Emerging Market Links + The Week Ahead (August 7, 2023)
China to target pharma in latest planned anti-corruption campaign, tech sanctions bite exporters to China, Mexico nearshoring, EM stock picks (Taste Gourmet, etc) & the week ahead for emerging markets
China investors beware: Caixin has reported that China is planning a year-long nationwide crackdown on corruption in the pharmaceutical sector. As part of its heightened push to clean up an industry “plagued by bribery,” the focus will be on hospital chiefs and those in “key positions.”
My guess is that Big Pharma and medical equipment makers in China are in the habit of paying kickbacks to hospital directors and Xi wants to put a stop to this. Given how corrupt Big Pharma and the health care system is in the USA, we should assume the Chinese will find plenty of their own high-profile cases - especially given the amount of “excess profits” that were no doubt earned during COVID.
We should also assume that Chinese pharma and health care stocks are due for a beat down (just like the tech, education, gaming, etc. sectors have endured) and there-in lies the problem with investing in China.
See our last week’s post (China's Problems That Few People Talk About (And Investor Implications) who’s conclusion summarized (or linked to our previous fund posts that talked about) fund strategies for investing China. Investing in the Chinese health care sector makes sense given the country’s aging population and has been a theme for some foreign fund investors. HOWEVER, new investors might want to study what happened with other sectors subject to crackdowns before opening new positions…
On the other hand and once the crackdowns are done, the Chinese health care sector should be “cleaner.” This will ultimately benefit investors when the stocks re-rate.
In addition, it sounds like American tech sanctions are starting to bite - at least bite other countries (Korea, Taiwan, Japan, Vietnam, Malaysia, etc) that export technology to China. Remember: US restrictions are primarily imposed by restricting exports from other countries and this will impact their tech exporting stocks.
Finally, we have a number of interesting stock write-ups from different sources. Note that Morgan Stanley has upgraded India to overweight while downgrading China.
Emerging Market Stock Pick Tear Sheets
$ = behind a paywall
Vasta Platform Limited (NASDAQ: VSTA): A Brazilian Subscription Based High Growth Education Company
moneycontrol India Stock of the Day (July 2023) Partial $
Includes: Senco Gold, CIE Automotive, Navneet Education, KIMS Hospitals, Dabur India, State Bank of India (SBI), PCBL, MapMyIndia (CE Info Systems), Nazara Technologies, Faze Three Ltd, Titan Company, Motherson Sumi Wiring India, Aptus Value Housing Finance India, Cochin Shipyard, Control Print, Sumitomo Chemicals India, 360 One Wealth, Transport Corporation of India & Jindal Steel & Power
Emerging Market Stock Picks / Stock Research
$ = behind a paywall
Not quite closure: Alibaba exit leaves questions for SenseTime (Bamboo Works)
Investors have been cashing out of the Chinese AI specialist while other AI stocks around the world are surging
SenseTime (HKG: 0020 / OTCMKTS: SNTMF)’s battered share price enjoyed a brief bounce after Alibaba Group (NYSE: BABA) completed a stake selloff, removing some of the uncertainty surrounding the stock
Investors will pay close attention to SenseTime’s performance in the first half of the year, looking for any progress in tackling the problems of rising trade receivables, falling revenue and surging costs
[Hua Hong (1347 HK, BUY, TP HK$34) TP Change]: Valuation Is Attractive Post-Shanghai Listing (Smart Karma) $
Note: See our write-up: Hua Hong Semiconductor (HKG: 1347 / FRA: 1HH / OTCMKTS: HHUSF): Plans a $2.6B Shanghai Share Sale to Fuel Expansion
We expect Hua Hong Semiconductor (HKG: 1347 / FRA: 1HH / OTCMKTS: HHUSF) to report C1Q23 top-line and non-IFRS net income in-line and (24%) vs. cons., respectively, missing mainly due to one-time costs.
Hua Hong’s post-A share IPO valuation is cheap at 0.7x P/B, but we expect that weakening industrials demand and a slow recovery to hamper shipments.
We maintain BUY but cut Hua Hong’s TP to HK$ 34 reflecting lowered wafer shipments estimates for FY24/25. Our TP implies 15x FY24 PE.
