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Hedge funds dumped Japanese stocks ahead of upper house election, says Goldman

Hedge funds dumped Japanese stocks ahead of upper house election, says Goldman

Yahoo5 days ago
By Summer Zhen
HONG KONG (Reuters) -Global hedge funds offloaded Japanese equities at the sharpest pace in almost two-and-a-half months last week, just ahead of the country's upper house election on Sunday, Goldman Sachs said in a note.
Sunday's election dealt a major blow to Prime Minister Shigeru Ishiba and his ruling coalition, just as investors who had been selling Japanese bonds and stocks in the run up to the election had expected.
Japan's benchmark Nikkei 225 and Topix have dropped 1.7% and 0.6%, respectively so far this month, bucking the rally in other stock markets.
Both indexes closed down on Friday.
Sunday's outcome further weakens Ishiba's grip on power, even though he has vowed to remain party leader to complete trade tariff negotiations with the United States.
The selling by hedge funds between July 11 and July 17 was mainly driven by increased short bets and a relatively moderate reduction in long positions, according to a Goldman Sachs prime brokerage note on Friday, seen by Reuters on Monday.
Markets in Japan were closed for a holiday on Monday, but the yen strengthened while Nikkei futures rose slightly, as the election results appeared to be already priced in.
Overall, hedge funds remain overweight Japan compared to its weight in the MSCI World Index by 0.6%, Goldman said.
Analysts said uncertainty about the prime minister's future has increased and could lead to "policy paralysis" and larger fiscal deficits.
"This marks the first time since 1955 that the LDP-led government has fallen below a majority in both the lower and upper house, potentially increasing political instability in Japan," MUFG analysts said in a note.
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Is There An Opportunity With China Aviation Oil (Singapore) Corporation Ltd's (SGX:G92) 48% Undervaluation?
Is There An Opportunity With China Aviation Oil (Singapore) Corporation Ltd's (SGX:G92) 48% Undervaluation?

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Is There An Opportunity With China Aviation Oil (Singapore) Corporation Ltd's (SGX:G92) 48% Undervaluation?

Key Insights The projected fair value for China Aviation Oil (Singapore) is S$2.26 based on 2 Stage Free Cash Flow to Equity China Aviation Oil (Singapore) is estimated to be 48% undervalued based on current share price of S$1.18 Industry average discount to fair value of 65% suggests China Aviation Oil (Singapore)'s peers are currently trading at a higher discount How far off is China Aviation Oil (Singapore) Corporation Ltd (SGX:G92) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. The Method We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF ($, Millions) US$68.2m US$72.8m US$66.6m US$63.1m US$61.2m US$60.3m US$60.2m US$60.5m US$61.1m US$62.0m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ -8.55% Est @ -5.27% Est @ -2.98% Est @ -1.38% Est @ -0.26% Est @ 0.53% Est @ 1.08% Est @ 1.46% Present Value ($, Millions) Discounted @ 5.8% US$64.5 US$65.0 US$56.2 US$50.3 US$46.1 US$43.0 US$40.5 US$38.5 US$36.7 US$35.2 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$476m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.4%. We discount the terminal cash flows to today's value at a cost of equity of 5.8%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = US$62m× (1 + 2.4%) ÷ (5.8%– 2.4%) = US$1.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$1.8b÷ ( 1 + 5.8%)10= US$1.0b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.5b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of S$1.2, the company appears quite good value at a 48% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Important Assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at China Aviation Oil (Singapore) as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.8%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for China Aviation Oil (Singapore) SWOT Analysis for China Aviation Oil (Singapore) Strength Earnings growth over the past year exceeded the industry. Currently debt free. Dividends are covered by earnings and cash flows. Weakness Dividend is low compared to the top 25% of dividend payers in the Oil and Gas market. Opportunity Annual revenue is forecast to grow faster than the Singaporean market. Trading below our estimate of fair value by more than 20%. Threat No apparent threats visible for G92. Looking Ahead: Although the valuation of a company is important, it ideally won't be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For China Aviation Oil (Singapore), we've compiled three relevant factors you should consider: Risks: For instance, we've identified 1 warning sign for China Aviation Oil (Singapore) that you should be aware of. Future Earnings: How does G92's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. 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HKTDC Research Report: Exploring Opportunities in Hong Kong's Proprietary Chinese Medicine Industry
HKTDC Research Report: Exploring Opportunities in Hong Kong's Proprietary Chinese Medicine Industry

