Daily BriefsFinancials

Financials: Bank of Kyoto, S&P 500, Thai Life Insurance, HKEX, KB Financial, Tokyo Stock Exchange Tokyo Price Index Topix, BRL, RHB Bank Bhd and more

In today’s briefing:

  • Bank of Kyoto – Trading the Holdco Range
  • SPX Risk on July Trade
  • Thai Life Insurance IPO – Can’t Pinpoint the Upside
  • ETFs in Stock Connect: List Announced; Effective 4 July
  • KRX Banks Index (KODEX ETF): September Rebalancing Preview
  • Challenge Is How to Promote Sustainability in a Japanese Company that Has Inadequate Human Resources
  • The Hump and Kink in Brazil’s Yield Curve to Become More Pronounced
  • Malaysian Banks Screener; RHB Bank Is Our Top Pick

Bank of Kyoto – Trading the Holdco Range

By Travis Lundy

  • Bank of Kyoto has twice changed/improved its capital governance in the past six months.
  • Silchester International Investors wants it to do more, asking for a small special dividend at tomorrow’s AGM. I don’t think it will get it. 
  • The holdco is now a better holdco trade than it was 6mos ago, and trading the range is the right way to look at it. 

SPX Risk on July Trade

By Thomas Schroeder

  • RTY was the favored long bet at 1,650 and SPX near 3,700/25. NDX 11k was our low call to cover shorts.
  • Call was for a ST top Monday for a give back (often hard) and then an upside re test to form a bigger tactical high.
  • Risk looks more favorable to buy US dips in July with Europe and Asia trailing. Inflation expectations have come off (bear commodity call) and been replaced with recession risk.

Thai Life Insurance IPO – Can’t Pinpoint the Upside

By Sumeet Singh

  • Thai Life Insurance (TLI) is looking to raise up to US$975m in its upcoming Thailand IPO. Cornerstone investors including GIC have taken up around 54% of the deal.
  • Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
  • In this note we will talk about the deal dynamics and run the deal through our ECM framework.

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

KRX Banks Index (KODEX ETF): September Rebalancing Preview

By Sanghyun Park

  • The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
  • Compared to the last rebalancing, where we had Kakao Bank’s inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
  • The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.

Challenge Is How to Promote Sustainability in a Japanese Company that Has Inadequate Human Resources

By Aki Matsumoto

  • I would like to discuss the Nikkei article titled “EY Survey Legal Managers on Awareness of Sustainable Society.”
  • The survey also included responses from Japanese companies, stating that “many legal departments in Japanese companies do not have sufficient systems in place to deal with ESG and other issues.
  • The question is how seriously management is discussing how to deal with these issues, as many Japanese companies do not have sufficient human resources, not only in their legal departments. 

The Hump and Kink in Brazil’s Yield Curve to Become More Pronounced

By Gautam Jain, PhD, CFA

  • With the Brazilian central bank approaching the end of its aggressive monetary tightening cycle, the rate curve has taken a unique shape that features a hump and a kink.
  • The hump should get more pronounced because the rate-cutting cycle should be deeper than currently priced because real rates are quite elevated and growth risks are high.
  • The kink should also get more prominent as the curve should steepen further out due to fiscal risks irrespective of who wins the upcoming presidential election.

Malaysian Banks Screener; RHB Bank Is Our Top Pick

By Victor Galliano

  • The six Malaysian banks have healthy capital adequacy ratios, healthy credit quality and adequate NPL coverage; increased tourism should support GDP, positive cost of risk trends and loan growth demand
  • We like RHB, with its attractive post-provision profitability and sound cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG
  • We also like big-cap Maybank with its reasonable valuations; combined with a prospective earnings recovery due to contained risk costs, this could drive a re-rating, after lacklustre share returns

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