[SMIC (0981 HK, BUY, TP HK$26) Target Price Change]: Pricing Power Courtesy of Export Restrictions (Smart Karma) $
Note: See our write-up: Semiconductor Manufacturing International Corp (SHA: 688981 / HKG: 0981 / FRA: MKN2): China's Most Important Chipmaker
We expect Semiconductor Manufacturing International Corporation (SMIC) (SHA: 688981 / HKG: 0981 / FRA: MKN2) to report C1Q23 top-line and non-IFRS net income 2% and 16% vs. consensus, respectively.
We suggest SMIC’s ability to supply sanctioned firms with 14/7nm nodes provides it with significant pricing power. We expect the decline in SMIC’s wafer ASP to slow.
We expect overall 2H demand to improve due to (1) normalizing fabless inventory levels, and (2) stabilized smartphone demand. We maintain BUY rating and raise our TP to HK$ 26.
Hollysys automation (Turtles all the way down!)
I think it’s very likely Hollysys Automation Technologies (NASDAQ: HOLI) will be taken out in the next few months for $26-29 vs the current share price of just over $17. 70% of the market cap is in net cash by now and the stock trades at about 8x forward earnings. Backlog is $900 million vs previous backlogs of around $600 million in 2019-2021.
I think the market perceives this as not happening since there has been no official communication by the company about the $29 bid that was made last year. And all the previous bids have failed as well. So the market is now very sceptical, which I think is unwarranted as I will explain below.
Yuexiu Property - Tear Sheet - Lucror Analytics (Smart Karma) $
We view Yuexiu Property (HKG: 0123 / FRA: GUZA / OTCMKTS: YUPRF) as "Low Risk" on the LARA scale. Our assessment takes into account the company's: [1] parental support from Guangzhou Yuexiu (SHE: 000987), which is an SOE; [2] sound operating track record; [3] good contracted sales performance; and [4] geographical diversity, with a focus on the Greater Bay Area. These are balanced against weak market sentiment and a change in government policy.
Highway Holdings Limited ($HIHO): Hidden Gem or Just Another #Shitco? (JunkBondInvestor’s Newsletter)
I recently received a Twitter DM on a company called Highway Holdings Limited (NASDAQ: HIHO), a third-party contract manufacturer based in China/Myanmar. The company IPO’d in 1996 and currently trades on the Nasdaq stock exchange. Knowing me and my love for #shitco stocks, I thought it would be fun to have a quick look over the weekend.
Naturally, HIHO has a lot of characteristics of a #shitco microcap stock:
Today’s market cap is <USD$10 million
Only USD$60k worth of shares trade per day
The company’s operations are in China/Myanmar
Revenues were down 19% last year and are still 34% below what they were pre-COVID
These factors alone suggest to avoid this stock with a 10-foot pole. However, there were a few positive things that caught my eye upon a closer review:
Miniso rings up dividend policy to lure investors (Bamboo Works)
See: MINISO Group Holding (NYSE: MNSO): Asia's Notorious Copycat Retailer
MINISO Group Holding (NYSE: MNSO)’s new dividend policy with a payout rate of 50% or more will please shareholders, including the company’s chairman and his wife who own 62% of its stock.
The dividend pledge could help Guangzhou-based Miniso attract new investors as it aggressively expands its network of budget lifestyle stores.
AustAsia finds tough going as independent dairy (Bamboo Works)
AustAsia (HKG: 2425) said it expects to report a loss of $50 million to $60 million for the first half of 2023, but added its gross margin improved in the second quarter compared with the first
The company’s shares currently trade at a big discount to larger rivals, positioning it for a potential buyout bid from one of China’s major dairies
‘Sauerkraut Fish’ king flies back from Covid, as trendy tresses show signs of fading (Bamboo Works)
Jiumaojiu International Holdings (HKG: 9922 / FRA: 3YU)’s revenue rose to 2.88 billion yuan or more in the first half of 2023, up 51.7% from the previous year and also well above the level for 2021
The restaurant operator’s core Tai Er brand performed weakly last year, hinting that the trendy chain may be starting to fade
China Catering Sector: Positioning for Interim Results (Smart Karma) $
Positive profit alerts from both Jiumaojiu International Holdings (HKG: 9922 / FRA: 3YU) and Haidilao International Holding (HKG: 6862 / FRA: 8HI / OTCMKTS: HDALF) (see: Haidilao (HKG: 6862 / FRA: 8HI / OTCMKTS: HDALF): Cooking Up a Turnaround?) reflect strong gain in operating efficiency but also point to looming growth deceleration as brands mature.
