Category

India

Brief India: Morning Views Asia: GMR Hyderabad International Airport, JSW Steel Ltd and more

By | Daily Briefs, India

In this briefing:

  1. Morning Views Asia: GMR Hyderabad International Airport, JSW Steel Ltd
  2. Shriram Transport Finance – A Bridge Is For Sale In Brooklyn
  3. Healthcare Global: An Attractive Spread Trade

1. Morning Views Asia: GMR Hyderabad International Airport, JSW Steel Ltd

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.

2. Shriram Transport Finance – A Bridge Is For Sale In Brooklyn

*Weak Earnings Across The Board: Shriram Transport Finance (SHTF.IN) [Shriram] reported FY 4Q20 net income of INR 2.2 bn – missing consensus by 8%-10%, declining INR 6.6  (74.6%) linked quarter as business momentum has effectively grinds to a halt;

*Credit Getting Messy: Although stated gross NPLs at Shriram have actually declined INR 2.1 bn (2.3%), they still represent a grotesque 8.36% of total loans and as of May 2020, about 70% of Shriram’s loan book is under moratorium. To make matters worse, we find that Shriram is well-under reserved and has over-stated earnings in FY 4Q20 alone – by INR 6.6 bn or 300%; and

*Liquidity Risk?: Shriram did not apply for a moratorium on repayments to banks when Reserve Bank of India (RBI) announced the first moratorium as it was carrying sufficient liquidity. Subsequently, since the announcement of a second moratorium, and a liquidity rundown in April and May owing to repayments Shriram is now applying to its banks for moratoriums – giving us concerns about Shriram’s ability to manage liquidity in this current environment.

3. Healthcare Global: An Attractive Spread Trade

Image 37988848121592101317780

Contrary to our expectations, CVC’s offer to acquire a substantial stake in Healthcare Global Enterprises (HCG IN) has been approved by the shareholders with a thumping majority. Nonetheless, as highlighted in our earlier note, even in this scenario, the opportunity is attractive with a gross spread of 7.8% (potential IRR of ~50%) as per the last closing price of INR 120.55. We continue to maintain that HCG remains an attractive opportunity for both event-driven and fundamental investors.

Insight Flow:

  • What’s New
  • What’s Next
  • How Should One Trade?
  • Conclusion

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: Another Top Executive Leaves HDFC Bank, But Don’t Try Finding the News in the Media and more

By | Daily Briefs, India

In this briefing:

  1. Another Top Executive Leaves HDFC Bank, But Don’t Try Finding the News in the Media
  2. Morning Views Asia: Alam Sutera Realty, Glenmark Pharmaceuticals
  3. Double Bubble, Double Trouble?
  4. Relative Value – Manappuram ’23 Vs. Muthoot ’23
  5. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment

1. Another Top Executive Leaves HDFC Bank, But Don’t Try Finding the News in the Media

Munishquittweet10july2020

It is the season for long serving business head verticals to exit HDFC Bank (HDFCB IN). Following the abrupt departures  of Abhay Aima (former Group Head – private banking) and Ashok Khanna (ex-Group Head – automobile loans) comes news of Munish Mittal (Group Head – Information Technology and Chief Information Officer [CIO]) quitting the bank on July 10, 2020.

In the true tradition of recent senior-level departures at HDFC Bank, the bank’s highly visible and active communications department did not bother to inform stakeholders or even its own staff. Instead it was left to an anonymous source to tweet that Munish Mittal’s last date was July 10, 2020, as was the case for one of his deputies in the department. The business media as usual did not consider the departure of the CIO at India’s number 1 bank by market capitalisation (one which prides itself on its digital strategy) to be newsworthy, or found it too onerous to verify by querying the bank. Responding to a query by this writer, HDFC Bank said that the 51-year old Mittal, who joined the bank on August 1996 and rose to be the CIO, had decided to take a break, and wanted to enrol for a 2-year course at a foreign university.

There is something fundamentally wrong in the system when a prominent bank does not disclose senior level management exits, and it is left to anonymous sources or whistleblowers to inform the market. The business media, which exist to report such news, refuse to do elementary journalism and decline even to contact the bank to verify the news. In HDFC Bank it is all the more worrying as Aditya Puri, the CEO since the bank’s inception, is finally stepping down in October 2020, and the successor is not yet known to the market. In this situation, it adds to the uncertainty when we find heads of important verticals suddenly leaving.

