Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>You'd only want to be long <a href="https://www.smartkarma.com/entities/sun-corp" target="_blank" data-smartkarma-citation="entities:10803:1" rel="noopener">Sun Corp (6736 JP)</a> if you're very bullish <a href="https://www.smartkarma.com/entities/cellebrite-di-ltd" target="_blank" data-smartkarma-citation="entities:37102:1" rel="noopener">Cellebrite (CLBT US)</a>and some of the other businesses inside Sun Corp which aren't making money.</li>
<li>It's never ideal shorting rocket ships on the way up. Best to short on the way down. At some juncture, there will be a magnificent correction in <a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia (285A JP)</a>.</li>
<li>On balance, the optics in <a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a> are looking attractive. </li>
</ul>


You'd only want to be long Sun Corp (6736 JP) if you're very bullish Cellebrite (CLBT US)and some of the other businesses inside Sun Corp which aren't making money.
It's never ideal shorting rocket ships on the way up. Best to short on the way down. At some juncture, there will be a magnificent correction in Kioxia (285A JP).
On balance, the optics in CK Hutchison Holdings (1 HK) are looking attractive. 


Last Week In Event SPACE: Sun Corp/Cellebrite, Kioxia, CK Hutchison, Toshiba/ROHM

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

<ul><li>From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. </li><li>For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.</li><li>Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. </li></ul>

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and medical equipment diverge across the region, and still trail the per capita averages of the 34 OECD member countries. For a shorter-term perspective, over the past five weeks, four Healthcare stocks (Cordlife Group, iX Biopharma, UG Healthcare Corporation &amp; Health Management International) have released Annual Reports whilst a secondary listing (Techcomp Holdings) has released an Interim Report.Within these reports, there are examples of how the Healthcare Sector is adapting to Asia Pacific demographics, maintaining an ongoing focus on Research &amp; Development, monitoring pharmaceutical &amp; food regulation trends, collaborating with communities to build business channels, expansion of production lines and pursuing value chain management in manufacturing and distribution. 

<ul>
<li>Australia's ASIC releases the aggregated short position data four business days after the reporting day. Data in this insight is up to 2nd April, published ~9AM on the 10th April.</li>
<li>The largest industry net increase in the past week was A$699mn into "Diversified Meals"; the largest industry net decrease was A$83mn out of "Steel". Net shorts increased A$2.6bn week-on-week.</li>
<li>Companies mentioned in this regular weekly report include: <a href="https://www.smartkarma.com/entities/goodman-group" target="_blank" data-smartkarma-citation="entities:959:1" rel="noopener">Goodman Group (GMG AU)</a>, <a href="https://www.smartkarma.com/entities/generation-development-group-l" target="_blank" data-smartkarma-citation="entities:14945:1" rel="noopener">Generation Development (GDG AU)</a>, <a href="https://www.smartkarma.com/entities/pexa-group-ltd" target="_blank" data-smartkarma-citation="entities:34716:1" rel="noopener">PEXA Group (PXA AU)</a>, <a href="https://www.smartkarma.com/entities/cochlear-ltd" target="_blank" data-smartkarma-citation="entities:918:1" rel="noopener">Cochlear (COH AU)</a>, and <a href="https://www.smartkarma.com/entities/supply-network-ltd" target="_blank" data-smartkarma-citation="entities:2280:1" rel="noopener">Supply Network (SNL AU)</a>.</li>
</ul>


Australia's ASIC releases the aggregated short position data four business days after the reporting day. Data in this insight is up to 2nd April, published ~9AM on the 10th April.
The largest industry net increase in the past week was A$699mn into "Diversified Meals"; the largest industry net decrease was A$83mn out of "Steel". Net shorts increased A$2.6bn week-on-week.
Companies mentioned in this regular weekly report include: Goodman Group (GMG AU), Generation Development (GDG AU), PEXA Group (PXA AU), Cochlear (COH AU), and Supply Network (SNL AU).


