This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. 2025 High Conviction Idea: The Case for a Rotation Out of India into Hong Kong – Part 1
- Risk reward favours this shift in allocation between these markets.
- Short to mid-term concerns on the Indian market warrant this strategic change
- Slowing revenue growth and less government spending leading to decelerating profits which is not yet reflected in market multiples
2. The Drill – The China Meltdown Is Ruining the Upbeat Trends in Manufacturing
- Happy Tuesday, and welcome back to our weekly commodity editorial, where we keep you updated each and every week on what’s going on in the world of commodities, energy, and the like!
- It’s hard to talk about commodities without talking about China these days, as we have seen a complete reversal in the Chinese macro scene after we scouted last week for the best commodity plays should the Chinese stimulus come through.
- After all, they used the same wording as they did back in 2008, and it was wise of markets to “cry wolf,” as China would need to publish actual stimulus plans and their size before markets chased the story.
3. A Hindenburg Omen in an Oversold Market
- What happens when an ominously sounding Hindenburg Omen occurs when the market is oversold? The notoriously unreliable Omen is said to have called “ten of the last three market corrections”.
- The market’s reaction to the FOMC decision added to the risk-off market tone. The Fed marked down the number of 2025 quarter-point rate cuts from four to two.
- Four of the five components of our Bottom Spotting Model have flashed buy signals. Two or more simultaneous buy signals have been good long entry points for traders.
4. Steno Signals #176 – Will 2025 be 2007 or 2021 all over again?
- Welcome to my weekly editorial, where I assess the big-picture macro landscape, explore potential risks, and identify the next narrative for traders.
- Last week, I kept getting pings, rings, and dings from traders eager to discuss whether inflation is poised to make a comeback following the fourth consecutive hot inflation report in the U.S. Admittedly, we’re trending around 3.5% inflation on an annualized basis, which doesn’t look great amidst a cutting cycle.
- Consequently, the market has started repricing the inflation outlook, with the near-term (2-year) outlook once again outpacing the 10-year inflation outlook in inflation swaps.
5. Positioning Watch – Everything you need to know about Fixed Income positioning before we enter 2025
- Hello everyone, and welcome back to our weekly positioning update – this week with a strong focus on the moves we are seeing in Fixed Income and forward-pricing at the moment and the subsequent positioning as we head into 2025.
- Markets continue to lean bearish on the Eurozone while upbeat on the US in equity terms, and likely for good reasons as macro data hasn’t given any good arguments as to why one should be upbeat on the Eurozone, and the signs we are getting on European growth in our nowcasts have yet to show up in actual releases – for now, it’s mainly the less China sensitive countries like Spain, Portugal and Greece that are performing macro-wise while Germany, France and Italy suffer.
- GDP growth is surprisingly strong in the first 3 whilst very weak in the latter 3, and given the latter’s weighting in European equity indices, it makes sense why we are seeing hedge funds being long consumer staples, health care and other defensives while scaling down bets on cyclical equities.
6. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 20 Dec 2024
- US and China treasury yields highlight inflation control challenges, with the Fed’s rate cut fueling market uncertainty.
- Asia’s mixed monetary decisions saw Japan hold rates, while the Philippines’ cuts worsened currency pressures.
- China’s retail sales remain resilient despite lower growth expectations, contrasting with declining real sales in the US.
7. Speadbites: Food for Credit Market Thought as We Head Into the Holidays
- Global credit ecosystem remains stable, similar to 2024 outlook
- Tight spreads and low all-in yields support demand in credit markets
- Concerns about non-cash accrual companies in private credit portfolios and potential impact on risk distribution from public to private markets, but overall sentiment remains positive for credit markets.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
8. T.R.U.M.P | Dec 19, 2024
- According to Webster the word of the year is Polarization.
- Oxford have Brain Rot and Cambridge have Manifest. Collins have Brat, which was apparently ‘made famous by a Chari XCX album’ (me neither).
- Personally, just as Cozzy Livs (cost of living) was my favourite in 2023, this year really deserves to be ‘Word Salad’, although without Kamala it is unlikely to reappear anywhere near as much.
