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. Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
- A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
- ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
- This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.
2. Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Lifestyle China (2136 HK), Arcadium Lithium (ALTM US), Shanghai Henlius Biotech (2696 HK), ESR Group (1821 HK), Get Nice Financial Group Ltd (1469 HK), Canvest.
- Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Capitol Health (CAJ AU), Elematec Corp (2715 JP).
3. Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
- The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
- There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
- There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.
4. NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
- The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
- Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.
5. S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
- CAR Group (CAR AU) replaces Dexus Property (DXS AU) in the S&P/ASX50 Index and Clarity Pharmaceuticals Ltd (CU6 AU) replaces Spark New Zealand (SPK AU) in the S&P/ASX200 (AS51 INDEX).
- Dexus Property and Spark New Zealand were deleted from a global index a couple of weeks ago, so this will heap further pressure and increase the real float of the stocks.
- There has been an increase in cumulative excess volume for all changes, but positioning in some stocks may continue post the announcement.
6. Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
- There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
- Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
- There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.
7. Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
- The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
- We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.
8. NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
- Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
- The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.
9. Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY
- Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
- The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
- The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.
10. Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
- When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
- Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
- The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.
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. Strategic Outlook 2025: Winter Is Coming, Can Asia Keep Itself Warm?
- With the US and China distracted from stabilizing the world geopolitical order, flare-ups and stresses will occur more frequently as various actors feel emboldened to undertake risky gambits.
- The world, including emerging Asia, will have to contend with “much higher for much longer” geopolitical risk and its aftereffects on global trade, investments, and financial markets.
- But most economies in the region retain agency to adapt to a more hostile environment by bolstering internal resilience and forming new coalitions of the willing to pursue shared objectives.
2. Investing During an Era of American Exceptionalism
- This year was one of American exceptionalism and asset return domination, led by the leadership of the Magnificent Seven.
- . We believe Magnificent Seven leadership is likely to fade in 2025.
- We expect that 2025 will be a year of transition from growth to value, large caps to small caps and paper to hard assets.
3. Here is what we told Hedge Funds this week – and how we’re trading it!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
4. The US Dollar and the Only Chart that Matters!
- The US Net International Investment Position (NIIP) as a debtor country has ballooned since the GFC, attracting global demand for US assets, which feeds demand for the dollar.
- Historically high dollar demand has allowed the US to enjoy the benefits of low interest rates and created a historic bull market in US equities.
- As the US continues to use its currency for geopolitical purposes, countries have begun to question dollar hegemony. The US fights against any country that tries to weaken the dollar
5. Steno Signals #175 – 4 asymmetrical cases for Santa Powell
- Happy Sunday, everyone, and welcome to my weekly editorial on everything tradable in macro! I was confident heading into last week that the U.S. data releases would bring bond yields lower, and both ISM numbers and NFP aligned with our views.
- The NFP report was much weaker than it appeared, with the median duration of unemployment ticking up—a clear symptom of a low-hiring, low-firing labor market with little momentum for those who lost jobs in recent quarters to find new opportunities.
- Monthly job creation of around 225k is obviously decent, but this figure is skewed by employees returning from strikes and a lack of substantial positive revisions to the abysmal job creation in October.
6. The LLM Quant Revolution: From ChatGPT to Wall Street
- A Comprehensive Guide to Building AI-Powered Investment Systems: The application of Large Language Models (LLMs) in quantitative finance, focusing on the current state of LLM technology in financial applications
- I also cover: 1. Comparative analysis of leading models 2. Implementation frameworks for production systems 3. Risk management and quality control considerations
- Key Findings: 1. Multi-model approaches outperform single-model solutions 2. Production implementation requires robust quality controls 3. Model selection should be task-specific within the investment process
7. Bitcoin 100K: Buy or Fade the Animal Spirits?
- Now that Bitcoin has exceeded the psychologically important 100,000 mark, it is becoming evident that the FOMO risk-on stampede is in full force.