Aussie Shorts [2nd Apr]: Goodman Group, Generation Development, PEXA Group, Cochlear, Supply Network

Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Macroeconomics

<ul><li>Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on Tuesday.  Real rates have effectively lifted in the first half of CY2016, with the 25 basis point cut to the OCR in May only partially offsetting the 50 basis point decline in underlying inflation.</li><li>Consequently, Evidente believes that the central bank should deliver another rate cut this week of 25 basis points.  With the Governor’s ten year term about to end in September, surely Mr Stevens will not want to leave a legacy of have tolerated a 50 basis point undershoot on the RBA’s inflation target?</li><li>Since its launch a month ago, the key macro principle guiding Evidente’s model portfolio has been the prospect that interest rates will remain low for an extended period due to the shortfall in aggregate demand.  As a result, the portfolio retains a strong defensive bias, with an overall beta of less than 0.85.  Over the past month, the portfolio delivered alpha of 1.2%, reflecting stock selection within the small cyclical budget, including overweights in MND (+41%), BSL (+32%), MYR (+19%) and PMV (+14%). </li></ul>

Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on Tuesday.  Real rates have effectively lifted in the first half of CY2016, with the 25 basis point cut to the OCR in May only partially offsetting the 50 basis point decline in underlying inflation.Consequently, Evidente believes that the central bank should deliver another rate cut this week of 25 basis points.  With the Governor’s ten year term about to end in September, surely Mr Stevens will not want to leave a legacy of have tolerated a 50 basis point undershoot on the RBA’s inflation target?Since its launch a month ago, the key macro principle guiding Evidente’s model portfolio has been the prospect that interest rates will remain low for an extended period due to the shortfall in aggregate demand.  As a result, the portfolio retains a strong defensive bias, with an overall beta of less than 0.85.  Over the past month, the portfolio delivered alpha of 1.2%, reflecting stock selection within the small cyclical budget, including overweights in MND (+41%), BSL (+32%), MYR (+19%) and PMV (+14%). 

Retain Defensive Bias as the Reluctant Rate Cutter Likely to Deliver More Stimulus

<ul><li>Most active funds tout their ability to discriminate between good and poor quality management, and accordingly weight their portfolios towards businesses that they consider to be well managed.&nbsp; In the past decade, portfolio managers have also boasted of their ability to identify and invest in companies that score strongly across environment, governance and social (ESG) dimensions.</li></ul><ul><li>In the second instalment of Evidente's Dissecting Quality series, I show that management quality and corporate governance matter more for complex companies, where shareholders face high monitoring costs. To that end, I develop a systematic model of complexity and agency costs for the ASX200 based on eight company specific factors.</li><li>Some of the industrials that make up the top 20 complex stocks include: Qantas, Amcor, Computershare, Seek and Brambles. Investors can use the model to integrate their assessments of company management and corporate governance. In particular, investors should avoid complex stocks that score poorly across management quality and governance practices.</li></ul>

Most active funds tout their ability to discriminate between good and poor quality management, and accordingly weight their portfolios towards businesses that they consider to be well managed.&nbsp; In the past decade, portfolio managers have also boasted of their ability to identify and invest in companies that score strongly across environment, governance and social (ESG) dimensions.In the second instalment of Evidente's Dissecting Quality series, I show that management quality and corporate governance matter more for complex companies, where shareholders face high monitoring costs. To that end, I develop a systematic model of complexity and agency costs for the ASX200 based on eight company specific factors.Some of the industrials that make up the top 20 complex stocks include: Qantas, Amcor, Computershare, Seek and Brambles. Investors can use the model to integrate their assessments of company management and corporate governance. In particular, investors should avoid complex stocks that score poorly across management quality and governance practices.

Dissecting Quality: When Does Management Quality and Corporate Governance Matter Most?

Australia

Cochlear Limited researches, develops and markets cochlear implant systems for hearing impaired individuals.  The Company's hearing implant systems include Nucleus and Baha and are sold both domestically and internationally.

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Cochlear Ltd (COH AU)

Last Week In Event SPACE: Sun Corp/Cellebrite, Kioxia, CK Hutchison, Toshiba/ROHM

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Key Drivers of Asia's Healthcare Sector

From a demand perspective, Asia’s population is growing as is longevity. On the supply side, Asia’s number of doctors, nurses, hospitals and...

Singapore Exchange Ltd (SGX)

Aussie Shorts [2nd Apr]: Goodman Group, Generation Development, PEXA Group, Cochlear, Supply Network

The largest industry net increase in the past week was A$699mn into "Diversified Meals"; the largest industry net decrease was A$83mn out of...

David Blennerhassett

Retain Defensive Bias as the Reluctant Rate Cutter Likely to Deliver More Stimulus

Interbank Cash Rate Futures point to a 65% probability that the RBA will cut the Overnight Cash Rate (OCR) by 25 basis points to 1.5% on...

Sam Ferraro

Dissecting Quality: When Does Management Quality and Corporate Governance Matter Most?

Most active funds tout their ability to discriminate between good and poor quality management, and accordingly weight their portfolios towards...

Sam Ferraro

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