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Smartkarma Daily Briefs

Daily Brief Japan: Seven & I Holdings, Toyo Construction, Universal Entertainment, Takeda Pharmaceutical and more

By | Daily Briefs, Japan

In today’s briefing:

  • Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business
  • Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board
  • Universal Entertainment of Japan: IPO for Its Manila Casino Draws Closer
  • Takeda Strengthens Oncology Portfolio with HUTCHMED’s Fruquintinib Acquisition

Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business

By Oshadhi Kumarasiri

  • New York-based hedge fund ValueAct has told Seven & I Holdings (3382 JP)’s shareholders to support them in their bid to spin off the 7-Eleven US convenience store business.
  • Spinning off the only growth driver of the business does not seem like an idea that Seven & I or its shareholders are likely to entertain.
  • We fear that ValueAct could be looking for reasons to call-off its investor-activism-campaign and perhaps is trying to squeeze out every last bit of gains as it exits its positions.

Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board

By Arun George

  • Due to the inability of getting a fair hearing from Toyo Construction (1890 JP)’s Board, YFO’s strategy now is to replace some of the Board at the June AGM.  
  • YFO’s latest press release also catalogues the Board’s shockingly poor corporate governance in relation to its tender offer at JPY1,000. Crucially, a special committee is yet to be formed. 
  • There is no timeline update on the tender which was set to start in late January. YFO continues to maintain that it will not withdraw its proposal.

Universal Entertainment of Japan: IPO for Its Manila Casino Draws Closer

By Howard J Klein

  • The long, tortured legal mess between Universal and its ousted founder over control of its lucrative Manila integrated casino resort now has a clear path to its spin off IPO.
  • The Okada Manila resort is among the sector leaders in the burgeoning Philippines gaming market now ramping rapidly toward full GGR recovery.
  • At UE’s current price of 2,347jpy, the stock bears a built in premium of a Spac IPO now appearing to be pointed to debut this year.

Takeda Strengthens Oncology Portfolio with HUTCHMED’s Fruquintinib Acquisition

By Shifara Samsudeen, ACMA, CGMA

  • Takeda announced Monday that it has entered into an exclusive licensing agreement with HUTCHMED (China) for further development and commercialisation of Fruquintinib outside of Mainland China, Macau and Hong Kong.
  • Takeda will pay HUTCHMED $400m upfront and up to $730m in additional potential payments relating to regulatory, development and commercial sales milestones, as well as royalties on net sales.
  • Fruquintinib was approved in China in 2018, is a highly selective, oral VEGFR1/2/3 Tyrosine Kinase Inhibitor and offers potential new treatment option for patients with refractory metastatic colorectal cancer (CRC).

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Most Read: Oriental Land, Fujitsu General, Seven & I Holdings, LG Energy Solution, Alibaba Group, Sabana Industrial REIT, Toyo Construction, KB Financial and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
  • Fujitsu General (6755) – Fujitsu’s Stake On The Block
  • Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business
  • LG Energy Solution: Another MSCI Upweight Event Coming in May
  • Alibaba Group Holdings: Staying the Course
  • Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix
  • Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board
  • Good Morning Japan | The Doves Strike Back; Google Joins Layoff Parade; “Too Early for BOJ Exit”
  • Good Morning Japan |THE SQUEEZE – Just Buy Tech; US Broker U/G to Semi Spurs Rally; Watch Copper
  • Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE

Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

By Brian Freitas


Fujitsu General (6755) – Fujitsu’s Stake On The Block

By Travis Lundy


Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business

By Oshadhi Kumarasiri

  • New York-based hedge fund ValueAct has told Seven & I Holdings (3382 JP)’s shareholders to support them in their bid to spin off the 7-Eleven US convenience store business.
  • Spinning off the only growth driver of the business does not seem like an idea that Seven & I or its shareholders are likely to entertain.
  • We fear that ValueAct could be looking for reasons to call-off its investor-activism-campaign and perhaps is trying to squeeze out every last bit of gains as it exits its positions.