- Our review of market internals leads us to conclude that the risk-on FOMO stampede that’s driving the animal spirits is on the verge of becoming exhausted.
- Our base case calls for a brief period of consolidation or shallow weakness, followed by a rally into year-end.
8. Positioning Watch – Is the Santa Rally at risk of being canceled? Not yet..
- Hi everyone, and welcome back to our weekly positioning update.
- I’ve been puzzled over the past weeks of just how much risk assets have been denying the underlying macro trends, and it very much mimics the pattern we saw in Q4 2023.
- Markets are not really responding to macro unless there is a major surprise to either side of the economic consensus as this is the only scenario which can change the expected rate path of the Fed.
9. Geopolitical Flash Update: See you later Scholz!
On Dec. 4, Michel Barnier became only the second Prime Minister in French history to be ousted by a no-confidence vote.
Precisely one week later, the other major EU economy, Germany, submitted a motion of no-confidence of its own to be held on Dec. 16. What the heck is going on in Europe?!
The political chaos in France and Germany has the same root cause: a sluggish economy and insurmountable debt levels.
10. Globalisation: Same, Same but Different
- Contrary to popular belief, the upward trend in global US$ exports, which has been in place since 1948 remains intact. World trade openness too is higher today than pre-GFC.
- US consumers are the richest. However Asian affordability is growing quickly . The region’s share of the global imports is already on par with Europe’s.
- Globalisation is not reversing but evolving. Regional trade is driving world exports while world manufacturing production chains are transitioning from horizontal to vertical integrated.
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. Understanding Kioxia, A Worthwhile IPO?
- Kioxia is planning to offer its IPO on 18 December 2024. This Insight profiles Kioxia and its market.
- NAND flash, Kioxia’s product, is a commodity, and that results in dramatic price, revenue, and margin swings.
- Kioxia is in a joint venture that provides excellent scale economies which are offset by a supply agreement that amplifies troubles caused by oversupplies
2. Intel CEO Shock Resignation. What’s Going On?
- No stated reason for Mr. Gelsinger’s shock resignation as Intel’s CEO.
- CFO and CCG leaders named as interim co-CEO’s with the latter also assuming a newly created role as CEO of Intel’s Products (CCG, DCAI & NEX)
- It’s the beginning of the end for Intel as we used to know it
3. ASML. Class Action Lawsuit Looms As Share Price Declines 37% From Peak
- A case against ASML being brought by the Hollywood Firefighters Pension Fund (HFPF) is now opening up into a class action lawsuit
- Claims that ASML withheld crucial information from investors in the Jan-Oct 2024 time period, e.g. impact of US sanctions, strength of the semi recovery, order backlog etc.
- In reality, ASML warned in October 2023 that 2024 would be a zero growth year. Did the HFPF think they were kidding?
4. The Death of Intel: When Boards Fail
- If you haven’t heard the news, Pat Gelsinger is “retiring.” The reality is this was not a retirement but a firing of Pat.
- His brief stint of 1386 days was surprising because not only was he the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest.
- Pat has by no means been perfect, and the conference at UBS kind of showed the frustrations that the board likely had with Pat.
5. Intel CFO @ UBS Global Technology Conference “Core Strategy Remains Intact”
- Earlier this week, at the UBS Global Technology Conference, Intel CFO and co-interim CEO David Zinsner declared that the company’s “core strategy remains intact”
- Recently onboarded GM of IFS Dr. Naga Chandrasekaran, explained that while 18A remains on track, there are still “many milestones” to be met before it ramps in H225
- He also admitted that 18A is more geared towards HPC, is skewed in favour of Intel Products and that 14A will likely be more suitable for the broader semiconductor ecosystem
6. Happy Thanksgiving Semicap & Semiconductors
- This is a very light note, given time constraints. It’s rumored that on Monday, we will have new export controls, which seem to be massively light.
- Importantly, they are going to exclude CXMT altogether.