9. Thailand: Policy Rate Held At 2.25% (Consensus 2.25%) in Dec-24
- The Bank of Thailand unanimously maintained the policy rate at 2.25%, aligning with consensus expectations, citing alignment with economic potential and inflation within target expectations.
- Economic growth projections for 2024–2025 remain steady, but uneven sectoral recovery, particularly in manufacturing and SMEs, presents ongoing risks to sustainable recovery.
- Global economic uncertainties, credit growth trends, and the efficacy of government debt-relief programmes in supporting domestic demand and financial stability will influence future policy decisions.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
10. Monday Macro: Bumper Crystal Ball Time, Plus the US Equity Bulls Are Still Rampaging
- Over the last week, the FTSE ALL World equities index stalled slightly, losing 0.8% in value, with the FTSE ALL Share index losing a tad more, down a smidgeon under 1%.
- Tech stocks again outperformed, sending the Nasdaq 1.5% higher and taking the index to over 20,000 for the first time ever.
- The S&P 500 edged 0.5% lower, and the Russell 2000 ended the week 2% down. The Magnificent 7 hit new highs as the market-broadening trend evaporated.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Tech Weekly: TSMC 2NM Yield Jump Rumors; Seeing Taiwan’s Starlink Alternative Firsthand in KS
- TSMC’s N2 Progress Sparks Buzz Amid Yield Improvement Rumors; If True Then 2nm Will Become Even More Successful Than 3nm
- Hon Hai & TASA Showcase Homegrown Space Technologies Including an Alternative to Starlink
- Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing
2. Intel Ex-CEO Calls For 24 Hours Of Prayer & Fasting For Intel’s Remaining 100k Employees
- Pat Gelsinger took to X to invite us to join him in 24 hours of “praying and fasting” for Intel’s 100k employees to help them navigate “this difficult period”
- This is an unprecedented move never before seen in the semiconductor world, albeit we suspect that IBM may have dabbled in something similar to resurrect their 2nm process prowess
- This coming Thursday is the proposed date. Don’t expect miracles, this could take until the following Monday for the full impact to manifest itself in terms of share price appreciation
3. Taiwan Dual-Listings Monitor: TSMC Spread At Decent Short Level; UMC Short Interest Rises Again
- TSMC: +23.5% Premium; Decent Level to Short Relative to Historical Trading Range
- UMC: +0.1% Premium; Middle of the Historical Trading Range; Short Interest Rises Again
- ASE: +3.5% Premium; Near Middle of Recent Range, Wait for Better Levels
4. AMD’s Lisa Su Named Time CEO Of The Year
- AMD’s Lisa Su has been honoured as Time’s CEO of the year, a fitting tribute to a leader who pulled off what many thought to be impossible
- Despite flawless execution and carving out a brand new $5 billion market segment within AI Acceleration, AMD’s share prices is down 44% from its 52 week high
- AMD will ultimately face headwinds from Arm but, for the time being, their growth will come from continuing to take market share from Intel and building on their Instinct platform
5. Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing
- Last Week: Himax Buyback Program Announced; Likely a Strong Use of Cash
- Himax Strengthening Automotive Display Leadership; Progress with Korea Display Companies
- Himax LCOS Microdisplay Technology Deepening Entrenchment in Designs of Major AR Glasses Players — Maintain Structural Long Rating.
6. Mediatek: Apple Watch Win Highlights Smartwatch Market Opportunity; Apple Supply Chain Breakthrough
- Mediatek’s Apple Watch Win Highlights Smartwatch Market Opportunity; Breakthrough Into Apple’s Supply Chain
- MediaTek’s Role in Apple Watch Connectivity; Mediatek’s TSMC Relationship to Provide a Lasting Advantage
- Mediatek Rallied But Remains Below Highs; Significant Upside Remains — Maintain Structural Long
7. MediaTek (2454.TT): D9400 Success Will Extend into 2025. Prepare to Re-Qualify IPad and IWatch.
- Although the outlook for 1Q25 might be somewhat negative, we believe that it is a reasonably typical result.