LG Energy Solution: Another MSCI Upweight Event Coming in May

By Sanghyun Park

  • MSCI will likely reflect the ESOP selling in the upcoming rebalancing. Since MSCI’s rounding magnitude is 5%p, a similar passive impact as that of the previous IR may appear.
  • This means that the remarkable price rally up to last November’s announcement date can be repeated this time closer to the announcement time in May.
  • Conservatively assuming MSCI Korea’s tracking fund size to be ₩60T, LG Energy’s 5%p up-weight is expected to induce about ₩330B of passive inflow, which is 2.09x ADTV.

Alibaba Group Holdings: Staying the Course

By Steven Holden

  • Average fund weights in Alibaba among 270 active EM funds fell from a peak of 6.3% in October 2020 to between 1.7% and 2.5% over the last 18 months. 
  • Significant switch from Growth to Value, with Value/Yield funds at record ownership levels whilst Aggressive Growth scale back holdings.
  • Fund ownership trends are positive, with a growing number of managers making the move to overweight whilst index weights and prices remain at these levels.  

Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix

By Travis Lundy

  • On Friday, after the close, 5.4% owner of Sabana Industrial REIT (SSREIT SP) announced it had offered to buy another 10.0% in a Partial Offer at a recent high price.
  • The Price of the Tender Offer at S$0.465/share matches a recent (and 7-year) high and a 0.88x multiple against June 2022 NAV of S$0.53/share.
  • It’s a small deal (US$35mm) for a small REIT (US$350mm) but there’s an activist and an engaged not-quite sponsor, and this would make a third large unitholder in the mix.

Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board

By Arun George

  • Due to the inability of getting a fair hearing from Toyo Construction (1890 JP)’s Board, YFO’s strategy now is to replace some of the Board at the June AGM.  
  • YFO’s latest press release also catalogues the Board’s shockingly poor corporate governance in relation to its tender offer at JPY1,000. Crucially, a special committee is yet to be formed. 
  • There is no timeline update on the tender which was set to start in late January. YFO continues to maintain that it will not withdraw its proposal.

Good Morning Japan | The Doves Strike Back; Google Joins Layoff Parade; “Too Early for BOJ Exit”

By Mark Chadwick

  • OVERSEAS.  SPX +1.9% to close on highs; Beta-driven rally as Tech rebounds;  Dovish talk from 2 Fed Members;  Google joins the fray slashing 12,000 staff; US Banks not far behind.
  • JAPAN.  NKY Futs +1.3% vs Cash; USDJPY 129.6;  CORE Inflation hits 4%;  Kishida: too early to discuss BOJ 2% policy exit;  Japan courts global elite grads; Population declines in 2022
  • DAILY NUGGET.  Change of Direction with new BOJ Leadership? Ha, policy direction has already been decided, and whoever the Govt selects will just continue where Kuroda left off.

Good Morning Japan |THE SQUEEZE – Just Buy Tech; US Broker U/G to Semi Spurs Rally; Watch Copper

By Mark Chadwick

  • OVERSEAS.  SPX +1.2% but all Action in Tech as SOX +5.5%; Barclay Sector upgrade spurs Semis; Fed Hikes in the rear view for now; Watch Copper – supply risks+China demand
  • JAPAN. NKY Futs +0.9% vs Cash; USDJPY 130.65; Where US goes, Japan will follow: All about Tech; Kishida speech: Nuclear Power, Defense, Child support in focus; Wage hikes gather steam.
  • DAILY NUGGET. Davos  on board with the coming of the Metaverse. We highlight this and think there are near term challenges.

Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE

By Douglas Kim

  • In this insight, we discuss the five most aggressive corporate activist firms that have been moving the Korean equity market in the past year.
  • They include Align Partners Capital Management, KCGI, Flashlight Capital Partners, Truston, and LIFE Asset Management.
  • Share prices of 15 companies that the corporate activist firms have invested in Korea are up on average 9.7% YTD, outperforming KOSPI which is up 7.1% in the same period.

