This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
- Shanghai-Based Bloks Group, a leader of assembly character toys in China, has announced the initial price range for its IPO in Hong Kong.
- The offering is expected to be between HK$55.65 and HK$60.35, implying a market cap of ~HK$14B or ~$1.8B at the midpoint of the price range.
- Assuming IPO offer price of HK$58.00, UBS AM Singapore, Greenwoods AM and Fullgoal Investors have agreed to invest ~HK$388M or ~$50M in the offering.
2. Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention
- The assembly character toy segment market size is not big and Bloks is already China’s largest player. So, there will be a day when the growth ceiling is reached.
- Bloks’ business model is more similar to Pop Mart, rather than LEGO, but Bloks’ profitability is lagging behind both of them. The current high revenue growth may not be sustainable.
- Pre-IPO valuation of Bloks reached RMB7.2 billion. Valuation of Bloks should be lower than Pop Mart. If Bloks’ valuation could reach the industry average after IPO, it is already good.
3. Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist
- Bloks Group (1850960D CH) is looking to raise US$188m in its Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In our previous note, we looked at the firm’s past performance. In this note, we discuss the latest PHIP updates.
4. Didi Global Q324 Results & Two Key Reasons Company May Consider A New Listing in 2025
- In Q324, Didi grew slowly, but core margin improved significantly on higher “take rate”
- Q324 liquidity position sound, but pace of 2024 investment difficult to sustain
- Two important reasons Didi could list shares in ’25, even if cash needs aren’t urgent
5. S.F. Holding (6936 HK) – Here’s Why Post-IPO Share Price Performance Is So “Boring”
- The Time-definite express services are actually a double-edged sword for S.F.- Although it helps S.F. establish core competitiveness, such strategy limits the Company’s market share and growth ceiling in China.
- The issue here is that S.F. has encountered growth bottlenecks, but due to its heavy asset model, the only truly suitable solution is internationalization, which however is full of uncertainties.
- S.F. is facing many challenges. The IPO final offer price of HK$34.3 is expensive, which might explain why S.F.’s share price has been a bit “boring” since its listing.
6. LG CNS: Updated IPO Valuation Analysis
- According to our updated valuation analysis of LG CNS, it suggests a base case implied market cap of 7.4 trillion won, representing target price of 76,383 won per share.
- Our base case valuation target price of 76,383 won is 23% higher than the high end of the IPO price range.
- We lowered our target price by 6%, mainly due to greater political risks arising from the recent cancelled martial law and ongoing impeachment of President Yoon.
7. LG CNS IPO: The Bear Case
- LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
- In LG CNS IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on fading growth momentum, mid-tier revenue growth, weak non-AI growth, high contract assets, bottom-tier FCF margin and large share overhang.
8. Pre-IPO Ascentage Pharma – The US Stock Listing Will Stimulate Future Growth Potential
- Ascentage has filed with the SEC to raise up to US$100 million in a US IPO. We think its future market value is expected to surpass that of Hutchmed.
- The outlook of olverembatinib is clear. Takeda can give more possibilities to olverembatinib. 2025 Sales of olverembatinib is expected to reach RMB500 million.Market value contribution from olverembatinib is US$1-1.5 billion.
- Investors have higher expectations on APG-2575 to be out-licensed to MNCs. We think the peak sales of APG-2575 is expected to surpass that of olverembatinib in overseas markets.
9. Orum Therapeutics Lowers IPO Price Range
- Orum Therapeutics (475830 KS) has lowered its IPO price range to 24,000 won to 30,000 won.
- The IPO offering amount will be between 60 billion won to 75 billion won. The expected market cap of the IPO is between 531 billion won to 664 billion won.
- Our updated valuation of Orum Therapeutics suggests implied target price of 24,939 won per share, which is 8% lower than the mid-point of the revised down IPO price range.
10. Initial Thoughts on the DN Solutions IPO
- DN Solutions is planning to complete its IPO in Korea in 2025. The expected value of DN Solutions is estimated to be about 5 trillion won to 6 trillion won.
