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. Announcement of Value-Up Index in Korea on 24 September
- The Korea Exchange is expected to announce its long awaited KRX Korea Value-Up index on 24 September. However, the actual launch of this index will begin on 30 September.
- It is expected to produce two types of indices including a basic price index (PR) and a total return index (TR) under the name of KRX Korea Value-Up index.
- In this insight, we also provide a list of 20 small cap stocks that could be included in the Korea Value Up index.
2. Steno Signals #117 – 25bp equals mayhem, while 50bp equals panic?
- After a major dash for cash at the start of September, markets regained some optimism last week (much to my surprise, in all transparency).
- A weak USD, soft USD rates, and soaring precious metals characterized the week, especially after Mr. Fed source #1, Nick Timiraos, wrote an article suggesting that a 50bp cut is in play.
- USD weakness is something we often observe when the Fed begins cutting rates, as they are perceived to be much more reactive and aggressive than their peers.
3. Just when I Thought I Was Out, They Pull Me Back In – Time for Another Tradeable Rally in the HSI?
- Sentiment, positioning and valuation provide a similar setup to January 2024
- External macro events leading to a better fundamental environment for China
- Foreign Investors’ disappointment in minimal fiscal stimulus provides an asymmetric opportunity
4. Portfolio Watch: Buy Bonds, Wear Diamonds (or Gold)?
- We’ve generally experienced a “softer” September than anticipated in terms of interest rates.
- The typical September issuance seasonality takes a back seat to the upcoming first Fed cut in this cycle.
- Nick Timiraos has hinted that some officials are seriously considering going big already next week, so we may be in for a ride.
5. The Week at a Glance – Is a 50bps Cut Good if Paired with Economic Weakness?
- Good morning from Copenhagen.
- It’s make-or-break this week with Powell taking the stage on Wednesday to reveal whether the rumors from Nick Timiraos about the Fed considering a 50bps cut were actually true after all.
- Markets have been desperately hoping for the 50bps cut, as evidenced by the price action where Fixed Income is being bought regardless of the economic news.
6. The Drill: The Party Seems Over In Freight Rates
- Take aways: Freight rates dropped for the first time since 2022, signaling a slowdown in factors driving rate increases.
- Trade tariffs may have minimal impact on the USD and inflation, with fiscal policies playing a larger role.
- A BRICS monetary union could create instability, while Trump’s policies may push the U.S. toward economic risks.
7. In China: THE SKY FALLING? In the US: TREES GROW TO THE SKY?
- China continues to be the outcast of the investment community even though its GDP is still projected to grow by 4.5% to 5% this year.
- China’s economy has substantial hurdles to overcome but is not in the dire situation portrayed by most commentators and not headed for “Japanification”.
- On the other hand, the US economy has steadied itself but is not in the “Goldilocks” period implied by the media.
8. US Rates: Schrodinger’s Cut
- The Fed is expected to cut rates by 50 basis points on Wednesday, with additional cuts expected in November and December
- There is uncertainty in the markets with regards to the size of the rate cut, with equal probabilities for a 25 or 50 basis point cut
- Near term uncertainty is high, leading to bullishness on volatility in the markets
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
9. Fed: 50bps Cut and 175bps More to Follow
- The 50bps cut in the Fed Funds rate to 4.75-5.00% will likely be followed with two 25bps cuts in November and December.
- For 2025, we now look for 125bps rather than 150bps, given our soft landing view and also the 50bps being delivered at the September meeting.
- This would be a 3.00-3.25% Fed Funds rate and just above the revised long run estimate of 2.9%.
10. The Slow March to Fiscal Dominance
- The sovereign debt levels of major developed economies are well on the path to fiscal dominance, underpinned by the U.S. fiscal trajectory.
- Mario Draghi’s proposals for European competitiveness also highlighted a need for debt-financed investments that will also substantially raise EU debt to GDP ratios.
- Investors should expect a regime shift toward higher term premiums on bonds and from paper assets to hard assets in the coming years.