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HKTDC Research Report: Exploring Opportunities in Hong Kong's Proprietary Chinese Medicine Industry

International Conference of the Modernization of Chinese Medicine & Health Products to be held next month to foster progress in traditional medicine research - The implementation of streamlined approval procedures for Hong Kong- and Macao-registered proprietary Chinese medicines ("pCms") by mainland China presents significant opportunities for Hong Kong companies to expand into the Greater Bay Area and other mainland market.- A unified and comprehensive registration system strengthens the quality control of Hong Kong's pCms, reinforcing confidence among other regulatory bodies and stakeholders.- Hong Kong's first Chinese medicine hospital will gradually commence operations by year end. This will help promote the popularity of Chinese medicine and pCms. HONG KONG - July 25, 2025 (NEWMEDIAWIRE) - The Hong Kong Trade Development Council ("HKTDC") today released a report, "Challenges and Opportunities in Hong Kong's Proprietary Chinese Medicine Industry," that analyses the sector's development, challenges, and export potential of Hong Kong's pCm sector. With the completion of the transitional registration process for pCms in June this year, all pCms sold in Hong Kong now hold formal registration, marking a new era in the regulatory regime. The Chinese Medicine Hospital of Hong Kong is set to begin operations by late 2025 further popularising pCms. Additionally, mainland China has streamlined approval procedures for Hong Kong-registered traditional pCms, creating easier access to the mainland market. 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Wing Chu, Principal Economist (Greater China) of the HKTDC, stated: "Many Hong Kong proprietary Chinese medicines companies are eager to expand exports especially to the mainland market although pCm imports in mainland China are relatively small, with different pCms registration system and technical standards from those of Hong Kong. Notably, Hong Kong's pCms are highly regarded in Southern China and overseas Chinese communities, and streamlined approval procedures in mainland China for traditional pCms of Hong Kong and Macao offer significant opportunities for Hong Kong businesses to expand into the Greater Bay Area and other mainland markets. Additionally, the rise of online shopping enables companies to leverage cross-border e-commerce platforms to access mainland and overseas markets, provided they comply with the corresponding regulatory requirements." Comprehensive registration system drives standardisation of Chinese medicine The report indicates that, in recent years, the HKSAR Government has actively promoted the development of Chinese medicine. Key initiatives include the establishment of the Chinese Medicine Council of Hong Kong to oversee the registration and management of pCms, and continuous support for Chinese medicine services in areas such as education, medical treatment, and scientific research. These efforts have enabled Hong Kong to cultivate professional Chinese medicine talent and promote the modernisation of Chinese medicine. Earlier this month, some 345 Hong Kong enterprises, including traders, registered a total of 8,244 pCms. The report states that a unified and comprehensive registration system enhances the quality control of Hong Kong's pCms, further increasing the confidence of other regulatory bodies and stakeholders in these products. Hong Kong's first Chinese medicine hospital is set to open in late 2025, providing comprehensive diagnostic and treatment services with Chinese medicine, which will drive the popularisation of Chinese medicine and pCms. In addition, Hong Kong pCm companies and local universities are committed to developing new pCms to further expand the market. Recently, the Centre for Chinese Herbal Medicine Drug Development at Hong Kong Baptist University (HKBU), funded by the Innovation and Technology Commission of HKSAR Government under the InnoHK Research Clusters, developed a novel drug, CDD-2101, for the treatment of chronic constipation. The innovation is based on previous pilot clinical studies and basic research on the traditional Chinese herbal formulation "MaZiRenWan". For the first time, it has received authorisation for clinical research in the United States. Prof. BIAN Zhaoxiang, Director of the Centre for Chinese Herbal Medicine Drug Development and Associate Vice-President (Clinical Chinese Medicine) at HKBU, said: "Our goal is to collect sufficient safety and efficacy data to obtain FDA approval for CDD-2101 as a marketable new drug and successfully launch it in the United States. This represents not only a major breakthrough in the research and development of Chinese medicine in Hong Kong but also an important step in driving the standardisation and internationalisation of Chinese medicine." Mainland market surpasses RMB450 billion Mainland China, the world's largest pCm market valued at RMB450 billion, streamlined registration and approval procedures in 