We see valuation more reasonable due to a combination of sector de-rating in 1H23 and higher visibility into earnings recovery post these profit alerts.
YUM China (NYSE: YUMC) remains best long-term play in China catering sector in our view. While both Haidilao and Xiabu Xiabu Catering or XBXB (HKG: 0520 / FRA: 0XI / OTCMKTS: XIAXF) present trading opportunity, we are still cautious about Jiumaojiu. (See: CMBI Research Focus List of China Stock Picks (June 2023))
Taste Gourmet (8371 HK) (Oriental Value)
We think there is still a lot of runway for the company, considering there are still good malls it has yet to penetrate. There is also room to open more restaurants in some of the same malls. Having said that, we will keep a watchful eye on whether it is a scalable business model - it is a daunting task to operate so many different brands. There is also key-man risk. Relationships with mall owners rest with its founders, as well as its operational excellence.
Taste Gourmet: Q1 FY24 Preview, Another Strong Quarter in the Making (Smart Karma) $
We estimate Taste Gourmet (HKG: 8371) to deliver 39% YoY revenue growth and about 13% YoY profit growth (adj 350% YoY) for Q1 FY24e, to be declared on August 10th.
The company is expected to go ex-dividend on the 4th of August and pay out a 5.2-HK cent final dividend by the 24th of August for FY23.
Trading at 6x FY24e PE /20% of the market capitalization in cash and a 9-10% dividend yield ( based on a 50-60% payout ratio) represents a great investment opportunity.
With that out of the way, let’s dive into Taste Gourmet (HKG: 8371), a catering group listed in the secondary market (or GEM board) of the Hong Kong Stock Exchange.
Catering is usually a business with little moat, characterised by low barriers to entry.
While some brands are widely recognizable, humans generally want to devour something different each day, therefore it is an everyday struggle for restaurants to stand out among competition.
E21: [In-depth] The rise and strategies of SHEIN (The Impulso Podcast from Momentum Works)
Note: Also see their report: Who is Shein?
In this episode, we explore the rise of Shein, the Chinese fast fashion retailer that has taken the world by storm. We'll discuss the company's founding, its unique supply chain, and its recent developments, including its recent restructuring. We'll also talk about why people should be interested in Shein, and whether or not its business practices are sustainable.
Shein was founded in 2008 by Chris Xu, a Chinese entrepreneur. The company started out as an online retailer of wedding dresses, but it quickly expanded into other categories, such as women's clothing, men's clothing, and children's clothing.
Shein's supply chain is one of the things that sets it apart from other fast fashion retailers. The company uses a quick reorder model, which means that it doesn't actually own much of its inventory. Instead, it partners with factories around the world to produce products on demand. This allows Shein to keep its prices low and to respond quickly to trends.
In recent years, Shein has come under fire for a number of reasons. Despite these controversies, Shein remains one of the most popular online retailers in the world. The company has over 100 million active users and it's estimated to be worth over $100 billion.
So why should people be interested in Shein? The company's prices are certainly attractive, and its selection of products is vast. However, it's important to be aware of the company's business practices before you make a purchase. In this episode, we'll discuss all of these things and more. We'll also talk about the future of Shein and whether or not the company can continue to grow at its current pace.
Korea Small Cap Gem #23: Hanwha Galleria (Deep Value + Five Guys + Chairman's Son Buying) (Smart Karma) $
Hanwha Galleria (KRX: 452260) is the 23rd company in our Korea Small Cap Gems series.
Hanwha Galleria is a spun-off company from Hanwha Solution (KRX: 009830). Hanwha Galleria's shares have declined 39% since being relisted on 31 May 2023.
Hanwha Galleria is a deep value stock with undervalued real estate assets. Chairman's son is also buying aggressively and there is a big catalyst for Five Guys launch in Korea.
Straco Corp. (Eloy Fernández Deep Research)
A cash cow highly undervalued.
Straco Corporation Limited (SGX: S85) is a Singapore-based company of tourist attractions in Singapore and China. The Company operates through two segments: Aquariums and Observation Wheel.
Key Points
Portfolio of unique assets protected against competition.
Cash-Cow Business model.