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. Advantest (6857 JP): High Valuation, Low Visibility
- Visibility is poor. Following excellent 1Q results, management raised FY Mar-25 sales guidance by 14%, operating profit guidance by 53% and net profit guidance by 57%.
- Strong demand for AI processors and memory should support more than 35% growth in IC tester revenues and a doubling of operating profit in the two years to Mar-26.
- The shares have dropped to the bottom of their recent trading range, but are still selling at more than 30x our EPS estimate for next fiscal year.
2. Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium
- TSMC: +15.9% Premium; Sales Rose 33% YoY in August & Headroom Increased
- UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
- ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium
3. Taiwan Tech Weekly: TSMC Becoming More Dominant; Apple’s AI Opportunity; Taiwan Market Hammered
- TSMC Extends Global Foundry Dominance Amid 33% Sales Surge – A Buy on Weakness Despite Market Concerns
- Apple ‘Glowtime’ AI Announcements: Mixed Analyst and Media Reactions May Overlook Key Advantage — Apple Is Best Positioned to Seamlessly Integrate AI Into Your Smartphone Experience
- Taiwan Market Gainers & Losers: Consumer Electronics & Memory Names Some of the Hardest Hit
4. Silicon Wafers. Recovery Is Nigh Yet Valuations Have Slumped To 5 Year Lows. But Why?
- During Q224, the top 4 silicon wafer manufacturers saw their revenues increase 12.3% QoQ to ~$2.5 billion. This was down 3% YoY.
- Silicon wafer area shipments in Q224 amounted to 3,035 million square inches (MSI), an increase of 7.1% QoQ but a decline of 8.9% YoY.
- The Silicon wafer segment is entering a recovery phase. Yet, you can buy the key players today for the same price you would have paid 5 years ago. That’s nice..
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Midea Group H Share Listing (300 HK): Valuation Insights
- Midea Group Co Ltd A (000333 CH) has launched its H Share listing at HK$52.00-54.80 per share. Pricing will be on 13 September, and the listing on 17 September.
- We previously discussed the listing in Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health and Midea Group H Share Listing: AH Discount Views.
- Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.
2. Midea Group HK IPO Valuation Analysis
- We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares.
- We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
- Pricing of this offering is expected to be completed on 13 September and listing on 17 September.
3. Midea HK Listing: Valuation Insights
- Chinese home appliance maker Midea has announced the terms for its IPO. The company plans to raise $3.46bn at an indicative price range of HK$52.0-54.8 per share.
- The company has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and a growing robotics business.
- As we expected, the HK offering is priced at around 25% discount to it’s A-shares and our analysis suggests that Midea’s HK offering is priced attractively.
4. Midea A/H Listing – Bigger Deal, Better Pricing
- Midea Group Co Ltd A (000333 CH) aims to raise up to US$3.5bn in its H-share listing, the deal is somewhat larger than what was being spoken about earlier.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the deal background in our previous notes. In this note, we talk about valuations.
5. K Bank IPO – The Biggest IPO in Korea in 2024
- K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
- According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
- The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million).
6. Pre-IPO Midea Group H Share (PHIP Updates) – Some Points Worth the Attention
- China’s home appliance industry is facing challenges. Even with large-scale “trade in” activities, its expansion effect on market size still appears limited, making it difficult to trigger significant growth momentum.
- However, Midea still achieved strong performance growth in 24H1. Both revenue and net profit showed double-digit growth rates. Midea’s business expansion and product profitability are much better than peers.
- Performance drivers are overseas business and air conditioners. Our forecast is Midea’s 2024 net profit would reach about RMB37 billion. Valuation of Midea could be higher than Haier Smart Home.
7. Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
- A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
- We have covered the background of the deal in our earlier note, Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics.
- In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.
8. Terumo (4543 JP): The Current Playbook
- Since the US$1.4 billion secondary placement announcement, Terumo Corp (4543 JP)’s shares are down 3.5% from the undisturbed price of JPY2,771 per share (29 August).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Terumo’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 10 September. Despite Kokusai and Honda’s disappointing performance, the average large Japanese placement tends to generate positive returns.
9. LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations
- LG Electronics’s India business IPO could be valued above USD 7 billion, exceeding market expectations, driven by its dominant position in India’s growing home appliances market and strong sector valuations.
- Favourable market conditions and robust sector growth make now an ideal time for LG Electronics (066570 KS) to launch its India IPO, securing high investor interest and compelling valuations.
- In a recent interview, LG Electronics(066570 KS) CEO William Cho mentioned that an Indian market debut is one of several options being considered to revitalise the company’s consumer electronics business.
10. Bajaj Housing Finance IPO- Forensic Analysis
- Bajaj Housing Finance (BHF IN) upcoming IPO is worth INR 65.6 bn, comprising of fresh issue worth INR 35.6 bn and offer for sale worth INR 30 bn.
- The company reports strong KPIs and has been better than peers in several aspects. AUM growth is strong and is driven by Developer Financing and Lease Rental Discounting.
- There are few important cautions regarding the NHB observations and assignments.
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. Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
- Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
- Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.
2. Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
- Constituent changes to the S&P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
- The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
- The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&P 500 INDEX (SPX INDEX) trackers.
3. CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
- There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
- We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
- Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.
4. Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
- Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
- The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.
5. S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
- The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
- The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.
6. MBK’s Dual Tenders for Korea Zinc and Youngpoong Precision: The Largest Deal Ever in Korea
- MBK launches a tender offer to acquire 14.6% of Korea Zinc at ₩660,000 per share, a ₩2T deal with an 18.7% premium. Offer runs from September 13 to October 4.
- On top of that, MBK’s also rolling out a tender offer for Young Poong Precision at ₩20,000 per share—a hefty 113% premium over yesterday’s close.
- Spread action is possible if the Choi family counters, driving volatility. The market’s watching for a higher bid, which could create trading opportunities amid rising spread volatility.
7. 7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Late last week, the Nikkei reported Seven & I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT’s Proposal and deemed it “inadequate.” Indeed it was.
- 7&i then published the Board’s letter, saying 7&i remained open to discussions but ACT’s Offer “grossly undervalued” 7&i’s intrinsic value and lacked in other areas. ACT responded with a “letter.”
- But ACT’s “letter” was a press release aimed not at 7&i but the public. 7&i released a terse response today. ACT is the suitor. It needs to act like it.
8. SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That
- As things stand, Trent Ltd (TRENT IN) could replace Bajaj Finserv (BJFIN IN) in the S&P BSE SENSEX Index (SENSEX INDEX) at the close on 20 December.
- Addition to the F&O list could see Zomato (ZOMATO IN) added to the index instead. That could then result in two changes to the S&P BSE SENSEX Index in December.
- Trent Ltd (TRENT IN) is also an inclusion to the NIFTY Index (NIFTY INDEX) later this month and the pool of shares available for active investors is getting smaller.
9. Taking Advantage of Terumo (4543) Weakness And After-Offering Flow
- Terumo Corp (4543 JP) was able to hang in well after the announcement, up until the day or two before pricing date, then the shares were walloped into Pricing.
- After pricing, they have fallen and erased most of the discount. That’s an opportunity.
- The shares have underperformed Peers, and there is flow to come. This deal was, as advertised, smaller than it first appeared.
10. Seven & I Holdings (3382 JP): State of Play
- Despite Seven & I Holdings (3382 JP)‘s rejection, Alimentation Couche-Tard (ATD CN) remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&i shareholders.
- Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.
- The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders.
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. Global Commodities: The art of keeping up with yesterday and avoiding tomorrow
- Output hikes announced in fourth quarter
- Various commodities including copper, natural gas, and grain oilseeds have experienced sharp declines
- Oil prices influenced by economic indicators, strong underlying demand, and declining global visible oil inventories
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
2. Korea Exchange Plans to List Additional 39 Stock Futures and 6 Stock Options
- On 12 September, the Korea Exchange announced that it plans to list additional 39 stock futures (27 KOSPI and 12 KOSDAQ) and 6 stock options on 4 November.
