Thomas J. Monaco

Actionable bottom-up long/short Insights on equities

Equity Bottom-Up

Credit Suisse Group AG is an international financial services group. The Group provides investment banking, private banking, and asset management services to customers located around the world.

<ul>
<li>Plenty of review announcements after the close on Friday - HSI, HSCEI, HSTECH, FTSE AW/AC, Sensex. Most changes were as expected.</li>
<li>There are a lot of review cutoffs on Monday and announcements expected later in the week (KOSPI200, KOSDAQ150, CSI300, STAR50).</li>
<li>There were inflows to Hong Kong, Taiwan, Korea and Australia focused ETFs during the week, while there were outflows from China, Japan and India focused ETFs.</li>
</ul>

Brian Freitas

Pan-Asia Index Rebalances/Events/Delta One

<ul>
<li>
<a href="https://www.smartkarma.com/entities/taisho-pharmaceutical-holdin" target="_blank" data-smartkarma-citation="entities:3774:1" rel="noopener">Taisho Pharmaceutical Holdin (4581 JP)</a> is the leader in the Japanese OTC drug market. The company’s Lipovitan, Pabron and RiUP brands capture top market share in their respective categories.</li>
<li>With the re-opening of economy, increasing number of people are indulging in outdoor activities and consumer spending is recovering. These should boost Taisho’s OTC drug business.  </li>
<li>The company’s prescription pharmaceutical business is well-positioned for long-term growth, driven by strong performance of existing drugs and upcoming new product launch.</li>
</ul>

Tina Banerjee

Global Healthcare Analyst

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tvs-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:16123:1" rel="noopener">TVS Motor (TVSL IN)</a> primary setback is in the form of poor capital allocation</li>
<li>In <a href="https://www.smartkarma.com/insights/tvs-motors-analysis-of-various-investments" target="_blank" data-smartkarma-citation="insights:30047" rel="noopener">TVS Motors: Analysis Of Various Investments</a> , we had briefed on the investment policy of the company and how the non-core investments/subsidiaries are dragging the profits.</li>
<li>This insight is an extension of the previous one; we update on the various investments the company has undergone and how it impacts the capital allocation.</li>
</ul>

Nitin Mangal

Indian Accounting Research Analyst

<ul>
<li>We anticipate the uptick in retail primarily aided by the wedding season to be short-lived for <a href="https://www.smartkarma.com/entities/hero-motocorp-ltd" target="_blank" data-smartkarma-citation="entities:2391:1" rel="noopener">Hero Motocorp (HMCL IN)</a>. </li>
<li>HMCL has not been able to keep pace with changing consumer preferences, the limited success in premium segment and scooters is likely to remain an overhang even on new launches.  </li>
<li>Inventory correction at the dealer's end could aid wholesales supporting valuations, but the company remains structurally unattractive. </li>
</ul>

Pranav Bhavsar

Indian Consumer Analyst

<ul>
<li>World Stock Markets are being battered by weak US Fed Liquidity and by weakening World economic activity 
</li>
<li>
Central Bank tightness increasing driven by US Fed who are slated to drain US$2 trillion from markets </li>
<li>
Chinese economy struggling under C-19 lockdowns and tight People's Bank (PBoC)</li>
</ul>

Michael J. Howell

Cross-Asset Liquidity Strategist

<ul>
<li>
Horta-Osorio Is Out:Credit Suisse Group (CSGN.VX) (“Credit Suisse”) Chairman Antonio Horta-Osório abruptly resigned on January 16, 2022, following breaches of quarantine rules in both Switzerland and the United Kingdom;</li>
<li>
Lehmann Not Lehman:With CEO Gottstein’s alleged resistance to strategic change, we remain cautious that the current strategic direction of Credit Suisse will not be maintained;  and   </li>
<li>
Blunders Could Force Sale:There have been numerous costly high profile blunders at Credit Suisse in 2021. A reversion to the “Bad Old Days” could force a sale.   </li>
</ul>

Silver Point

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<ul>
<li>The inclusion of <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International</a>, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group</a>, <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC)</a> and <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao</a> plus the deletion of <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings</a> takes us to 69 index stocks.</li>
<li>Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover is 3.43% and will result in a one-way trade of HK$7,444m.</li>
<li>There is huge short interest on <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> and <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a> and there could be some short covering from now to implementation.</li>
</ul>

<ul>
<li>As expected, <a href="https://www.smartkarma.com/entities/nio-inc-2d526675-c878-4104-840f-87fed1735e85" target="_blank" data-smartkarma-citation="entities:35652:1" rel="noopener">NIO Inc (9866 HK)</a> will be added to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the close on 10 June replacing <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>.</li>
<li>We estimate passive trackers will need to buy over 9 days of ADV on <a href="https://www.smartkarma.com/entities/nio-inc-2d526675-c878-4104-840f-87fed1735e85" target="_blank" data-smartkarma-citation="entities:35652:1" rel="noopener">NIO Inc (9866 HK)</a> while selling 11 days of ADV on <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/nio-inc-2d526675-c878-4104-840f-87fed1735e85" target="_blank" data-smartkarma-citation="entities:35652:1" rel="noopener">NIO Inc (9866 HK)</a>'s inclusion in the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> could create significant arb opportunities versus <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> on 10 June.</li>
</ul>

<ul>
<li>As expected, <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a> will replace <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> after the close of trading on 10 June.</li>
<li>
<a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> has been kept in the index for now, though suspension till 30 June will see it deleted early July.</li>
<li>Changes to the stocks, number of shares, float and capping results in an estimated one-way turnover of 3.7% and will result in a one-way trade of HK$2,977m.</li>
</ul>

<ul>
<li>We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.</li>
<li>From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.</li>
<li>Once KT's foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again. </li>
</ul>

Credit Suisse Group AG

Credit Suisse Group – Lehmann Moment