- DN Solutions’ revenue and operating profit increased at CAGR of 19.9% and 62.2%, respectively from 2020 to 2023.
- Currently, the largest shareholder of DN Solutions is GMT Holdings which has a 90.32% stake. DN Automotive (007340 KS) owns a 100% stake in GMT Holdings.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
- In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
- On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
- The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.
2. HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
- There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
- There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.
3. ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
- ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
- ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
- There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.
4. Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
- The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
- Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?
5. Australia: Six Stocks in Passive Selling Crosshairs for February
- Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
- If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
- The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.
6. InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
- InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
- InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
- Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.
7. Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
- Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
- There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
- With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.
8. NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
- Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
- Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
- There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.
9. Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
- 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: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).
10. Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction
- Grandblue Environment Co A (600323 CH) continues to make steady progress in satisfying the precondition for its HK$4.90 privatisation offer for Canvest Environmental Protection Group (1381 HK).
- Two of the five preconditions are satisfied, and another will be satisfied by 20 January. The long stop date of 17 July provides ample time to satisfy the remaining two.
- Although the peers have materially re-rated, the offer implies a premium compared to peer multiples. Vote risk remains low, aided by selling by a shareholder with a blocking stake.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. The 10 Most Interesting Things We Learned on Odd Lots in 2024
- Private credit is transforming the world of debt, creating concerns for investors and the broader economy
- Chicken wing prices are volatile due to the poultry industry focusing on breast meat demand, making wings a fall-off product
- Companies like Elf Bar evade FDA regulation by flooding the market with products and rebranding under different names
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
2. HONG KONG ALPHA PORTFOLIO (December 2024)
- Hong Kong Alpha Portfolio returned 5.23% in December and outperformed the benchmark by 5.92%. The portfolio has outperformed Hong Kong indexes by 10.36% to 14.38% since its inception on 10/01/24.
- About 80% of the portfolio’s excess returns have been from alpha generation. The portfolio has no exposure to Real Estate, Healthcare, Materials, or Energy at this time.
- At month end, we sold ZhongAn Online P&C Insurance C (6060 HK) , China Longyuan Power (916 HK) , CRRC Corp Ltd H (1766 HK), and Weibo (9898 HK) .
3. 2025 Regime Update: How Does the Opening Scene of 2025 Look?
- Hello everyone—we hope you enjoyed the holiday season and had a wonderful Christmas.
- The festive season has been relatively quiet macro-wise, with only a few comments from the PBoC and BoJ.
- However, markets seem unwilling to move until there is news on the USD front, which has been driving almost all assets since December.
4. Steno Signals #178 – Brace yourselves, liquidity is coming!
- Happy New Year, friends, and welcome back to the Steno Signals editorials! My apologies for the silence over the past few days—I celebrated New Year’s Eve (and my 35th birthday) battling a nasty pneumonia, which has taken some time to recover from.
- Thankfully, I am finally better and wanted to share my 2025 thoughts on liquidity with you, as I find myself disagreeing quite a bit with the current semi-bearish consensus.
- We experienced an almost equally “tight” year-end as the tight quarter-end back in September.
5. Surging Share Buybacks in Korea in 2024
- Capitalizing on the lower share prices combined with the government’s pressure for Corporate Value up improvements, the share buybacks surged in Korea in 2024.
- As of 27 December 2024, the total treasury shares planned acquisition amount by Korean companies increased by 215% YoY to 11.83 trillion won in 2024.
- There have been some mixed share price performances among the companies announcing meaningful share buyback/cancellation announcements this year.
6. Contrarian Bargains Among Santa’s Discards
- The stock market is likely to advance during the Santa Claus rally window, which began on December 24 and ends January 3.
- But the rally is attributed to an oversold bounce and marked by narrow leadership. Either the rebound fizzles in January or broadens into lagging issues.
- We identified selected contrarian value opportunities for bulls among Santa’s discards for potential outperformance into January and beyond.
7. Asia Ex-Japan Funds: Stock Positioning Update
- Top holdings remain unchanged: TSMC, Samsung Electronics, and Tencent are almost universally owned. TSMC hits record weights but active funds sell into strength as benchmark weights surpass 10%
- Hon Hai, Hyundai Motor, and Singtel lead recoveries from prolonged declines. Baidu Inc. and Kweichow Moutai see sharp ownership drops.