- We understand that MediaTek did not succeed in qualifying its Apple iPad and iWatch CPUs originally, but we believe it is now preparing for a re-qualification process.
- Looking ahead to 2025, we anticipate a more favorable outlook for MediaTek.
8. Nidec (6594 JP): India & Nvidia Point the Way Forward
- Shipping the first water-based cooling systems for servers equipped with Nvidia’s new Blackwell GPUs and building two new motor factories in India.
- Moving beyond excessive dependence on China while restructuring operations to reduce costs. Sales short of 1H guidnce, but operating profit up.
- Share price down 30% since May and close to its 52-week low. Selling at 17.5x this fiscal year’s EPS guidance, the lowest P/E multiple in a decade.
9. Intel. Laser Focus & No More Meaningless Life-Time Value Foundry Deal Updates
- Laser focus, transparency and adoption of a “say do” approach to measuring success are now the order of the day at Intel
- Data Center roadmap not in good shape and if IFS can’t deliver, MJ won’t hesitate to outsource DC products to TSMC alongside existing Client products.
- Gaudi is not a mass market product, Falcon Shores won’t be great either but we will listen, learn, iterate and fail quickly. Watch out NVIDIA !
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Sanrio (8136 JP): The Current Playbook
- Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
- It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.
2. Paradigm Biopharmaceuticals (PAR AU): Fund Raising Amidst Pipeline Progress Raises Conviction
- Paradigm Biopharmaceuticals (PAR AU) has requested a trading halt to the ASX pending an announcement in relation to a capital raising. Normal trading will resume on Monday, December 9, 2024.
- Assuming quarterly cash burn rate of A$7M, Paradigm’s cash balance should provide a runway through mid-Q3FY25. The company is in a dire need to raise fund.
- With lead drug being in late-stage trial and having huge market potential, Paradigm seems to be an attractive biotech investment opportunity. Recently, optimism is growing surrounding Paradigm’s lead drug candidate.
3. Vishal Mega Mart IPO – Showcasing the Wrong Peers, Somewhat Limited Upside
- Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
- 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 in our previous notes. In this note, we will talk about the IPO valuations.
4. Mao Geping Cosmetics IPO Trading – Highest Demand for This Year
- Mao Geping Cosmetics raised around US$345m in its Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the trading dynamics.
5. IGI (India) IPO – Unique Exposure but Questionable Acquisition, and 4x Returns for PE in 18 Months
- International Gemmological Institute (India) Limited (IGII) is looking to raise about US$500m in its upcoming 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.
- In this note, we will look at the company’s past performance and talk about the IPO valuations.
6. LG CNS IPO Valuation Analysis
- According to our valuation analysis, it suggests a base case implied market cap of 7.9 trillion won for LG CNS, representing target price of 81,095 won per share.
- Therefore, our base case valuation target price of 81,095 won is 31% higher than the high end of the IPO price range.
- We estimate LG CNS to generate sales of 5.99 trillion won (up 6.8% YoY) and net profit of 356.1 billion won (up 7.1% YoY) in 2024.
7. ECM Weekly (9th Dec 2024) – Goodman, Auckland Airport, Kioxia, MNC, DIY, Vishal Mega, Mao Geping
- 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, the deal flow doesn’t seem to be slowing down much into the year end. The coming two weeks will see some of the past IPOs listing.
- On the placements front, Goodman Group (GMG AU)‘s block trade was hogging all of the limelight this week.
8. LG Electronics India IPO Preview
- LG Electronics India is getting ready to complete an IPO in India in the next several months. The IPO offering size is expected to be about US$1.8 billion.
- LG Electronics (066570 KS) plans to sell 101.8 million shares, accounting for about 15% of the post-offer paid up equity capital shares of LG Electronics India.
- If LGEI is valued at US$13 billion, then an 85% of this stake would be worth US$11.1 billion, which would be worth more than LG Electronics’s own market cap.
9. 2025 (“Year of the Snake”) Major IPOs Pipeline in Korea
- This is our 10th “Annual Edition of the Major Korean IPOs Pipeline Preview” at Smartkarma.