Net cash position and high returns on capital invested.
Business driven by China's middle-income population.
High upside potential.
Travel notes: Manila (Asian Century Stocks)
Note: Mentions a number of Filipino stocks.
It’s also a fact that investors remain cautious about Philippine equities. The Price/Book ratio of the Philippine Stock Exchange Index (PSEi) is now close to its 2008 lows. And the total market cap of Philippine stocks as a percentage of the world market cap is also close to a 10-year low:
I’m becoming more careful of who I invest with. While the Ayalas, Razons and Gokongweis have decent reputations, other businessmen may not be as trustworthy.
BFI Finance Indonesia (BFIN IJ) - Short-Term Blip Provides Opportunity (Smart Karma) $
PT BFI Finance Indonesia (IDX: BFIN) booked a solid set of 1H2023 results that were marred by an operational blip, with 2Q2023 impacted but this is likely to abate in 2H2023.
The company continues to stand out for its leading position in collateralized lending backed by 4W, 2W, heavy equipment, shophouses and property, with an accomplished 15-year track record
BFI Finance Indonesia remains the top pick to play the increasing growth from multi-finance in Indonesia. It trades on 2x FY2023E PBV, forecast to book an ROE over 20%.
Pounding the table on EPAM (Value Punks)
As most AI heavyweight stocks (e.g. Nvidia, Microsoft) have already soared, some investors may be left feeling that they have missed the AI bandwagon.
We believe there's a delayed “AI winner” which the market is still sleeping on: EPAM (NYSE: EPAM).
With Russia’s invasion of Ukraine the stock fell from $550 per share to $180 per share as the market was worried about EPAM’s outsized exposure to workforce/delivery centers in Ukraine, Belarus and Russia. However, the management at EPAM did a wonderful job de-risking the company from this exposure. They exited Russia by not only leaving their clients there but also by closing their delivery centers in the country. By the end of 2022, EPAM’s exposure to these volatile countries had reduced from 60% of overall workforce to 30% of overall workforce. EPAM moved some of the affected employees to neighboring countries and ramped up their hiring efforts in India and Latam. Due to this, the stock moved up to $450 per share a few months later in August 2022.
Mexican Housing Crunch (Mindset Value)
And one of my largest investments, Consorcio Ara (BMV: ARA / FRA: 4GJ / OTCMKTS: CNRFF), is starting to benefit. Despite building 5.3% fewer homes this year, Q2 sales increased 4.9% thanks to average prices rising nearly 11%.
Mexico needs homebuilders to make more money and for their margins to expand to build more housing. Unlike in the US, there aren’t many pure land developers who commit capital and get land developed for homebuilders to build on. That means that homebuilders have to be in a capital position and be truly motivated to develop lots of land.
In 2021, I wrote a deep dive research report on it calling Ara: The Most Undervalued Stock in North America. I followed up with a post last year: An Update on The Most Undervalued Stock in North America
Further Suggested Reading
$ = behind a paywall
China’s Top Graft Watchdog Announces Year-Long Crackdown on Pharmaceutical Industry (Caixin) $
China is planning a year-long nationwide crackdown on corruption in the pharmaceutical sector, particularly among hospital chiefs and those in “key positions,” as part of its heightened push to clean up an industry plagued by bribery.
The Central Commission for Discipline Inspection (CCDI), the country’s top graft buster, held a meeting in Beijing on Friday to prepare for the campaign. The commission has asked local authorities to step up law enforcement efforts, to keep a close eye on people in senior or “key positions,” and to investigate both “bribe-paying and bribe-taking,” it said in a statement on its website. In the past, crackdowns have focused more on those receiving bribes.
U.S. Tech Sanctions Against China Are Starting to Bite Hard (Tom's Hardware)
Semiconductor imports down 22%, manufacturing equipment down 23%.
The US restrictions are primarily imposed by restricting exports from other countries to China, and with that perspective, it's important to note that Taiwan (and TSMC) have accounted for a significant reduction in China's chip import numbers (around 40% since the start of the year), followed by South Korea (home of Samsung and Hynix). Interestingly, Malaysia, Japan, and Vietnam follow with the most significant declines.