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Daily Brief Singapore: Sabana Industrial REIT and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix

Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix

By Travis Lundy

  • On Friday, after the close, 5.4% owner of Sabana Industrial REIT (SSREIT SP) announced it had offered to buy another 10.0% in a Partial Offer at a recent high price.
  • The Price of the Tender Offer at S$0.465/share matches a recent (and 7-year) high and a 0.88x multiple against June 2022 NAV of S$0.53/share.
  • It’s a small deal (US$35mm) for a small REIT (US$350mm) but there’s an activist and an engaged not-quite sponsor, and this would make a third large unitholder in the mix.

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Daily Brief India: Pidilite Industries and more

By | Daily Briefs, India

In today’s briefing:

  • NIFTY50 Index Rebalance Preview: No Changes Likely in March

NIFTY50 Index Rebalance Preview: No Changes Likely in March

By Brian Freitas


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Daily Brief Quantitative Analysis: TWSE Short Interest Weekly (Jan 20th): Alexander Marine and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • TWSE Short Interest Weekly (Jan 20th): Alexander Marine

TWSE Short Interest Weekly (Jan 20th): Alexander Marine

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Jan 20th which has an aggregated short interest worth USD12.1bn.
  • 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.
  • Short interest decreased by 0.4% last week. We highlight short interest changes in Alexander Marine.

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Daily Brief Technical Analysis: Ethereum (XETUSD): Target Achieved in 9 Days (+19.6%) and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Ethereum (XETUSD): Target Achieved in 9 Days (+19.6%)

Ethereum (XETUSD): Target Achieved in 9 Days (+19.6%)

By David Coloretti, CMT

  • On 12 January we published a bullish tactical recommendation in Ethereum (XETUSD).
  • We determined that Ethereum at 1400.813 was evolving into a sustainable multi-month uptrend and was likely to initially target a 19.6% upswing to 1675.58. 
  • Ethereum achieved our initial target at 1675.58 (+19.6%) on 21 January 2023.

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Daily Brief Thematic (Sector/Industry): Good Morning Japan | The Doves Strike Back; Google Joins Layoff Parade; “Too Early for BOJ Exit” and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan | The Doves Strike Back; Google Joins Layoff Parade; “Too Early for BOJ Exit”
  • China EV Outlook: 2023 Will Be a Year of Divergence
  • The Innovations Portfolio – Week Nine
  • Weekly Stock Bullfinder – Week of 1/23

Good Morning Japan | The Doves Strike Back; Google Joins Layoff Parade; “Too Early for BOJ Exit”

By Mark Chadwick

  • OVERSEAS.  SPX +1.9% to close on highs; Beta-driven rally as Tech rebounds;  Dovish talk from 2 Fed Members;  Google joins the fray slashing 12,000 staff; US Banks not far behind.
  • JAPAN.  NKY Futs +1.3% vs Cash; USDJPY 129.6;  CORE Inflation hits 4%;  Kishida: too early to discuss BOJ 2% policy exit;  Japan courts global elite grads; Population declines in 2022
  • DAILY NUGGET.  Change of Direction with new BOJ Leadership? Ha, policy direction has already been decided, and whoever the Govt selects will just continue where Kuroda left off.

China EV Outlook: 2023 Will Be a Year of Divergence

By Shawn Yang

  • CPCA reported China’s 2022 EV sales of 6.49mn units, + 96.1% YoY, primarily driven by better market acceptance of EVs and favourable EV policies. 
  • We think the fiercer competition will lead to divergence, which is already proven by Tesla’s price war. The followers such as Xpeng, could only be price takers and sacrifice margin.
  • We reiterate Li Auto as our top pick, as 1) better profitability; 2) positive growth outlook in 2023. We cut NIO’s TP to US$ 18.

