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Smartkarma Daily Briefs

Sep 26
0

Daily Brief China: Tuhu Car, Zhejiang Leapmotor Technologie, Trip.com, Bank of Jiangsu , Beijing Yuanxin Technology Group Co Ltd and more

By | China, Daily Briefs

In today’s briefing:

  • Tuhu Car IPO Trading – Lukewarm Subscription, Small Float Could Impact Trading
  • Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot
  • Monthly Chinese Tourism Tracker | ‘Pent-Up’ Travel Demand — Does China Have Any? | (September 2023)
  • Bank of Jiangsu – Fees -33%, Gains +64% Credit Costs -19%, Does Not Suggest Quality Earnings
  • Pre-IPO Beijing Yuanxin Technology Group – Some Points Worth the Attention

Tuhu Car IPO Trading – Lukewarm Subscription, Small Float Could Impact Trading

By Clarence Chu

  • Tuhu Car (2007986D HK) raised around US$151m in its Hong Kong IPO.
  • Tuhu is an integrated online and offline platform for automotive services in China.
  • We have covered various aspects of the deal in our previous notes. In this note, we will talk about the demand and trading dynamics.

Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot

By Sumeet Singh

  • Leapmotor (9863 HK) (LM) raised around US$800m in its Hong Kong IPO. The stock was listed in Sep 2022, its lockup on pre-IPO investors will expire on 29th Sep 2023.
  • LM is a smart EV company based in China, founded in 2015.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

Monthly Chinese Tourism Tracker | ‘Pent-Up’ Travel Demand — Does China Have Any? | (September 2023)

By Daniel Hellberg

  • August outbound travel activity surged against easy 2022 comps, but offered no surprises
  • The pace of outbound capacity rebuild slowed in August — what do airlines see ahead?
  • Is there really “pent-up” tourism demand among Chinese consumers? We don’t think so

Bank of Jiangsu – Fees -33%, Gains +64% Credit Costs -19%, Does Not Suggest Quality Earnings

By Daniel Tabbush

  • Fee income is down 33% in the most recent quarter which may have prompted the bank to realize gains up 63% in the period to preserve profit growth
  • Quality of earnings is not strong, with more than half of the bank’s pre-tax income delta driven by realized and unrealized gains, with credit cost decline the other key driver
  • Loss NPLs are now 26% of total NPLs, from 11% a few year ago, suggesting worsening credit metrics. Declining credit costs seem at odds with economy, NPL distribution.

Pre-IPO Beijing Yuanxin Technology Group – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • Yuanxin’s financial performance has not improved and it is still in a state of continuous loss. At such low gross margin level, Yuanxin will find it difficult to make money.
  • As China’s retail pharmacy market has entered a new era of integration as the industry growth is slowing down, the challenges Yuanxin has to face would be different from before.
  • When the market pattern has been basically determined, Yuanxin has little chance to break through. Being acquired may be a better outcome. If IPO, valuation would be lower than peers.

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Sep 26
0

Daily Brief Japan: Kokusai Electric , Toyo Construction, Tsuruha Holdings, Kosaido and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share
  • Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
  • YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share
  • Activists May Be Pushing Tsuruha Towards a Merger with Welcia
  • Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles
  • KOSAIDO Holdings (7868) – Wide Economic Moat Providing a Major Competitive Advantage

Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the positive aspects of the deal.

Kokusai Electric (6525 JP) IPO – Index Demand On The Follow

By Travis Lundy

  • Niche Japanese Semiconductor Production Equipment specialist Kokusai Electric (6525 JP) last Thursday announced the TSE approved its late October IPO (with indicative pricing, shares to be sold, and initial prospectus).
  • This insight looks at initial shareholder structure, selling group, post-IPO shareholder structure with index inclusion timing, and follow-on flow possibilities. 
  • At ¥435bn indicative market cap, it will be the largest IPO in Japan since pre-covid, despite coming in a cycle trough. I expect it will be hot. 

YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share

By Travis Lundy

  • Last night Reuters teased a headline saying the Nintendo Family Office called YFO (and related entities) would raise its proposed takeover price for Toyo Construction to ¥1255/share.
  • Recently, the company had agreed to start an investigation and YFO had dropped its demands for an EGM. In Q1, the company reporetd Revenues +18.6%yoy, reasonably in-line with original guidance.
  • This new price comes at a 1% premium to previous close, and is meant to start discussions. The Board has indicated it will start deliberations tomorrow.