Today, the largest bank by market capitalisation, in a country where the index has a significant weightage towards banking and the financial sector, declines to provide market sensitive information; the media  chose to report only information which the company itself officially releases, and deliberately avoid reporting any information which may embarrass the company. The market is treading on dangerous ground when HDFC Bank is yet to officially acknowledge the controversial exits of Aima and Khanna, and the media has only just reported Khanna’s unceremonious exit; but nobody seems concerned that the market is deprived of market sensitive information by the institutions tasked with the universal disbursal of such information.

2. Morning Views Asia: Alam Sutera Realty, Glenmark Pharmaceuticals

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.

3. Double Bubble, Double Trouble?

Image 46719834551594500095933

A review of U.S. and global markets reveals that market leadership has narrowed to NASDAQ and Chinese stocks. If this is the start of a new bull, or a continuation of the old bull, can it rest on the narrow leadership of a handful of NASDAQ stocks and the Chinese market?

Is this just a double bubble, and does that imply double trouble ahead?

We are not sure. We are torn between Bob Farrell’s Rule No. 4:

Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

And Rule No. 7.

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

Investors need to be aware of the tension between Rule No. 4, which raises the possibility of a stock bubble, and the risks posed by the narrow leadership warned by Rule No. 7. Tail-risk is high in both directions. In this environment, it is worthwhile to return to basics and re-visit investment objectives and risk tolerances in order to balance risk and reward. There are no perfect answers and each will be different.

Regardless of what direction the market takes, investors can count on a climate of high volatility in the near future.

4. Relative Value – Manappuram ’23 Vs. Muthoot ’23

Image 39349422841594371391877

Both Muthoot Finance (MUTH IN) and Manappuram Finance (MGFL IN) are gold loan companies with very similar businesses. The major difference is the larger size of Muthoot and the somewhat larger share of non-gold loans in Manappuram’s portfolio. Given this, we feel the spread differential of over 200 bps between bonds of the 2 companies due ’23 is excessive at present. As such, Manappuram represents better value.

Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

5. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment

Image 71063129331594361508270

In our previous insight, we spoke about 5G being a disappointment, a possible delay in 5G adoption, and how WiFi-6 could take its place. In this insight, we look at 6G, which is still a developing technology. 6G is the sixth generation of wireless technologies, with extreme coverage and capacity. 6G network systems are expected to support data rates at a speed of 1 terabit per second (Tbps), 8000 times faster than 5G, with an end-to-end latency of one microsecond. The increase in IoT applications triggered the expansion of 5G, and it is now stimulating the demand for the 6G networks as well. Our key points based on the first look at 6G, are:

  • 6G is still a remote concept and will take another 15 years to be fully deployed (i.e. by 2035) since there are many necessary technological and technical advancements to be made before a 6G product is introduced to the market.
  • Most developments and the initiation of projects come from the South Korean and Chinese players. In our opinion, South Korea could take the lead, as China is currently focusing on developing its 5G networks, and China’s Huawei is also having issues with the expansion of its 5G networks.
  • South Korean mobile manufacturers like Samsung and LG are likely to benefit due to their increased initial commitments focusing on 6G, and this might give them an edge over Chinese and U.S. manufacturers like Apple or Huawei.
  • The U.S. manufacturers have a head start in 6G semiconductor technology. However, given the reduced size requirement for base stations and, eventually, for mobile phones, we believe that Japanese MLCC players could closely compete with the U.S. chip manufacturers.

Previous related insights:

5G for the Next Big Turn of a New Decade 

Will 2020 See Successful Deployment of 5G? 

Lockdown To Accelerate WiFi 6: A Threat to Anticipated 5G Deployment? 

5G Delay and Disappointment – Will Murata Suffer? 

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: Shriram Transport Finance – A Bridge Is For Sale In Brooklyn and more

By | Daily Briefs, India

In this briefing:

  1. Shriram Transport Finance – A Bridge Is For Sale In Brooklyn
  2. Healthcare Global: An Attractive Spread Trade

1. Shriram Transport Finance – A Bridge Is For Sale In Brooklyn

*Weak Earnings Across The Board: Shriram Transport Finance (SHTF.IN) [Shriram] reported FY 4Q20 net income of INR 2.2 bn – missing consensus by 8%-10%, declining INR 6.6  (74.6%) linked quarter as business momentum has effectively grinds to a halt;

*Credit Getting Messy: Although stated gross NPLs at Shriram have actually declined INR 2.1 bn (2.3%), they still represent a grotesque 8.36% of total loans and as of May 2020, about 70% of Shriram’s loan book is under moratorium. To make matters worse, we find that Shriram is well-under reserved and has over-stated earnings in FY 4Q20 alone – by INR 6.6 bn or 300%; and

*Liquidity Risk?: Shriram did not apply for a moratorium on repayments to banks when Reserve Bank of India (RBI) announced the first moratorium as it was carrying sufficient liquidity. Subsequently, since the announcement of a second moratorium, and a liquidity rundown in April and May owing to repayments Shriram is now applying to its banks for moratoriums – giving us concerns about Shriram’s ability to manage liquidity in this current environment.