- This insight will feature 50 of the biggest potential IPOs in Korea in 2025.
- These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.
10. LG Electronics India Pre-IPO Tearsheet
- LG Electronics (066570 KS) is looking to raise US$1.5bn+ via part-selling its stake in LG Electronics India IPO. The deal will be run by MS, JPM, Axis, BofA and Citi.
- LG Electronics India (LGEI) was the market leader in India in major home appliances and consumer electronics (excluding mobile phones) in terms of volume in 1Q25, as per Redseer Report.
- LGEI has been the number one player in this industry for 13 consecutive years (CY11-CY23) as per the value market share in the offline channel in India, as per Redseer.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
- A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
- ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
- This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.
2. Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
- 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: Lifestyle China (2136 HK), Arcadium Lithium (ALTM US), Shanghai Henlius Biotech (2696 HK), ESR Group (1821 HK), Get Nice Financial Group Ltd (1469 HK), Canvest.
- Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Capitol Health (CAJ AU), Elematec Corp (2715 JP).
3. Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
- The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
- There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
- There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.
4. NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
- Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
- The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
- Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.
5. S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
- CAR Group (CAR AU) replaces Dexus Property (DXS AU) in the S&P/ASX50 Index and Clarity Pharmaceuticals Ltd (CU6 AU) replaces Spark New Zealand (SPK AU) in the S&P/ASX200 (AS51 INDEX).
- Dexus Property and Spark New Zealand were deleted from a global index a couple of weeks ago, so this will heap further pressure and increase the real float of the stocks.
- There has been an increase in cumulative excess volume for all changes, but positioning in some stocks may continue post the announcement.
6. Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
- There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
- Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
- There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.
7. Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
- The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
- We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.
8. NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
- Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
- The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.
9. Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY
- Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
- The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
- The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.
10. Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
- When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
- Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
- The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Strategic Outlook 2025: Winter Is Coming, Can Asia Keep Itself Warm?
- With the US and China distracted from stabilizing the world geopolitical order, flare-ups and stresses will occur more frequently as various actors feel emboldened to undertake risky gambits.
- The world, including emerging Asia, will have to contend with “much higher for much longer” geopolitical risk and its aftereffects on global trade, investments, and financial markets.
- But most economies in the region retain agency to adapt to a more hostile environment by bolstering internal resilience and forming new coalitions of the willing to pursue shared objectives.
2. Investing During an Era of American Exceptionalism
- This year was one of American exceptionalism and asset return domination, led by the leadership of the Magnificent Seven.
- . We believe Magnificent Seven leadership is likely to fade in 2025.
- We expect that 2025 will be a year of transition from growth to value, large caps to small caps and paper to hard assets.
3. 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.
4. The US Dollar and the Only Chart that Matters!
- The US Net International Investment Position (NIIP) as a debtor country has ballooned since the GFC, attracting global demand for US assets, which feeds demand for the dollar.
- Historically high dollar demand has allowed the US to enjoy the benefits of low interest rates and created a historic bull market in US equities.
- As the US continues to use its currency for geopolitical purposes, countries have begun to question dollar hegemony. The US fights against any country that tries to weaken the dollar
5. Steno Signals #175 – 4 asymmetrical cases for Santa Powell
- Happy Sunday, everyone, and welcome to my weekly editorial on everything tradable in macro! I was confident heading into last week that the U.S. data releases would bring bond yields lower, and both ISM numbers and NFP aligned with our views.
- The NFP report was much weaker than it appeared, with the median duration of unemployment ticking up—a clear symptom of a low-hiring, low-firing labor market with little momentum for those who lost jobs in recent quarters to find new opportunities.
- Monthly job creation of around 225k is obviously decent, but this figure is skewed by employees returning from strikes and a lack of substantial positive revisions to the abysmal job creation in October.