- Momentum leaders include Accton Technology, CATL, and KE Holdings. By contrast, Axis Bank, PDD, and Reliance face stalling ownership.
8. Estimating Downside Risk
- The U.S. equity is highly vulnerable because of overvaluation and excessive growth expectations, but valuation is not very predictive of returns over a one-year time horizon.
- We estimate downside risk on the S&P 500 in the 20–30% range in the event of a major bear market.
- Despite our concerns, we see no immediate bearish triggers for investors to adopt defensive positioning in their portfolios.
9. Asia Ex-Japan Funds: Country Positioning Update
- China dominates allocations, India and Taiwan are equal 2nd, while South Korea lags a further 7% behind after seeing a big drop in exposure.
- Indonesia leads the ASEAN region, emerging as the top overweight country as a record 79.8% of funds are ahead of the benchmark.
- India sees 62% underweight the benchmark. Vietnam hits new highs in average fund weight (0.97%) and fund participation (34%).
10. End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2025
- We discuss the end of the mandatory lock-up periods for 57 stocks in Korea in January 2025, among which four are in KOSPI and 53 are in KOSDAQ.
- The ban on short selling of Korean stocks which is still in place is likely to be lifted on 31 March 2025.
- Some of the companies mentioned in this insight which highlights the end of the major lockup periods could help to narrow down the list of candidates for potential shorting.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Micron. So Long Legacy & Hello There HBM, Data Center & Leading Edge
- Micron’s Q1F25 met expectations on key metrics but the ~9% downward guidance for the current quarter sent the share price into a tailspin
- Consumer-Related inventory issues and China competition were highlighted as the root causes for the surprise downward guide
- Micron is ok to cede legacy products to China competition and focus instead on the much more lucrative leading edge products, especially HBM. The transition could be rocky however
2. Memory Monitor: The Emerging Mass-Market Edge AI Need for Mobiles; Long Micron Vs. Short Nanya Tech
- Micron’s Latest Outlook Disappoints & Shares Fall; Decoupling Trade Between SK Hynix & Nanya Tech Has Worked However
- Smartphone AI Insights — On-Device Local Search & Context-Aware Interfaces Emerging as Key Local AI Needs
- Conclusion — Consider Swapping In MICRON as the Long Side of the Memory Decoupling Trade
3. Nvidia (NVDA.US): To Establish Offshore Headquarter in Taiwan.
- NVIDIA Corp (NVDA US) CEO Mr. Jensen Huang announced plans to establish an offshore headquarters in Taipei during his visit this June.
- From a geopolitical perspective, Taiwan is one of the focal points where the U.S. and China could potentially be in conflict.
- Focusing on AI, NVIDIA Corp (NVDA US) is currently attracting significant attention, but the decision to establish an offshore headquarters in Taipei is raising curiosity.
4. Hamamatsu Photonics (6965 JP): Rebound Ahead
- Profits and share price stabilizing after steep declines, although margins still under pressure from rising R&D and depreciation, and costs associated with recent acquisitions.
- Sales of medical equipment to recover from post-COVID decline. Semiconductor equipment driven by advanced logic and high-bandwidth memory. Lasers to become fourth major product division.
- Buy for the long-term. Risks include Trump tariffs, weak European economies, emergence of Chinese competition.
5. United Microelectronics: Key QCOM Advanced Packaging Win Signals Client Shift Away from TSMC
- UMC Secures Key Qualcomm Advanced Packaging Order; Breakthrough in High-Growth Chip Supply Chain Segment
- Why TSMC Remains Critical for QCOM Manufacturing, Yet UMC Provides a Strong Strategic Counterbalance
- UMC Must Prove Itself, but QCOM Win Sparks Optimism for Sentiment and Outlook Recovery — Maintain TSMC as Structural Long & Rate UMC as Outperform
6. The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.
- The US-China trade war has shaped a new trend: Advanced and Matured Technologies led by Taiwan Semiconductor (TSMC) – ADR (TSM US) and Semiconductor Manufacturing International Corp (SMIC) (981 HK) respectively.