2. Healthcare Global: An Attractive Spread Trade

Image 37988848121592101317780

Contrary to our expectations, CVC’s offer to acquire a substantial stake in Healthcare Global Enterprises (HCG IN) has been approved by the shareholders with a thumping majority. Nonetheless, as highlighted in our earlier note, even in this scenario, the opportunity is attractive with a gross spread of 7.8% (potential IRR of ~50%) as per the last closing price of INR 120.55. We continue to maintain that HCG remains an attractive opportunity for both event-driven and fundamental investors.

Insight Flow:

  • What’s New
  • What’s Next
  • How Should One Trade?
  • Conclusion

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: Morning Views Asia: Alam Sutera Realty, Glenmark Pharmaceuticals and more

By | Daily Briefs, India

In this briefing:

  1. Morning Views Asia: Alam Sutera Realty, Glenmark Pharmaceuticals
  2. Double Bubble, Double Trouble?
  3. Relative Value – Manappuram ’23 Vs. Muthoot ’23
  4. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment
  5. Core Correlations Weekly – July 6th, 2020

1. Morning Views Asia: Alam Sutera Realty, Glenmark Pharmaceuticals

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.

2. Double Bubble, Double Trouble?

Image 141113133121594500095937

A review of U.S. and global markets reveals that market leadership has narrowed to NASDAQ and Chinese stocks. If this is the start of a new bull, or a continuation of the old bull, can it rest on the narrow leadership of a handful of NASDAQ stocks and the Chinese market?

Is this just a double bubble, and does that imply double trouble ahead?

We are not sure. We are torn between Bob Farrell’s Rule No. 4:

Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

And Rule No. 7.

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

Investors need to be aware of the tension between Rule No. 4, which raises the possibility of a stock bubble, and the risks posed by the narrow leadership warned by Rule No. 7. Tail-risk is high in both directions. In this environment, it is worthwhile to return to basics and re-visit investment objectives and risk tolerances in order to balance risk and reward. There are no perfect answers and each will be different.

Regardless of what direction the market takes, investors can count on a climate of high volatility in the near future.

3. Relative Value – Manappuram ’23 Vs. Muthoot ’23

Image 39349422841594371391877

Both Muthoot Finance (MUTH IN) and Manappuram Finance (MGFL IN) are gold loan companies with very similar businesses. The major difference is the larger size of Muthoot and the somewhat larger share of non-gold loans in Manappuram’s portfolio. Given this, we feel the spread differential of over 200 bps between bonds of the 2 companies due ’23 is excessive at present. As such, Manappuram represents better value.

Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

4. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment

Image 71063129331594361508270

In our previous insight, we spoke about 5G being a disappointment, a possible delay in 5G adoption, and how WiFi-6 could take its place. In this insight, we look at 6G, which is still a developing technology. 6G is the sixth generation of wireless technologies, with extreme coverage and capacity. 6G network systems are expected to support data rates at a speed of 1 terabit per second (Tbps), 8000 times faster than 5G, with an end-to-end latency of one microsecond. The increase in IoT applications triggered the expansion of 5G, and it is now stimulating the demand for the 6G networks as well. Our key points based on the first look at 6G, are:

  • 6G is still a remote concept and will take another 15 years to be fully deployed (i.e. by 2035) since there are many necessary technological and technical advancements to be made before a 6G product is introduced to the market.
  • Most developments and the initiation of projects come from the South Korean and Chinese players. In our opinion, South Korea could take the lead, as China is currently focusing on developing its 5G networks, and China’s Huawei is also having issues with the expansion of its 5G networks.
  • South Korean mobile manufacturers like Samsung and LG are likely to benefit due to their increased initial commitments focusing on 6G, and this might give them an edge over Chinese and U.S. manufacturers like Apple or Huawei.
  • The U.S. manufacturers have a head start in 6G semiconductor technology. However, given the reduced size requirement for base stations and, eventually, for mobile phones, we believe that Japanese MLCC players could closely compete with the U.S. chip manufacturers.

