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Weekly Top Ten Event-Driven and Index Rebalance – Mar 10, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”

By Travis Lundy, Quiddity Advisors

  • Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
  • The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback. 
  • Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.

2. Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks

By Travis Lundy, Quiddity Advisors

  • The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected. 
  • Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise. 
  • Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.

3. Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

By Brian Freitas, Periscope Analytics


4. S&P/​​​​ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning

By Brian Freitas, Periscope Analytics

  • There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
  • The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
  • There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.

5. S&P 500/400/600 Index Rebal – It’s Not The Trade You Think

By Travis Lundy, Quiddity Advisors


6. Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN

By Travis Lundy, Quiddity Advisors

  • Now that the March 2024 Nikkei 225 Rebalance is decided, we have a model for the Sep 2024 Review. As previously discussed on Smartkarma, actual name changes get tough now. 
  • As of now, there should be two ADDs and two DELETEs. They might not occur. But there are two other situations which create interesting dynamics around big names. 
  • The dynamics of Fast Retailing and Tokyo Electron promise more fun than the actual name changes in September 2024. It impacts how you trade Nikkei vs TOPIX and tech internals.

7. JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What

By Arun George, Global Equity Research Ltd

  • JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR. 
  • Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
  • Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating. 

8. Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation

By Brian Freitas, Periscope Analytics

  • Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
  • Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
  • Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

9. STTF Index Rebalance: The Widening Emperador Spread

By Brian Freitas, Periscope Analytics


10. CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

By Brian Freitas, Periscope Analytics

  • With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
  • The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

Weekly Top Ten Macro and Cross Asset Strategy – Mar 10, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Portfolio Watch: What if We Add a Rate Cut to This Fire..

By Andreas Steno, Steno Research

  • The cyclical rotation is slowly but slowly rolling and if central banks add rate cuts to this mix, we are staring directly into the melt up.
  • Welcome to our weekly Portfolio Watch, where we assess the tradeable themes and discuss our portfolio composition.
  • In this revamped version of the series, we will touch upon the developments in our Macro Alpha Portfolio and our Digital Assets Portfolio.

2. 3 Take-Aways from Li Qiang’s Speech

By Mikkel Rosenvold, Steno Research

  • Welcome to this week’s Great Game where we turn our attention to China.
  • The Communist Party is annual National People’s Congress where Premier Li Qiang (Xi’s right hand man) delivered a very noteworthy speech on the Central Committee’s financial and political plans.
  • Watching a speech from a Chinese politician is a very different beast from watching top US politicians address the masses.

3. February Themes and Thematic Portfolio Review

By Rikki Malik

  • A monthly review at how the markets and our themes are currently performing
  • Analysing what went wrong and what went right in stocks and sectors
  • Highlighting positions  added or removed  from the thematic investment portfolio

4. Positioning Watch – Are the unpopular bets back in town?

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch! Equity markets continue their drift higher for yet another week, and it seems safe to say that markets are now more concerned about liquidity/growth than rates to reiterate ourselves, as equity markets have not attributed the U-turn in rates expectations any value whatsoever.
  • As the growth and liquidity outlook still looks decent for the weeks/months ahead, we keep our long risk asset bias.
  • The rates outlook looks to have a bigger impact in FX and especially the carry-heavy side of this asset class, and with the market likely going to up-hawk expectations even further if inflation picks up momentum, it could be time for a revival of the USD – FX volatility has at least started to pick up a bit of momentum (bullish USD).

5. Macro Regime Indicator: MORE liquidity is coming

By Elias Lisberg Glistrup, Steno Research

  • Greetings and welcome to this month’s Macro Regime Indicator.
  • Financial markets have behaved pretty much just as we laid out in last month’s predictions.
  • Sentiment remains strong and the US consumer continues to spend.

6. Nowcasting Nearly Half of Global GDP

By Thomas Lam

  • My hybrid nowcasting framework tracks the inflation-adjusted or real GDP growth rates of US, Euro Area and Japan
  • My nowcasts for the individual G3 economies are prospectively diverging at the beginning of 2024
  • But in aggregate, my nowcast suggests that G3 GDP growth is potentially tracking softer through the first-half of 2024 on average 

7. How to Trade the YOLO and FOMO Market

By Cam Hui, Pennock Idea Hub

  • A YOLO and FOMO mania has gripped stock market psychology and it’s unclear when the mindset will reverse.  Numerous warnings are appearing and the market can correct at any time.
  • We are long-term bullish on stocks, but remain cautious near term.
  • Despite our cautious short-term outlook, traders are advised against taking a short position until some tangible signs of a bearish reversal appear.