- Notably, construction of semiconductor fabs in Singapore seems to be of lesser concern at the moment.
- The emergence of AI offers new hope, not only for advanced semiconductor technology but also for lagging technologies.
7. Taiwan Tech Weekly: Rapidus’s Challenge Vs. TSMC for 2nm; Hon Hai Hunting for Automaker Acquisition
- Rapidus vs. TSMC: Can Japan’s Newcomer Compete in the 2nm Race?
- Memory Monitor: The Emerging Mass-Market Edge AI Need for Mobiles; Long Micron Vs. Short Nanya Tech
- Hon Hai Pauses Nissan Pursuit Amid Honda Talks — A Japanese Savior for Nissan is Likely But This Confirms Hon Hai’s EV Ambitions Remain High
8. Taiwan Dual-Listings Monitor: TSMC ADR Spread Near All-Time Highs; UMC at Upper End of Range
- TSMC: +25.4% Premium; At Historical Highs, Good Level to Short the Spread
- UMC: +2.1% Premium; Upper Level of Historical Range, Short Level
- ASE: +5.4% Premium; Near-Term High However Likely Best to Wait for Higher Levels
9. Nidec (6594 JP): Acquisition of Makino Milling Would Add Value
- Nidec has announced its intention to acquire Makino Milling Machine (6135 JP) for ¥11,000 per share, a 42% premium over Thursday’s closing price.
- The stock market liked the idea. Nidec’s share price rose 4% on Friday. Makino’s jumped 19%. The pice looks high, but at 17.7x Makino’s EPS guidance, it is not unreasonable.
- The acquisition would be accretive to earnings and bring greater scale and competitiveness to Nidec’s machine tool business. It should support our Buy recommendation.
10. SK Hynix(000660.KS): Insisting on HBM Technology and Continuing to Surpass Samsung in Net Earnings
- SK Hynix (000660 KS)‘s key turning point is its dedication to developing High Bandwidth Memory (HBM) technology, which has finally paid off.
- In the third quarter of 2024, SK Hynix (000660 KS) continued to surpass Samsung Electronics (005930 KS) net earnings based on their financial results.
- Samsung Electronics (005930 KS) is reportedly exploring partnership opportunities with Taiwan Semiconductor (TSMC) – ADR (TSM US) in the realm of HBM, aiming to strengthen its ties with NVIDIA.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Minieye Technology IPO: Valuation Multiples Appear Justified Given Top-Line Growth of 30%+
- Minieye Technology, a fast-growing provider of intelligent driving and cabin solutions in China, will price its IPO this week.
- The company was backed by CICC Capital, Beijing Siwei, Shenzhen Zeyi, and Mr. Wu Yongming, the current CEO of Alibaba, among others.
- IPO valuation multiples appear justified given the company’s top-line growth of 30%+ and full-stack in-house R&D capabilities.
2. 2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals
- 2024 ECM offerings in the Greater China logistics & transport segment included TS Lines (in Hong Kong), SF Holding(Hong Kong), and BingEx (US)
- Generally, recent share offerings in the segment have not performed well at all
- Looking to 2025, we see several deals, including SHEIN and a possible Didi return
3. Pre-IPO Duality Biotherapeutics – Has the Potential to Surpass RemeGen
- Founder Zhu Zhongyuan is a key figure in biotech landscape.So, when Duality first started its entrepreneurial financing, the process was smooth and the starting point of Duality was not low.
- The R&D progress of Duality’s pipelines is slower than competing candidates, so they would be in a passive position after market launch. So, Duality’s valuation would be lower than Kelun Bio.
- Duality’s pipeline still has “good stories” to tell. There’s a chance its valuation could be higher than RemeGen, whose business model/investment logic have been falsified due to weak sales data.
4. Calendar Effects Trading Strategy: Combining TOY and Santa Rally Effects for Enhanced Returns
- Calendar effects in equity markets have persisted despite widespread knowledge of their existence.