Richard Koo on China's Risk of 'Japanification' (Odd Lots) 54:12 Minutes
Note: The Bloomberg hosts + equally annoying advertising make this a long-winded podcast + the auto generated transcript is poorly done. Also see: "Balance-Sheet Recession" Guru Warns Japanification Is Coming To China (Zerohedge) + this Twitter thread (from Thread Reader)
Richard Koo literally wrote the book on balance sheet recessions, or the idea that large levels of debt can weigh on future growth for years and even decades to come. Now, the Nomura Research Institute chief economist sees a similar risk emerging in China. The country has been struggling with vast levels of debt and slowing economic growth in the wake of the Covid-19 pandemic. In this episode, Koo discusses the signs he sees that a balance sheet recession is already underway as China's companies shy away from borrowing more money for future investment. He also suggests some ideas for just what China's authorities should do about it.
Malaysia 2.0 Needs More Than a Booming Economy (Bloomberg) Archived Article
The country epitomized a model that generated rapid development — and a fair amount of waste. New problems demand a fresh approach.
India’s stock market is running hot (MacroBond)
This chart uses data from FactSet aggregated by Macrobond to dive into fundamental valuations, comparing Indian equity sectors’ price-earnings ratios with post-2007 norms (as represented by the 5-95, 10-90 and 25-75 percentile bands). The broad market is also included.
As the green dots indicate, 6 of the 10 sub-sectors are trading at PE multiples above the 75th percentile – indicating a richly valued market. The healthcare and non-cyclical consumer sectors have shot above their 95th percentile.
The telecom sector is an interesting laggard on a relative basis, trading near its historic average. This segment also has by far the most volatile historic range.
Mexico Street View: The nearshoring neighbor (UBS AM)
Note: Our post last Tuesday covered a podcast interview with a fund manager who had visited Monterrey and observed the same.
On-the-ground research in Monterrey highlights the acceleration of North American nearshoring to Mexico.
The massive expansion of manufacturing is creating a great number of new jobs in cities like Monterrey, bringing about significant improvement in income and boosting consumption.
Global Wealth Lifestyle Report 2023 (Julius Baer) PDF File
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):
Argentina Referendum Aug 13, 2023 (d) Confirmed
Ecuador Ecuadorian Presidency Aug 20, 2023 (t) Confirmed Apr 11, 2021
Ecuador Ecuadorian National Congress Aug 20, 2023 (t) Confirmed Feb 7, 2021
Ecuador Referendum Aug 20, 2023 (t) Confirmed Feb 5, 2023
Zimbabwe Zimbabwean National Assembly Aug 23, 2023 (d) Confirmed Jul 30, 2018
Zimbabwe Zimbabwean Presidency Aug 23, 2023 (d) Confirmed Jul 30, 2018
Singapore Singaporean Presidency Sep 13, 2023 Date not confirmed Sep 23, 2017
Slovakia Slovakian National Council Sep 30, 2023 (t) Confirmed Feb 29, 2020
Pakistan Pakistani National Assembly Oct 14, 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
PolandReferendum Oct 31, 2023 (t) Date not confirmed Sep 6, 2015
Chile Referendum Dec 17, 2023 (t) Confirmed Sep 4, 2022
Indonesia Indonesian Regional Representative Council Feb 14, 2024 (t) Confirmed Apr 17, 2019
Indonesia Indonesian Presidency Feb 14, 2024 (t) Confirmed Apr 17, 2019
Indonesia Indonesian House of Representatives Feb 14, 2024 (t) Confirmed Apr 17, 2019
South Korea South Korean National Assembly Apr 10, 2024 (t) Confirmed Apr 15, 2020
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):
Gamer Pakistan Inc. GPAK, 1.7M Shares, $4.00-5.00, $8.0 mil shares, 8/10/2023 Thursday
We are an early-stage esports company focused on developing and organizing esports events in Pakistan. (Incorporated in Delaware)
We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021. Our initial focus is on creating college, inter- university and professional esports events for both men’s and women’s teams, particularly esports opportunities with colleges and universities in Pakistan. The Government of Pakistan’s 2021-22 Pakistan Economic Survey estimated that from 2020-21 there were approximately 500,000 students enrolled in technical and vocational education, approximately 760,000 in degree-awarding colleges, and 1.96 million students in universities.1 Though the foregoing likely will remain our focus for at least 12 months, over time, we intend to expand the range of our esports offerings, expand to other markets and eventually consider live sports. We will endeavor to integrate competitive events that include our teams and leagues with regional and global teams and leagues sponsored by others.