8. Monday Macro – a deep dive into stocks and bonds for the long run

By Adventurous Investor, The Adventurous Investor

  • This week, I’m going to try and combine my three interests: 1. working out what the heck markets might do next,
  • 2. figuring out how economic growth rates impact stock market returns (surely there must be some relationship or are they entirely unrelated), and
  • 3. digging into the economic history record books to see what’s worked in the past in investment terms.

9. Are You Ready To Be A Contrarian Cigar Butt Investor?

By Cam Hui, Pennock Idea Hub

  • We review Warren Buffett’s shareholder letter and his pivot from deep value to QGARP investing.
  • We offered two case studies to compare and contrast his approach: 1) Berkshire’s holdings in Japan, which was successful; and 2) China, a deep value opportunity that he ignored.
  • We are agnostic in our opinion between the two approaches and believe both can offer alpha, but on different time horizons.

10. Commodity & Shipping Watch: Time to get back into the shipping bets?

By Ulrik Simmelholt, Steno Research

  • Negative roll yield killing BCOM returns, even as spot has performed OK
  • We need to see some serious stimulus out of China for broad commodities to rally
  • Macro data turning bullish in shipping and the Container output from Shanghai is showing signs of a STRONG rebound

Weekly Top Ten Tech Hardware and Semiconductor – Mar 3, 2024

By | Tech Hardware and Semiconductor
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.

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1. TSMC (2330.TT; TSM.US): Foundry Market Forecast in 2030F; TSMC Had Developed The 2nm Nanosheet.

By Patrick Liao

  • TSMC expects the foundry, semiconductor, electronics, industrial technology, and global GDP to be $0.25 trillion, $1 trillion, $3 trillion, $12 trillion, and $145 trillion, respectively, in 2030F
  • Transistor technology is constantly evolving, and FinFET architecture will be followed by Nanosheet and others.
  • In the transition, the automotive market belongs to IDM companies, but the utility of ADAS (Advanced Driver Assistance Systems) could fall under Foundry territory.  

2. Taiwan Tech Weekly: Mediatek Surges After Showcasing Breathtaking AI Capabilities; Novatek; Nanya

By Vincent Fernando, CFA, Zero One

  • Mediatek Top Performer; Showcasing New AI Capabilities at the Mobile World Congress in Barcelona
  • Memory Monitor: Competition Is Hotting Up for Key Memory Chips Nvidia Depends On; Nanya Left Out?
  • Novatek (3034.TT): It Has Been Qualified by the IPhone 16 for OLED Driver IC

3. Memory Monitor: Competition Is Hotting Up for Key Memory Chips Nvidia Depends On

By Vincent Fernando, CFA, Zero One

  • Competition in the High Bandwidth Memory (HBM) space is intensifying; Micron shares have rallied after it announced HBM3e mass production; SK Hynix has outperformed since its earnings release.
  • Nvidia’s H200, its most advanced chip for generative AI, leans heavily on HBM3e memory for its increased performance vs. the previous H100 generation. Memory leaders are key for Nvidia’s success.
  • Taiwan’s Nanya Tech appears to be watching HBM competition between Micron, SK Hynix, and Samsung from the sidelines; can its shares get back into the game?

4. Semiconductor Memory 2023 In Review, 2024 Outlook

By William Keating, Ingenuity

  • 2023 DRAM + NAND revenues declined 36% YoY from $140.3 billion to $89.2 billion. This followed a 14% decline YoY in 2022.
  • Forecasting ~40% YoY growth in 2024, bringing overall memory revenues back to roughly 2022 levels
  • ASML’s Memory-related WFE revenue in 2023 was an all time record high at $5.9 billion. Much of that was spent in China and its impact remains to be seen..

