Daily Briefs

Mavacamten is expected to be LianBio’s first commercialized product. Due to low diagnostic rate/doctors’ insufficient cognition of HCM, whether it can become a blockbuster drug in China is still uncertain.
There’s an “insurmountable obstacle” to license-in model, and its “fault-tolerant space” is small. LianBio has to go all the way to the end.Otherwise, the license-in projects will eventually become worthless.
Due to high cost rate, it’s difficult for LianBio to make profit even with large drug sales. Although pipeline is good, LianBio could still fail to bring investors good returns.

Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality

Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
When Aier’s external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.

Directors of agri-food and F&B companies raise their stakes

Share buybacks by primary listed companies 25 – 31 Aug 2023 UOB again led the share buyback consideration tally, buying back 360,000 shares at an average price of S$28.41 per share, followed by Olam Group which bought back 3.25 million shares at an average price of S$1.25 per share.
Between Aug 28 and 31, SunMoon Food Company non-independent and non-executive director Song XiaoJun acquired 2,055,500 shares at an average price of S$0.02 per share.

REIT Watch – Data centre S-Reits under spotlight as investors look for ways to ride AI wave

INVESTMENT in artificial intelligence (AI) is booming worldwide – the frenzy fuelled by the release of ChatGPT last November has led to a surge in demand for data centres as well as the real estate investment trusts (Reits) that invest in them.
NVIDIA shares marked an intra-day record high on Aug 24 of US$502.66 per share two days after the company’s earnings exceeded expectations.
Singapore Reits with substantial data centre assets include Keppel DC Reit (KDCReit) and Digital Core Reit (DC Reit).

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Sep 04

Daily Brief Macro: Fed Policy Outlook: Could Housing’s Resilience Force a Higher Inflation Target? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Fed Policy Outlook: Could Housing’s Resilience Force a Higher Inflation Target?
The Weekly Market Monitor – Spending Pressure, Labor Lull, and Bitcoin Fatigue

Fed Policy Outlook: Could Housing’s Resilience Force a Higher Inflation Target?

By Said Desaque

Lack of existing homes for sale has supported the demand for new homes where homebuilders have assisted buyers via mortgage rate buy downs.
House price appreciation has resumed again, despite tougher comparisons, thereby helping to support aggregate demand. Future disinflation could spark swiftly declining borrowing costs, thereby complicating policy conduct for the Fed.
Further home price appreciation could undermine the Fed’s efforts to achieve 2% inflation, but political pressure to raise the target could increase in order to maximise full employment and homeownership.

The Weekly Market Monitor – Spending Pressure, Labor Lull, and Bitcoin Fatigue

By Jeroen Blokland

This week, we look at the skewed US personal income and spending data, concluding that wage growth must take over quickly to keep spending afloat.
This week, we look at the skewed US personal income and spending data, concluding that wage growth must take over quickly to keep spending afloat.
We discuss the latest developments surrounding Bitcoin and a spot Bitcoin ETF. While approval odds steadily rise, low attention and trading volumes reveal that investors are preoccupied with AI.

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Sep 04

Daily Brief Australia: Ramelius Resources, Lake Resources Nl, Liontown Resources and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete
Liontown Warms To Abermarle’s Bump

S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises

There is 1 change for the S&P/ASX100 Index, 5 adds/ 6 deletes for the S&P/ASX 200 INDEX, and 10 adds/ 8 deletes for the S&P/ASX300 Index at the September rebalance.
There will be 4-14 days of ADV to trade on the S&P/ASX100 Index and S&P/ASX 200 INDEX adds while the impact on the deletions is between 3-12 days of ADV.
On average, the adds to the S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index have outperformed the deletes over the last few months.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete

The review period for the MVIS Global Rare Earth/Strategic Metals Index ended 31 August. The changes will be announced on 8 September and implemented at the close on 15 September.
Coming in around the 85% cutoff, Rising Nonferrous Metals Share (600259 CH) is a potential inclusion. There are two stocks that are very close to the 98% deletion threshold.
Lake Resources Nl (LKE AU) is a deletion from the S&P/ASX 200 (AS51 INDEX) at the September rebalance and there could be more to sell if deleted from this index.

Liontown Warms To Abermarle’s Bump

By David Blennerhassett

Back on the 28 March, Liontown Resources (LTR AU) rejected the third proposal of $2.50/share from Albemarle (ALB US), the world’s largest lithium producer, citing terms were opportunistic.
Then everything went quiet. There appeared to be an interested party building a stake ~$2.75/share, but nothing concrete emerged.
Now Albemarle has returned with a revised indicative proposal of $3.00/share – best and final. Due diligence has been granted. The board is supportive if terms are firmed.