- With these listings, the stock options will also be available for most of the top stocks in the stock market, including Samsung Biologics and Samsung Life Insurance.
- Given that shorting of stocks is still essentially banned in Korea, the use of stock futures and options are likely to be increasingly used by investors to improve risk management.
3. Don’t Shoot the Piano Player
- The undulating prospect of a 25bps or 50bps cut at the September Fed meeting coupled with a foggy future rate path is weighing on market sentiment
- The state of financial market conditions–broadly and narrowly defined–may abruptly influence the outcome of upcoming Fed meeting/s, or vice versa
- My weekly estimate of market leverage in the US hedge fund sector in total, which remains elevated at this time, warrants more attention
4. Positioning Watch: Markets Are Positioned for Softness (in Rates)
- Hello everyone, and welcome back to our weekly positioning watch.
- A lot is happening in markets ahead of what could be a significant turning point in sentiment, with the August CPI report landing in our inboxes at 14:30 CPH time.
- The debate between Harris and Trump seems to have set the tone in markets leading up to the event, with the USD selling off as markets agree that Trump is likely the more bullish of the two on USD.
5. EM Watch: The Non-Feasible Return of the EM Carry Case Amidst a Global Slowdown
- Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) through the lens of Western investors.
- It’s been a rough month for anything linked to China, including industrially sensitive commodities.
- According to one of the most reliable live gauges of Chinese energy demand—the Singapore Gasoil-Dubai Crude Crack Swap—we are still on a slippery slope toward weaker demand from China.
6. Steno Signals #116 – Here comes the dash for USD cash!
- Happy Sunday, folks—if you can stay upbeat in the current market environment, that is.
- We have had September 100% spot on, and the developments late on Friday support our notion that a dash for USD cash will arrive through the month.
- The USD started rebounding alongside the sell-off in commodities and risk assets, following Waller’s appearance during the FOMC Q&A.
7. EM Watch: China was WEAKENING even before the decline in Western demand
- Since July, US macroeconomic momentum has weakened substantially.
- We are now back on a negative trajectory for cyclical growth, with signs of fading momentum in some service sectors, including leisure and hospitality.
- In the spring, we observed a significant build-up of orders relative to inventories as manufacturers sought to bypass the latent pressure from trade tariffs by front-loading activity.
8. China Equities: More of the Same
- We are strategically underweight China Equities in global and EM equity baskets, due to the structural slowing of growth and low EPS prospects.
- Event risk around the U.S. presidential election will also start to be considered.
- Further targeted policies from China authorities could cause intermittent trading driven short-covering, but aggressive game changing policy would be required to sustain a rally.
9. How to Trade the Seasonal Weakness
- The stock market is due for a period of sloppiness and corrective action in the next two months
- However, macro and technical indicators do not point to a major market top.
- We have outlined a number of bullish tripwires for traders to take advantage of a pending sale on stock prices and buy the dip.
10. US: Harris Wins the Presidential Debate Hands Down, but Impact on Race Still Mild
- In possibly the only Trump-Harris presidential debate, VP Kamala Harris clearly won, according to polls/focus groups conducted by FoxNews and CNN, as well as the vast majority of commentators.
- Harris largely remained focused on centrist positions, and was able to bait Trump into angry outbursts and digressions away from his key talking points. The economy remained her Achilles Heel.
- Weakness on the economy, and the failure to highlight her “freedom” theme, meant that Harris didn’t score a slam dunk. The race is a dead heat, Harris a nose ahead.
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. Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
- The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
- Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock
2. Intel Cancels 20A. Now Why Would They Go & Do That?
- Intel’s CFO says the company is going to “kind of skip over productizing 20A”
- This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
- The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp
3. TSMC (2330.TT; TSM.US): Benefiting from Intel (INTC.US) Skipping 20A Process.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.
- Intel plans to stick with the 18A process and has identified about 5 potential customers.