- History is a pretty good guide. Almost every single export restriction has led to bad returns prior, bad returns on the week off, and positive returns almost 100% of the time 6 months after for SOXX. This applies doubly to Semicap.
7. How Important Are China Gallium, Germanium, and Antimony Bans to the US?
- China has boycotted sales of Gallium, Germanium, and Antimony, three important elements, to the US
- All three are used in the production of semiconductors, but in very small quantities. They are also widely available from sources outside of China.
- The net impact of this boycott to the US semiconductor market should be negligible.
8. Intel’s Next CEO Will Have To Deal With An Unholy Mess. But Who Will It Be?
- Gelsinger’s IDM 2.0 strategy will be up for debate by Intel’s BoD. Most likely it will be largely scaled back
- The new CEO’s options will be limited by the legal agreements in place with Brookfield & Apollo, along with the restrictions imposed by the US DOC
- Possible CEO candidates are the current Globalfoundries CEO, Tom Caulfield, former Intel board member Lip-Bu Tan and former Intel executive Stacy Smith, who recently joined Intel’s BoD
9. Taiwan Tech Weekly: Taiwan’s Space Tech Conference This Week; AI Driving New Humanoid Robot Industry
- Taiwan’s Largest Space Technologies Conference Is Happening This Week– Hon Hai Is Title Sponsor Showcasing Its Satellites; We Are Also Attending
- TSMC’s 2nm Breakthrough: Kaohsiung Fab Ahead of Schedule, Apple and AMD Poised as Early Adopters
- AI Driving the Emergence of a US$2bn Humanoid Robot Market by 2027E
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
2. Kioxia IPO: Peer Comparison and Valuation
- Kioxia has announced the terms for its IPO, and plans to raise $730m through issuing new shares as well as offer by existing shareholders, at a market capitalisation of $819bn.
- Kioxia Holdings (285A JP) ‘s earnings have been volatile and margins have trailed compared to peers Micron and SK Hynix. Earnings are approaching a new peak.
- Kioxia’s implied valuation multiples are at a deep discount to peer multiples, suggesting there is significant upside to the indicative IPO price range.
3. Kioxia (285A JP) IPO: Valuation Insights
- Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
- We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
- Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.
4. Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight
- CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
- Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. Auckland Airport Placement – NZ$1.3bn (US$770m) Cleanup Sale Will Remove the Overhang
- Auckland Council is looking to raise NZ$1.3bn (US$772m) from selling its entire stake in Auckland Intl Airport (AIA NZ).
- Overall, the selldown will be a large one for the stock to digest at 10% of shares outstanding and 62 days of three month ADV.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
6. Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
- Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
7. DigiCo Infrastructure REIT IPO – Looks Decent – After All the Adjustments
- DigiCo REIT (DIGICO AU) is looking to raise around US$1.3bn in its Australian IPO.
- DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
8. LG CNS IPO Details Out: My Read on This IPO
- The KRW 5T-6T valuation and 13x-16x PER look solid compared to local peers like SDS and Hyundai AutoEver, with CNS possibly getting a premium due to its smaller captive stake.
- Instos probably won’t push hard for lock-ups but will aggressively target pricing to secure larger allotments, knowing the company is likely to stick with a market-friendly price.
- On a separate note, I wouldn’t expect much of a NAV discount reduction for LG Corp, as LG CNS’s stake isn’t significant enough to move the needle.
9. Mr DIY Indonesia IPO – Has Aggressively Expanded Its Network
- PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
- Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The firm is the largest home improvement retailer in Indonesia with a 25.2% market share as per 2023 sales
- In this note, we look at the firm’s past performance.
10. Mr DIY Indonesia IPO – Aiming to Repeat the Performance of Its Parent’s Listing
- PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
- Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The entity is the Indonesian entity under the Mr DIY group’s list of subsidiaries.
- In this note, we will undertake a peer comparison and discuss our thoughts on valuation.