5. The Big Question: Can Today’s AI Surge Last?

By Jim Handy, Objective Analysis

  • The AI GPU market has been exploding, and this has turned the DRAM market’s downturn into a strong upturn
  • With this growth, DRAM manufacturers have seen their business turn around, thanks to increased use of HBM
  • Two questions concern us: Will AI growth last? Will increased competition in HBM DRAM create a price collapse?

6. Elan Microelectronics: 50% YoY Growth Feasible for 2024E; Now a Pricey Consensus Long

By Vincent Fernando, CFA, Zero One

  • Elan Guides For Strong Revenue Growth Ahead and High Margins to Continue
  • AI PCs Only Expected to Drive Significant Volume by 2025E; Major AI Opportunity for Touch Sensors
  • Elan Can Benefit From Rising Consensus Forecasts But is Pricey — We Wouldn’t Chase the Rally But Also Don’t Want to Short It

7. Semiconductor WFE 2023 In Review, 2024 Outlook

By William Keating, Ingenuity

  • 2023 WFE revenues amounted to $93 billion, representing a YoY decrease of just ~1%. Most had expected a 20% YoY decline at the start of last year
  • We forecast 2024 WFE revenues to grow modestly by around 5% YoY
  • China’s WFE spend in 2023 was ~1.5x Taiwan & ~2x Korea

8. ChipMOS: Valuation at Risk Given Latest Results; Short Interest Shows Sentiment Has Room to Shift

By Vincent Fernando, CFA, Zero One

  • ChipMOS Margin Rebound Sputters, Guidance Implies Margins Could Remain Under Pressure
  • Valuation Appears Precarious In Light of Latest Results and Guidance
  • Valuation Appears Precarious In Light of Latest Results and Guidance

9. Novatek (3034.TT): It Had Been Qualified by the IPhone 16 for OLED Driver IC.

By Patrick Liao

  • The supply chain received good news that Novatek Microelectronics Corp (3034 TT) as successfully passed iPhone 16 OLED DRIVER IC (DDIC) qualification.
  • Novatek’s recent alliance with ARM to develop Neoverse V2 is a noteworthy development.
  • Novatek’s 1Q24F forecast remains unchanged, but the outlook for 2024F is likely to show positive growth.

10. KYEC (2449.TT): 2024F Could Be a Prosperous Year Although 4Q23 Saw a 5% Decline QoQ.

By Patrick Liao

  • It was declined by 5% for 2023 verses 2022, which was not a surprise because the overall sentiment should be dim in 2023.
  • For the coming 1Q24F, it could be a bit downside by 5%, assumed as a normal seasonality.
  • AI demand remain the biggest driving force, and all eyes are on the CoWoS. 

Weekly Top Ten Equity Capital Markets – Mar 3, 2024

By | Equity Capital Markets
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec

By Travis Lundy, Quiddity Advisors

  • Today after the close, Mitsubishi Electric (6503 JP) announced the sale of its position in Renesas Electronics (6723 JP). That’s 50,706,800 shares.  
  • This is the third large block in four months (Renesas in November for 223mm shares, NEC and Hitachi in January 2024 for 123mm shares).
  • This is smaller, and reasonably well-flagged. Index demand is longer-dated.

2. Toei Animation (4816 JP) – This Offering Could Be Heavy; the NEXT Offering Is More Interesting

By Travis Lundy, Quiddity Advisors


3. Toei Animation (4816 JP): The Current Playbook

By Arun George, Global Equity Research Ltd

  • Since the US$550 million secondary placement announcement, Toei Animation (4816 JP)’s shares are down 7.0% from the undisturbed price of JPY18,560 per share (14 February).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Toei Animation’s shares have followed the pattern of previous large placements.
  • The offering will likely be priced on 27 February. Investors participating in previous large Japanese placements tend to secure positive returns.

4. Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested

By Clarence Chu, Aequitas Research

  • IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
  • While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now. 
  • Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.

5. Nippon Express (9147) Secondary Offering – Banks, Sompo, Others Sell – “2024 Problem” Looms

By Travis Lundy, Quiddity Advisors

  • Today post-close, Nippon Express Holdings (9147 JP) announced a secondary offering. Total size is ~¥30bn before considering where it will price; 11-12 days of ADV, 4.6% of shares out.
  • Various banks, Toyota-related auto cos, and Sompo Japan will sell. This is a start to the unwind, but it is a very small portion of the total cross-holding position. 
  • NX also announced an on-market  buyback of up to ¥10bn to run from 11April -31July 2024. This, and index demand, mitigate some heaviness. But The 2024 Problem looms large.

