In today’s briefing:
- Select Sector Indices and S&P Equal Weight Rebalance Preview: US$17bn Round-Trip Trade
- HK Connect SOUTHBOUND Flows (To 6 June 2025); Volumes Up, Tech Down, ENERGY Bought Big
- Bank of Japan’s June Policy Decision: A Non-Event for Markets?
- S&P/ASX 200 Tactical Outlook Post-Index Rebalance Announcement
- COLI (688 HK): The Best Beta Play for China
- Chime Financial, Inc. (CHYM): Heavy Demand in IPO Order Book but Reason for Caution
- Slide Holdings Insurance, Inc.(SLDE): Another Insurance IPO Sets Terms, Seeking $2bn Valuation
- Ategrity Specialty Holdings LLC (ASIC): Accelerated Deal, Valuation Fits the Bill for Insurance IPO
- US Asset Correlations Spike: Early Days, But A New Regime May Be Unfolding
- Lucror Analytics – Morning Views Asia
Select Sector Indices and S&P Equal Weight Rebalance Preview: US$17bn Round-Trip Trade
- There are no constituent changes for the S&P 500 INDEX (SPX INDEX) in June but there are capping changes for the Select Sector indices and the Equal Weight Index.
- The round-trip trade is US$17.4bn with a big chunk from the Equal Weight Index, Communication Services Select Sector SPDR Fund (XLC US) and Energy Select Sector SPDR Fund (XLE US).
- The largest flows are expected in Exxon Mobil, Alphabet, Chevron Corp, Visa, Blackstone, Live Nation Entertainment, Meta, Broadcom, TKO Group Holdings, Dell Technologies and Omnicom Group.
HK Connect SOUTHBOUND Flows (To 6 June 2025); Volumes Up, Tech Down, ENERGY Bought Big
- Gross SOUTHBOUND volumes back above US$13bn a day this past 4-day week. Net buying back below US$500mm/day.
- Among the top buys as a percentage of volume, FINANCIALS, ENERGY, TELECOMS stand out, dramatically. Among top sells, it is INFO TECH again. 8 weeks in a row negative.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
Bank of Japan’s June Policy Decision: A Non-Event for Markets?
- With Japan’s policy rate at 0.5% and the last hike in January 2025, markets are closely watching the BoJ’s next move on June 17.
- Historical data shows limited market impact from anticipated rate decisions—but rare surprises, like the July 2025 hike, have triggered outsized index reactions.
- While historical data and current option pricing suggest the June BoJ decision is unlikely to move markets significantly, investors should be aware of low-probability tail risk when positioning.
S&P/ASX 200 Tactical Outlook Post-Index Rebalance Announcement
- As reported by Brian Freitas on 6 June the list of changes to the S&P/ASX family of indices was announced, including some change for the S&P/ASX 200 (AS51 INDEX).
- The S&P/ASX 200 index has become quite overbought as of last Friday’s Close, a pullback is probably imminent.
- This insight evaluates possible scenarios for the possible 2-4 weeks, beyond the June 20 date when the index review will become effective.
COLI (688 HK): The Best Beta Play for China
- COLI, being a SOE residential developer, has no bankruptcy risk. Under the current downturn, it is gaining market share and evolving into a stronger market leader
- It recently issued onshore bond at historical low coupon 1.80% (5-year) and 2.37% (10-year), which is even lower than China’s LPR. This is very significant
- Valuation is almost all time low, and downside is limited. We think it is the perfect beta play for China
Chime Financial, Inc. (CHYM): Heavy Demand in IPO Order Book but Reason for Caution
- The hold-up is based upon how Chime should be valued — either like a fintech darling or just another financial services company.
- The company’s gross profit tells a solid growth story as Chime ramps into the IPO with a healthy 33% gross profit clip based on Q1 2025 financials vs Q1 2024.
- According to our sources, the Chime order book is considered multiple-times oversubscribed.
Slide Holdings Insurance, Inc.(SLDE): Another Insurance IPO Sets Terms, Seeking $2bn Valuation
- Slide Insurance Holdings (SLDE US) will be the fourth insurance company to go public in the first half of 2025.
- The company is offering 20 million shares at $15-$17 equating to a $1.9b-$2.1b market cap.
- We anticipate there to be solid interest in this IPO based upon sector tailwinds. The company considers itself an “insurtech” which could create a different investor profile for this deal.
Ategrity Specialty Holdings LLC (ASIC): Accelerated Deal, Valuation Fits the Bill for Insurance IPO
- Ategrity Specialty Holdings (ASIC US) has elected to push pricing ahead by one-day due to the strength of the order book.
- According to our sources, the deal is multiple-times oversubscribed with quality conversions from 1-on-1 meetings.
- This IPO is being well-received. Insurance IPOs are not the type of deal that is “flashy” out of the gates but is one that is geared toward buy-and-hold investors.
US Asset Correlations Spike: Early Days, But A New Regime May Be Unfolding
- We revisit the evolving correlation between US equities, bonds, and the dollar post-Liberation Day.
- Recent asset price behavior may be signaling a deeper structural shift in US market dynamics.
- Market moves suggest that traditional hedging assumptions may need to be re-evaluated.
Lucror Analytics – Morning Views Asia
- Treasury yields climbed yesterday, led by the front and belly tenors, in line with similar price action in Europe after ECB President Christine Lagarde indicated that the central bank could pause rate cuts in the summer.
- The UST curve bear-flattened, with the yield on the 2Y UST rising 5 bps to 3.92% and the yield on the 10Y UST up 4 bps at 4.39%.
- US equities retreated, with the S&P 500 and Nasdaq declining 0.5% and 0.8%, respectively. US President Donald Trump and his Chinese counterpart Xi Jinping spoke on Thursday in a call that lasted c. 1.5 hours.
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