In today’s briefing:
- ETFs in Stock Connect: Criteria & Potential Southbound Inclusions
- Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)
- Thai Life Insurance Pre-IPO – The Negatives – Lacks Growth
- Why Would A16z Launch a $4.5B Investment Fund Now?
- Rhizome Partners Q1 2022 Investor Letter
- Diamond Hill Large Cap Concentrated Fund Q1 2022 Market Commentary
- Diamond Hill Large Cap Fund Q1 2022 Market Commentary
- Turkish Lira Takes the Helm as the Worst-Performing EM Currency
ETFs in Stock Connect: Criteria & Potential Southbound Inclusions
- On 27 May, the SFC and CSRC announced that they had agreed in principle to the inclusion of Exchange Traded Funds by mainland and Hong Kong exchanges in Stock Connect.
- We currently see 6 ETF being eligible for inclusion in Southbound Connect and another couple that could be included at a subsequent review.
- Increased mainland participation in the ETF market could lead to sustained premium/discount on the ETFs and this will be transmitted to index futures and affect pricing of short-term/long-term repo.
Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)
- After the market close today, Kakao Pay (377300 KS) announced that there will be a block deal sale of the company’s shares (5 million) by Alipay Singapore Holdings.
- Alipay is the second largest shareholder of Kakao Pay with a 38.52% stake. After the block deal sale, there will be continued overhang on the remaining shares held by Alipay.
- We continue to have a NEGATIVE view on Kakao Pay and we also have a negative view on this block deal sale as well.
Thai Life Insurance Pre-IPO – The Negatives – Lacks Growth
- Thai Life Insurance is looking to raise up to US$1bn in its upcoming Thailand IPO.
- 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 not so positive aspects of the deal.
Why Would A16z Launch a $4.5B Investment Fund Now?
- We believe in certain inalienable truths from this industry that seem independent from any economic cycle
Crypto is highly efficient. Protocols running on distributed networks achieve things that would otherwise require massive investments in hardware and software services and teams.
Crypto is also one of the most attractive destinations for high-quality, high-drive talent. In the last years, the inflow of capital from VCs has made Web3 compete head to head with Web2
Rhizome Partners Q1 2022 Investor Letter
- Rhizome Partners LP is a Delaware limited partnership, aims to achieve long-term capital appreciation while limiting the risk of loss.
- For the first quarter of 2022, Rhizome Partners generated a net loss of 9.9% versus a 4.6% loss.
- We may be experiencing a regime change in the market in 2022.
- Investors seem to have started to favor profitable companies trading at low multiples of existing cash flow over companies with uncertain payoffs in ten years.
- We still favor good businesses with healthy margins, good balance sheets, structural moats, high returns on invested capital, rational competitors, pricing power, and reasonable growth.
Diamond Hill Large Cap Concentrated Fund Q1 2022 Market Commentary
- Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
- During a volatile quarter, Diamond Hill Large Cap Concentrated Fund performed roughly in line with the Russell 1000 Index.
- The market environment in Q1 provided a meaningful opportunity for us to initiate positions in high-quality names.
- From current levels, equity market returns over the next five years are likely to be below historical averages.
Diamond Hill Large Cap Fund Q1 2022 Market Commentary
- Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
- During a volatile quarter, Diamond Hill Large Cap Fund held up better than the Russell 1000 Index by a decent margin in Q1.
- After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
- From current levels, equity market returns over the next five years are likely to be below historical averages.
Turkish Lira Takes the Helm as the Worst-Performing EM Currency
- The Turkish lira has become the worst-performing currency this year as the central bank is holding the policy rate steady despite sharply accelerating inflation, leading to highly negative real rates.
- The lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means real rates become more negative, hurting the currency.
- High inflation is also weighing on the economic outlook, which combined with worsening current account and fiscal deficits and depleting international reserves, is adding to the depreciation pressure.
Before it’s here, it’s on Smartkarma