Pakistan is a large market for esports. Pakistan is the fifth most populous country in the world, with a current population estimated to be approximately 231 million persons. The median age in Pakistan is 22.8 years, and 35.1% of the population is urban (77,437,729). Mobile cellular subscriptions have grown at an astounding rate in Pakistan, with 79.51% of the inhabitants having a mobile cellular subscription in 2020 compared to only 0.22% in 2000. Approximately 36.8 million persons in Pakistan have been estimated to play video games in 2022, and the number is expected to increase to 50.9 million by 2026.
We plan to conduct our operations in Pakistan through K2 Gamer (PVT) Ltd. (“K2 Gamer”), and Elite Sports Pakistan Pvt. Ltd. (“ESP”), each a company duly incorporated under the laws of Pakistan. Pursuant to agreements with the three owners of K2 Gamer, we acquired 90% ownership of K2 Gamer on July 10, 2023 when the transfer was approved by the Securities and Exchange Commission of Pakistan (“SECP”). We will account for the transfer as an acquisition of a business under the provisions of ASC 805. To date all activities have been conducted by K2 Gamer and ESP, and not the Company, although the Company has received public recognition as a sponsor for many of the tournaments.
As a result of the assignment to K2 Gamer by ESP of all of its rights with respect to the exploitation of esports, ESP is an affiliate of K2 Gamer and, as a result of the acquisition by us of 90% of the stock of K2 Gamer, ESP now is our affiliate as well. For purposes of this prospectus, we have assumed, except where otherwise stated, that K2 Gamer has been our subsidiary and that ESP has been our affiliate during the periods mentioned. Mr. Muhammed Jamal Qureshi is an owner of K2 Gamer and ESP as well as CEO and a director of K2 Gamer and ESP.
Esports are the competitive playing of video games by amateur and professional teams or individuals for cash and other prizes. Esports typically take the form of organized, multiplayer video games that include real-time strategy and competition, including virtual fights, first-person shooter and multiplayer online battle arena games. The games are played on dedicated hardware (consoles), personal computers (PCs), or a range of mobile devices including smart phones and tablets. Unlike games of chance or luck, esports are defined as competitive games of skill, timing, knowledge, experience, practice, attention and teamwork. Tournaments can be held using consoles, PCs, mobile devices, or a combination of the foregoing. Competitors participate at large in-person events, small in-person events and virtually from home or computer cafes.
Between November 2021 and November 2022, we organized and held 27 separate championships, including the first “Annual University Esports National Tournament and Championship on June 30 through July 1 of 2022. In December 2022 we held the week-long inaugural National Esports Free Fire Championship. During 2023, K2 Gamer and/or ESP are expected to organize and conduct at least 18 championships. There were no paying sponsors for these championships, as a result of which we recognized no revenue from them. We believe that we will be able to gain paying sponsors as the championships gain popularity.
*Note: Revenue and net loss figures are for the year ended Dec. 31, 2022.
(Note: Gamer Pakistan Inc. filed its S-1 on July 12, 2023, and disclosed terms for its IPO: 1.7 million shares at $4.00 to $5.00 to raise $8.0 million. Selling stockholders are offering up to 2.9 million shares (2,290,429 shares) of common stock. The company will NOT receive any proceeds from the sale of the selling stockholders’ shares.)
Solowin Holdings, Ltd.SWIN, 2.5M Shares, $4.00-4.00, $10.0 mil, 8/11/2023 Week of
(Incorporated in the Cayman Islands)
Solowin is an exempted limited liability company incorporated under the laws of the Cayman Islands on July 23, 2021. As a holding company with no material operations of its own, Solowin conducts its operations primarily through its wholly owned subsidiary, Solomon JFZ, a limited liability corporation incorporated in Hong Kong.