Previous related insights:

5G for the Next Big Turn of a New Decade 

Will 2020 See Successful Deployment of 5G? 

Lockdown To Accelerate WiFi 6: A Threat to Anticipated 5G Deployment? 

5G Delay and Disappointment – Will Murata Suffer? 

5. Core Correlations Weekly – July 6th, 2020

Image 838743361594274027652

Demand

  1. China Manufacturing PMI: Manufacturing PMI data from China continues to be healthy after posting a dip in February due to COVID. June data came in at 50.9 and showed sequential improvement over May’s 50.6.
  2. Fundamental data points from China continue to show strength. Auto demand is likely to be up 4-5% YoY in June, and CRIC (China Real Estate Information Corporation) data shows property sales are up 14% YoY in June for the top 200 developers. Data for Jan-June FY20 has inflected into positive territory at 1% YTD.

Supply

  1. Supply issues from Brazil in June were not as bad as initially feared. Brazil shipped out 30 million tons in June, recording a 1% YoY growth.

  2. Inventory at the ports in China rose for the first time in three months.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: Healthcare Global: An Attractive Spread Trade and more

By | Daily Briefs, India

In this briefing:

  1. Healthcare Global: An Attractive Spread Trade

1. Healthcare Global: An Attractive Spread Trade

Image 37988848121592101317780

Contrary to our expectations, CVC’s offer to acquire a substantial stake in Healthcare Global Enterprises (HCG IN) has been approved by the shareholders with a thumping majority. Nonetheless, as highlighted in our earlier note, even in this scenario, the opportunity is attractive with a gross spread of 7.8% (potential IRR of ~50%) as per the last closing price of INR 120.55. We continue to maintain that HCG remains an attractive opportunity for both event-driven and fundamental investors.

Insight Flow:

  • What’s New
  • What’s Next
  • How Should One Trade?
  • Conclusion

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: ICICI Bank Placement – Early Look – Another US$2bn Raising and more

By | Daily Briefs, India

In this briefing:

  1. ICICI Bank Placement – Early Look – Another US$2bn Raising
  2. Axis Bank Placement – Early Look – Looking to Raise US$2bn
  3. Chinese Easing Drives Next Phase of Liquidity-Driven Boom. Could EM Soar?
  4. Mindspace Business Parks REIT Pre-IPO – Updates Aren’t so Great
  5. Future Retail + Reliance – To Be, or Not to Be…

1. ICICI Bank Placement – Early Look – Another US$2bn Raising

Previous%20offering

ICICI Bank Ltd (ICICIBC IN) announced yesterday that its board had approved a fund raising of up to US$2bn (INR150bn) in one or more tranches via issuing equity shares.

The company will take shareholders approval for the same via a postal ballot.

In this insight, I’ll take an early look at the deal. 

The pipeline for large Indian financials raising appears to be building up with HDFC and Axis already ahead in the queue, see:

2. Axis Bank Placement – Early Look – Looking to Raise US$2bn

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Axis Bank Ltd (AXSB IN) recently announced that its board has approved a fund raising of up to US$2bn (INR150bn) via issuing equity shares and/or convertible securities linked to equity shares.

The company will take shareholders approval for the same at its annual general meeting later this month.

In this insight, I’ll take an early look at the deal. 

3. Chinese Easing Drives Next Phase of Liquidity-Driven Boom. Could EM Soar?

Image 92307970051594125679396

  • PBoC is easing through the ‘backdoor’ while keeping its balance sheet flat
  • Directed lending programs are fueling a step-up in credit growth
  • 20% annualized pick-up in lending fastest since early-2016
  • Chinese equity exposure in portfolios relatively low. Risk assets look attractive
  • EM should also benefit from Chinese easing

4. Mindspace Business Parks REIT Pre-IPO – Updates Aren’t so Great

Image?1594109117

Mindspace Business Parks REIT (MBP IN) (MBP) aims to raise around US$500m via a mix of selling primary and secondary shares in its Indian IPO.

MBP will own one of the largest Grade-A office portfolios in India with a total leasable area of 29.5 msf. MBP’s portfolio contained five integrated business parks and five independent offices across four cities, Mumbai, Hyderabad, Pune and Chennai.