6. ECM Weekly (26th Feb 2024) – Trial Holdings, Juniper, Xiaocaiyuan, Union Bank, Orica, Azure

By Sumeet Singh, Aequitas Research

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, we looked at Trial Holdings (5882 JP) refiling and Xiaocaiyuan International Holding .
  • For placements, it was an action packed week in India, again, with Australia joining in as well.

7. Renesas Electronics Block – Smaller than Recent Deals but Still Likely Well Flagged

By Ethan Aw, Aequitas Research

  • Mitsubishi Electric (6503 JP) is looking to raise approximately US$800m through an accelerated secondary block deal, via selling 50.71m shares (2.6% of TSO) of Renesas Electronics (6723 JP) stock. 
  • The deal will be an easy one to digest at only three days of three month ADV.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

8. Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID

By Sumeet Singh, Aequitas Research

  • Tokyo Metro (TKYMETRO JP)’s shareholders, the Japanese and Tokyo Metropolitan Governments, could look to raise up to US$2bn by selling half of their stake via an IPO.
  • Tokyo Metro is one of the two metro network operators in the Tokyo region. It operates nine subway lines.
  • In this note, we take an early look at the possible listing.

9. Trading Strategy of APR on the First Day of IPO

By Douglas Kim

  • In this insight, we discuss a trading strategy for APR (278470 KS) which starts trading on 27 February. APR is the most anticipated IPO in Korea so far in 2024.
  • Our base case (6 months – 1 year) target price of APR is 370,809 won, which is 48% higher than the IPO price. 
  • We recommend investors to take some profits off the table (30%-50%) if the share price shoots higher by 100% to 200%+ from the IPO price on the first day. 

10. MIXUE/ChaPanda/Good Me Pre-IPO – Peer Comparison

By Sumeet Singh, Aequitas Research

  • Mixue Group  is looking to raise about US$1bn in its Hong Kong IPO, while Sichuan Baicha (ChaPanda) and Guming Holdings (Good me) are said to be looking to raise US$300m each.
  • All three are primarily focussed on providing freshly-made drinks, including freshly-made fruit drinks, and tea, with some selling ice cream, coffee, baked goods and ready to drink beverages as well.
  • In this note, we will undertake a peer comparison, including the Hong Kong listed peer, Nayuki Holdings (2150 HK).

Weekly Top Ten Event-Driven and Index Rebalance – Mar 3, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?

By Travis Lundy, Quiddity Advisors

  • Over the weekend there was an article in the Nikkei saying that Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) were considering a merger. Other media outlets followed.
  • This has been a possible outcome. Aeon Co Ltd (8267 JP) owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.
  • This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for MatsukiyoCocokara (3088 JP). It would be 25% of the market. Questions will be asked about concentration. 

2. Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3

By Travis Lundy, Quiddity Advisors

  • Keisei Electric Railway Co (9009 JP) has long been the target of activist-ish-y holders who seek to have the company monetise its 20+% stake in Oriental Land (4661 JP)
  • Last autumn (17-Oct-2023), Keisei was the subject of a presentation by activist-ish-y fund Palliser Capital who called the stock 43% undervalued. They want Keisei to sell some OLC shares.
  • Palliser wanted Keisei to use resulting monies for growth capex+shareholder return, improve IR/governance, shrink board, adopt KPIs, etc. Thursday we got an announcement of a 2.9% stock buyback. 

3. JAPAN ACTIVISM:  Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?

By Travis Lundy, Quiddity Advisors

  • Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report. 
  • The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns. 
  • But there has to be a question here. Why? And Why this way? And what kind of activism would be possible? 

4. Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications

By Brian Freitas, Periscope Analytics

  • Hyosung Corporation (004800 KS) has announced that it is spinning off part of its business holdings to Hyosung New Holding Corporation in a 0.818:0.182 ratio.
  • The stock will remain suspended from late June to late July. We expect Hyosung Corporation (004800 KS) to maintain its index membership while the New Entity will not be added.
  • The dynamics between listed ETFs and non-listed passive trackers differ and we take a look at the potential index flows.

5. Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)

By Travis Lundy, Quiddity Advisors

  • RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
  • That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
  • This should cause people to get excited short-term about property developers.

6. Details of Korea Value-Up Initiatives & Index, Announced This Morning

By Sanghyun Park, Clepsydra Capital

  • The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
  • The government will encourage the National Pension Service to utilize it as a benchmark.
  • Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

7. ESR Group (1821 HK): Evaluating a Potential Privatisation

By Arun George, Global Equity Research Ltd

  • On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
  • The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. 
  • The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. 

8. Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger! [Redux]

By Travis Lundy, Quiddity Advisors

  • The first piece had a question mark in the title. This one has an exclamation point. The exclamation point has value for one investor. Other people? Not so much.
  • Today post-close we got the deal. I was a little surprised it came this fast, but it’s now mostly done it appears – largely as predicted in the last piece.
  • There are things one can probably read into the details. It is probably worth thinking about those, and how those details affect the industry. 

9. Ecopro BM (247540 KS): Index Impact of KOSDAQ to KOSPI Transfer

By Brian Freitas, Periscope Analytics

  • Ecopro BM (247540 KS)‘s Board has approved the delisting of the stock from the KOSDAQ market and to list on the KOSPI market. The shareholder meeting is on 26 March. 
  • Historically, the KRX has taken an average of 64 days from application to approve the listing to transfer from the KOSDAQ market to the KOSPI market.
  • Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index on its last trading day and inclusion in the KOSPI 200 Index could take place in September.

10. HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Mar 2024)

By Brian Freitas, Periscope Analytics


Weekly Top Ten Macro and Cross Asset Strategy – Mar 3, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. Hong Kong Dollar Carry Trade and Its Influence on Hong Kong Market

By David Mudd

  • Hong Kong Dollar (HKD) Carry Trade (CT) is an good leading indicator of the directional trend of the Hong Kong Market
  • Recently the HKD CT has been trending to a less positive/flat position
  • Hong Kong Aggregate Balance will no longer provide cushion against HIBOR rising due to the HKD peg system

2. FSC Announces Corporate Value Up Reforms Details

By Douglas Kim

  • On 26 February, South Korea announced its long awaited Corporate Value Up reform plan details to improve shareholder returns of listed Korean companies. 
  • Due to the lofty expectations about these corporate reforms, there was some disappointment when the details actually came out. KOSPI declined by 0.8% today following these corporate reform details. 
  • Many investors are likely to take a “wait and see” attitude to see if real, material, positive changes will be announced in 2Q/3Q, before committing additional capital into Korean equities.

3. The Week Ahead – US Core PCE, Euro Area Flash Inflation and Japan CPI

By Nomura – The Week Ahead, Nomura – The Week Ahead

  • Global equities finished the week on a high note, with Nvidia’s strong earnings boosting markets, especially in Japan.
  • European yields rose due to strong PMIs, while the dollar weakened and the euro and pound strengthened.
  • In the US, core PCE inflation is expected to be strong, with potential temporary factors contributing to the high readings.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.


4. Positioning Watch – Commodities Are Finally Moving

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch! We have been all about the possibility of a cyclical rebound with the US economy showing great signs at the moment, and China is also potentially looking to beat the fairly bearish expectations (and why barely anyone has been net long cyclicals in all asset spaces).
  • This leaves markets with a great divergence, as Europe is yet to show the same signs of momentum, and inflation expectations (between USD and EUR) are also starting to diverge, but positioning has not followed accordingly.
  • Let’s rerun our current trades to kick things off: Equities: Long Materials and Long Korea (as a China proxy).

5. NPS to Invest 11 Trillion Won in Low PBR/Value Stocks in Korea?

By Douglas Kim

  • NPS is in discussion to invest nearly 11 trillion won in low PBR/undervalued Korean stocks.
  • Korea Exchange is in discussion with NPS to create a new index tracking low PBR/undervalued stocks in Korea in efforts to boost government’s efforts to boost the local stock market
  • This index is tentatively named Korea Value-Up Index and institutional investors are expected to use it as one of the benchmark indices for equity investments.

