Consumer Discretionary

Report by Blue Lotus Research Institute

Stablecoin adoption presents a unique long-term opportunity for BABA. As the US moves to legitimise stablecoins for global transactions and reserves, China must adapt, albeit cautiously. Hong Kong is emerging as a testbed, with Ant Financial well-positioned to play a strategic role. China’s strength in cross-border trade and BABA’s ~29% share in export e-commerce puts the company at the forefront of this transformation. While stablecoins are unlikely to replace domestic payments, they are poised to reshape international transactions and financial influence. BABA’s regulatory track record, global reach and fintech infrastructure give it an edge over peers like PDD, TikTok Shop and Shein. Blue Lotus maintains BABA as a Top Buy, while Futu is also highlighted as a likely long-term winner in the web3.0 world.

Communications

Report by Aequitas Research

In Sumeet Singh’s earlier note in 2022, ‘Tencent investee selldown - The US$120bn global overhang’, he had looked at the group's overall investment portfolio. With two of its heavyweight investments having now been spun-out, Sumeet re-looks at Tencent’s shareholdings in various companies to try and gauge which ones it could sell out of and how. In terms of regulatory scrutiny, Pinduoduo is probably very high up on the list, alongside Kuaishou, Futu and PolicyBazaar. Announcements re. the divestments of JD.com and Meituan occurred towards the end of 2021 and 2022, respectively. Thus, some of these names could start to come under pressure by the last quarter.