The portfolio has shown decent growth in the past and has multiple levers to help it to continue growing, like increased completions, rental reversions and acquisitions. 

In my earlier note, Mindspace Business Parks REIT Pre-IPO – Decent Growth but Not All Assets Are Equal, I spoke about the company background and some of its assets.

In this note, I’ll talk about the updates from the recently filed addendum to the draft offer document.

5. Future Retail + Reliance – To Be, or Not to Be…

Image 53198965821594102462590

There has been substantial news-flow regarding the possibility of a deal between Future Retail (FRETAIL IN) and Reliance Industries (RIL IN) .  We feel that the news reports are credible. We also present our thoughts on potential hurdles facing the deal and recommend booking profits on the FRETAI 5.6% bonds due ’23 at current levels (69).

Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: Double Bubble, Double Trouble? and more

By | Daily Briefs, India

In this briefing:

  1. Double Bubble, Double Trouble?
  2. Relative Value – Manappuram ’23 Vs. Muthoot ’23
  3. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment
  4. Core Correlations Weekly – July 6th, 2020
  5. Smartkarma Webinar

1. Double Bubble, Double Trouble?

Image 604597554131594500095937

A review of U.S. and global markets reveals that market leadership has narrowed to NASDAQ and Chinese stocks. If this is the start of a new bull, or a continuation of the old bull, can it rest on the narrow leadership of a handful of NASDAQ stocks and the Chinese market?

Is this just a double bubble, and does that imply double trouble ahead?

We are not sure. We are torn between Bob Farrell’s Rule No. 4:

Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

And Rule No. 7.

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

Investors need to be aware of the tension between Rule No. 4, which raises the possibility of a stock bubble, and the risks posed by the narrow leadership warned by Rule No. 7. Tail-risk is high in both directions. In this environment, it is worthwhile to return to basics and re-visit investment objectives and risk tolerances in order to balance risk and reward. There are no perfect answers and each will be different.

Regardless of what direction the market takes, investors can count on a climate of high volatility in the near future.

2. Relative Value – Manappuram ’23 Vs. Muthoot ’23

Image 39349422841594371391877

Both Muthoot Finance (MUTH IN) and Manappuram Finance (MGFL IN) are gold loan companies with very similar businesses. The major difference is the larger size of Muthoot and the somewhat larger share of non-gold loans in Manappuram’s portfolio. Given this, we feel the spread differential of over 200 bps between bonds of the 2 companies due ’23 is excessive at present. As such, Manappuram represents better value.

Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

3. 6G: Still a Remote Concept; Capable of Overcoming 5G Disappointment

Image 71063129331594361508270

In our previous insight, we spoke about 5G being a disappointment, a possible delay in 5G adoption, and how WiFi-6 could take its place. In this insight, we look at 6G, which is still a developing technology. 6G is the sixth generation of wireless technologies, with extreme coverage and capacity. 6G network systems are expected to support data rates at a speed of 1 terabit per second (Tbps), 8000 times faster than 5G, with an end-to-end latency of one microsecond. The increase in IoT applications triggered the expansion of 5G, and it is now stimulating the demand for the 6G networks as well. Our key points based on the first look at 6G, are:

  • 6G is still a remote concept and will take another 15 years to be fully deployed (i.e. by 2035) since there are many necessary technological and technical advancements to be made before a 6G product is introduced to the market.
  • Most developments and the initiation of projects come from the South Korean and Chinese players. In our opinion, South Korea could take the lead, as China is currently focusing on developing its 5G networks, and China’s Huawei is also having issues with the expansion of its 5G networks.
  • South Korean mobile manufacturers like Samsung and LG are likely to benefit due to their increased initial commitments focusing on 6G, and this might give them an edge over Chinese and U.S. manufacturers like Apple or Huawei.
  • The U.S. manufacturers have a head start in 6G semiconductor technology. However, given the reduced size requirement for base stations and, eventually, for mobile phones, we believe that Japanese MLCC players could closely compete with the U.S. chip manufacturers.

Previous related insights:

5G for the Next Big Turn of a New Decade 

Will 2020 See Successful Deployment of 5G? 

Lockdown To Accelerate WiFi 6: A Threat to Anticipated 5G Deployment? 

5G Delay and Disappointment – Will Murata Suffer? 

