Date Issued – 13th November 2024
Preview
CATL, the world’s largest battery maker, is expanding into green energy grids and EV platforms, eyeing opportunities in the U.S. market. Swiggy’s successful IPO defies India’s weak market, signaling resilience in the quick-commerce sector. Japan’s Seven & i explores a $58 billion management buyout to resist a takeover by Canada’s Couche-Tard. President-elect Trump taps Elon Musk and Vivek Ramaswamy to lead a new “Department of Government Efficiency” initiative. Yen-hedged U.S. Treasury yields are set to turn positive for the first time in two years, potentially renewing Japanese investor interest.
CATL Expands Beyond Batteries Into Green Energy and EV Platforms, Eyes U.S. Market
Chinese battery giant CATL, the world’s largest, is making bold moves to expand beyond its core EV battery business. Founder Robin Zeng is pushing CATL into two new areas: developing zero-carbon electric grids and offering off-the-shelf EV platforms. The energy grid business, which leverages renewable sources like solar and wind, could become ten times larger than CATL’s current battery segment, according to Zeng, challenging the dominance of China’s state oil giants. Meanwhile, CATL’s EV platform integrates long-range batteries directly into the chassis, aiming to slash EV development costs and open the market to new players.
While these ventures represent a significant strategic shift, CATL is also open to building a U.S. plant if President-elect Donald Trump reduces trade barriers. Though U.S.-China tensions have previously stifled Chinese investments in the EV supply chain, Zeng remains optimistic about future opportunities. The company already licenses its battery technology to U.S. giants like Tesla and Ford, and further expansion could depend on shifting political winds.
Investment Insight
CATL’s aggressive push into green energy grids and cost-efficient EV platforms offers substantial growth potential, positioning it as a leader in the clean energy transition. Investors should track the company’s ability to scale these new initiatives while navigating geopolitical complexities, particularly with its potential U.S. expansion hinging on trade policy changes.
Market price: CATL (300750.SZ): 282.00 CNY
Swiggy’s India IPO Defies Market Weakness with Strong Debut
Swiggy Ltd. made a successful stock market debut in Mumbai, with shares rising over 7% from the IPO price of 390 rupees to 420.05 rupees. The $1.3 billion IPO, India’s second-largest this year, overcame initial lukewarm demand, bolstered by strong institutional interest on the final day. Swiggy’s listing comes amid a competitive quick-commerce landscape dominated by larger rival Zomato and privately-held Zepto. Despite facing regulatory scrutiny and operating at a loss, Swiggy’s growth trajectory is supported by India’s booming online retail market, which analysts predict will expand significantly over the next decade.
Investment Insight
Swiggy’s IPO performance signals resilience in India’s quick-commerce sector despite a weak market for large listings. Investors should monitor competitive dynamics and regulatory risks, but Swiggy’s growth potential in a $1 trillion retail market makes it a promising long-term play.
Market price: Swiggy Ltd (Mumbai): 446.95 INR
Seven & I Explores $58 Billion Management Buyout Amid Takeover Threat
Seven & i Holdings, the operator of 7-Eleven stores, is exploring a management buyout worth around ¥9 trillion ($58 billion) to resist a potential takeover by Canadian convenience store giant Alimentation Couche-Tard. The buyout, backed by Japan’s top megabanks and trading house Itochu Corp., would be the largest-ever in Japan. The move is seen as a defensive strategy to keep the company, which has been restructuring, under domestic control. Couche-Tard had previously increased its offer for Seven & i to ¥7.2 trillion, marking the largest-ever foreign takeover attempt of a Japanese company.
Investment Insight
The potential management buyout of Seven & i reflects Japan’s deep resistance to foreign takeovers, a rare event in the country’s corporate landscape. Investors should watch for further developments in the buyout talks, as they could offer significant implications for corporate Japan and the global retail sector.
Market price: Seven & i Holdings (3382.T): 2,490.00 JPY
Trump Taps Musk, Ramaswamy to Lead “Department of Government Efficiency”
President-elect Donald Trump announced that Elon Musk and former GOP candidate Vivek Ramaswamy will spearhead a new initiative dubbed the “Department of Government Efficiency” (DOGE), aimed at streamlining federal operations. Though not an official government agency, the group will work externally with the White House and the Office of Management and Budget to drive cost-cutting reforms. Musk, a frequent visitor to Mar-a-Lago, has previously claimed he could identify $2 trillion in government savings. The group, operating outside traditional federal regulations, will not be bound by typical conflict of interest or disclosure rules.
Investment Insight
Musk’s role in advising on government efficiency may strengthen his influence in Washington, potentially impacting sectors like energy, aerospace, and technology. Investors should monitor how his recommendations could reshape federal spending and regulatory policies, which could have ripple effects across multiple industries.
Market price: Tesla (TSLA): $328.49
Treasury Yields Set to Turn Positive for Yen-Hedged Investors
For the first time in two years, yen-hedged U.S. Treasury yields are poised to turn positive, driven by rising U.S. interest rates following Donald Trump’s election and easing hedging costs due to Federal Reserve rate cuts. The yield on 10-year Treasuries, adjusted for currency hedging, reached minus 13 basis points on Tuesday, after being negative since September 2022. While Japanese investors have been net sellers of Treasuries this year, the reduction in hedging costs could renew interest, particularly in higher-yielding U.S. agency and corporate bonds.
Investment Insight
As hedging costs decline, U.S. Treasuries may become more attractive for Japanese investors. However, with Japanese government bonds offering competitive returns, the pace of investment may depend on further shifts in U.S. yields and currency risks.
Market price: 10-Year U.S. Treasury Yield: 4.31%
Conclusion:
CATL’s expansion into renewable grids and EV platforms underscores China’s ambition in green energy, while Swiggy’s IPO signals resilience in India’s growing quick-commerce sector. In Japan, the potential buyout of Seven & i by domestic management reveals a strong stance against foreign takeovers. Meanwhile, President-elect Trump’s appointment of Musk and Ramaswamy to lead the “Department of Government Efficiency” could drive cost-cutting measures affecting sectors reliant on federal spending. Additionally, with U.S. Treasury yields becoming more attractive to yen-hedged investors, Japanese demand may see renewed interest.
Upcoming Dates to Watch:
- November 13, 2024: U.S. Consumer Price Index (CPI) data release
- November 14, 2024: Eurozone Q3 GDP report release
- November 20, 2024: U.S. Federal Open Market Committee (FOMC) meeting minutes
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.