- Combine the Turn-of-Year (TOY) effect with the Santa Rally phenomenon systematically
- The trading approach historically generates 1.4-2.0% returns over a 7-day period, with a win rate of 75% since 2000.
5. China Healthcare Weekly (Dec.29) – Haier Biomedical Plans to Merge with and Absorb Shanghai RAAS
- Haier Biomedical plans to merge with and absorb Shanghai RAAS through the issuance of shares, and both parties have signed a letter of intent for the potential merger.
- Haier’s acquisition of RAAS helps connect the software and hardware of the blood industry and strengthen the company’s dominant position in the entire industry chain in the blood products industry.
- The market value/financial performance of these two are far apart. If the acquisition is completed, it will help Haier improve financial performance, which is obviously more beneficial for Haier.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Japan: Potential Passive Selling in February
- Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
- Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.
2. Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
- Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
- Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.
3. KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
- The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
- A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
- Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.
4. Korea: Potential Relegations from K League 1
- There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
- There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
- Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.
5. LG CNS IPO: Limited Float Pushes Back Passive Buying
- LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
- As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
- Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.
6. [Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
- Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
- Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December.
- I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected.
7. Nidec Goes Hostile On Makino Milling at ¥11,000/Share
- This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
- The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
- But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.
8. NEC Networks (1973 JP) Next To Last Showdown – NEC Lowers Minimum, Bumps Tiny, Ignores Synergies
- On Friday, NEC Corp (6701 JP) raised the price for its Tender Offer on Nec Networks & System Integr (1973 JP) from ¥3,250 to ¥3,300.
- It also lowered the minimum to 10.153mm shares (6.82%). It had proposed to do so earlier but NESIC demanded a bump, and NEC didn’t want to.
- Now it’s bumped. That’s the “final price.” But it still does not include “a fair allocation of a portion of the value that cannot be realised without an acquisition.”
9. GA Pack (468 HK): The State of Play
- On 20 December, Shandong Xinjufeng Technology Packaging (301296 CH) satisfied the precondition for its Greatview Aseptic Packaging (468 HK) offer. The offer document will be despatched by 27 December.
- Analysing the EGM vote on 18 October suggests that the 50% minimum acceptance condition will be met if no competing management offer is made.
- Management will oppose the offer, but the last EGM protest votes suggest that many minorities will ignore management. At the last close, the gross/annualised spread was 2.3%/25.3%.
10. Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January
- Shanghai Henlius Biotech (2696 HK)’s IFA opines that Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer is fair and reasonable. The vote is on 22 January.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There are recent movements in H Share substantial shareholders.
- Key shareholders should be supportive of the cash/scrip offer. At the last close and for a 15 February payment, the gross/annualised spread is 2.9%/16.9%.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. EM Fixed Income: ‘Tis the Season for Volatility
- The discussion focused on the importance of politics over economics for emerging markets in 2025, with a specific emphasis on fiscal trajectories.
- Lessons learned include the need to expand imagination of possible scenarios, the impact of specific country situations on returns, and the caution against following consensus trades.
- Market outlook for early 2025 is expected to be choppy and driven by policy announcements, with a key event being the US Inauguration Day on January 20th leading to potential market adjustments.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
2. San Francisco Fed President Mary Daly Explains the ‘Hawkish Cut’
- The Federal Reserve recently cut interest rates by 25 basis points, unveiling new year expectations for inflation and economic growth.
- San Francisco Fed President Mary Daly discusses the current state of the labor market, the impact of AI on productivity, and the importance of data and evidence in making policy decisions.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
3. Infrastructure mini-series Ep 2: The Low-Carbon Transition: A $100 Trillion Infrastructure Opport…
- Global transition to low carbon economy discussed in the second episode of the Infrastructure miniseries
- Key areas of investment include electrification, renewable power plants, electric vehicle charging stations, and clean fuels
- Importance of public and private investment in infrastructure to enable energy transition and decarbonization, with a focus on long-term growth opportunities like data centers and mining infrastructure
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
4. NPS: Portfolio Rebalance Could Lead to Buying At Least 25 Trillion Won in Korean Stocks in 2025
- In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock market.