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. 7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal
- A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
- The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
- But more directly, this leads us back to 7&I (3382) – What If… A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.
2. Goodman Group (GMG AU) Placement: Limited Index Flows
- China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
- Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
- There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.
3. Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
- At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
- TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.
4. Sanrio (8136 JP) – Kitty Behaving Badly
- Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
- There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
- There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.
5. TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.
6. Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
- Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
- The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
- Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.
7. HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
8. NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade
- There could be 19 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December. There are some stocks from the new F&O inclusions.
- If all changes are on expected lines, one-way turnover is estimated at 65.2% and that will result in a one-way trade of INR 71bn (US$837m).
- The potential inclusions have outperformed the potential deletions since the start of July. The pace picked up over the last month as we neared the end of the review period.
9. Auckland Airport (AIA NZ) Placement: Potential Index Flows
- Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
- The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
- There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.
10. 7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
- I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
- This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness
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. South Korean Parliament Lifts Martial Law Declared by the President Yoon
- Late Tuesday on 3 December, South Korean President Yoon Suk-Yeol declared a martial law. Several hours afterwards, the South Korean Parliament voted to lift President Yoon’s martial law order.
- By drawing so much attention to the “dangers of the communist party from within Korea and outside,” President Yoon is trying to align himself closer to President Trump.
- In the near term, the impact on the Korean stock market of the declaration and lifting of martial law is likely to be negative.
2. Potential Impeachment of President Yoon Suk-Yeol and Impact on the Korean Financial Markets
- In this insight, we discuss the potential impeachment of the South Korean President Yoon Suk-Yeol and the implications on the Korean financial markets.
- We would put a 50-60% probability that there is more than 200 votes to impeach the South Korean President Yoon Suk-Yeol right now by the members of the Parliament.
- We would attach about 30-40% probability that at least six justices of the Constitutional Court vote in favor of impeaching President Yoon.
3. The Week Ahead – Give Thanks For
- Trump announced potential tariff policies on social media targeting Canada and Mexico, leading to a weakening in both currencies.
- Trump appointed key members to his economic team, setting the tone for his administration’s policies.
- Markets are anticipating the Fed meeting in December, with expectations of a dovish hold and strong labor market reports.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
4. Positioning Watch – Markets have NOT been Ready for Growth to Weaken in the US
- Happy Thursday, and welcome to our weekly positioning watch, brought to you just before the crucial NFP report tomorrow.
- From what we see across markets, it looks like participants are starting to take risk off the table in equity space ahead of the report.
- Markets have struggled this week to settle on a clear narrative for USD assets, especially USD rates.
5. Europe Flash Watch – The German 2025 bazooka!
- In Germany, “debt hawks” are slowly but surely waking up to the reality of their manufacturing industry being brought to its knees.
- In Angela Merkel’s recent book, she pleads for a softer stance on the debt brake, and the political landscape in Germany seems to be softening on the “Schwarze Null” in general, with also the Buba member Nagel now advocating for a softer stance.
- The future government would need a two-thirds majority in the Bundestag and Bundesrat to change the debt brake.
6. What Is the Real Purpose of President Yoon’s Martial Law – To Reveal Election Fraud?
- One of the most important questions about the martial law three days ago is why did President Yoon send special forces (297) to the National Election Commission?
- President Yoon may have ordered troops to be deployed to the NEC to get to the bottom of the election fraud since all the important election servers are stored there.
- It is EXTREMELY DIFFICULT to prove an election fraud. Even if President Yoon declares a war on election frauds, he must have extraordinary pieces of data to back this up.
7. Steno Signals #128- I thought Trump and tariffs were supposed to lead to a bond riot?
- Happy Sunday, friends, and welcome to my straight-to-the-point editorial on everything macro!Just as everyone had concluded that Trump and his (alleged) trade wars would be bond-unfriendly, the bond market has started performing much better—exactly as we suggested would happen following the election results.
- The first major difference compared to 2016, when bonds rioted after Trump’s victory, is that Trump was the clear base case this time around.
- The second major difference is that Trump’s policy mix is not inflationary this time—in fact, it’s quite the opposite.
8. The Week at a Glance: Manufacturing Rebound, Fed Liquidity Signals & Oil’s Fragile Balance
- Happy Monday!Each week, we collect the most important events in the week ahead and provide you with our direction going into them.
- Enjoy!Monday – ISM ManufacturingThe ISM Manufacturing data is due this afternoon, with consensus expecting a rebound from last month’s report, forecasting a figure of 47.6. After reviewing our model library, we see substantial risk/reward in betting on an upward surprise in manufacturing data.
- For instance, our regional PMI model—which uses regional manufacturing prints as inputs—indicates a material increase in the manufacturing PMI today.
9. Geopolitical Flash Update – Bye Bye Barnier
- France sovereign debt reached a record €3.228 trillion, amounting to 112% of GDP in June, well above the 60% cap set by EU regulations.
- France growing debt have slowly been chipping away at investors’ confidence in French bonds.
- After Macron called a snap election in June resulting in a hung parliament, risk premiums on French 10-year bonds have shot up.
10. Here is What We Told Hedge Funds This Week—and How We’re Trading It!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
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. Taiwan Tech Weekly: New China Tech Restrictions Monday; PC Demand Commercial Vs. Consumer Disconnect
- US Set to Unveil New Wave of Semiconductor Restrictions on China
- Hon Hai Subsidiary Says Progress for Nvidia GB200 Servers is Smooth, Mass Production in 2025E
- PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
2. Taiwan Dual-Listings Monitor: TSMC Spread Maintains Elevated Range; UMC Short Interest Rises Higher
- TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
- UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
- ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising
3. Delta Taiwan Vs. Thailand Monitor: Delta Thai Remains at Extreme Relative Value Even After Sell-Off
- Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
- Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
- Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform
4. Intel Finalises US CHIPS Funding But With Some Rather Unusual T&C’s
- Intel is now set to receive $7.86 billion in CHIPs Act funding, down from the $8.5 billion originally touted back in March 2024
- The funding comes with a raft of restrictions and caveats regarding what happens in the event of any changes in Intel’s organizational structure and/or ownership
- The US Department of Commerce also reserves the right to withhold funding and/or weigh in on decisions around outsourcing if Intel fails to meet key, critical milestones. Ouch!
5. Taiwan Semiconductor Industry Aggregate Analysis: Margins Challenged; Inventory Data Positive
- Gross Margins Aggregate Data – Shows Taiwan Semiconductor Companies Under Pressure
- How TSMC and GlobalWafers show two very different margin environments; However everyone needs to manage rising energy costs into 2025E
- Aggregate Inventory Levels — Inventory Days Declining Trend is a Positive Sign
6. PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
- Soft PC Results from Dell and HPQ and Delayed Industry PC Upgrades into 2025E; Dell and HPQ Shares Fall Sharply
- Conclusion: Both Firms Confirm Relative Strength for Commercial and Weakness for Consumer; AI PCs and Windows 11 to Drive 2025E Upgrades
- Asia PC Makers Showing Stronger Growth; However, Dell & HPQ Share Rout May Weigh on Sentiment
7. Taiwan Dual-Listings Monitor: TSMC Spread Approaching Short Level; UMC Short Interest Soars Higher
- TSMC: +20.4% Premium; ADR Premium is Approaching a Short Level
- UMC: +0.7% Premium; Short Interest Soars to New Two-Year Highs
- ASE: +4.2% Premium; ADR Headroom Falls to 100% Maxed Out
8. Memory Monitor: Decoupling Trade Long SK Hynix Vs. Short Nanya Tech
- Memory Market Diverges: AI Demand Continues to Surges While Legacy Segments Struggle in November
- Diverging Demand Trends Highlight Market Decoupling — AI Driving HBM, Server DRAM, QLC NAND Demand
- Outlook for the Memory Market — Decoupling Trade: Long SK Hynix vs. Short Nanya Tech Trade
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon
- Today, Sanrio (8136 JP) announced a large secondary offering where banks would sell down shares and the Tsuji family would sell a few shares at the margin.
- The stock has been on a rocket for two years. It’s expensive. Growth slows next year. Will this cause momentum to turn? Maybe. The offering is 38% of Max RWF.
- I think one could give this a pass, and even sell it if it opens down small.
2. HULIC (3003 JP) – Crossholders Show Up with a BIG (Relative) Secondary Offering
- Today, Hulic Co Ltd (3003 JP) announced a large secondary offering where about a quarter of the crossholdings will sell down holdings. Some exit entirely. Some partially.
- After this selldown, there is a fair bit more to go later, but more of that will be corporate. It’s a BIG offering: 55d of ADV and 55% of MRWF.
- It is “only” about $800mm and retail gets 80% of it. The high div yield will be a selling point but there is a lot of debt.
3. Kansai Electric Power (9503 JP): The Current Playbook
- Since the US$3.5 billion primary/secondary offering announcement, Kansai Electric Power (9503 JP)’s shares have been down 20.6% from the undisturbed price of JPY2,397 per share (13 November).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, KEPCO’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 26 November. The average large Japanese placement tends to generate positive returns.
4. FineToday Holdings (289A JP) IPO: The Bear Case
- FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
- In FineToday Holdings (289A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on the weak 3Q24 revenue performance, mid-tier revenue growth, leveraged balance sheet, share overhang and pre-IPO dividend.
5. Sanrio Placement – Opportunistic >US$800m Selling at All-Time Highs
- A group of domestic financial institutions and the firm’s executives are looking to raise US$840m from trimming their stakes in Sanrio (8136 JP).
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
- In this note, we will talk about the placement and run the deal through our ECM framework.
6. Sanrio (8136 JP): A US$840 Million Secondary Offering
- Sanrio (8136 JP) has announced a secondary offering of up to 25.9 million shares (29.8 million including overallotment), worth around US$840 million (US$970 million including overallotment).
- Sanrio’s goal with the secondary offering is (i) to reduce cross-shareholdings and (ii) to expand and diversify the shareholder base, which should further enhance liquidity.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 13 December (likely 10 December).
7. Meiji Holdings Placement – Momentum Leading into This Cross-Shareholding Selldown Isn’t the Greatest
- A group of investors are looking to raise US$264m from trimming a portion of their stakes in Meiji Holdings (2269 JP).
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
- In this note, we will talk about the placement and run the deal through our ECM framework.
8. Kioxia Pre-IPO – Peer Comparison
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.
9. Kioxia Pre-IPO – Thoughts on Valuations
- Kioxia Holdings (285A JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our earlier notes. In this note we talk about valuations.
10. Kioxoa Pre-IPO – The Negatives – Still a Follower of the Cycle
- Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- In this note, we talk about the not-so-positive aspects of the deal.
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. 7&I (3382 JP) – A York Holdings Deal And Warren Buffett?
- The Seven & I Holdings (3382 JP) to rid itself of control of the Ito-Yokado, York Benimaru, Akachan Hompo, and Denny’s Japan businesses in York Holdings proceeds apace.
- The First Round of bids is due tomorrow, apparently, and all manner of bidders have assembled.
- This leads to the question of a deal for the rest of 7&i. If a TradingCo is a natural co-investor for the Ito family (or ACT), so is Berkshire Hathaway.
2. Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics
- Overnight, Sanrio (8136 JP) announced a placement of 25.87m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 3.88m shares.
- There will be limited passive buying in the short-term and the shares offered is a large percentage of real float of the stock.
- However, Sanrio (8136 JP) is the highest ranked non-constituent stock in a global index universe and a drop in the stock price could be used to accumulate positions.
3. Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- There are now new changes forecast for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
- Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
- The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.
4. Kansai Electric Power (9503 JP) – Huge Offering Is Smaller Now; Reward/Risk Skews Upwards
- On 13 November, Kansai Electric Power (9503 JP) announced an equity offering to raise capital for capex expenditures over the next several years. It is significantly dilutive.
- The shares responded by falling 23% to 8-months lows of ¥1,850 last Thursday and Friday. That puts the stock at the same forward PER post-offering as it was pre-offering.
- That’s probably not an awful place to own now that the stock will have been slightly de-risked/de-levered.
5. Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Big Shift in Divs Leads to Last Minute Changes
- Using data from the close on 25 November, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 17.3% and a one-way trade of TWD 60.6bn (US$1.86bn).
- On average, the forecast adds have started to outperform the forecast deletes. Positioning should continue in stocks that have large flow/impact or have recently joined the list of forecast adds/deletes.
6. [JAPAN ACTIVISM] Keisei Elec (9009) – Murakami Stake Causes Pop But the Oppty Is Still Unconvincing
- 13mos ago, activist investor Palliser Capital spoke at a conference about the value offered by Keisei Electric Railway Co (9009 JP) due to its large stake in Oriental Land (4661).
- Keisei outperformed OLC by 30% over 3.5mos. Then it fell all the way back, and more, over the next five months. Asset sale, buyback, AGM proposals. Meh.
- Nov 25th, Toyo Keizai wrote activist Murakami-san had acquired stakes of <5% in Keikyu Corp (9006 JP) and <1% in Keisei Electric Railway Co (9009 JP). Shares in both jumped.
7. Taiwan Top 50 ETF Rebalance Preview: Double Inclusion for Yang Ming Marine (2609 TT)
- Yang Ming Marine Transport (2609 TT) is forecast to be added to the Yuanta/P-Shares Taiwan Top 50 ETF in December, replacing Airtac International (1590 TT).
- Yang Ming Marine Transport (2609 TT) is also expected to be added to the Yuanta/P-shares Dividend Plus ETF in December, so there will be buying from multiple trackers.
- Shorts are near their lows in Yang Ming Marine Transport (2609 TT) while there has been covering in Airtac International (1590 TT) after an increase in the last few months.
8. HSTECH Index Rebalance: Midea (300 HK) Replaces Weibo (9898 HK); US$1.5bn Round-Trip Trade
- In a surprise, Midea Group (300 HK) will replace Weibo (9898 HK) in the Hang Seng TECH Index (HSTECH INDEX) after the close of trading on 6 December.
- Estimated one-way turnover at the rebalance is 4.5% resulting in a round-trip trade of HK$11.72bn (US$1.51bn). Passives need to buy 9x ADV in Midea Group (300 HK).
- The Midea Group Co Ltd A (000333 CH) / Midea Group (300 HK) premium could drop due to the index inclusion providing an entry point into an AH expansion trade.
9. NTT (9432 JP) And SBI Sumishin NetBank (7163 JP)? Maybe. Maybe Not. Seven Bank A Better Idea
- An article in Japanese weekly magazine Bunshun this morning sent shares inSBI Sumishin Net Bank (7163 JP) limit up +17% with a headline that NTT Docomo was interested to buy.
- Without access to the article, I can’t go deep, but the base concept is that NTT Docomo is “worried” about KDDI (which has a bank, as does Softbank Corp)
- It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn’t the same as buying a company. Hmmm…
10. Seven & I Holdings (3382 JP): Implications from the YORK Holdings Stake Sale
- NHK reports that Seven & I Holdings (3382 JP)‘s first bidding round for a YORK Holdings stake ends on 28 November. The sale provides a third-party valuation benchmark for the asset.
- It is an incremental positive for the founding family MBO as it supports the post-privatisation strategy and assists in securing bank financing.
- This is an incremental negative for Alimentation Couche-Tard (ATD CN) as it shows that the Board believes the restructuring plan will increase shareholder corporate value.
