In today’s briefing:
- USDJPY Disconnect
- KBANK : Return to Normal Operations
- The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step
- CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte
- Itaú Corpbanca – Contrarian Buy Idea in the Andean Banks
USDJPY Disconnect
- The slip in US yields has lead the US_Japan yield spread to move lower thereby putting USDJPY out of line with it
- The danger is that once month end is over, USDJPY may “catch up” by trending down in the short term
- In addition we see price action developments on USDJPY itself that reflects weakness in the uptrend
KBANK : Return to Normal Operations
- Maintain BUY for KBANK with a target price of Bt174.00. We are optimistic about the joint venture between KBANK and JMT. Going forward, we expect KBANK’s profitability to increase
- A joint venture between KBANK and JMT: KBANK joined with JMT Network (JMT) in establishing JK Asset Management Co., Ltd. (JK AMC). The establishment of JK AMC will allow KBANK
- KBANK plans to sell NPLs of Bt50bn to JK AMC within 2022, which will alleviate KBANK’s future NPLs, improve net interest margin (NIM), and reduce potential provisions
The Adoption of the Presence of Female Directors as a Criterion for Voting Was Finally a First Step
- I would like to discuss the Nikkei article, “Japanese asset management companies have decided to steer against a proposal to elect directors for companies that do not have female directors.
- The reason why major Japanese investment managers have been reluctant to take action on diversity and governance is likely due to the sales policies of their parent companies,
- Companies with higher percentage of women directors the boards have higher stock prices. I would like to encourage both investment managers and companies to accelerate their efforts in the future.
CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte
- Banorte and Santander have both hired M&A advisors for a potential Citibanamex bid, according to Reuters; Banco Azteca is not participating in the bidding, whilst Inbursa is potentially still interested
- In the event of a bid, we do not expect Santander to be aggressive on price; Banorte could be more aggressive, which would increase its chances of a winning bid
- Were Banorte to acquire Citibanamex, we continue to believe that its prospective dividend could be at risk; in essence, the risks of M&A still outweigh the potential opportunities
Itaú Corpbanca – Contrarian Buy Idea in the Andean Banks
- Itaú Corpbanca operates in Chile and Colombia, with the recent win by Colombian presidential candidate Gustavo Petro hitting Colombian share prices, including Itaú Corpbanca
- Nonetheless, we see some evidence of fundamental recovery from a bottom up perspective in the case of Itaú Corpbanca, despite the political headwinds
- We rate Itaú Corpbanca as a contrarian buy; it is an emerging recovery stock, unloved and undervalued by the market but with a firmer balance sheet base and returns recovering
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