Asia links 4 Feb 2021: Malaysian speculation, C-REITs, second-hand goods trading apps

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 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

Weekend reads

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

Source: CLSA

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