Activists May Be Pushing Tsuruha Towards a Merger with Welcia

By Michael Causton

  • Tsuruha is the latest retailer to come under attack from an activist investment fund. 
  • As with Seven & I, the company fended off demands to shake up its board, crucially with the support of Aeon, its largest stakeholder.
  • The move will likely lead to some careful reconsideration of how Tsuruha and Aeon could work together and may even lead to a Welcia/Tsuruha merger.

Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the not-so-positive aspects of the deal.

KOSAIDO Holdings (7868) – Wide Economic Moat Providing a Major Competitive Advantage

By Astris Advisory Japan

  • Robust barriers to entry and generating attractive returns – KOSAIDO Holdings is the market-leading funeral services operator in the Tokyo metropolitan area, with a 70% market share in cremations.
  • The company’s robust economic moat is derived from its dominant market position as the primary operator of crematorium services in central Tokyo.
  • The low likelihood of new entrants due to stringent legal and political barriers further solidifies its competitive advantage. 

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Sep 25
0

Daily Brief Quantitative Analysis: Northbound Flows (Sep 22nd): BYD and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Northbound Flows (Sep 22nd): BYD, CATL, Zijin Mining, Mindray
  • Hong Kong Connect Flows (Sep 22nd): China Mobile, ICBC, Innovent Biologics
  • A-H Premium Weekly (Sep 22nd): Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation
  • EQD | HSI WEEKLY Bounce Will Face These Resistance Levels
  • EQD | VIX Index WEEKLY: Has Volatility Already Peaked?
  • HK Short Interest Weekly: Innovent Bio, Trip.Com, Nio, Baba, Zto Express, HSBC

Northbound Flows (Sep 22nd): BYD, CATL, Zijin Mining, Mindray

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of September 22nd.
  • We estimate the weekly inflows to be US$47.4 million, led by consumer discretionary, information technology, financials sectors, and offset by materials, health care.
  • We highlight flows for BYD, CATL, Zijin Mining and Mindray.

Hong Kong Connect Flows (Sep 22nd): China Mobile, ICBC, Innovent Biologics

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 22nd.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for China Mobile, ICBC and Innovent Biologics.

A-H Premium Weekly (Sep 22nd): Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 115.7% as of Sep 22nd.
  • The average A-H premium changed by -1.1ppt week on week, led by energy, industrials, communication services and offset by consumer discretionary.
  • We highlight weekly changes in A-H premium for Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation.

EQD | HSI WEEKLY Bounce Will Face These Resistance Levels

By Nico Rosti

  • The Hang Seng Index is approaching WEEKLY OVERSOLD territory, but it is in a clear downtrend, so when it bounces it could be a good occasion to go SHORT. 
  • The trade can be placed between this week and the next 2 weeks, with this week and the next being the most probable time for the reversal to happen.
  • Based on MRM WEEKLY model readings, the target price area where to enter the SHORT trade is 18553-19494.

EQD | VIX Index WEEKLY: Has Volatility Already Peaked?

By Nico Rosti

  • The VIX INDEX last week reversed up and briefly touched 17, it’s OVERBOUGHT according to MRM WEEKLY SHORT model.
  • VIX Index could pull back a bit this week, then go up again, but not much higher than 18. Volatility should end this coming week, or early the following week.
  • WEEKLY and MONTHLY OVERSOLD MRM reading on global markets suggest an imminent bounce, possibly a lasting MONTHLY bounce – unless all of a sudden the market enters a Bear Market.

HK Short Interest Weekly: Innovent Bio, Trip.Com, Nio, Baba, Zto Express, HSBC

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Sep 15th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight short changes in Innovent Bio, Trip.Com, Nio, Baba, Zto Express, HSBC.

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Sep 25
0

Daily Brief ESG: Ways Should Be Explored to Make Companies More Effective in Disclosing Their Cost of Capital and more

By | Daily Briefs, ESG

In today’s briefing:

  • Ways Should Be Explored to Make Companies More Effective in Disclosing Their Cost of Capital

Ways Should Be Explored to Make Companies More Effective in Disclosing Their Cost of Capital

By Aki Matsumoto

  • Recognizing the cost of capital and return on capital is an important factor in determining business strategy, but not many companies disclose their cost of capital and specific management vision.
  • In order to increase the effectiveness of disclosure of the cost of capital, we should consider changing the Corporate Governance Code to require disclosure by prime market listed companies.
  • JPX Prime 150 Index, which is based on “equity spreads,” has begun to be calculated, but it has’t attracted much attention since its performance doesn’t differ from that of TOPIX.