Solomon JFZ is one of the few Chinese investor-focused, versatile securities brokerage companies in Hong Kong and it offers a wide spectrum of products and services through advanced and secured one-stop electronic platform. Solomon JFZ currently is primarily engaged in providing (i) securities related services, (ii) investment advisory services, (iii) corporate consultancy services and (iv) asset management services to the customers. It is licensed with the Hong Kong Securities and Futures Commission (“HKSFC”) and a participant of the Hong Kong Stock Exchange to carry out regulated activities including Type 1 (Dealing in Securities), Type 4 (Advising on Securities), Type 6 (Advising on Corporate Finance) and Type 9 (Asset Management). Solomon JFZ strictly follows the requirements of the HKSFC for internal regulation and risk control to maximize the safety of investors’ assets. It provides online account opening and trading services via its Front Trading and Back-office Clearing systems, in conjunction with Solomon Pro – a highly integrated application accessible via any mobile device, tablet, or desktop, all of which are licensed from third parties. With strong financial and technical capabilities, Solomon JFZ has been providing brokerage services to global Chinese investors residing both inside and outside the PRC and institutional investors in Hong Kong, and have been recognized and appreciated by users and industry professionals.
Solomon JFZ’s trading platform allows investors to trade over 10,000 listed securities and their derivative products listed on the Hong Kong Stock Exchange (HKSE), New York Stock Exchange (NYSE), Nasdaq, Shanghai Stock Exchange and Shenzhen Stock Exchange. In addition, it provides Hong Kong IPO underwriting, Hong Kong IPO Public Offer application and International Placing subscription, Hong Kong IPO margin financing services, Hong Kong Pre-IPO securities trading and US IPO subscription. Hong Kong IPO margin financing services refer to loans offered by a licensed financial institution to clients for the purpose of purchasing securities in an IPO before the issuers are listed on the Hong Kong Stock Exchange. The loan, commonly referred to as an IPO loan, enables clients to invest more than the required deposit of 5% or 10% of funds. The loan, which is short-term, interest-bearing, typically covers 90% or 95% of the investment amount and is repaid right after the allotment result release. Once the investor is allotted shares cost over the required deposit and a part of loan is used for the shares, the shares can be sold and the proceeds are utilized to repay the loan of the financial institution, with any remaining balance going to the investor. Our customers may also use Solomon JFZ’s platforms to trade various listed financial products, such as ETFs, Warrants and Callable Bull/Bear Contracts. Beside securities related service, Solomon JFZ also offers asset management services as an investment manager. Our High-Net-Worth customers may also subscribe private fund products through Solomon JFZ.
Our clients are mostly Chinese investors residing in Asia as well as institutional clients in Hong Kong, Australia and New Zealand. As of March 31, 2023, we had more than 20,000 users, including more than 15,400 clients who are users and have opened trading accounts with Solomon JFZ. We classify those who have registered on Solomon JFZ’s platform as users and those users who have opened accounts on Solomon JFZ’s platform as clients. We currently have over 1,500 active clients, who have assets in their trading accounts.
As of March 31, 2023, Solomon JFZ’s operations mainly consisted of four business segments: (i) securities related services, (ii) investment advisory services, (iii) corporate consultancy services and (iv) asset management services to the customers.
Note: Revenue and net income are in U.S. dollars for the fiscal year that ended March 31, 2023.
(Note: Solowin Holdings, Ltd. cut the size of its IPO by 33 percent to 2.5 million shares – down from 3.75 million shares – and kept the assumed IPO price at $4.00 on a price range of $4.00 to $6.00 to raise $10 million, according to an F-1/A filing dated July 7, 2023. The company filed its F-1 on April 28, 2023, without disclosing terms. Its original terms were 3.0 million shares on a $4.00-to-$6.00 price range to raise $15.0 million, according to an F-1/A filing dated May 22, 2023. The deal’s size was increased to 3.75 million shares at $4.00 to $6.00 to raise $18.75 million, in an F-1/A filing dated June 15, 2023. Solowin Holdings had submitted confidential IPO documents to the SEC on Dec. 23, 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:
05/18/2023 - Putnam Emerging Markets ex-China ETF PEMX - Value + growth stocks
05/11/2023 - JPMorgan BetaBuilders Emerging Markets Equity ETF BBEM - Large + midcap stocks
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:
07/07/2023 - Emerge EMPWR Sustainable Emerging Markets Equity ETF - EMCH
06/23/2023 - Invesco PureBeta FTSE Emerging Markets ETF - PBEE
06/16/2023 - AXS Short China Internet ETF - SWEB
04/11/2023 - SPDR Bloomberg SASB Emerging Markets ESG Select ETF - REMG
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 (August 7, 2023) was also published on our website under the Newsletter category.