Smartkarma Daily Briefs

Oct 15

Daily Brief Event-Driven: Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown
Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tensions Rise
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Newcrest Mining, Haitong Int’l, Liontown, NWS, IMAX China
Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye

By Travis Lundy

The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

By Brian Freitas

An ad hoc S&P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light & Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU).
The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.

Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy

By David Blennerhassett

Should the nominated directors, to be voted on by EOFlow (294090 KS)‘s shareholders at the November EGM, include Medtronic Plc (MDT US) executives, then game on.
Fast Retailing (9983 JP) STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).
JMDC (4483 JP) has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tensions Rise

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Newcrest Mining, Haitong Int’l, Liontown, NWS, IMAX China

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma this week: Haitong Securities Co Ltd (A) (600837 CH)‘s Offer for Haitong International Securities Group (665 HK).
Key updates took place for: Origin Energy (ORG AU), Estia Health (EHE AU), Newcrest Mining (NCM AU), Liontown Resources (LTR AU), NWS (659 HK),IMAX China (1970 HK), and Eoflow (294090 KS).

Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

By Janaghan Jeyakumar, CFA

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at our final expectations for the ADDs and DELs for the December 2023 and their flow implications.

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Oct 15

Daily Brief Macro: Global Liquidity: Looking Towards 2024 and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Global Liquidity: Looking Towards 2024
The Weekly Market Monitor – Bad Inflation + Bad Sentiment = Bad Bounce?

Global Liquidity: Looking Towards 2024

By Michael J. Howell

Global Liquidity Cycle hit a low in September 2022. It has been rising slowly since and looks set to hit a peak around 2026. Risk assets should get greater support
Yet the large ‘carry’ on government bonds and the recent sell-off persuades us to allocate towards fixed income for the first time in two years
There are risks. With coupon issuance is set to soar, Central Banks will be increasingly asked to finance monetary inflation

The Weekly Market Monitor – Bad Inflation + Bad Sentiment = Bad Bounce?

By Jeroen Blokland

Contrary to many other Sentiment Indicators – which we don’t really understand – our Fear & Frenzy Sentiment Index has moved into ‘Frenzy.’
China is considering launching a state-backed stabilization fund to boost the Chinese stock market. We show what happened the last time China came up with a similar move.
Even though headline and core inflation were close to expectations, the underlying data signals trouble. Powell’s favorite CPI measure, SuperCore inflation, rose 7.6% on an annualized basis in September.

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Oct 15

Daily Brief Financials: Japan Post Bank, JPMorgan Chase & Co and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown
The Big 3 U.S. Banks Delivered Solid Earnings on NII, Benign Credit Quality

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

By Brian Freitas

An ad hoc S&P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light & Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU).
The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.

The Big 3 U.S. Banks Delivered Solid Earnings on NII, Benign Credit Quality

By Fern Wang

The U.S. Big 3 banks delivered strong 3Q23 earnings on the back of record net interest income, despite a lower balance in commercial loans and residential mortgages.
Credit quality is mostly steady, with credit card charge-offs normalized. The main pain point is in CRE, especially for WFC.
The proposed Basel III end game, if materialized, could have a huge impact on JPM and Citigroup in particular.

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Oct 15

Daily Brief Consumer: Rakuten Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

ECM Weekly (15th Oct 2023) – Kokusai, J&T, Ecopro, Thai Credit, Lalatech, Barito, Rakuten, Zomato

ECM Weekly (15th Oct 2023) – Kokusai, J&T, Ecopro, Thai Credit, Lalatech, Barito, Rakuten, Zomato

By Sumeet Singh

Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Kokusai Electric (6525 JP) managed to get strong support, even though we remain somewhat unconvinved.
In the placement space, we looked at the upcoming lockups for Rakuten Bank (5838 JP) and Zomato (ZOMATO IN), along with the Ingenia Communities (INA AU) placement.

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Oct 15

Most Read: Li Auto , China Unicom Hong Kong, China Galaxy Securities (H), Astra International, Wuhan Jingce Electronic Group, Nws Holdings, HDFC Bank, Light & Wonder , Allkem Ltd, Japan Post Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
HSCEI Index Rebalance Preview: One Change; Capping Impact Increases
WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: 45% Turnover & US$2.5bn to Trade
WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week
ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues
NWS (659 HK): Final Divvie Assured. NWD Vote Risk Remains
WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: 16% Turnover, US$660m Trade
S&P/ASX 200 Index Adhoc Change: Light & Wonder (LNW) To Replace UMG
Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December

By Brian Freitas

With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.

HSCEI Index Rebalance Preview: One Change; Capping Impact Increases

By Brian Freitas

Zhongsheng Group (881 HK) is in deletion zone and could be deleted. China Unicom Hong Kong (762 HK) could be added to the index as the highest ranked non-index constituent.
Estimated one-way turnover at the rebalance is 2.14% resulting in a one-way trade of HK$1.38bn. Meituan (3690 HK), Alibaba Group (9988 HK) and Tencent (700 HK) will be capped higher.
China Unicom Hong Kong (762 HK) is supported on its 50/100 day moving averages and could move higher. Zhongsheng Group (881 HK) has been trading below its moving averages.

WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: 45% Turnover & US$2.5bn to Trade

By Brian Freitas

The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
The October rebalance will result in a one-way turnover of ~45% and in a one-way trade of US$1.24bn. There are ~300 stocks with over 1 day of ADV to trade.
With only 4 trading days to implementation, there could be large moves on stocks with large flows and impact over the next few days.

WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week

By Brian Freitas

The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
The October rebalance will result in a one-way turnover of ~37% and in a one-way trade of US$926m. There are 92 stocks with over 1 day of ADV to trade.
In Asia, the largest buy flows are expected on Astra International (ASII IJ) and the largest sell flows on POSCO Holdings (005490 KS).

ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues

By Brian Freitas

Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
Given stock selection uses liquidity as a major input, the impact of passive trading will be much larger on the deletions as compared to the additions.
The potential adds have outperformed the potential deletes, but relative performance has been drifting lower over the last few months. There are stocks that will have flows from other indices.

NWS (659 HK): Final Divvie Assured. NWD Vote Risk Remains

By David Blennerhassett

Accelerating the Offer timetable for NWS (659 HK) such that it closes before the dividend ex-date appeared stingy. But why pay dividends to shareholders that won’t hold the shares anymore?
Those concerns have been put to rest with the despatch of NWS’ Composite Doc and New World (17 HK)‘s Circular, guaranteeing all shareholders the dividend, no matter the Offer outcome.
The key risk now is NWD’s independent shareholder vote. On balance, this should get up.

WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: 16% Turnover, US$660m Trade

By Brian Freitas

The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
The October rebalance will result in a one-way turnover of ~16% and in a one-way trade of US$329m. There are 16 stocks with over US$3m to trade.
HDFC Bank (HDFCB IN) will be added to the index while there will be selling in Taiwan Semiconductor (TSMC) (2330 TT).

S&P/ASX 200 Index Adhoc Change: Light & Wonder (LNW) To Replace UMG

By Brian Freitas

Shareholders have approved United Malt Group Ltd (UMG AU)‘s acquisition by Malteries Soufflet and UMG is expected to stop trading after the close on 17 October.
United Malt Group Ltd (UMG AU) will be replaced by Light & Wonder (LNW AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 17 October.
This is a surprise and there is unlikely to be a lot of pre-positioning on Light & Wonder (LNW AU). Buy Light & Wonder (LNW US) during US hours.

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye

By Travis Lundy

The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

By Brian Freitas

An ad hoc S&P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light & Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU).
The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.

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Oct 15

Daily Brief Australia: Allkem Ltd, Newcrest Mining and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Newcrest Mining, Haitong Int’l, Liontown, NWS, IMAX China

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye

By Travis Lundy

The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Newcrest Mining, Haitong Int’l, Liontown, NWS, IMAX China

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma this week: Haitong Securities Co Ltd (A) (600837 CH)‘s Offer for Haitong International Securities Group (665 HK).
Key updates took place for: Origin Energy (ORG AU), Estia Health (EHE AU), Newcrest Mining (NCM AU), Liontown Resources (LTR AU), NWS (659 HK),IMAX China (1970 HK), and Eoflow (294090 KS).

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Oct 15

Daily Brief South Korea: Eoflow , Hanall Biopharma and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy
Hanall Biopharma (009420 KS): Pipeline Progress and New Deal Depict Brighter Outlook

Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy

By David Blennerhassett

Should the nominated directors, to be voted on by EOFlow (294090 KS)‘s shareholders at the November EGM, include Medtronic Plc (MDT US) executives, then game on.
Fast Retailing (9983 JP) STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).
JMDC (4483 JP) has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.

Hanall Biopharma (009420 KS): Pipeline Progress and New Deal Depict Brighter Outlook

By Tina Banerjee

Hanall Biopharma (009420 KS)‘s licensed partner Harbour BioMed announced that the China’s NMPA has officially accepted the Biologics License Application for batoclimab for the treatment of generalized myasthenia gravis.
Immunovant announced positive initial result from the single-ascending dose portion of the Phase 1 trial of IMVT-1402. Initial data from the multiple-ascending dose cohorts are expected in October/ November 2023.
Hanall and Daewoong have initiated phase 1 clinical trial of HL192 for the treatment of Parkinson’s disease, and dosed the first subject. The initial results are expected in 2H24.

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Oct 15

Daily Brief United States: JPMorgan Chase & Co, Braze Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

The Big 3 U.S. Banks Delivered Solid Earnings on NII, Benign Credit Quality
Braze: Potential For A More Profitable SaaS Company By FY25, But Macro Is Still Challenging

The Big 3 U.S. Banks Delivered Solid Earnings on NII, Benign Credit Quality

By Fern Wang

The U.S. Big 3 banks delivered strong 3Q23 earnings on the back of record net interest income, despite a lower balance in commercial loans and residential mortgages.
Credit quality is mostly steady, with credit card charge-offs normalized. The main pain point is in CRE, especially for WFC.
The proposed Basel III end game, if materialized, could have a huge impact on JPM and Citigroup in particular.

Braze: Potential For A More Profitable SaaS Company By FY25, But Macro Is Still Challenging

By Andrei Zakharov

Braze, a leading customer engagement cloud-based platform provider, outperformed its key competitors, Adobe and Salesforce, on a year-to-date basis.
Braze shares massively outperformed, with shares up ~67% over the year versus a ~28% gain on the NASDAQ. However, the stock is still below the IPO price of $65/share.
Reported y/y revenue growth has decelerated from 58% in FY22 to 49% in FY23, and management has guided ~27% y/y revenue growth in FY24.

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Oct 15

Daily Brief China: Hang Seng Index, Shanghai Fosun Pharmaceutical (Group), Cainiao Smart Logistics, Eoptolink Technology and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tensions Rise
China Healthcare Weekly (Oct.13) – Deteriorating Financing Environment, ADC>BsAb>CGT, Fosun Pharma
CaiNiao Smart Logistics Pre-IPO Part 2 | Analyzing Financial Statements & Operating Statistics
Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tensions Rise

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

China Healthcare Weekly (Oct.13) – Deteriorating Financing Environment, ADC>BsAb>CGT, Fosun Pharma

By Xinyao (Criss) Wang

Due to IPO policy adjustment on SSE STAR Market, investment/financing for innovative drugs should continue to deteriorate.But the positive side is the innovative drug industry is emerging from the bottom.
For the three hot fields in pharmaceutical industry (BsAb, ADC, CGT), we analyze their position and pecking order, which should be ADC > BsAb > CGT at the current stage.
To better understand the investment logic of Fosun Pharmaceutical, it is necessary to fully understand the ecosystem/operational model of Fosun Group. Fosun Pharma’s role is just a “chess piece”.

CaiNiao Smart Logistics Pre-IPO Part 2 | Analyzing Financial Statements & Operating Statistics

By Daniel Hellberg

How did CaiNiao turn profitable? We answer with an analysis of the company’s P&L
We also analyze CaiNiao’s Balance Sheet, Cash Flow statement, and Operating Stats
We conclude with a list of ten questions we would put to CaiNiao management

Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

By Janaghan Jeyakumar, CFA

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at our final expectations for the ADDs and DELs for the December 2023 and their flow implications.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
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Oct 15

Daily Brief Japan: Japan Post Bank, Rakuten Group , Kokusai Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown
ECM Weekly (15th Oct 2023) – Kokusai, J&T, Ecopro, Thai Credit, Lalatech, Barito, Rakuten, Zomato
Weekly Deals Digest (15 Oct) – Kokusai, EcoPro, Seoul Guarantee, J&T, Eoflow, NWS, Origin, Liontown

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

By Brian Freitas

An ad hoc S&P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light & Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU).
The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.

ECM Weekly (15th Oct 2023) – Kokusai, J&T, Ecopro, Thai Credit, Lalatech, Barito, Rakuten, Zomato

By Sumeet Singh

Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Kokusai Electric (6525 JP) managed to get strong support, even though we remain somewhat unconvinved.
In the placement space, we looked at the upcoming lockups for Rakuten Bank (5838 JP) and Zomato (ZOMATO IN), along with the Ingenia Communities (INA AU) placement.