The Innovations Portfolio – Week Nine

By Pyari Menon

  • The three companies we write about this week are ASML Holding NV (ASML US) , Bayer AG (BAYN GY)  and Gentex Corp (GNTX US)
  • We included ChatGPT’s innovation assessment for the three companies in the report. The qualitative commentary of ChatGPT though fluffy does somewhat reflect our quantitative assessment from technical literature.
  • For the nine weeks since inception ended 20 Jan the combined innovation portfolio was +3.5%, versus DJIA -1.1%, S&P500 +0.2%, Nasdaq -0.1%, Russell2000 +1.0%, MSCI-ACWI-ETF +3.1%, all in US$ terms

Weekly Stock Bullfinder – Week of 1/23

By Weekly Stock Bull Finder

  • Hope everyone had a nice weekend! Collisions Ahead? As some food for thought, I am listing out a few “collisions” I am focusing on in the short to intermediate term that I believe are important signposts to monitor.
  • I am calling them collisions for now because markets usually never follow a nice and simple linear movement as competing forces, new trends, data, and developments emerge which is what make markets interesting and extremely difficult to predict in the short term.
  • Below are 4 “collisions” I am keeping on eye on.

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Daily Brief Credit: Morning Views Asia: Fosun International and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Fosun International, Yankuang Energy Group

Morning Views Asia: Fosun International, Yankuang Energy Group

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


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Daily Brief Macro: Fed Policy Outlook: Quantitative Tightening Programme Facing Tough Challenges in 2023 and more

By | Daily Briefs, Macro

In today’s briefing:

  • Fed Policy Outlook: Quantitative Tightening Programme Facing Tough Challenges in 2023
  • Positioning Watch – a Sentiment-Gauge Across Asset Classes
  • Steno’s Signals – S&P 500 to Bottom at 3250 in H2-2023 According To “The Waller Rule”
  • Will the Soft Landing Green Shoots Be Trampled?
  • Is the Dip a Gift From the Breadth Thrust Gods?
  • Mean Reversion
  • Integrated Oil, Oil Prod’n, Dept Stores & Major Banks Estimates in Accelerating Downtrends.
  • Recession or Soft Landing?

Fed Policy Outlook: Quantitative Tightening Programme Facing Tough Challenges in 2023

By Said Desaque

  • Rising uncertainty about the economic outlook and investors’ lack of understanding about quantitative tightening (QT) have raised concerns of unintended and excessive US monetary tightening.
  • Disintermediation by households is putting downward pressure on bank reserves via direct cash purchases of T-bills due to unattractive returns on certificates of deposits. 
  • The US debt ceiling impasse raises the prospect of QT being neutralised as depletion of the Treasury’s General Account at the Fed is offset by an increase in bank reserves. 

Positioning Watch – a Sentiment-Gauge Across Asset Classes

By Andreas Steno

  • We still keep a watchful eye on copper which, in our opinion, still possesses all the fundamentals for further upside. 
  • JPY positioning is way too SHORT, should the BoJ further widen the band. AUD is too NEGATIVE, if China is to fully reopen.
  • We perceive the near future somewhat optimistically – relatively to consensus. We believe that the market is a bit too bearish, and we favor some net equity exposure

Steno’s Signals – S&P 500 to Bottom at 3250 in H2-2023 According To “The Waller Rule”

By Andreas Steno

  • Christopher Waller from the Fed hinted of a rule-based policy setup on QT
  • If USD reserves reach 10-11% of GDP, the Fed may consider pausing the balance sheet
  • A lot of liquidity will have to be withdrawn to get to 10% of GDP – S&P 500 at 3250?

Will the Soft Landing Green Shoots Be Trampled?

By Cam Hui

  • Will the soft landing shoots be trampled? The coming weeks will be an acid test. Risk levels are elevated and everything has to go right for the bulls to prevail.
  • Earnings season is in full swing and the macro narrative of a soft landing could shift suddenly to an earnings recession.
  • China is celebrating its Spring Festival as workers return to their homes for the Lunar New Year. Spring Festival travel has the potential to develop into a COVID catastrophe.