6. The LLM Quant Revolution: From ChatGPT to Wall Street
- A Comprehensive Guide to Building AI-Powered Investment Systems: The application of Large Language Models (LLMs) in quantitative finance, focusing on the current state of LLM technology in financial applications
- I also cover: 1. Comparative analysis of leading models 2. Implementation frameworks for production systems 3. Risk management and quality control considerations
- Key Findings: 1. Multi-model approaches outperform single-model solutions 2. Production implementation requires robust quality controls 3. Model selection should be task-specific within the investment process
7. Bitcoin 100K: Buy or Fade the Animal Spirits?
- Now that Bitcoin has exceeded the psychologically important 100,000 mark, it is becoming evident that the FOMO risk-on stampede is in full force.
- Our review of market internals leads us to conclude that the risk-on FOMO stampede that’s driving the animal spirits is on the verge of becoming exhausted.
- Our base case calls for a brief period of consolidation or shallow weakness, followed by a rally into year-end.
8. Positioning Watch – Is the Santa Rally at risk of being canceled? Not yet..
- Hi everyone, and welcome back to our weekly positioning update.
- I’ve been puzzled over the past weeks of just how much risk assets have been denying the underlying macro trends, and it very much mimics the pattern we saw in Q4 2023.
- Markets are not really responding to macro unless there is a major surprise to either side of the economic consensus as this is the only scenario which can change the expected rate path of the Fed.
9. Geopolitical Flash Update: See you later Scholz!
On Dec. 4, Michel Barnier became only the second Prime Minister in French history to be ousted by a no-confidence vote.
Precisely one week later, the other major EU economy, Germany, submitted a motion of no-confidence of its own to be held on Dec. 16. What the heck is going on in Europe?!
The political chaos in France and Germany has the same root cause: a sluggish economy and insurmountable debt levels.
10. Globalisation: Same, Same but Different
- Contrary to popular belief, the upward trend in global US$ exports, which has been in place since 1948 remains intact. World trade openness too is higher today than pre-GFC.
- US consumers are the richest. However Asian affordability is growing quickly . The region’s share of the global imports is already on par with Europe’s.
- Globalisation is not reversing but evolving. Regional trade is driving world exports while world manufacturing production chains are transitioning from horizontal to vertical integrated.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Understanding Kioxia, A Worthwhile IPO?
- Kioxia is planning to offer its IPO on 18 December 2024. This Insight profiles Kioxia and its market.
- NAND flash, Kioxia’s product, is a commodity, and that results in dramatic price, revenue, and margin swings.
- Kioxia is in a joint venture that provides excellent scale economies which are offset by a supply agreement that amplifies troubles caused by oversupplies
2. Intel CEO Shock Resignation. What’s Going On?
- No stated reason for Mr. Gelsinger’s shock resignation as Intel’s CEO.
- CFO and CCG leaders named as interim co-CEO’s with the latter also assuming a newly created role as CEO of Intel’s Products (CCG, DCAI & NEX)
- It’s the beginning of the end for Intel as we used to know it
3. ASML. Class Action Lawsuit Looms As Share Price Declines 37% From Peak
- A case against ASML being brought by the Hollywood Firefighters Pension Fund (HFPF) is now opening up into a class action lawsuit
- Claims that ASML withheld crucial information from investors in the Jan-Oct 2024 time period, e.g. impact of US sanctions, strength of the semi recovery, order backlog etc.
- In reality, ASML warned in October 2023 that 2024 would be a zero growth year. Did the HFPF think they were kidding?
4. The Death of Intel: When Boards Fail
- If you haven’t heard the news, Pat Gelsinger is “retiring.” The reality is this was not a retirement but a firing of Pat.
- His brief stint of 1386 days was surprising because not only was he the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest.
- Pat has by no means been perfect, and the conference at UBS kind of showed the frustrations that the board likely had with Pat.
5. Intel CFO @ UBS Global Technology Conference “Core Strategy Remains Intact”
- Earlier this week, at the UBS Global Technology Conference, Intel CFO and co-interim CEO David Zinsner declared that the company’s “core strategy remains intact”
- Recently onboarded GM of IFS Dr. Naga Chandrasekaran, explained that while 18A remains on track, there are still “many milestones” to be met before it ramps in H225
- He also admitted that 18A is more geared towards HPC, is skewed in favour of Intel Products and that 14A will likely be more suitable for the broader semiconductor ecosystem
6. Happy Thanksgiving Semicap & Semiconductors
- This is a very light note, given time constraints. It’s rumored that on Monday, we will have new export controls, which seem to be massively light.