6. Steno Signals #88: Anyone left willing to bet on rate cuts in H1?

By Andreas Steno, Steno Research

  • It seems like no one is willing to add bets on rate cuts in H1 after even the doves from the ECB and the Fed have been hard to convince of spring action lately.
  • G3 central bankers have been on parade with messages around the risks of easing prematurely after watching the cocktail of 1) higher freight rates, 2) sticky wages and 3) easing financial conditions, especially in the US.
  • We have seen front-end back paddling in rates space ever since New Years accordingly and the almost bizarre uniformity in views and positioning has been blown into pieces in a matter of weeks.

7. The Weekly Market Monitor – Please Give a Warm Welcome to BITCOIN

By Jeroen Blokland, True Insights

  • Bitcoin rose nearly 20% this week, and the impact of spot Bitcoin ETFs is huge, but with a twist.
  • This week’s US personal income data provides yet another chart showing that the recession is already behind us. But will the US consumer keep spending?
  • That new The Economist cover does not bode well for stocks, but the moving average does. Yet, sentiment remains in Frenzy.

8. How the Rise of ‘Pod Shops’ Is Reshaping the Way Markets Trade

By Odd Lots, Odd Lots

  • Recent market volatility with large moves in individual stocks
  • Multistrategy hedge funds may be impacting these market movements
  • Goose Hollow Capital founder Krishna Kumar discusses the workings of pod shops and their impact on stock trading

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.


9. Money Watch: Trillions of USDs Are Waiting to Be Unleashed

By Andreas Steno, Steno Research

  • Money trends were abysmal for most parts of 2022 and the early parts of 2023, but we are starting to see interesting trends arising in the global money growth with clear geographical divergences.
  • Japan, China and the Euro zone have reported January M1, M2 and M3 developments and while trends remain benign in JPY and CNY, the money trends in EUR are re-worsening.
  • A gap seems to be opening between USD and EUR money trends, which rhymes well with our strong thesis of a growing inflation gap between the US and the Euro zone.

10. Macro Nugget: Trillions of USDs waiting to be unleashed

By Andreas Steno, Steno Research

  • If we look at M2 trends (narrow money + time deposit / MMFs and similar assets), the broad USD measure remains a staggering 18% above trend with M2 nominally trending almost 4 trillion USDs above a long-term trajectory.
  • The similar trend in EURs is much less extraordinary with M2 currently 7% above trend, which translates to a little more than 1 trillion EURs nominally.
  • There is still a large excess of USDs in the systemSo where are those excess USDs parked?

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Weekly Top Ten Tech Hardware and Semiconductor – Feb 25, 2024

By | Tech Hardware and Semiconductor
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.

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1. From Nvidia Results to See Supply Chain Stories?

By Andrew Lu

  • Post 35% price gain in a quarter, many good news we expected and other analysts expected already factored into the share price. We believe the risk/reward not attractive here.
  • TSMC guides stronger 1Q24 and 2024, helped by Nvidia and copy cat AI GPU/ASIC orders. We see greater opportunities for alternative copy cat solutions like AMD and Alchip.
  • We attribute Nvidia customers’ sales discrepancy to AI server is cannibalizing non-AI server and Nvidia is allocating more GPUs to premium price paying customers in 1H24 and reverse in 2H24.

2. TSMC (2330.TT; TSM.US): The Implications of Feb Sales, TSMC 2nd Japanese Fab and NVDA Stock Price.

By Patrick Liao

  • Usually, February is typically the month with the fewest working days of the year, and therefore, revenue is likely to be at its lowest as well.
  • We consider that the Taiwanese government may desire TSMC to build fabs in countries aligned with those who signed the “Wassenaar Arrangement.” 
  • The price hike of NVIDIA Corp (NVDA US) by US$785.38 on February 22 in the US market could signal an important development in the AI sector.

3. United Microelectronics Is Becoming a Great Long-Term Acquisition Target for Intel

By Vincent Fernando, CFA, Zero One

  • UMC spoke at an investment bank’s recent conference, providing additional color on guidance and its collaboration with Intel for 12nm chip production.
  • UMC comments imply the key synergies between the two companies, whereby each can solve the other’s key problem,
  • While UMC most likely needs to remain a “Taiwanese company” in terms of optics given its history, Intel’s synergies with UMC establishes acquisition-value support for UMC shares in our view.