Is the Dip a Gift From the Breadth Thrust Gods?

By Cam Hui

  • Technical analysts recently became very excited when price momentum signals began to flash buy signals. Should you trust the historical evidence of breadth thrusts? Opinions are varied.
  • The S&P 500 stalled at trend-line resistance and support can be found at about 3850, while resistance is at about 3970.
  • From a fundamental perspective, a substantial number of S&P 500 stocks will report earnings in the next 2–3 weeks and set the tone for equity risk appetite.

Mean Reversion

By Mark Tinker

  • Firstly, a Happy Chinese New Year to all our friends and colleagues in Asia, for as we pointed out in a post this time a year ago Chinese New Year is celebrated not only in Greater China but across much of Asia.
  • Indeed, we would estimate that close to 2bn people are celebrating this week, and after the disruption of the last two years, there is enormous pent up demand for travel and social interaction. Enjoy!
  • This year is the year of the Rabbit, or more specifically, the Water Rabbit, as each of the 12 signs of the Chinese Zodiac rotates through a cycle of five elements, nicely described in the annual (tongue in cheek) investment guide from CLSA on the Feng Shui Index .

Integrated Oil, Oil Prod’n, Dept Stores & Major Banks Estimates in Accelerating Downtrends.

By Eric Fernandez, CFA

  • Analyst sentiment improved.  Net 32% of companies are seeing raises (v 27% last week).  The average estimate revision  is a raise of +0.8%, very slightly higher than last week. 
  • Sentiment is uniform and bullish for Precious Metals, Auto Parts, Electronics/Appliances, Personal Care, Restaurants, Software, Med/Nursing, Advertising/Marketing, Specialty Telecom.  Sentiment is deeply depressed for Oil Production, AgriCommodities and Shipping.
  • New estimate cuts have come for AgriChemicals, Environmental Services, Hotels/Resorts and Major Banks.  Integrated Oil, Oil Production, Department Stores and Major Banks are in accelerating estimate downtrends. 

Recession or Soft Landing?

By The Macro Compass

  • The soft landing crew is increasingly taking over.
  • No, the bond market’s base case is not a recession – it’s immaculate disinflation.
  • Yes, getting this call right is crucial for your portfolio performance in 2023.

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Daily Brief Event-Driven: Fujitsu General (6755) – Fujitsu’s Stake On The Block and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Fujitsu General (6755) – Fujitsu’s Stake On The Block
  • Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
  • Merger Arb Mondays (23 Jan) – Origin Energy, Warrego, Golden Energy, Yashili, Kingston, O2Micro
  • Weekly Deals Digest (22 Dec) – Kingston, Fengxiang, Yashili, Golden Energy, Olam, SSREIT, Warrego
  • LG Energy Solution: Another MSCI Upweight Event Coming in May

Fujitsu General (6755) – Fujitsu’s Stake On The Block

By Travis Lundy


Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

By Brian Freitas


Merger Arb Mondays (23 Jan) – Origin Energy, Warrego, Golden Energy, Yashili, Kingston, O2Micro

By Arun George


Weekly Deals Digest (22 Dec) – Kingston, Fengxiang, Yashili, Golden Energy, Olam, SSREIT, Warrego

By Arun George


LG Energy Solution: Another MSCI Upweight Event Coming in May

By Sanghyun Park

  • MSCI will likely reflect the ESOP selling in the upcoming rebalancing. Since MSCI’s rounding magnitude is 5%p, a similar passive impact as that of the previous IR may appear.
  • This means that the remarkable price rally up to last November’s announcement date can be repeated this time closer to the announcement time in May.
  • Conservatively assuming MSCI Korea’s tracking fund size to be ₩60T, LG Energy’s 5%p up-weight is expected to induce about ₩330B of passive inflow, which is 2.09x ADTV.

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