- Importantly, they are going to exclude CXMT altogether.
- History is a pretty good guide. Almost every single export restriction has led to bad returns prior, bad returns on the week off, and positive returns almost 100% of the time 6 months after for SOXX. This applies doubly to Semicap.
7. How Important Are China Gallium, Germanium, and Antimony Bans to the US?
- China has boycotted sales of Gallium, Germanium, and Antimony, three important elements, to the US
- All three are used in the production of semiconductors, but in very small quantities. They are also widely available from sources outside of China.
- The net impact of this boycott to the US semiconductor market should be negligible.
8. Intel’s Next CEO Will Have To Deal With An Unholy Mess. But Who Will It Be?
- Gelsinger’s IDM 2.0 strategy will be up for debate by Intel’s BoD. Most likely it will be largely scaled back
- The new CEO’s options will be limited by the legal agreements in place with Brookfield & Apollo, along with the restrictions imposed by the US DOC
- Possible CEO candidates are the current Globalfoundries CEO, Tom Caulfield, former Intel board member Lip-Bu Tan and former Intel executive Stacy Smith, who recently joined Intel’s BoD
9. Taiwan Tech Weekly: Taiwan’s Space Tech Conference This Week; AI Driving New Humanoid Robot Industry
- Taiwan’s Largest Space Technologies Conference Is Happening This Week– Hon Hai Is Title Sponsor Showcasing Its Satellites; We Are Also Attending
- TSMC’s 2nm Breakthrough: Kaohsiung Fab Ahead of Schedule, Apple and AMD Poised as Early Adopters
- AI Driving the Emergence of a US$2bn Humanoid Robot Market by 2027E
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
- 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 in our previous notes. In this note, we will talk about the IPO valuations.
2. Kioxia IPO: Peer Comparison and Valuation
- Kioxia has announced the terms for its IPO, and plans to raise $730m through issuing new shares as well as offer by existing shareholders, at a market capitalisation of $819bn.
- Kioxia Holdings (285A JP) ‘s earnings have been volatile and margins have trailed compared to peers Micron and SK Hynix. Earnings are approaching a new peak.
- Kioxia’s implied valuation multiples are at a deep discount to peer multiples, suggesting there is significant upside to the indicative IPO price range.
3. Kioxia (285A JP) IPO: Valuation Insights
- Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
- We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
- Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.
4. Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight
- CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
- Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. Auckland Airport Placement – NZ$1.3bn (US$770m) Cleanup Sale Will Remove the Overhang
- Auckland Council is looking to raise NZ$1.3bn (US$772m) from selling its entire stake in Auckland Intl Airport (AIA NZ).
- Overall, the selldown will be a large one for the stock to digest at 10% of shares outstanding and 62 days of three month ADV.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
6. Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
- Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
7. DigiCo Infrastructure REIT IPO – Looks Decent – After All the Adjustments
- DigiCo REIT (DIGICO AU) is looking to raise around US$1.3bn in its Australian IPO.
- DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
8. LG CNS IPO Details Out: My Read on This IPO
- The KRW 5T-6T valuation and 13x-16x PER look solid compared to local peers like SDS and Hyundai AutoEver, with CNS possibly getting a premium due to its smaller captive stake.
- Instos probably won’t push hard for lock-ups but will aggressively target pricing to secure larger allotments, knowing the company is likely to stick with a market-friendly price.
- On a separate note, I wouldn’t expect much of a NAV discount reduction for LG Corp, as LG CNS’s stake isn’t significant enough to move the needle.
9. Mr DIY Indonesia IPO – Has Aggressively Expanded Its Network
- PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
- Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The firm is the largest home improvement retailer in Indonesia with a 25.2% market share as per 2023 sales
- In this note, we look at the firm’s past performance.
10. Mr DIY Indonesia IPO – Aiming to Repeat the Performance of Its Parent’s Listing
- PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
- Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The entity is the Indonesian entity under the Mr DIY group’s list of subsidiaries.
- In this note, we will undertake a peer comparison and discuss our thoughts on valuation.
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1. 7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal
- A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
- The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
- But more directly, this leads us back to 7&I (3382) – What If… A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.
2. Goodman Group (GMG AU) Placement: Limited Index Flows
- China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
- Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
- There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.
3. Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
- At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
- TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.
4. Sanrio (8136 JP) – Kitty Behaving Badly
- Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
- There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
- There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.
5. TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.
6. Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
- Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
- The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
- Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.
7. HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
8. NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade
- There could be 19 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December. There are some stocks from the new F&O inclusions.
- If all changes are on expected lines, one-way turnover is estimated at 65.2% and that will result in a one-way trade of INR 71bn (US$837m).
- The potential inclusions have outperformed the potential deletions since the start of July. The pace picked up over the last month as we neared the end of the review period.
9. Auckland Airport (AIA NZ) Placement: Potential Index Flows
- Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
- The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
- There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.
10. 7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
- I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
- This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness
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1. South Korean Parliament Lifts Martial Law Declared by the President Yoon
- Late Tuesday on 3 December, South Korean President Yoon Suk-Yeol declared a martial law. Several hours afterwards, the South Korean Parliament voted to lift President Yoon’s martial law order.
- By drawing so much attention to the “dangers of the communist party from within Korea and outside,” President Yoon is trying to align himself closer to President Trump.
- In the near term, the impact on the Korean stock market of the declaration and lifting of martial law is likely to be negative.
2. Potential Impeachment of President Yoon Suk-Yeol and Impact on the Korean Financial Markets
- In this insight, we discuss the potential impeachment of the South Korean President Yoon Suk-Yeol and the implications on the Korean financial markets.
- We would put a 50-60% probability that there is more than 200 votes to impeach the South Korean President Yoon Suk-Yeol right now by the members of the Parliament.
- We would attach about 30-40% probability that at least six justices of the Constitutional Court vote in favor of impeaching President Yoon.
3. The Week Ahead – Give Thanks For
- Trump announced potential tariff policies on social media targeting Canada and Mexico, leading to a weakening in both currencies.
- Trump appointed key members to his economic team, setting the tone for his administration’s policies.
- Markets are anticipating the Fed meeting in December, with expectations of a dovish hold and strong labor market reports.
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4. Positioning Watch – Markets have NOT been Ready for Growth to Weaken in the US
- Happy Thursday, and welcome to our weekly positioning watch, brought to you just before the crucial NFP report tomorrow.
- From what we see across markets, it looks like participants are starting to take risk off the table in equity space ahead of the report.
- Markets have struggled this week to settle on a clear narrative for USD assets, especially USD rates.
5. Europe Flash Watch – The German 2025 bazooka!
- In Germany, “debt hawks” are slowly but surely waking up to the reality of their manufacturing industry being brought to its knees.
- In Angela Merkel’s recent book, she pleads for a softer stance on the debt brake, and the political landscape in Germany seems to be softening on the “Schwarze Null” in general, with also the Buba member Nagel now advocating for a softer stance.
- The future government would need a two-thirds majority in the Bundestag and Bundesrat to change the debt brake.
6. What Is the Real Purpose of President Yoon’s Martial Law – To Reveal Election Fraud?
- One of the most important questions about the martial law three days ago is why did President Yoon send special forces (297) to the National Election Commission?
- President Yoon may have ordered troops to be deployed to the NEC to get to the bottom of the election fraud since all the important election servers are stored there.
- It is EXTREMELY DIFFICULT to prove an election fraud. Even if President Yoon declares a war on election frauds, he must have extraordinary pieces of data to back this up.
7. Steno Signals #128- I thought Trump and tariffs were supposed to lead to a bond riot?
- Happy Sunday, friends, and welcome to my straight-to-the-point editorial on everything macro!Just as everyone had concluded that Trump and his (alleged) trade wars would be bond-unfriendly, the bond market has started performing much better—exactly as we suggested would happen following the election results.