2021 for traditional pCms for external use being sold in Hong Kong and Macao. In January 2025, the National Medical Products Administration further simplified the approval process for traditional pCms for oral use, provided they have been in use in Hong Kong for more than 15 years and whose production processes comply with Good Manufacturing Practice (GMP) requirements. Relevant application materials and technical requirements were also released in April this year. The report notes that the implementation of the streamlined registration procedures opens a more convenient channel for Hong Kong companies to expand into the Greater Bay Area and other mainland markets. The recognition and acceptance of pCms differ across overseas regions. In many international markets, pCms are categorised and regulated as herbal medicines, health foods or dietary supplements. However, many Southeast Asian countries have specific, similar legal requirements for pCms, providing a clear pathway to enter these markets. The rapid growth of global e-commerce has created new sales channels for Hong Kong's pCms through cross-border e-retail. For the mainland market, the report points out that certain pCms for external use, such as Chinese medicinal wines and cooling oils, have been incorporated in the Cross-border E-commerce Retail Import Commodity List, allowing relevant products to be sold to mainland China through cross-border e-commerce channels. In overseas markets, the e-commerce retail sector in ASEAN is experiencing significant growth, fueled by robust demand for herbal and health-related products in local markets. By adhering to local regulations, Hong Kong pCm enterprises can capitalise on additional business opportunities through online channels. Annual Chinese Medicine Conference to Share Latest Research Findings To foster the development of the Chinese medicine industry, the International Conference of the Modernization of Chinese Medicine & Health Products will be held at the Hong Kong Convention and Exhibition Centre from 15 to 16 August 2025. The conference is jointly organised by the Modernized Chinese Medicine International Association, the HKTDC and 10 scientific research institutions. During the event, 21 scholars and experts from medical schools, research institutions, pharmaceutical companies and organisations from mainland China, Hong Kong, Malaysia and Thailand will discuss the latest research progress in the prevention and treatment of tumors, inflammation, and cardiovascular and cerebrovascular diseases using traditional medicine. They will also present a number of related clinical research results and share successful cases. For more details, please visit: Report and photo download: Media Enquiries Ogilvy Public Relations Chole Chan Tel: (852) 6809 6633 Email: Leanne Pok Tel: (852) 9379 9694 Email: HKTDC's Communications and Public Affairs Department Stanley So Tel: (852) 2584 4049 Email: Serena Cheung Tel: (852) 2584 4272 Email: Clayton Lauw Tel: (852) 2584 4472 Email: Media Room: About HKTDCThe Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong's trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. 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Those who invested in Multi-Chem (SGX:AWZ) five years ago are up 457%
Those who invested in Multi-Chem (SGX:AWZ) five years ago are up 457%

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Those who invested in Multi-Chem (SGX:AWZ) five years ago are up 457%

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term Multi-Chem Limited (SGX:AWZ) shareholders would be well aware of this, since the stock is up 276% in five years. It's down 2.1% in the last seven days. Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement. During five years of share price growth, Multi-Chem achieved compound earnings per share (EPS) growth of 32% per year. This EPS growth is remarkably close to the 30% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Rather, the share price has approximately tracked EPS growth. The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image). We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Multi-Chem's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. What About Dividends? When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Multi-Chem, it has a TSR of 457% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! A Different Perspective Multi-Chem's TSR for the year was broadly in line with the market average, at 29%. It has to be noted that the recent return falls short of the 41% shareholders have gained each year, over half a decade. Although the share price growth has slowed, the longer term story points to a business well worth watching. It's always interesting to track share price performance over the longer term. But to understand Multi-Chem better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Multi-Chem you should know about. Multi-Chem is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singaporean exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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