- As of now, TSMC remains the primary source for technology deliveries.
4. Taiwan Tech Weekly: Nvidia’s SG Revenue Red Flag; Rise of Custom Silicon; SEMICON Taiwan This Week
- Latest Industry Signals — Nvidia Crashed While Marvell Soared… Custom Silicon a Threat to Nvidia’s Monster Growth? Taiwan AI/Server Exposed Names Were a Mixed Bag of Performance
- Key Events to Watch — SEMICON Taiwan This Week, We Will Be Attending
- Perspective — NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
5. Hotchips Conference Sparknotes
- Hot Chips this year was primarily about AI chips (per the theme of every semiconductor conference as of late).
- The most impactful presentation by far was the Broadcom CPO presentation, SuperMicro water cooling, MTIA, and some honorable mentions to Enfabrica and Dojo/Mojo from Tesla.
- The biggest disappointment was AMD, which presented nothing incremental and, of course, the CPU announcements.
6. Vanguard (5347.TT): The Outlook of 4Q24 Seems a Bit Softer.
- The 4Q24 is slightly on the downside, and we are currently adopting a somewhat conservative approach.
- Visibility extends for no more than 3 months, and any increase in demand is primarily driven by urgent orders.
- As for the upcoming 12″ Fab, which is in collaboration with Nxp Semiconductors Nv (NXPI US), it has commenced local recruitment efforts in Singapore.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Midea Group H Share Listing: AH Discount Views
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
- In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.
2. Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- Midea is the world’s largest home appliance company in sales volume and revenue in 2023. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
- The PHIP update shows that the business is in good health, with accelerating growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.
3. Midea: Thoughts on HK Listing and Valuation
- Chinese appliance maker Midea’s application to list its shares on the HKEx has been approved and the company plans to list up to 10% of its shares to raise $4bn.
- Midea Group Co Ltd A (000333 CH) has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and M&A’s that have helped significantly grow its business.
- Our analysis on previous secondary listings of Chinese-listed companies on HKEx shows that the HK listings were priced at a significant discount to their A-Shares.
4. Key Things to Watch in Ecopro HN’s Big Rights Offering
- Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
- The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
- The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.
5. Hamamatsu Photonics Placement – Peculiar Timing
- Toyota Motor (7203 JP) aims to raise around US$190m via selling over a 4% stake in Hamamatsu Photonics Kk (6965 JP).
- This is another cross-shareholding unwind and hence, won’t be a huge surprise. Although given the recent share price weakness, the timing appears peculiar.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
6. Bajaj Housing Finance IPO – Will Trade at a Premium
- Bajaj Housing Finance (BHF IN) is looking to raise around US$800m in its India IPO.
- BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
- In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.
7. Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop
- Premier Energies Limited (0377949D IN) raised around US$337m after pricing the deal at the top end of the range at INR450 / share.
- It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.
8. CICT Placement – Accretive Acquisition, Should Be Favored by Existing Unitholders
- Capitaland Integrated Commercial Trust (CICT SP) is looking to raise around S$350m (US$267m) in its primary placement. Included in the issuance is a preferential offering to raise an additional S$757m.
- The proceeds will be geared towards acquiring a 50% interest in the ION Orchard mall from its Sponsor.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
9. Midea Group: Initial Thoughts on the Hong Kong IPO Listing
- Midea Group Co Ltd A (000333 CH) is getting ready for a Hong Kong IPO listing, trying to raise at least US$3 billion.
- Midea Group is trading a relatively attractive valuations. It is trading at P/E of 11.8x, EV/EBITDA of 8.1x, and P/B of 2.5x based on 2024 consensus earnings estimates.
- In the past five days, Midea’s price is down 2.3%. Some investors have been selling shares in Midea due to concerns about higher discount price offered at HK IPO listing.
10. The Born Korea IPO Preview
- The Born Korea is getting ready to complete its IPO in Korea in November. The total IPO offering is expected to range from 69 billion won to 84 billion won.