- At the end of September 2024, NPS’s domestic stock portfolio was 12.7% of its total assets, a 2.2% lower than NPS’s domestic stocks target at the end of 2025 (14.9%).
- The top five net purchases by the NPS and local pension funds of Korean stocks in the past one month include Samsung Electronics, Kakao, SK Innovation, Hyundai Motor, and SEMCO.
5. Global Monetary Easing Cycle Becomes More Idiosyncratic
- The Swiss and Canadian central banks cut their respective policy rates by 50 basis points. The former faces currency appreciation and deflationary risks. Canada faces higher unemployment and deteriorating growth.
- The European Central Bank is taking a gradual policy easing path in 2025. Policy outlooks for the Reserve Bank of Australia and Bank of England are more data dependent.
- The Fed cut its policy rate by 25 basis points as expected, but fewer reductions are now expected in 2025 due to a more robust economic outlook compared to September.
6. Steno Signals #177 – Another ill-timed flip-flop from Jay Powell?
- Happy Sunday from me! This will be the last update before the festive season, and I hope you will have a relaxed and enjoyable time with your loved ones.
- It has been a big year for me personally with the launch of Asgard-Steno Global Macro.
- Despite Powell pulling the rug from under the Christmas rally, we are off to a decent start and expect to deliver strong returns in choppy markets in 2025, where the macro direction will be challenged by several factors.
7. The Darker Side of the Hindenburg Omen
- Current market conditions are characterized by a strong S&P 500 that’s near its all-time high and weak breadth.
- The closest template to these circumstances is August 1972, which is just before the final Nifty Fifty top.
- As the market undergoes its inevitable bounce due to oversold conditions, investors should monitor technical conditions for negative divergences, which could be the signal for a long-term cyclical top.
8. Equity Return Expectations Under An Alien Invasion
- We are subscribers to Occam’s Razor, or the simplest explanation is the most satisfactory, and recent UFOs sightings are of terrestrial origin.
- It’s nevertheless a worthwhile exercise to consider asset return expectations under the scenario of an extra-terrestrial alien invasion.
- Our study of an alien invasion opens the door to discussing return studies. Standard assumptions about returns to bonds and equity risk premiums are useful only up to a point.
9. Here is what we told hedge funds this week – and how we’re trading it!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
10. Three Presidents in One Month in South Korea – What’s Next?
- The acting South Korean President Han Duck-Soo was impeached by the South Korea’s Parliament on 27 December. Choi Sang-Mok (finance minister) is now the new, acting President of South Korea.
- There could be multiple impeachments of acting Presidents in the next several weeks which would be unprecedented and raise further concerns about the lack of political stability in South Korea.
- Amid all this political uncertainty, Yoon Suk-Yeol’s approval rating has been improving sharply to more than 30%.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Mediatek: Google Reportedly Dropping QCOM & Adopting Mediatek for Pixel 10 Modem; Structural Long
- Report — Google Drops QCOM, Shifts to MediaTek for Pixel 10’s 5G Modems
- Strong “Double” Indication for Mediatek’s Competitiveness — Combined with Recent Reports that Mediatek Won Apple to Provide Modems for the Apple Watch
- Mediatek’s Opportunity to Deliver a Big Win for Google; Maintain Our Structural Long Rating for Mediatek.
2. Taiwan Tech Weekly: Apple’s TSMC 2nm Power Move Beats Samsung; Himax Ascends with TSMC/Nvidia Halos
- Apple’s 2nm Power Move with TSMC — Beating Samsung Yet Again
- Why TSMC’s 2nm Will be Huge — Extending Tech Lead vs. Samsung & Major AI/Power Consumption Benefits for Customers
- The Memory Decoupling Trade is Working — Nanya Tech Underperforms SK Hynix
3. TSMC (2330.TT; TSM.US): 2025 Could Achieve 25% Yearly Growth.
- We anticipate Taiwan Semiconductor (TSMC) – ADR (TSM US) can achieve a 25% growth in 2025.
- It is unsurprising for TSMC to dominate in AI, including the assembly and testing segments.
- Chinese companies are also involved in AI, but there hasn’t been a recent spread as a result of U.S. sanctions.
4. General Motors Abruptly Pulls The Plug On Cruise
- GM announced it will no longer continue to fund its loss making Cruise subsidiary, effectively ending its RoboTaxi ambition. Market reaction? Nothing.
- Microsoft has already announced it will write off its $800 million investment made back in 2021 when Cruise was valued at $30 billion
- Root cause? The tsunami that was triggered by Cruise’s botched response to an accident in October 2023.
5. Taiwan Dual-Listings Monitor: TSMC Spread at Short Level; UMC and CHT Short Interest Spikes
- TSMC: 22.7% Premium; Good Level to Short the Spread Given Historical Trading Range
- UMC: +0.2% Premium; Middle of Historical Trading Range; Short Interest Rises to New High
- CHT: +0.5% Premium; Major Spike in Short Interest for the Local Taiwan Shares
6. MediaTek (2454.TT): Google Pixel 10 Will Use MediaTek’s Modem
- Alphabet (GOOGL US) Pixel 10 will use the Mediatek Inc (2454 TT) T9000 modem.
- The shipment quantity to the smartphone market is small, and we see this as a small triumph for Mediatek Inc (2454 TT).
- Samsung Electronics (005930 KS) is facing a 3nm process issue and lacks the capacity to support its own smartphone CPU Exynos 2400.
7. Scaling Laws Meet Economics, but Adoption is still Accelerating
- Technological model scaling is not dead, but we are clearly at a critical moment when the definitions will shift.
- Pre-training, the original scaling law, might hit its first diminishing return. The piece SemiAnalysis used the analogy that pre-training was like the end of Dennard’s law.
- However, multi-core scaling led to another decade of scaling transistors. Technology progresses, just not in the same way.
8. Intel (INTC.US): Exploring a Tough Journey.
- Regardless of the circumstances, Intel Corp (INTC US) must select a new CEO and hope that a new strategy will turn the situation around.
- A possible decision to spin off Altera could signal the possibility of Intel further breaking into several parts.
- For the near term, Intel must overcome financial and management challenges, and laying off 1/10 of its workforce is a short-term and necessary step.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Kioxia IPO Trading – Decent Demand for Decent Upside
- Kioxia Holdings (285A JP) raised around US$800m (including over-allocation) in its Japan IPO, after pricing its IPO in the middle of its range.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.
2. 2025 (“Year of the Snake”) IPOs Pipeline in Asia
- In this insight, we provide a list of 70 prominent companies in Asia that could complete their IPOs in Asia next year.
- This is a comprehensive, REFERENCE GUIDE to help clients so that they could get a broad view of the major IPOs that could get completed in Asia in 2025.
- Some of the most prominent potential IPOs in Asia next year include Reliance Jio, LG Electronics India, Shein, Sony Financial Group, Didi Global, and Okada Manila.
3. 2025 IPOs Pipeline (USA, Europe, and the Middle East)
- In this insight, we provide a list of 70 prominent companies in the USA, Europe, and the Middle East that could complete their IPOs in 2025.
- This is a comprehensive, REFERENCE GUIDE to help clients so that they could get a broad view of the major IPOs that could get completed in these regions in 2025.
- Some of the most prominent potential IPOs in these regions next year include Starlink, SpaceX, Stripe, Open AI, Klarna, Five Holdings, Monzo, and Ethiad Airways.
4. Shenzhen Dobot IPO (2432.HK): Global Offering, The Rising Star of Collaborative Robotics
- Shenzhen Dobot, a CICC-backed robotics unicorn, aims to raise up to HK$830M (~$107M) in the initial public offering in Hong Kong.
- The offering is expected to be between HK$18.80 and HK$20.80, implying a market cap of ~HK$8B or ~$1B at the midpoint of the price range.
- Given Shenzhen Dobot’s long-term growth opportunities and high TAM, they are likely to get a premium valuation, and the company could trade like UBTech Robotics and Doosan Robotics.