4. Core Correlations Weekly – July 6th, 2020

Image 838743361594274027652

Demand

  1. China Manufacturing PMI: Manufacturing PMI data from China continues to be healthy after posting a dip in February due to COVID. June data came in at 50.9 and showed sequential improvement over May’s 50.6.
  2. Fundamental data points from China continue to show strength. Auto demand is likely to be up 4-5% YoY in June, and CRIC (China Real Estate Information Corporation) data shows property sales are up 14% YoY in June for the top 200 developers. Data for Jan-June FY20 has inflected into positive territory at 1% YTD.

Supply

  1. Supply issues from Brazil in June were not as bad as initially feared. Brazil shipped out 30 million tons in June, recording a 1% YoY growth.

  2. Inventory at the ports in China rose for the first time in three months.

5. Smartkarma Webinar

In this Smartkarma Webinar, Dr Y. Shirley Meng, an energy technology expert, will talk through the advances in battery technology, which can change the future of energy consumption and have a profound impact on everything from cars to pacemakers.

The webinar will be hosted on Friday, 17/July/2020, 11.00am SGT/HKT.



Shirley holds the Zable Endowed Chair Professor in Energy Technologies and is Professor of NanoEngineering and Materials Science at the University of California San Diego (UCSD). She is the founding Director of Sustainable Power and Energy Center, and her research group – Laboratory for Energy Storage and Conversion (LESC) – focuses on functional nano and micro-scale materials for energy storage and conversion.

You are currently reading Executive Summaries of Smartkarma Insights.

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Brief India: India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants and more

By | Daily Briefs, India

In this briefing:

  1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants

1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants

Download

  • Tencent, Alibaba and SoftBank have quietly placed big bets on India’s online betting sector’s future despite a miasma of confused gaming laws.
  • Our prior insights named India as the sleeping giant of global online gaming. Pure plays to date are few, but well priced.
  • As sports betting legalization spreads, the nation’s passion for cricket wagering will grow exponentially beyond its current lone province of Sikkim.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants and more

By | Daily Briefs, India

In this briefing:

  1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants
  2. Post-Covid 19 – Economic Reality Bites

1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants

Download

  • Tencent, Alibaba and SoftBank have quietly placed big bets on India’s online betting sector’s future despite a miasma of confused gaming laws.
  • Our prior insights named India as the sleeping giant of global online gaming. Pure plays to date are few, but well priced.
  • As sports betting legalization spreads, the nation’s passion for cricket wagering will grow exponentially beyond its current lone province of Sikkim.

2. Post-Covid 19 – Economic Reality Bites

Capture

A severe global recession is baked in the cake is the realisation steadily dawning on market commentators and institutions. Corporate profits have collapsed. Debt levels are rising rapidly. Both are ingredients for investment led economic downturn. So far markets buoyed by cheap liquidity markets have chosen to ignore economic reality but that might be changing.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief India: India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants and more

By | Daily Briefs, India

In this briefing:

  1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants
  2. Post-Covid 19 – Economic Reality Bites
  3. IIFL Finance Ltd. – Downgrade to Sell

1. India: Early Stage Bets on Online Wagering Emerging from Asian Tech Giants

Download

  • Tencent, Alibaba and SoftBank have quietly placed big bets on India’s online betting sector’s future despite a miasma of confused gaming laws.
  • Our prior insights named India as the sleeping giant of global online gaming. Pure plays to date are few, but well priced.
  • As sports betting legalization spreads, the nation’s passion for cricket wagering will grow exponentially beyond its current lone province of Sikkim.

2. Post-Covid 19 – Economic Reality Bites

Capture

A severe global recession is baked in the cake is the realisation steadily dawning on market commentators and institutions. Corporate profits have collapsed. Debt levels are rising rapidly. Both are ingredients for investment led economic downturn. So far markets buoyed by cheap liquidity markets have chosen to ignore economic reality but that might be changing.

3. IIFL Finance Ltd. – Downgrade to Sell

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Prices on bonds of IIFL Holdings (IIFL IN)  have risen from 67 cents to the dollar on May 7 to current levels of 84 due to the global improvement in risk appetite . We currently downgrade the bonds to sell. While we expect the company to survive the crisis, in the near term, we think downside risks outweigh rewards for bondholders, especially given the rally. Specifically, we will need to watch liquidity for the next quarter. 

Fundamental credit research focused on Asian high yield, including coverage of areas which are generally overlooked such as Indian finance companies and non-USD denominated credit (SGD).  Sector agnostic. Research process consists of rigorous bottom-up company analysis combined with spotting market dislocations to provide trade ideas.

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