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Sep 25
0

Daily Brief Event-Driven: The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
  • Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
  • Quiddity HK Connect SOUTHBOUND Flows (Week to 22Sep23) : China Mobile, Meituan, Xpeng, Banks!
  • Merger Arb Mondays (25 Sep) – ENM, Poly Culture, Eoflow, Origin Energy, Symbio, Costa, InvoCare
  • Quiddity A/H Premium Weekly (To 22Sep23):  Financials & Communications Dominate Flows
  • Golden Agri-Resources (GGR SP): Could Outperform Peers
  • Quiddity Mainland Connect NORTHBOUND Flows (Week to 22Sep23) : BYD, Midea, Bk of Jiangsu, & Amperex

The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour

By Travis Lundy

  • Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
  • But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
  • Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.

Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst

By Brian Freitas

  • Thai Beverage (THBEV SP) has trended lower over the last couple of years and the stock is trading very close to its lows.
  • There has been a contraction in multiples and Thai Beverage (THBEV SP) trades cheaper than a lot of its Asia listed peers.
  • A potential index inclusion could bring in significant passive inflows and result in a rerating of the stock.

Quiddity HK Connect SOUTHBOUND Flows (Week to 22Sep23) : China Mobile, Meituan, Xpeng, Banks!

By Travis Lundy

  • This is the brand spanking new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
  • The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
  • We like the nifty interactive tables and charts and welcome feedback. This week saw HKD 14.5bn+ of net buying. That makes ten weeks of net inflows.

Merger Arb Mondays (25 Sep) – ENM, Poly Culture, Eoflow, Origin Energy, Symbio, Costa, InvoCare

By Arun George

Quiddity A/H Premium Weekly (To 22Sep23):  Financials & Communications Dominate Flows

By Travis Lundy

  • The Brand-Spanking New (7 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
  • We used to do it and brought it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 47 Trade Recommendations.
  • The last 6 weeks (since the start of the new Monitor and Portfolio 7 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%.

Golden Agri-Resources (GGR SP): Could Outperform Peers

By Brian Freitas

  • Golden Agri Resources (GGR SP) has traded lower over the last year and trades cheaper than some of its peers.
  • Revenue, income and net profit margins have been moving higher over the last few years and EPS/DPS have increased sharply over the last two years.
  • Potential passive buying could result in Golden Agri Resources (GGR SP) outperforming peers in the near term.

Quiddity Mainland Connect NORTHBOUND Flows (Week to 22Sep23) : BYD, Midea, Bk of Jiangsu, & Amperex

By Travis Lundy

  • This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
  • The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
  • We like the nifty interactive tables and charts and welcome feedback. This week saw small net buying for the first week in seven.

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Sep 25
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan: SPX -2.9%WoW as UAW Auto Strikes Expand; JapanX – Nintendo Is THE Prime Gaming Asset and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan: SPX -2.9%WoW as UAW Auto Strikes Expand; JapanX – Nintendo Is THE Prime Gaming Asset
  • 2023Q4 A-Share Market Outlook and the Potential Sino-US Deals – Time to Go Long?

Ohayo Japan: SPX -2.9%WoW as UAW Auto Strikes Expand; JapanX – Nintendo Is THE Prime Gaming Asset

By Mark Chadwick

  • OVERSEAS: The S&P 500 lost 2.9% last week, its worst performance since March;  US Auto Strike expands; US budget talks fail – Govt shutdown risk rises.
  • JAPAN: Nikkei ends the week down -3.4%; BOJ downplays policy exit; Japan Core Inflation remains at 3.1%
  • JAPAN X: Phil Spencer, the head of gaming at Microsoft, was found to have expressed keen interest in acquiring Nintendo

2023Q4 A-Share Market Outlook and the Potential Sino-US Deals – Time to Go Long?

By Xinyao (Criss) Wang

  • How long the Fed has to maintain high interest rates sometimes does not entirely depend on the US itself, but also depends on whether other countries are willing to “cooperate”.
  • As China and the US have entered deeper negotiations, investors are looking forward to some big deals, but they may also need to be psychologically prepared for “not meeting expectations”.
  • Since the biggest problem restricting foreign investment inflows has been solved, incremental funds are coming. The real A-share bull market may not come until the RMB officially enters sustained appreciation channel.

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Sep 25
0

Daily Brief ECM: Jyoti CNC Automation Pre-IPO Tearsheet and more

By | Daily Briefs, ECM

In today’s briefing:

  • Jyoti CNC Automation Pre-IPO Tearsheet

Jyoti CNC Automation Pre-IPO Tearsheet

By Ethan Aw

  • Jyoti CNC Automation (0907734D IN) is looking to raise up to US$120m in its upcoming India IPO. The deal will be run by Equirus, SBI Capital and ICICI Securities.
  • Jyoti CNC Automation is a manufacturer of simultaneous 5-Axis Computer Numerical Control (CNC) machines with the second and twelfth largest market share in India and globally, respectively, according to F&S. 
  • Its portfolio includes a range of CNC machines such as CNC Turning Centers, CNC Turn Mill Centers and CNC Vertical Machining Centers, amongst others. 