5. ECM Weekly (16th Dec 2024) – LG CNS, Mao Geping, Digico, Kioxia, Vishal Mega, IGI, Sai Life, Quantum
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, a number of offerings were live in India, in a bid to beat the year-end lull.
- On the placements front, there was a large placement for SenseTime Group (20 HK) and a number of smaller deals in India.
6. LG CNS IPO: The Bull Case
- LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
- In 2020, Macquarie Asset Management bought a 35% stake from LG Corp for KRW950 billion, beating KKR & Co (KKR US), the other shortlisted bidder.
- The bull case rests on an attractive market, improving visibility, strong AI-led growth, below-peer average dependence on related parties, and top-tier profitability.
7. Pre-IPO Xunfei Healthcare Technology (PHIP Updates) – Profitability Are Always the Pain Points
- Medical industry characteristics are the seriousness of diagnosis/treatment and the irreversibility of the process, which are the difficulties in implementing technology. The value that AI can provide is limited.
- Xunfei’s business model is not To C, but To G (government) model. It’s not possible for SOE customers to pay high price for Xunfei’s AI model/products, leading to questionable profitability.
- Pre-IPO valuation has reached RMB8.4 billion. Without sustainable growth and stable profitability, valuation/liquidity of Xunfei after listing wouldn’t be good. We think Xunfei’s valuation could be similar to Yidu Tech.
8. Vishal Mega Mart IPO Trading – Strong Demand Despite Not so Strong Anchor
- Vishal Mega Mart (VMM) raised around US$950m in its India IPO.
- Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.
9. Inventurus Knowledge Solutions IPO Trading: Decent Anchor Quality and Strong Subscription Results
- Inventurus Knowledge Solutions (IKSINCD IN) raised around US$295m in its India IPO.
- IKS is a technology-enabled healthcare solutions provider, assisting physician enterprises in US, Canada and Australia, with a core focus in the US.
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.
10. IGI (India) IPO Trading – Decent Anchor and Strong Overall Demand
- International Gemmological Institute (India) raised around US$500m in its India IPO.
- IGI India is part of the International Gemmological Institute (IGI) group. As of 22nd August 2024, IGI India handled operations of the IGI business in India and Türkiye.
- We have looked at the company’s past performance and IPO valuations in our previous notes. In this note, we talk about the trading dynamics.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. How Has the Index Rebalance Strategy Performed in 2024?
- It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
- Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
- As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.
2. TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact
- There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
- Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
- The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.
3. HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025
- We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
- We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
4. PCOMP Index Rebalance Preview: Two Changes Likely in February
- The review period for the February rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) ends in two weeks.
- There could be two changes for the index with passive trackers needing to trade between 23-64x ADV in the stocks.
- The passive buying is a lot larger than the passive selling, there will be funding outflows for the other index constituents; some stocks will have over 1x ADV to trade.
5. MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
- No constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December. But there are a lot of float and capping changes.
- Estimated one-way turnover is 2.6% resulting in a round-trip trade of US$269m. There are 8 stocks with over 1x ADV to trade from passive trackers.
- Stocks with the largest flows are Evolution Mining, Pan American Silver, Westgold Resources, B2Gold, Alamos Gold, Harmony Gold Mining, Eldorado Gold, K92 Mining, IAMGOLD, Endeavour Silver and Emerald Resources.
6. Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover
- Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
- 40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason.
- Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.
7. A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again
- This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
- We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
- Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.
8. KRX Value-Up Index Rebalance Results and Estimated Passive Impact
- KRX updated the Value-Up Index with five new names: KB Financial, Hana Financial, KT Corp, SK Telecom, and Hyundai Mobis, with Mobis replacing JB Financial, surprising the market.
- This is the first rebalancing, packed into one day, so expect notable price action. Reverse moves could also follow Thursday as pre-positioned trades unwind, so monitor price action closely.
- Even after Thursday’s rebalancing, half of the funds, especially from the National Pension Service, will flow into high-yield stocks, likely driving significant price moves through early next year.
9. 7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
- Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
- Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
- An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.
10. SET50 Index Rebalance: Four Changes; Cal Comp🚀
- There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
- All changes are in line with our forecasts and there appears to be positioning in all the stocks.
- Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.