- Based on the bankers’ valuation, the expected market cap of the company ranges from 357 billion won to 419 billion won.
- The Born Korea was founded by Baek Jong-Won, the most famous celebrity chef in Korea.
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. Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- On 30 August, 7&i shareholder Artisan Partners (holder since 2019, now at 1%) wrote an open letter to the Board of Directors of Seven & I Holdings (3382 JP)
- There are several comments in bold. “It is imperative that the board of directors negotiate with ACT immediately to achieve the best possible outcome for shareholders” is one.
- The letter is a bit preachy, a bit fluffy, and a bit misleading in parts. But it requests the Company brief shareholders on the negotiations by 19 September 2024.
2. Sep24 Nikkei 225 Rebal – Last Minute Thoughts and Change in Predictions
- The last two reviews have been announced on the second business day of the month of the review. The one before that on the third business day.
- The review could be announced today or tomorrow. Wednesday would seem to be “late.”
- There are still questions about implementation – thus “care” in previous insights. Here I explore the possibilities/probabilities/issues around the edges. And a Dark Horse which may be lighter than thought.
3. China ETF Inflows & Implications: YTD Inflows Near US$100bn
- Nearly US$100bn has flowed into mainland China listed ETFs year to date and could be driven by the National Team led by Central Huijin supporting the market.
- Nearly all the net inflows have been focused on the CSI 300, CSI 1000, CSI 500, SSE50, ChiNext and STAR50 indices. Flows to sector ETFs have been mixed.
- Over 70% of the net inflows have gone to the CSI 300 Index with another 18% going to the CSI 500 Index and CSI 1000 Index.
4. Select Sector Indices – Updated Flows as Round-Trip Trade Hits US$35bn
- The changes to the S&P 500 INDEX (SPX INDEX), S&P400 Index and S&P600 Index will be announced after market close on Friday.
- The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
- Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.
5. Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT
- Today, the Nikkei Index Committee decided to delete Nippon Paper (3863) for low liquidity, and DIC (4631) for sector over-representation, and added Nomura Research Institute (4307) and Ryohin Keikaku (7453).
- The only auto-delete was Nippon Paper. The DIC delete was “discretionary.” But they could have done a third. Why did they not do a third change? I do not know.
- The whole shebang should be ¥350-375bn a side. At current price, Fast Retailing is set for another capping (selling) event in March 2025. And there is one shoo-in then too.
6. HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September 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$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
7. India: Index Implications of Additions to the F&O Segment
- Following SEBI’s review of eligibility criteria for entry/exit of stocks in the derivatives segment, there could be 18 deletions/79 inclusions in the F&O segment over the next 6 months.
- The introduction of some stocks in the F&O segment could lead to their inclusion in the NIFTY, SENSEX, Nifty Bank and CNXIT indices and weight changes in the Nifty Next50.
- The inclusion of stocks in indices with a fixed number of constituents will result in deletion of some stocks from these indices. There should be methodology changes too.
8. CPMC Holdings (906.HK) Privatization Update – ORG Is Pushing Baosteel to Raise Its Offer
- Huarui Offer has been approved by SAMR, which marks a solid step forward.Meanwhile, ORG’s management stated that the reduction of Huangshan Novel shares is to raise funds to acquire CPMC.
- While Baosteel may want to “test the waters”, the signals ORG is sending is it will make every effort to advance the acquisition of CPMC and is accelerating the process.
- The return on Huarui Offer isn’t attractive.We recommend waiting for Baosteel to raise its Offer, or simply choosing to add more positions in China TCM, whose privatization is more lucrative.
9. STAR50/STAR100 Index Rebalance: Adds Rally, Deletes Drop as Positioning Builds Up
- There are 2 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the September rebalance that will be implemented at the close on 13 September.
- There are no surprises for the SSE STAR50 (STAR50 INDEX) while there are 3 surprise adds for the STAR100 Index with the profitability criterion being ignored.
- The adds to the SSE STAR50 (STAR50 INDEX) have outperformed the deletes over the last month and positioning is larger in some stocks compared to others.
10. Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped
- Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
- Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
- Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.
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. Best Of: How Dubai is reshaping the global oil trade
- Correspondent Tom Wilson visited Fujairah, a booming port city in the UAE where oil trading has exploded in recent years
- Western sanctions on Russian oil exports have led to a redirection of global energy flows, with the UAE emerging as a major energy trading hub
- Switzerland has historically been a top location for commodity traders due to its banking secrecy and political neutrality, but the rise of UAE as an oil trading hub is shifting the balance of power in oil markets
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
2. Tactical Trading – Time to Sell Japan Again
- Act II of the drama begins and continues from where it left off in early August
- Sentiment has changed – bad news really is bad news
- With >100 basis points of cuts already priced in before year end…
3. Corporate Value Up in Korea – Focus On Reducing Outstanding Shares and Comparison to M7
- In this insight, we compare the outstanding shares changes in the Korean stock market (KOSPI and KOSDAQ) relative to M7 (Magnificent 7) companies.
- In Korea, there are more companies such as Samsung C&T, KB Financial, and KT&G that are actively reducing their outstanding shares and investors are rewarding them with higher share prices.
- Top 10 companies in KOSPI that reduced their outstanding shares (from end of 2019 to 5 Sept 24) experienced average share price increase of 116% on average in this period.
4. Steno Signals #115 – The head-fake business cycle strikes again
- Happy Sunday from Copenhagen.
- Almost exactly a year ago, we wrote about the “roadmap to a recession” and how the market wrongly anticipated a near-term recession going into 2025.
- We also labeled the increasing re-inflation and manufacturing momentum a head-fake during the spring as the credit growth never truly supported a comeback to the most cyclical parts of the economy.
5. August Themes and Thematic Portfolio Review
- A monthly review of how the markets and our themes are currently performing
- Analysing what went wrong and what went right in stocks and sectors
- Highlighting positions added or removed from the thematic investment portfolio
6. JAPAN: No Lifeguard on Duty, Swim at Your Own Risk
- BOJ sows confusion with hawkish and dovish statements regarding its tightening policy. On a USD-basis the Japan market failed again to break its long-term resistance indicating a “Dead Cat Bounce”.
- Auto and Semiconductor sectors pressured by US trade policies and Trading Companies are affected by JPY strength. US rejection of Nippon Steel Corporation (5401 JP)merger affects Japan steel sector.
- Higher domestic yields is a catalyst to reverse the large money flows from Japan during the Kuroda years.
7. China’s Volatile Consumption Sector
- China consumption patterns are divergent; slowing and becoming more volatile at a sub sector level.
- Less certainty over new employment and wage growth, plus wealth worries over housing are some of the causes.
- We forecast GDP to slow in H2 and be 4.0% in 2025.
8. China Hard Landing Scenario
- We see a 30% probability of a harder landing in China GDP growth in 2025, which we most likely be in the 3-4% region but could persist into 2026.
- A large than projected slowdown in consumption would be a key concern, alongside persistently moderate negative deductions from residential investment.
- Negative inflation would only worsen this situation, while China authorities appear reluctant to go beyond targeted extra policy support towards aggressive action.
9. India GDP Review: A Bearish Start to FY25
- India’s GDP growth slowed to 6.7% yr/yr in Q1 FY25, falling short of expectations, as reduced public spending during the election period weighed on economic activity.
- Strong private consumption and investment provided some support, but a decline in manufacturing growth and weak external trade dampened overall momentum.
- Looking ahead, easing inflation, improved farm output, and a rebound in government spending are expected to drive growth in the coming quarters.
10. The Week At A Glance: No one trusts the July job report, but should they?
- Happy Labor Day! In this article, we are going to look into a feisty week of economic releases from the US economy given the backdrop of our nowcasting slowing considerably into September again.
- Our congestion based data has remained at muted growth levels, while the taxation data is starting to re-weaken, which is interesting into an otherwise strong tax season in September.