4. AMAT. Post Earnings Surge For No Good Reason

By William Keating, Ingenuity

  • Q124 revenues of $6.71 billion, at the high end of the guided range and essentially flat sequentially both QoQ and YoY
  • Q224 revenue $6.5 billion at the midpoint, a modest downward movement of 3% QoQ and in line with what we saw from peers KLAC and LRCX
  • Still a great company with excellent growth prospects, just not in 2024

5. SUMCO’s Sobering Outlook For Silicon Wafers

By William Keating, Ingenuity

  • Q423 revenues of ¥105.1 billion, about 5% better than forecasted, up 5% QoQ but down ~10% YoY.
  • Q124 revenues forecasted to decline 17% QoQ to ¥87 billion. Not surprisingly, EBITDA will also decline 33% QoQ to ¥22.1 billion.
  • On a brighter note, demand growth driven by generative AI will roughly double wafer demand for servers (AI+General) by 2027

6. Intel Snags Altman To Close Foundry Day Event

By William Keating, Ingenuity

  • Despite the high-profile announcement of his attendance, his segment was less than 3 minutes long!
  • Intel’s CEO alluded to a partnership with OpenAI and implied there’s more to come yet there’s been no public announcement of any such partnership. 
  • Microsoft’s commitment to use Intel’s 18A is a vote of confidence in their foundry offering. Let’s see how it plays out.

7. Finding the Sweet Spot: Nvidia’s Goldilocks Quarter

By Douglas O’Laughlin, Fabricated Knowledge

  • Nvidia’s earnings are akin to my Super Bowl.
  • There is no more significant event in semiconductors and AI, and each quarter, we tune into Nvidia’s results to see precisely what quarter we are in the AI hype cycle (and potentially bubble).
  • There is no better signpost for the entire AI ecosystem than the company making the most of the revenue so far: Nvidia.

8. Novatek (3034.TT): It’s Said to Alliance with ARM to Build up Neoverse V2, Targeting AI Market.

By Patrick Liao

  • Novatek’s share price has surged by more than 15% in four days due to the news of Novatek’s alliance with ARM to develop Neoverse V2.
  • While the decision on whether the iPhone 16 will feature OLED technology is still pending, the general sentiment is optimistic.
  • Novatek is set to leverage Intel Corp (INTC US)’s 12nm capacity through United Microelectron Sp Adr (UMC US) in the near future.

9. Taiwan Tech Weekly: AI Plays Weak Ahead of Nvidia Results Today; Intel & UMC; ARM & Novatek

By Vincent Fernando, CFA, Zero One

  • Key Events: 1) Nvidia Results Coming Today in the U.S. 2) Elan & ChipMOS Tomorrow in Taiwan 3) U.S. PC Maker Results Next Week
  • Why United Microelectronics Is Becoming a Great Long-Term Acquisition Target for Intel 
  • Novatek a Top Gainer After Reports of Alliance with ARM to Build Neoverse V2 for AI

10. Globalwafers (6488.TT): The Revenue Is Expected to Improve in 2H24F

By Patrick Liao

  • The sales of Jan 2024F were the lowest during 2022-2024F, indicating a likely downtrend for 1Q24F.
  • Demand is expected to remain sluggish in 2Q24F, potentially resulting in decreased raw wafer demand for Logic and Memory in 2Q24F.
  • The market for 12″ raw wafers is expected to have a more stable demand-supply balance, while raw wafers of 8” and smaller sizes could experience reduced demand in 1H24F.

Weekly Top Ten Equity Capital Markets – Feb 25, 2024

By | Equity Capital Markets
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering

By Travis Lundy, Quiddity Advisors

  • SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
  • Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what. 
  • In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.

2. Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out

By Travis Lundy, Quiddity Advisors

  • Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
  • The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
  • The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.

3. Heiwado (8276 JP) – Banks and Insurers Unwinding Cross-Holdings In Offering

By Travis Lundy, Quiddity Advisors

  • Heiwado Co Ltd (8276 JP) today announced a Secondary Offering sell-down by cross-holders, combined with a buyback post-offering to mitigate some of the effects of overhang.
  • Banks and insurers are selling, and that will leave the stock with a lot of cross-holders left, but investors should look at the model given he zeitgeist. 
  • Companies with lots of cross-holders have to be “fair” to them. Those without copious cash have to spread it around so this transaction model looks likely to be continued.

