between top- and lower tier cities. They also make the case that Chinese love their government.
The Atlantic are trying hard to make sense of China’s GDP numbers but finding it difficult
Chinese state media stops mentioning Jack Ma in list of top entrepreneurs
Xinhua News has now become the largest correspondent network in Africa
Review of Te-Ping Chen’s new book “Land of Big Numbers”
CXJ Research teaser on an upcoming Chinese fraud revelation that will be 10x more shocking than Luckin Coffee
Companies consider writing Hong Kong out of legal contracts
Erin Cook wrote a post on Myanmar’s “coup d’état”, though I can’t help thinking that the military was in charge all along, even during the Aung San Suu Kyi years
Japan says nuclear “crucial” to hitting net zero carbon emissions goal by 2050
Tokyo Olympics may go ahead in July, but without fans
On Thailand’s disastrous vaccine policy
Are you vaccinated? If so, Phuket wants you there by October
On the poor profitability of the recently cancelled Singapore-Kuala Lumpur high-speed railway
Podcasts and videos
Carson Block suspects hedge fund coordination in short squeezes
Dan Wang of GaveKal Dragonomics on China’s ambitions in semiconductors
The Rest is History podcast on China’s so called “5000 years of history”
ChinaTalk on Taiwanese local politics
BBC podcast on China’s advance into Latin America
Defense expert Dr Colin Koh on Maritime Security in Asia
Chart of the week – Chinese property new starts exceed completions, suggesting over-construction
How would you rate this week's newsletter? 🤔
Thanks for reading!
If you’re finding this newsletter valuable, consider sharing it with your friends.
Or subscribing if you aren’t already.