- Chart of the week: The Macro Environment is weakening in the US. Looking at the week ahead, we are on growth, liquidity, and inflation watch, especially focusing on the US.
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. NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
- NVIDIA delivered another blockbuster quarter with record revenues of $30 billion, blowing well past the guided $28 billion, up 15% QoQ and up 122% YoY.
- $5.6 billion in revenues were attributed to Singapore, making up more than 18% of overall revenues and up >5 times YoY
- What the heck is the city state doing with all of those GPUs?
2. TSMC (2330.TT; TSM.US): 2024 Top Clients
- TSMC’s top 5 clients for 2024 are Apple (AAPL US), Advanced Micro Devices (AMD US, Qualcomm Inc (QCOM US), Mediatek Inc (2454 TT) and NVIDIA Corp (NVDA US).
- Smartphone orders continue to dominate at TSMC, with QCOM and MediaTek being key clients.
- Looking ahead to 2025, Intel Corp (INTC US) is expected to rely more on TSMC, potentially leading to changes in TSMC’s client ranking.
3. Taiwan Dual-Listings Monitor: TSMC Maintaining Strong Premium; UMC Headroom Continues to Decrease
- TSMC: +15.4% Premium; Wait for Closer to 20% Before Opening Fresh Short
- UMC: +1.2% Premium; Can Consider Shorting at 1.5% or Higher; Headroom Continues to Decrease
- ASE: +5.2% Premium; Wait for More Extreme Levels Before New Trade
4. Taiwan Tech Weekly: Nvidia Results Imminent; Apple IPhone 16 Reveal Date; Micron’s Taiwan Expansion
- Nvidia, Dell, Marvell results coming out this week.. Apple iPhone 16 Reveal September 9th?
- Micron progressing on potential Taiwan capacity expansion due to strong HBM DRAM demand
- AMD acquires a key U.S. server systems integrator, expanding its enterprise server opportunity in a market including Taiwan’s server ODM players such as Hon Hai, Wiwynn, Inventec, Quanta, and Compal.
5. Intel Missed the Party, while AMD’s ZT Systems is the Bet to Stay in the Game
- First, let’s start with Intel. Intel had a pretty poor earnings result. There’s no two ways about it.
- Intel reports Q2 EPS $0.02 ex-items vs FactSet $0.10, announces $10B cost reduction plan; suspends dividend
- There was another layoff of around 15% of employees, a full dividend suspension (finally, guys), and a capex cut.
6. Earnings Preview (Nvidia and Marvell)
- It’s about to be primetime for the AI semiconductor trade, and for the first time in a long time (maybe ever), I wanted to write an earnings preview. It might be the first time (ever) and hopefully the last time.
- Two critical companies report this week. I’ll start with Marvell, the less important but the one I like, and then talk about some exciting dynamics at Nvidia that could lead to volatility and why it might not even matter.
- Marvell has always been a favorite of this newsletter. I won’t lie; I root for the hometown on this one. Inphi was my first paid post, and it worked out with a buyout by Marvell only two weeks later.
7. MHI (7011 JP): Election Unlikely to Affect Defense Budget
- The next leader of Japan’s ruling LDP, who will almost certainly become prime minister in October, will probably not make major changes to the nation’s defense policy.
- Guidance remains unchanged after 1Q results that suggest the possibility of a better than expected order flow but also a material negative impact from a stronger yen.
- MHI’s valuation is not yet in speculative territory, but neither is it compelling. If the yen remains stable, we expect the share price to test its recent highs.
8. Silergy (6415.TT): 2024 Can Be Operating Trough, and Revenue in 2025 Is Expected to Grow by 20-30%.
- Company’s 2Q24 overall performance exceeded expectations, and 3Q and 4Q are expected to be flat and to grow by 10-20% per quarter, respectively.
- With expectations of continued improvement in ASP and cost structure, overall gross profit margin is expected to continue to grow.
- Gen4 (12″) is mainly applied in EV, AI server, and new energy sectors, as these applications have higher specification requirements.