4. Initial Thoughts on the Webtoon Entertainment IPO

By Douglas Kim

  • Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024. 
  • The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO. 
  • The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).

5. Azure Minerals Block – Removal of Overhang but Still a Risky Bet

By Ethan Aw, Aequitas Research

  • Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up. 
  • The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap. 
  • In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

6. Union Bank of India QIP – Well-Flagged and Just in Time for Index Inclusion

By Sumeet Singh, Aequitas Research


7. Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses

By Sumeet Singh, Aequitas Research

  • Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
  • TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
  • We have looked at the past performance in our previous notes. In this note, we talk about the updates from its recent filings.

8. Orica Placement – Keeping the Acquisition Momentum Going

By Ethan Aw, Aequitas Research

  • Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco. 
  • The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution. 
  • In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

9. ECM Weekly (19th Feb 2024) – Toei Ani, KB Fin, IIF, Trial, Juniper, Bharti Hexacom, Octillion Energy

By Sumeet Singh, Aequitas Research

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, Trial Holdings (5882 JP) was back in the market, a year after ditching its previous attempt, while Juniper Hotels is trying to ride the India wave.
  • For placements, more signs of REIT coming back to life, this time in Japan. A relatively large deal in Toei Animation (4816 JP) as well was launched.

10. Amman Mineral International Lockup Expiry – Large Lockup Expiry, Sitting on Sizeable Profits

By Ethan Aw, Aequitas Research

  • Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
  • Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

Weekly Top Ten Event-Driven and Index Rebalance – Feb 25, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. HSTECH Index Rebalance: Tongcheng (780 HK) In; GDS (9698 HK) Out; Round Trip Trade US$1bn

By Brian Freitas, Periscope Analytics


2. Hang Seng Internet & IT Index Rebalance: Three Changes & One Big Surprise

By Brian Freitas, Periscope Analytics

  • There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the March rebalance. There are some surprises.
  • Estimated one-way turnover at the rebalance is 5.6% resulting in a round-trip trade of HK$3.26bn (US$416m). 6 stocks will have over 1x ADV to trade.
  • There is huge short interest on East Buy Holding (1797 HK) and there could be some short covering ahead of the inclusion of the stock in the index.

3. Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)

By Brian Freitas, Periscope Analytics


4. TCM (570 HK): Sinopharm’s $4.60/Share Offer

By David Blennerhassett, Quiddity Advisors

  • $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
  • As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
  • Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

5. China Traditional Chinese Medicine (570.HK) – New Information on Privatization

By Xinyao (Criss) Wang

  • Since China TCM doesn’t deny the rumors so far after the trading halt, privatization is becoming likely this time.Rumor said formal negotiations may not begin until after the Lantern Festival.
  • CNPGC may not want to pay high prices on privatization.Weak sentiment/share price may help with the negotiations.But the key is to obtain the consent of other shareholders, especially Ping An.
  • There’s underlying logic for Taiji Group to drive this privatization. A price of higher than HKD5.1 is possible. If the price could reach HKD6 (or higher), it has exceeded expectations.

6. STTF Index Rebalance Preview: One High Probability Change in March

By Brian Freitas, Periscope Analytics


7. Azure (AZS AU): MinRes’ Discounted Exit

By David Blennerhassett, Quiddity Advisors

  • JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price. 
  • It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
  • Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.

8. Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run

By Travis Lundy, Quiddity Advisors

  • The possibility/likelihood of a “¥50bn MBO” for Snow Peak Inc (7816 JP) was leaked in a Nikkei article last Friday. It went limit up two days in a row. 
  • That TOB price is more than 70% off its three-year high. That will certainly disappoint some. Separately, the price seems a bit low given growth. 
  • The family and friends own ~42% so if someone gets upset, or uppity, there could be a challenge. Just because an MBO exists doesn’t mean people have to tender in.

9. Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

By Sanghyun Park, Clepsydra Capital

  • NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
  • The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
  • The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

10. China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

By Arun George, Global Equity Research Ltd

  • China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
  • The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 
  • Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn.