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Smartkarma Daily Briefs

Nov 21
0

Daily Brief Quantitative Analysis: Hong Kong Connect Flows (Nov 18th): Tencent and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Hong Kong Connect Flows (Nov 18th): Tencent, HKEx, Country Garden, Meituan
  • HK Short Interest Weekly: AIA, Li Ning, SHK PPT, CSPC Pharma, Fosun Pharma, Kingsoft
  • Northbound Flows (Nov 18th): Moutai, Midea, China Merchants Bank, Ping An Insurance, Zijin Mining
  • TWSE Short Interest Weekly (Nov 18th): Wiwynn, Yageo, Evergreen Marine, UMC, ASE, Powerchip
  • A-H Premium Weekly (Nov 18th): China Longyuan, GF Securities, Great Wall Motor

Hong Kong Connect Flows (Nov 18th): Tencent, HKEx, Country Garden, Meituan

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of November 18th.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight inflows into Tencent, HKEx, Country Garden and outflows from Meituan.

HK Short Interest Weekly: AIA, Li Ning, SHK PPT, CSPC Pharma, Fosun Pharma, Kingsoft

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Nov 11th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight short changes in AIA, Li Ning, SHK PPT, CSPC Pharma, Fosun Pharma, Kingsoft.

Northbound Flows (Nov 18th): Moutai, Midea, China Merchants Bank, Ping An Insurance, Zijin Mining

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of November 18th.
  • We estimate the weekly inflows to be US$4,809.9 million, led by financials, consumer staples, consumer discretionary sectors.
  • We highlight flows for Moutai, Midea, China Merchants Bank, Ping An Insurance, Zijin Mining.

TWSE Short Interest Weekly (Nov 18th): Wiwynn, Yageo, Evergreen Marine, UMC, ASE, Powerchip

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Nov 18th which has an aggregated short interest worth USD13.9bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in Wiwynn, Yageo, Evergreen Marine, UMC, ASE, Powerchip.

A-H Premium Weekly (Nov 18th): China Longyuan, GF Securities, Great Wall Motor

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 121.4% as of Nov 18th.
  • The average A-H premium changed by -7.0ppt weeok on week, led by consumer discretionary, industrials, communication services and offset by consumer staples.
  • We highlight weekly changes in A-H premium for China Longyuan, GF Securities, Great Wall Motor, COSCO Shipping Energy. 

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Nov 21
0

Daily Brief Technical Analysis: SPX 4 and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • SPX 4,100 Top Build Ahead of 3,300

SPX 4,100 Top Build Ahead of 3,300

By Thomas Schroeder

  • SPX has another tactical leg up within our Q4 bull cycle toward 4,100-200 where a top is expected to form.
  • Lead warning signals are emerging in the RTY relative performance and well-defined rising wedge. NDX trading new key lows is a negative for growth.
  • SPX 4,100 wedge sell zone stands out for a final down leg to 3,300/200, that sets the stage for a macro low a new bull cycle.

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Nov 21
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan | Shifting Sentiments but Bullish Price Action and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan | Shifting Sentiments but Bullish Price Action
  • China Private Education: A Massive Comeback?
  • Weekly Stock Bullfinder – Week of 11/21

Good Morning Japan | Shifting Sentiments but Bullish Price Action

By Mark Chadwick

  • Good Morning Japan:  We strive to provide the very best breaking macro, stock and thematic overnight news that will impact your trading day in Japan. FOLLOW US to keep abreast!
  • OVERNIGHT.  Trump is back on Twitter ! Sentiment mixed on Fed Pivot -bulls still in charge – market underweight equities; Things not as bad in TECH; Thanksgiving =consumer stock volatility
  • JAPAN. NKY to open flat; Yen stable;  PM Kishida in danger of the sack ? Not yet; Inflation approaching BOJ’s 2% tgt – still need wages to rise

China Private Education: A Massive Comeback?

By Osbert Tang, CFA

  • The sharp rally of China’s higher education stocks on 18 Nov reflects positive sentiment from announcement of “Implementation Plan for the Project of Reaching the Standards for Running Vocational Schools”.
  • For China Education Group (839 HK), potential resumption of dividend will be a driver. The 48% increase in 2022/23 registered students and 10pp utilisation growth have secured FY23 outlook.  
  • CEG’s premium valuations are justified by execution capability, asset quality and earnings outlook. FY23 consensus forecasts are just too low and upgrades will be positive catalysts.

Weekly Stock Bullfinder – Week of 11/21

By Weekly Stock Bull Finder

  • One useful way of finding emerging trends and potential market leadership is by spotting divergences in sectors, companies, and indexes.
  • Alternatively, spotting negative divergences can be useful to identify when existing trends are reversing or about to reverse judged solely by the observed price action.
  • Divergences can often give helpful clues of new market leadership which then can be confirmed by technical charts and especially volume or accumulation signs.

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Nov 21
0

Daily Brief Macro: Fed Policy Outlook: Looming Pivot and a Higher Inflation Target? and more

By | Daily Briefs, Macro

In today’s briefing:

  • Fed Policy Outlook: Looming Pivot and a Higher Inflation Target?
  • Sentiment Whipsaws Are Masking the Bear Trend
  • The Fed Has Cratered Stock-Bond Diversification, What’s Next?
  • The 30,000-Foot View

Fed Policy Outlook: Looming Pivot and a Higher Inflation Target?

By Said Desaque

  • The better-than-expected October US consumer prices release has imparted hope in financial markets of a looming turning point in the conduct of US monetary policy. 
  • History suggests the yield curve inversion since July indicates the onset of recession in 2023 H2, by which time the Fed should have an ample buffer to reduce interest rates. 
  • The proponents of a higher Fed inflation target argue that the costs to the real economy of dogmatically pursuing a 2% goal are excessively high due to supply-side forces. 

Sentiment Whipsaws Are Masking the Bear Trend

By Cam Hui

  • The recent risk-on episode is attributable to the combination of excessively bearish sentiment and a positive inflation surprise.
  • Most of the effects of the buying stampede have likely dissipated.
  • Technical conditions are weak and the bear market is poised to resume.

The Fed Has Cratered Stock-Bond Diversification, What’s Next?

By Cam Hui

  • The performance of balanced funds was challenging in 2022. You would have to go back to the Volcker Fed of 1980–1982 to see positive correlation between stock and bond prices.
  • The good news is the inflection point should be just around the corner. 
  • Positive correlation between stock and bond prices in 2022 should translate to a strong return recovery for balanced funds.

The 30,000-Foot View

By The Macro Compass

  • In this business, we are often inundated by countless news headlines telling us all about what’s happening…now.
  • It’s a never-ending process that invites market participants to spend time and energy dissecting how new information affects the investment landscape.
  • For a macro investor though, every now and then taking a step back is crucial: with a 30,000-foot view, the macro big picture becomes increasingly clear.

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Nov 21
0

Daily Brief Crypto: The 2022 Crypto Debt Crisis and more

By | Crypto, Daily Briefs

In today’s briefing:

  • The 2022 Crypto Debt Crisis

The 2022 Crypto Debt Crisis

By Etherbridge

  • Over the past week and a half, we witnessed the unravelling of the $32 billion empire that was FTX and the fall of its “benevolent” leader Sam Bankman-Fried, otherwise known as SBF.
  • This story of overleveraging and outright fraud has formed a part of the bigger crypto debt crisis of 2022.
  • This article will explore how this debt crisis has unfolded and how all parties were closely interlinked. 

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Nov 21
0

Daily Brief Event-Driven: Hang Seng Index Dec22 Rebal – 3 IN and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)
  • FTSE All-World/​​​All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery
  • Hang Seng TECH Index Rebalance: Float & Capping Changes
  • HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow
  • Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile
  • Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
  • Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying
  • Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow
  • Despature Family/Somfy: Lowball Simplified Takeout, Timetable
  • Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)

By Travis Lundy

FTSE All-World/​​​All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery

By Brian Freitas

Hang Seng TECH Index Rebalance: Float & Capping Changes

By Brian Freitas

  • As expected, there are no adds or deletes for the Hang Seng Tech Index (HSTECH INDEX) in December. However, there are plenty of capping and float changes to drive flows.
  • The December rebalance is expected to have a one-way turnover of 2.3% resulting in a one-way trade of HK$1.9bn.
  • Short interest is greater than 5% of float on a few stocks and a continued recovering in markets could lead to a squeeze higher.

HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow

By Travis Lundy

Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile

By Oshadhi Kumarasiri

  • Following a couple of investor-activism campaigns against Toshiba Corp (6502 JP) and Fuji Soft Inc (9749 JP), Singapore-based Japan-focused activist investor, 3D-Investment-Partners seems to be turning its attention towards Sapporo.
  • Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until they hear out opinions and new ideas from shareholders.
  • We believe that there’s a chance that 3D Investment Partners could turn hostile as Sapporo Holdings (2501 JP) seems to be completely ignoring the activist investor’s requests and proposals.

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

By Arun George

Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying

By Brian Freitas

Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow

By Travis Lundy

  • The Hang Seng Tech Index Review was announced on Friday after the close. There are no name changes but there is decent flow. 3% one-way turnover.
  • There are five capping changes and one very large share count change making things interesting.
  • All told, this is less impactful than it was last time, and less impactful than the other index rebalances announced. 

Despature Family/Somfy: Lowball Simplified Takeout, Timetable

By Jesus Rodriguez Aguilar

  • Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
  • In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
  • I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

By Sanghyun Park

  • KRX will lower the tick sizes for KOSPI and KOSDAQ starting next January to reduce actual transaction costs and increase market liquidity by attracting more high-frequency traders.
  • KRX’s acceptance of the market’s long-standing demand at this point can be seen as primarily driven by the purpose of resolving the problem of reduced market liquidity.
  • We need to design a setup that takes a tighter holding period of event and flow trading in the Korean local market from next year.

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Nov 21
0

Daily Brief Equity Bottom-Up: Weimob (2013 HK): Strategic Patience Will Be Rewarded (Part 2) and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Weimob (2013 HK): Strategic Patience Will Be Rewarded (Part 2)
  • Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery
  • Galaxy Entertainment Group: Its 4.5% of Wynn Shares Key if the Stock Is in Play
  • Alfresa Holdings (2784 JP): H1FY23 Review- Better-Than-Expected Performance; Outlook Is Positive
  • Taiwan Tech Weekly: AMAT Results Buoy Market, But Nanya at Risk, Foreigners Massively Buy Taiwan
  • Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning
  • REIT Watch – Industrial S-Reits see resilience despite macro challenges

Weimob (2013 HK): Strategic Patience Will Be Rewarded (Part 2)

By Eric Chen

  • Weimob has emerged from the pandemic stronger and leaner, further consolidating its leadership in China’s e-commerce SaaS market. 
  • Drawing insights into the supply side (merchants/brands) on  Alibaba platform, our bottom-up analysis suggests that Weimob potentially has a US$600mn revenue opportunity by 2025.
  • We value Weimob at US$3bn assigning 5xPS on its US$600mn revenue by 2025,  implying 25% CAGR over 3-year period. Patience needed to navigate high-inflation environment which pressures growth assets. 

Selamat Sempurna (SMSM IJ) – Filters and Radiators Leading the Recovery

By Angus Mackintosh

  • Selamat Sempurna (SMSM IJ) remains one of the best quality Indonesian industrial companies, as the leading auto and heavy equipment filter producers for both OEM and the aftermarket.
  • The company booked a strong set of 9M2022 results, with sales up +21% YoY and net profit increasing +30% YoY, driven by both domestic and export markets.
  • Selamat Sempurna (SMSM IJ) maintains it FY2022 target for 15% sales and profits growth for FY2022, which looks conservative after the performance at 9M stage despite potential global headwinds.

Galaxy Entertainment Group: Its 4.5% of Wynn Shares Key if the Stock Is in Play

By Howard J Klein

  • In 2018, shortly after the departure of Wynn founder Steve Wynn, Galaxy bought 4.9% of his shares atUS$175. The shares have been under water. But a new player has entered.
  • Gaming, restaurant and sports entrepreneur Tillman Fertitta has just bought 6.1% of Wynn shares setting up a possible play on the shares, or a total takeover move.
  • There are three scenarios that could play bullish for Galaxy if Wynn is in play. All auger well for movement on the stock.

Alfresa Holdings (2784 JP): H1FY23 Review- Better-Than-Expected Performance; Outlook Is Positive

By Tina Banerjee

  • Alfresa Holdings (2784 JP) reported better-than-expected H1FY23 results, with sales growth of 3% to ¥1,332 billion, 2% ahead of guidance of ¥1,304 billion, mainly driven by pharmaceutical wholesaling business.
  • With a revenue growth of 4.3% y/y, pharmaceutical wholesaling business outpaced the broad market growth of 2.7% and improved its market share to 23.3% at the end of H1FY23.
  • The company has announced an interim dividend of ¥28 per share. Despite reporting encouraging H1FY23 performance, Alfresa has reiterated its FY23 guidance, implying accelerated growth in H2FY23.

Taiwan Tech Weekly: AMAT Results Buoy Market, But Nanya at Risk, Foreigners Massively Buy Taiwan

By Vincent Fernando, CFA

Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning

By Xinyao (Criss) Wang

  • Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)’s 22Q3 performance was disappointing because its strategy of “stabilizing” performance growth by raising prices has been ineffective.
  • Endogenous growth problem would finally be reflected in the decline of company’s valuation. We recommend to think about long-term logic from a broader perspective,not simply tracking performance of individual companies.
  • Pien Tze Huang’s valuation still has a lot of downward space. When the bubble bursts or its valuation is lower than Kweichow Moutai, it’s time to go long again.

REIT Watch – Industrial S-Reits see resilience despite macro challenges

By Geoff Howie

  • REIT Watch – Hospitality S-Reits ride on pent-up travel demand and the return of events in Q3 2022 All hospitality trusts with Singapore assets observed significant improvements in occupancy and RevPAR (revenue per available room) in the last quarter, driven by the return of large-scale events and the Mice (meetings, incentives, conventions and exhibitions) industry, alongside pent-up demand for overseas travels.
  • Far East Hospitality Trust recorded that its Q3 2022 gross revenue increased 2.0 per cent yoy, led by growth from the hotel segment which increased 4.7 per cent.
  • Income available for distribution grew 12.0 per cent yoy from higher NPI and interest income.

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Nov 20
0

Daily Brief Australia: OZ Minerals Ltd, Monadelphous and more

By | Australia, Daily Briefs

In today’s briefing:

  • Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend
  • S&P/​​​​​​​​ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend

By Arun George

S&P/​​​​​​​​ASX Quiddity Final Expectations Dec 22: Mostly Mining Companies, Avoid Short Buildup!

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
  • The 6-month reference period for the December 2022 Rebalance is now complete.
  • I do not see any changes for ASX 20 or ASX 100. I see one ADD/DEL for ASX 50 and three ADDs/DELs for ASX 200.

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Nov 20
0

Daily Brief South Korea: LG Household & Health Care, Lotte Chemical and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Light at the End of the Dark Tunnel for Korean Cosmetics?
  • Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

Light at the End of the Dark Tunnel for Korean Cosmetics?

By Douglas Kim

  • We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&H and Amorepacific Corp.
  • These two stocks have underperformed the market in the past year but have started to outperform the market in the past three weeks. 
  • There are credible signs that indoor mask wearing in Korea will be eliminated in Korea on/near March 2023 and that the inbound visitors to Korea will continue to increase significantly.

Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

By Sanghyun Park

  • Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.
  • This event has already been leaked in advance from early last week, so it isn’t easy to expect a significant return from the short-selling approach immediately after the announcement.
  • Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.

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Nov 20
0

Daily Brief Singapore: Halcyon Agri and more

By | Daily Briefs, Singapore

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

By David Blennerhassett

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