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Sep 04

Daily Brief South Korea: Eoflow , Lunit , Korea Stock Exchange KOSPI 200 and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin
KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance
EQD | KOSPI 200 Index Approaching Resistance

Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Seiko Pmc Corp (4963 JP), 111 Inc (YI US), Costa Group Holdings (CGC AU), Symbio Holdings (SYM AU), Eoflow (294090 KS), Orecorp Ltd (ORR AU).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Pacific Current (PAC AU), T&K Toka Co Ltd (4636 JP), Allkem Ltd (AKE AU), Celltrion Healthcare (091990 KS).

KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance

Over two-thirds of the way through the review period, we see 14 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
There could be index changes even before the December rebalance if there are delistings and stocks migrate from the KOSDAQ Market to the KOSPI Market.
Momentum in Korea has been strong. The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance.

EQD | KOSPI 200 Index Approaching Resistance

By Nico Rosti

The KOSPI 200 INDEX last week started to rally, so we want to look at WEEKLY resistance levels to evaluate where the current rally could end.
MRM Resistance Levels where the rally could stop are: 339, 348, 356.
Based on the current MRM pattern reading we expect the index to either roll down this week, or to rally for +2 more weeks (CC=+4) and then go down.

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Sep 04

Daily Brief Singapore: Mapletree Industrial Trust, Union Steel Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

REIT Watch – Data centre S-Reits under spotlight as investors look for ways to ride AI wave
Directors of agri-food and F&B companies raise their stakes

REIT Watch – Data centre S-Reits under spotlight as investors look for ways to ride AI wave

INVESTMENT in artificial intelligence (AI) is booming worldwide – the frenzy fuelled by the release of ChatGPT last November has led to a surge in demand for data centres as well as the real estate investment trusts (Reits) that invest in them.
NVIDIA shares marked an intra-day record high on Aug 24 of US$502.66 per share two days after the company’s earnings exceeded expectations.
Singapore Reits with substantial data centre assets include Keppel DC Reit (KDCReit) and Digital Core Reit (DC Reit).

Directors of agri-food and F&B companies raise their stakes

Share buybacks by primary listed companies 25 – 31 Aug 2023 UOB again led the share buyback consideration tally, buying back 360,000 shares at an average price of S$28.41 per share, followed by Olam Group which bought back 3.25 million shares at an average price of S$1.25 per share.
Between Aug 28 and 31, SunMoon Food Company non-independent and non-executive director Song XiaoJun acquired 2,055,500 shares at an average price of S$0.02 per share.

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Sep 04

Daily Brief China: Shanghai Friendess Electronic, Great Wall Motor, Kunlun Energy, KE Holdings , SHEIN, Aier Eye Hospital Group, 21Vianet Group and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

China ETFs: Inflows Continue to Support the Market
Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move
Kunlun Energy (135 HK): The Story Is Still Going On
[KE (BEKE US, BUY, TP US$24) TP Change]: Silver Lining Appear in Industry Cycle, Maintain BUY
Why Is SHEIN Getting Into Bed with Forever 21? | Plus, More Legal and Political Challenges in US
Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality
Morning Views Asia: O-Net Technologies (Group)

China ETFs: Inflows Continue to Support the Market

Money continues to flow into mainland China ETFs taking the total inflows since 18 July to over US$25bn. This has likely helped stabilise the market and prevent a bigger fall.
The inflows continue to be largest on ETFs tracking headline indices – CSI 300, STAR50, CSI1000, CSI 500, SSE50, ChiNext. Plus there are inflows on some sectoral and thematic ETFs.
The skew between stocks gaining 20%+ over the period vs those dropping -20% or more has improved significantly over the last week.

Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move

By Travis Lundy

The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
Last week was slightly disappointing but the Recommendations Outperformed the universe.
New stimulus measures are partly supply side, and a little bit demand side, but they’re not big enough yet to move the needle. Mainland ETF buying smells like National Team.

Kunlun Energy (135 HK): The Story Is Still Going On

By Osbert Tang, CFA

We think Kunlun Energy (135 HK) will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.
It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex.
Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.