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Sep 25
0

Daily Brief Credit: Morning Views Asia: JSW Steel Ltd and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: JSW Steel Ltd, Redsun Properties Group Ltd

Morning Views Asia: JSW Steel Ltd, Redsun Properties Group Ltd

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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Sep 25
0

Daily Brief Equity Bottom-Up: Shortlist Of High Conviction Ideas: Income and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
  • Taiwan Tech Weekly: Micron Results Ahead; Taiwan AI Plays Slump But Still Beat Nvidia Last 3 Months
  • Micron’s Results Likely to Call a Memory Market Trough and Highlight New HBM DRAM for AI
  • Malaysia Airport (MAHB): Undervalued Tourism Play in SEA
  • Lonking (3339 HK): Between a Rock and a Hard Place
  • Huawei and Kirin 9000S, Memory Markets, Intel, Nordic, and Broadcom TPUs
  • Monthly Chinese Express Tracker | August ASPs Plunge | Long SF / Short ‘Ground’? | (September 2023)
  • Pointerra Ltd – FY24 Outlook Improving
  • Lotus Pharmaceutical (1795 TT): Continued Stellar Growth in Q2; Pipeline Expansion to Drive Growth

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023

By Sameer Taneja

Taiwan Tech Weekly: Micron Results Ahead; Taiwan AI Plays Slump But Still Beat Nvidia Last 3 Months

By Vincent Fernando, CFA

  • Micron results this week. The company is likely to call a trough for memory prices and highlight its development of the next most advanced type of HBM DRAM for AI. 
  • Taiwan’s market fell, with previous AI-rally beneficiaries continuing to be some of the top losers. Interestingly, Taiwan AI-names outperformed Nvidia over the last three months.
  • Intel’s Innovation Conference wrapped up last week, with its new Meteor Lake PC CPUs launching Dec 14th, which is positive for the PC supply chain. Intel shares fell slightly however.

Micron’s Results Likely to Call a Memory Market Trough and Highlight New HBM DRAM for AI

By Vincent Fernando, CFA

  • Micron’s earnings results will be released September 27th. We expect the company to describe a trough for memory pricing happening now and provide a positive outlook for rising prices.
  • Micron and Nanya Tech have outperformed SK Hynix recently. Our ‘reversion catch up’ trade has worked. Going forward we believe Micron looks compelling on a relative basis.
  • SK Hynix was ahead of peers developing HBM DRAM needed for AI. However, Micron could now convince the market it can catch up by focusing on the next advanced version.

Malaysia Airport (MAHB): Undervalued Tourism Play in SEA

By Henry Soediarko

  • Besides Thailand and Singapore, Malaysia is one of the countries in South East Asia that are popular tourists destination. 
  • Malaysia Airports Holdings (MAHB MK) is the airport operator that benefits from the tourism recovery in Malaysia. 
  • Compared to Airports of Thailand (AOT TB) , Malaysia Airport is trading at a lower valuation, although it has recorded better operating numbers YTD. 

Lonking (3339 HK): Between a Rock and a Hard Place

By Osbert Tang, CFA

  • While valuations for Lonking Holdings (3339 HK) do not appear expensive, there is a risk that the 2H23 earnings outlook is weaker than expected. This opens room for disappointment.
  • There is no sign that domestic sales have picked up and Jul-Aug was still down significantly. Meanwhile, the strong export in 1H23 has not sustained in the last two months. 
  • The weaker A-share market so far in 2H23 also does not bode well for investment gains, which are important contributors to the impressive earnings rebound in 1H23.

Huawei and Kirin 9000S, Memory Markets, Intel, Nordic, and Broadcom TPUs

By Douglas O’Laughlin

  • First, let’s talk about Huawei. I want to highlight how lackadaisically the export restrictions have even been applied.
  • BIS granted validated end-user status to SMIC in 2007, which meant that as late as 2020, multiple SMIC entities were still receiving tools from American companies.
  • BIS got lobbied by tool makers to undo commerce control list regulations in 2018. Also, AMEC has outright stolen tools from US companies.

