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Finimize Research

Independent in-depth research from Finimize

Finimize

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Thematic (Sector/Industry)

<ul>
<li>The US economy’s resilience hasn’t come from the many – it’s come from the top 10% as the “wealth effect” from rising asset prices has boosted spending.</li>
<li>But it works in reverse too.  Since the richest make up nearly half of America’s consumer spending, that could lead to a serious economic fallout.</li>
<li>It’s worth considering protecting your portfolio. I’ve pulled together one list of companies that should do well and another that could suffer from the change in climate.</li>
</ul>


The US economy’s resilience hasn’t come from the many – it’s come from the top 10% as the “wealth effect” from rising asset prices has boosted spending.
But it works in reverse too.  Since the richest make up nearly half of America’s consumer spending, that could lead to a serious economic fallout.
It’s worth considering protecting your portfolio. I’ve pulled together one list of companies that should do well and another that could suffer from the change in climate.


A Defensive Portfolio Prepared For The Wealth Effect’s Reversal

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The changes to the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a>, S&amp;P400 Index and S&amp;P600 Index will be announced after market close on Friday.</li>
<li>The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.</li>
<li>Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the <a href="https://www.smartkarma.com/entities/consumer-staples-select-sector-spdr-fund" target="_blank" data-smartkarma-citation="entities:27536:1" rel="noopener">XLP</a> and <a href="https://www.smartkarma.com/entities/technology-select-sector-spdr" target="_blank" data-smartkarma-citation="entities:27543:1" rel="noopener">XLK</a>.</li>
</ul>


The changes to the S&amp;P 500 INDEX (SPX INDEX), S&amp;P400 Index and S&amp;P600 Index will be announced after market close on Friday.
The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.


Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-11-10/asia-pulp-paper-is-said-to-bid-for-stake-in-tissue-maker-vinda#xj4y7vzkg" target="_blank" rel="noopener">reported</a> Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring <a href="https://www.smartkarma.com/entities/essity-ab" target="_blank" data-smartkarma-citation="entities:28203:1" rel="noopener">Essity (ESSITYB SS)</a>’s controlling <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> stake at more than HK$20 per share.</li>
<li>Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.</li>
<li>Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.</li>
</ul>


Bloomberg reported Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring Essity (ESSITYB SS)’s controlling Vinda International (3331 HK) stake at more than HK$20 per share.
Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.
Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.


Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul>
<li>The amount of deposits in the US banking system are substantial in absolute terms and compared with recent periods and older periods</li>
<li>Of the USD17.4tr in deposits in the US banking system, 86% is liquid, available to access</li>
<li>Alongside concerns about the S&amp;P 500 Index or the broad US stock market, we believe it is worthwhile to keep in mind the amount of depositor liquidity</li>
</ul>


The amount of deposits in the US banking system are substantial in absolute terms and compared with recent periods and older periods
Of the USD17.4tr in deposits in the US banking system, 86% is liquid, available to access
Alongside concerns about the S&amp;P 500 Index or the broad US stock market, we believe it is worthwhile to keep in mind the amount of depositor liquidity


US Stock Market - US Banks Have Total Deposits of USD17.4tr, Which Was USD3-4tr ~30 Yrs Ago

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softcare-limited" target="_blank" data-smartkarma-citation="entities:44292:1" rel="noopener">Softcare (2698 HK)</a>'s IPO price was fixed at HK$26.20, or 16.4x FY26F PER, with overwhelming positive responses in both the Hong Kong IPO and international offer. </li>
<li>We calculate its fair value at HK$26.07-29.43, based on a 50% premium to <a href="https://www.smartkarma.com/entities/hengan-international-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan International Group (1044 HK)</a> and a 20% discount to the US peers, leaving limited upside.</li>
<li>Its tiny public shareholder ownership (15%) and the potential of being an M&amp;A target will elevate its valuations. However, anything above the US peers (i.e. 20.5x PER) is expensive. </li>
</ul>



Softcare (2698 HK)'s IPO price was fixed at HK$26.20, or 16.4x FY26F PER, with overwhelming positive responses in both the Hong Kong IPO and international offer. 
We calculate its fair value at HK$26.07-29.43, based on a 50% premium to Hengan International Group (1044 HK) and a 20% discount to the US peers, leaving limited upside.
Its tiny public shareholder ownership (15%) and the potential of being an M&amp;A target will elevate its valuations. However, anything above the US peers (i.e. 20.5x PER) is expensive. 


Softcare (2698 HK): Where Should It Be Traded?

United States

The Procter & Gamble Company manufactures and markets consumer products in countries throughout the world. The Company provides products in the laundry and cleaning, paper, beauty care, food and beverage, and health care segments. Procter & Gamble products are sold primarily through mass merchandisers, grocery stores, membership club stores, drug stores, and neighborhood stores.

Price Gauge
52-week Range	0.00 - 0.00
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Procter & Gamble Co (PG US)

A Defensive Portfolio Prepared For The Wealth Effect’s Reversal

The top 10% account for around 50% of consumer spending in the US. This insight looks at the sectors and companies that could win and lose from the...

Finimize Research

Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

US$300bn tracks the Select Sector Indices. Implementation of proposed changes will set off a US$35bn trade. Apple could be bought by multiple...

Brian Freitas

Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

Vinda’s improving performance has supported the increasing list of potential bidders. The most likely bid structure is the acquisition of Essity’s...

Arun George

US Stock Market - US Banks Have Total Deposits of USD17.4tr, Which Was USD3-4tr ~30 Yrs Ago

USD18.4 trillion in bank deposits at US banks as at 5 November week. At start of this century, that was USD3.5 trillion. There is a lot of...

Daniel Tabbush

Softcare (2698 HK): Where Should It Be Traded?

Softcare's IPO price was fixed at HK$26.20, with positive responses. Fair value is HK$26.07-29.43, and limited upside is expected. Small free...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

A Defensive Portfolio Prepared For The Wealth Effect’s Reversal

The top 10% account for around 50% of consumer spending in the US. This insight looks at the sectors and companies that could win and lose from the...

Finimize Research

Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

US$300bn tracks the Select Sector Indices. Implementation of proposed changes will set off a US$35bn trade. Apple could be bought by multiple...

Brian Freitas

Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

Vinda’s improving performance has supported the increasing list of potential bidders. The most likely bid structure is the acquisition of Essity’s...

Arun George

US Stock Market - US Banks Have Total Deposits of USD17.4tr, Which Was USD3-4tr ~30 Yrs Ago

USD18.4 trillion in bank deposits at US banks as at 5 November week. At start of this century, that was USD3.5 trillion. There is a lot of...

Daniel Tabbush

Softcare (2698 HK): Where Should It Be Traded?

​Softcare's IPO price was fixed at HK$26.20, with positive responses. Fair value is HK$26.07-29.43, and limited upside is expected. Small free...

Osbert Tang, CFA

Softcare's IPO price was fixed at HK$26.20, with positive responses. Fair value is HK$26.07-29.43, and limited upside is expected. Small free...