- The first major difference compared to 2016, when bonds rioted after Trump’s victory, is that Trump was the clear base case this time around.
- The second major difference is that Trump’s policy mix is not inflationary this time—in fact, it’s quite the opposite.
8. The Week at a Glance: Manufacturing Rebound, Fed Liquidity Signals & Oil’s Fragile Balance
- Happy Monday!Each week, we collect the most important events in the week ahead and provide you with our direction going into them.
- Enjoy!Monday – ISM ManufacturingThe ISM Manufacturing data is due this afternoon, with consensus expecting a rebound from last month’s report, forecasting a figure of 47.6. After reviewing our model library, we see substantial risk/reward in betting on an upward surprise in manufacturing data.
- For instance, our regional PMI model—which uses regional manufacturing prints as inputs—indicates a material increase in the manufacturing PMI today.
9. Geopolitical Flash Update – Bye Bye Barnier
- France sovereign debt reached a record €3.228 trillion, amounting to 112% of GDP in June, well above the 60% cap set by EU regulations.
- France growing debt have slowly been chipping away at investors’ confidence in French bonds.
- After Macron called a snap election in June resulting in a hung parliament, risk premiums on French 10-year bonds have shot up.
10. 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.
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1. Taiwan Tech Weekly: New China Tech Restrictions Monday; PC Demand Commercial Vs. Consumer Disconnect
- US Set to Unveil New Wave of Semiconductor Restrictions on China
- Hon Hai Subsidiary Says Progress for Nvidia GB200 Servers is Smooth, Mass Production in 2025E
- PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
2. Taiwan Dual-Listings Monitor: TSMC Spread Maintains Elevated Range; UMC Short Interest Rises Higher
- TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
- UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
- ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising
3. Delta Taiwan Vs. Thailand Monitor: Delta Thai Remains at Extreme Relative Value Even After Sell-Off
- Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
- Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
- Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform
4. Intel Finalises US CHIPS Funding But With Some Rather Unusual T&C’s
- Intel is now set to receive $7.86 billion in CHIPs Act funding, down from the $8.5 billion originally touted back in March 2024
- The funding comes with a raft of restrictions and caveats regarding what happens in the event of any changes in Intel’s organizational structure and/or ownership
- The US Department of Commerce also reserves the right to withhold funding and/or weigh in on decisions around outsourcing if Intel fails to meet key, critical milestones. Ouch!
5. Taiwan Semiconductor Industry Aggregate Analysis: Margins Challenged; Inventory Data Positive
- Gross Margins Aggregate Data – Shows Taiwan Semiconductor Companies Under Pressure
- How TSMC and GlobalWafers show two very different margin environments; However everyone needs to manage rising energy costs into 2025E
- Aggregate Inventory Levels — Inventory Days Declining Trend is a Positive Sign
6. PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
- Soft PC Results from Dell and HPQ and Delayed Industry PC Upgrades into 2025E; Dell and HPQ Shares Fall Sharply
- Conclusion: Both Firms Confirm Relative Strength for Commercial and Weakness for Consumer; AI PCs and Windows 11 to Drive 2025E Upgrades
- Asia PC Makers Showing Stronger Growth; However, Dell & HPQ Share Rout May Weigh on Sentiment
7. Taiwan Dual-Listings Monitor: TSMC Spread Approaching Short Level; UMC Short Interest Soars Higher
- TSMC: +20.4% Premium; ADR Premium is Approaching a Short Level
- UMC: +0.7% Premium; Short Interest Soars to New Two-Year Highs
- ASE: +4.2% Premium; ADR Headroom Falls to 100% Maxed Out
8. Memory Monitor: Decoupling Trade Long SK Hynix Vs. Short Nanya Tech
- Memory Market Diverges: AI Demand Continues to Surges While Legacy Segments Struggle in November
- Diverging Demand Trends Highlight Market Decoupling — AI Driving HBM, Server DRAM, QLC NAND Demand
- Outlook for the Memory Market — Decoupling Trade: Long SK Hynix vs. Short Nanya Tech Trade