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. Here’s What We Told Hedge Funds This Week – and How We’re Trading It!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and today, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
2. Flash Liquidity Update: A USD liquidity PUT is now in place
- We just received the meeting minutes from the November FOMC meeting, which include two important takeaways on liquidity—both of which are positive.
- We have been highlighting for some time that markets are trading close to pain thresholds in USD liquidity (and below them in EUR liquidity).
- The Fed is now acknowledging the need for a “put” on liquidity levels.
3. The Next Four Years…
- The Republican sweep, both in Congress and the White House, seems to have sparked a risk-on attitude across financial markets of late
- But Republican presidencies have coincided more regularly with periods of post-war economic downturns
- And the disparate US equity market performance enveloping presidential cycles is a nagging puzzle
4. EM Fixed Income: Emerging Markets Outlook & Strategy for 2025
- US election outcome and policy proposals causing challenges for emerging markets in 2025
- Expectations for US exceptionalism and potential insularity affecting global trade and growth
- Potential impacts on inflation, monetary policy, fiscal dynamics, and investment environment for EM fixed income in 2025, with short-term opportunities amidst uncertainties.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
5. Asian Equities: Be Selective – Focus on The “ROE Winners”
- Asia is cheap relative to the US – trading at less than 40% of US’s P/BV – but that’s because Asia’s ROE has consistently declined relative to US’s.
- Over the next couple of years Asian ROEs are forecast to revive relative to the US’s but all Asian markets are not forecast to participate in this recovery.
- The “ROE Winners” (rising forecast ROEs) are Korea, Taiwan, India, Malaysia. Indonesia to stay flat but solidly higher than Asian average. We are skeptical of HK/China and Thailand’s ROE recovery.
6. Japan Funds: Extreme Stocks
- We screen for Japanese companies at the extreme ends of their positioning or momentum ranges among active Japan equity funds.
- Low Positioning coupled with Negative Momentum: Nissan Motor Corp and Misumi Group
- High Positioning coupled with High Momentum: ASICS Corp and Kyushu Railway
7. CHINA TARIFFS: Fact and Fiction
- The US has ramped up its tariff threats months before Trump even takes office. The newly appointed trade representative is a China hawk with some questionable policies ideas.
- China has reduced its dependency on US exports by half over the last several years and is better prepared to handle trade negotiations.
- Although previous trade negotiations during Trump’s first term lasted more than a year, most of the tariffs were never imposed.
8. Steno Signals #127 – We need a bit of bad news for liquidity to improve
- Hope you had a great weekend! Here’s this week’s sneak peek into my thoughts on liquidity trends and how they influence my approach to risk-taking.
- Watching the alt-season unfold from an incredibly wet and windy Copenhagen this weekend has been quite bizarre.
- The weather outside certainly doesn’t bring out my animal spirits, but there’s a certain smell of 2021 in the air in financial markets—especially if central banks decide to print more into this scenario.
9. Positioning Watch – The US Exceptionalism Story Is Back in Play!
- Main point: The current positioning picture is becoming increasingly uniform across asset classes: higher US growth, higher USD rates versus EUR/GBP rates, higher USD vs. peers, and higher US equity returns compared to Europe/Asia.
- The risk/reward of taking the opposite bet is starting to look appetizing.
We have been looking at the explosive increase in US equity positioning for a while, as multiple indicators show that equities are reaching stretched points positioning-wise — CFTC positioning among asset managers skyrocketing, our own data showing increased positioning in US vs. the rest of the world, and surveys starting to indicate that everyone is expecting equities to crawl higher.
10. Deciphering Trumponomics 2.0
- Looking to 2025, market returns are likely to be more uncertain than in the past. The degree of dispersion in the range of forecasts is wider than usual.
- There will be winners and losers. Deregulation should benefit the energy, AI-related technology, and financials.
- Losers include bonds, and construction stocks because of their sensitivity to both rising rates and heightened labour costs from deportation.