[KE (BEKE US, BUY, TP US$24) TP Change]: Silver Lining Appear in Industry Cycle, Maintain BUY

By Shawn Yang

KE Holdings (Beike) reported 2Q23 GTV 5.6% lower than our estimate, revenue (2.6%)/0.4% vs. our estimate/consensus, and non-GAAP NI 21.8%/42.9% higher than our estimate/consensus.
We think 3Q23 is the trough and expect a rebound in 4Q23 as more substantial supportive policies laying out in China.
We maintain the stock as BUY rating and raised TP by US$2 to US$24/ADS

Why Is SHEIN Getting Into Bed with Forever 21? | Plus, More Legal and Political Challenges in US

By Daniel Hellberg

In this insight we analyze the drivers of a new relationship between SHEIN and Forever 21
We think SHEIN agreed to the deal in part to become more “mainstream” in the US
We also believe SHEIN takes seriously the legal and political risks it faces ahead of US IPO

Aier Eye Hospital Group (300015.CH) 23H1 – Time to Face the Gap Between Ideal and Reality

Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
When Aier’s external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.

Morning Views Asia: O-Net Technologies (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.

O-Net Technologies (Group)

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Sep 04

Daily Brief United States: LianBio and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

LianBio (LIAN.US) – Some Points Worth the Attention

LianBio (LIAN.US) – Some Points Worth the Attention

Mavacamten is expected to be LianBio’s first commercialized product. Due to low diagnostic rate/doctors’ insufficient cognition of HCM, whether it can become a blockbuster drug in China is still uncertain.
There’s an “insurmountable obstacle” to license-in model, and its “fault-tolerant space” is small. LianBio has to go all the way to the end.Otherwise, the license-in projects will eventually become worthless.
Due to high cost rate, it’s difficult for LianBio to make profit even with large drug sales. Although pipeline is good, LianBio could still fail to bring investors good returns.

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Sep 04

Daily Brief Japan: Seiko Pmc Corp, JSR Corp, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium
Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer
Weekly Deals Digest (03 Sep) – JSR, Seiko PMC, Eoflow, ENM, Doosan Robotics, ARM, Integral Corp
Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium

By Travis Lundy

Carlyle Group is buying Seiko Pmc Corp (4963 JP) from 54+% owner Dic Corp (4631 JP) and minorities in a Tender Offer with optical premium of 89%.
It looks good, takes advantage of tax code particularities, and the nature of the company disguises some value. Shareholder structure means this is basically a done deal before it starts.
With minimal foreign active investor ownership, and significant crossholder, ESOP, and director ownership, only a bit of retail actually needs to tender to make this successful.

Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer

Seiko Pmc Corp (4963 JP) has recommended Carlyle Group / (CG US)’s tender offer of JPY1,070 per share, an 88.7% premium to the undisturbed price.
Dic Corp (4631 JP) will not tender but vote for the share consolidation at the EGM. Post consolidation, DIC will sell its 54.51% stake to Carlyle at JPY799 per share.
Achieving the minimum ownership ratio (12.16%) requires a 26.7% acceptance rate, which is doable as the offer is attractive. The tender offer runs from 4 September to 17 October.

Weekly Deals Digest (03 Sep) – JSR, Seiko PMC, Eoflow, ENM, Doosan Robotics, ARM, Integral Corp

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Doosan Robotics (454910 KS), ARM Holdings (1822695D US), Integral Corporation (5842 JP) and S.F. Holding (002352 CH) IPOs.
Event-Driven developments – JSR Corp (4185 JP), Seiko Pmc Corp (4963 JP), Eoflow (294090 KS), ENM Holdings (128 HK), Shougang Fushan Resources (639 HK), Costa Group Holdings (CGC AU).

Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

By Aki Matsumoto

While it’s commendable that increasing numbers of companies are publishing skill matrices, there is not enough verification that the skill items are useful in expanding the value of the company.
It is a prerequisite that the process of selecting skill items and the nominating committee that governs it are functioning and independent.
Even if a governance framework and tools such as the skills matrix are introduced, whether they actually function depends largely on the quality of management.

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Sep 04

Most Read: Seiko Pmc Corp, Ramelius Resources, Youngpoong Paper Mfg, Wisdom Marine Lines, Shanghai Friendess Electronic, Ferrari N.V., Lake Resources Nl, Eoflow , Lunit and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium
S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises
Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF
Yuanta ETFs Rebalance: AI-Frenzy Means Tech Replaces Industrials; Shorts Surge; Big Positioning
China ETFs: Inflows Continue to Support the Market
Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete
Quiddity TDIV/50/100 Sep 23 Rebal: ALL 15 Changes Expected; US$420mn One-Way
Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin
KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium

By Travis Lundy

Carlyle Group is buying Seiko Pmc Corp (4963 JP) from 54+% owner Dic Corp (4631 JP) and minorities in a Tender Offer with optical premium of 89%.
It looks good, takes advantage of tax code particularities, and the nature of the company disguises some value. Shareholder structure means this is basically a done deal before it starts.
With minimal foreign active investor ownership, and significant crossholder, ESOP, and director ownership, only a bit of retail actually needs to tender to make this successful.