Monthly Chinese Express Tracker | August ASPs Plunge | Long SF / Short ‘Ground’? | (September 2023)

By Daniel Hellberg

  • Express industry pricing fell by -5% in August, but some companies’ ASPs fell by far more
  • Reportedly, we could see movement on planned J&T Express and CaiNiao IPOs this week
  • We think SF Holding should outperform its “plain vanilla” express peers in medium-term

Pointerra Ltd – FY24 Outlook Improving

By Research as a Service (RaaS)

  • Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using and sharing massive 3D point clouds and datasets.
  • Pointerra3D is a proprietary digital twin SaaS platform which delivers predictive digital insights and definitive answers to complex physical asset management questions.
  • The company has reported FY23 revenue of $8.3m, a decline of 22% on the previous corresponding period (pcp) and an underlying EBITDA loss of $4.68m (which includes non-recurring project services costs of $2.19m), against an underlying EBITDA loss of $0.02m a year ago. 

Lotus Pharmaceutical (1795 TT): Continued Stellar Growth in Q2; Pipeline Expansion to Drive Growth

By Tina Banerjee

  • In 2Q23, Lotus Pharmaceutical (1795 TT) reported 53% YoY growth in revenue to NTD4.4B, mainly driven by strong uptake of Lenalidomide and Suboxone in America and branded products in Taiwan.
  • Lotus reported an EPS of NTD4.85 for Q2 2023, 285% above EPS of NTD1.26 reported for the same quarter of 2022. This result beat the average analyst’s estimate by NTD0.64.
  • Lotus has acquired exclusive global right to develop and commercialize suicidal bipolar therapy NRX-101 and obtained approval for new branded oncology drug Zepzelca in Taiwan.

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Sep 25
0

Daily Brief Macro: Is Stagflation in Our Future? and more

By | Daily Briefs, Macro

In today’s briefing:

  • Is Stagflation in Our Future?
  • BoJ Risks Major Credibility Test, While Fed and ECB Send Different Signals About Peak Rates
  • Has the VIX Lost Its Use As A Fear Gauge?
  • Positioning Watch: Higher for longer vs Lower for longer?
  • Steno Signals #66: Buckle up for the energy crisis 2.0
  • Taking a Stab at Monitoring the Macro Pulse of China

Is Stagflation in Our Future?

By Cam Hui

  • Stagflation is not our base-case scenario, but a review of market leadership shows that stagflation risk is rising and needs to be monitored carefully.
  • In addition, stagflation could be exacerbated by disgruntled electorates turning to populist governments, which have shown to depress economic growth.
  • Investors can hedge against a stagflation scenario with a barbell exposure to commodity producers, U.S. megacap growth stocks, and value and high-quality outside the U.S.

BoJ Risks Major Credibility Test, While Fed and ECB Send Different Signals About Peak Rates

By Said Desaque

  • The Bank of Japan’s (BoJ) credibility could be tested as it exits its negative interest rate policy (NIRP) and yield curve control (YCC) due to political pressure.  
  • The European Central Bank strongly hinted that the peak in short-term interest rates may have been reached. Markets seem to be betting on a spring decline in Eurozone interest rates. 
  • The latest Federal Open Market Committee’s (FOMC) meeting confirmed a higher for longer policy stance in 2024, although the FOMC will allegedly receive more dovish voting members. 

Has the VIX Lost Its Use As A Fear Gauge?

By Cam Hui

  • In this era of increased 0DTE option trading, VXST is a more useful sentiment indicator, and readings are indicating a fear spike.
  • The S&P 500 has become sufficiently short-term oversold that a relief rally is imminent.
  • However, oversold markets can become more oversold and market internals could be supportive of one final sentiment flush before a durable bottom can be seen.

Positioning Watch: Higher for longer vs Lower for longer?

By Emil Moller

  • Hello everyone, and welcome back to our weekly weekend Positioning Watch.
  • The Central Bank bonanza week has come to a close, with only a few localized surprises in policy decisions.
  • It appears that only a handful of bold (or perhaps desperate) governors are willing to stand up to the market’s pressure these days.

Steno Signals #66: Buckle up for the energy crisis 2.0

By Andreas Steno

  • Is there another major energy crisis in the making and how does it differ from the crisis in 2021/2022?
  • We have long held the view that the tightness in energy markets would lead global macro trends from one extreme to the other with relatively short 18-24 month cycles and here we are probably on the verge of another extreme again.
  • The impulse from input costs in necessities (read mainly energy costs) will dictate the cycle trends and after an outright landslide in input costs over the past 12 months, we are now edging higher fast again.

Taking a Stab at Monitoring the Macro Pulse of China

By Thomas Lam

  • While it is desirable to gain more insights on China, it is also crucial to view it through a differentiated lens
  • This is partly because of the country’s multifaceted policy environment and its complex relationship to overall economic activity
  • My approach is to harness the proprietary China Credit Impulse Measure (CIM) to extract statistical relationships and unearth macro clues

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