S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises

There is 1 change for the S&P/ASX100 Index, 5 adds/ 6 deletes for the S&P/ASX 200 INDEX, and 10 adds/ 8 deletes for the S&P/ASX300 Index at the September rebalance.
There will be 4-14 days of ADV to trade on the S&P/ASX100 Index and S&P/ASX 200 INDEX adds while the impact on the deletions is between 3-12 days of ADV.
On average, the adds to the S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index have outperformed the deletes over the last few months.

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF

The HSI, HSCEI, HSTECH and HSCI rebalances will take place at the close on 4 September since the market was closed on 1 September due to Typhoon Saola.
There will be a few announcements next week with Nikkei 225 early in the week and the MVIS series post close on Friday. Plus the STAR50 rebalances on Friday.
Another week of huge inflows into mainland China ETFs focused on the CSI 300 Index, STAR50 INDEX and CSI Smallcap 500 Index.

Yuanta ETFs Rebalance: AI-Frenzy Means Tech Replaces Industrials; Shorts Surge; Big Positioning

There are 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
The impact on the inclusions is larger in terms of flow but smaller in terms of days to ADV to buy. Shorts are higher on the deletions.
There appears to be big positioning on a lot of the stocks. But the ETF adds could move higher in the short-term on short covering.

China ETFs: Inflows Continue to Support the Market

Money continues to flow into mainland China ETFs taking the total inflows since 18 July to over US$25bn. This has likely helped stabilise the market and prevent a bigger fall.
The inflows continue to be largest on ETFs tracking headline indices – CSI 300, STAR50, CSI1000, CSI 500, SSE50, ChiNext. Plus there are inflows on some sectoral and thematic ETFs.
The skew between stocks gaining 20%+ over the period vs those dropping -20% or more has improved significantly over the last week.

Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!

By Janaghan Jeyakumar, CFA

The September 2023 index changes for the ES50 index was confirmed after the close on Friday 1st September 2023.
There will be two ADDs and two DELETEs. One set of changes was well anticipated by us. The other set comes as a major surprise to us.
Collectively, the two ADDs could see ~US$2.4bn index flows and the two DELs could see ~US$2.9bn index flows, with US$500mm of reverse funding flows.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete

The review period for the MVIS Global Rare Earth/Strategic Metals Index ended 31 August. The changes will be announced on 8 September and implemented at the close on 15 September.
Coming in around the 85% cutoff, Rising Nonferrous Metals Share (600259 CH) is a potential inclusion. There are two stocks that are very close to the 98% deletion threshold.
Lake Resources Nl (LKE AU) is a deletion from the S&P/ASX 200 (AS51 INDEX) at the September rebalance and there could be more to sell if deleted from this index.

Quiddity TDIV/50/100 Sep 23 Rebal: ALL 15 Changes Expected; US$420mn One-Way

By Janaghan Jeyakumar, CFA

The September 2023 index changes for the TDIV, T50, and T100 Indices were confirmed after the close on Friday 1st September 2023.
In this insight, we take a look at our final flow expectations for these index changes and the capping flow expectations for the TDIV index.
There could US$420mn one-way flows across these three indices during this rebalance event.

Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Seiko Pmc Corp (4963 JP), 111 Inc (YI US), Costa Group Holdings (CGC AU), Symbio Holdings (SYM AU), Eoflow (294090 KS), Orecorp Ltd (ORR AU).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Pacific Current (PAC AU), T&K Toka Co Ltd (4636 JP), Allkem Ltd (AKE AU), Celltrion Healthcare (091990 KS).

KOSDAQ150 Index Rebalance Preview: Strong Momentum Leads to Outperformance

Over two-thirds of the way through the review period, we see 14 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
There could be index changes even before the December rebalance if there are delistings and stocks migrate from the KOSDAQ Market to the KOSPI Market.
Momentum in Korea has been strong. The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance.

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Sep 03

Daily Brief South Korea: Youngpoong Paper Mfg and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF