Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Event-Driven

Hyundai Mobis is at -2.3σ on a 20D MA relative to its brother, Hyundai Motor ordinary share.<table class="table table-striped">
<colgroup>
<col width="200">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"% of sigma"}'>% of sigma</td></tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"Today"}'>Today</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":-2.3035030515769517}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">-230.35%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"T-1"}'>T-1</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":-0.916931344299026}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">-91.69%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"T-2"}'>T-2</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":-0.5645130872563673}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">-56.45%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"T-3"}'>T-3</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":0.2465686874114751}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">24.66%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"T-4"}'>T-4</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":-0.4247825847315971}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">-42.48%</td>
</tr>
<tr>
<td style="width: 351.818px;" data-sheets-value='{"1":2,"2":"T-5"}'>T-5</td>
<td style="text-align: right; width: 350.909px;" data-sheets-value='{"1":3,"3":-0.09495037677635225}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=Data!R[-12]C[6]">-9.50%</td>
</tr>
<tr><td colspan="2" rowspan="1" style="width: 723.636px;" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>The price ratio between them is now practically at a 2-yr low.<table class="table table-striped">
<colgroup>
<col width="200">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Price ratio"}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>Price ratio</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Today"}'>Today</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.2701949860724233}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=Data!R[-21]C[1]">1.27019</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"20D MA"}'>20D MA</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.3161097671656496}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=Data!R[-22]C[2]">1.31611</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"σ"}'>σ</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0199325896537422}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=Data!R[-23]C[5]">0.01993</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"+1 σ"}' data-sheets-formula='="+1 σ"'>+1 σ</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.3360423568193918}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=Data!R[-24]C[3]">1.33604</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-1 σ"}' data-sheets-formula='="-1 σ"'>-1 σ</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.2961771775119075}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=Data!R[-25]C[4]">1.29618</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}'>-</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"120D mean"}'>120D mean</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.7010486771205928}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=average(Data!R2C3:R100C3)">1.70105</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.25328710274034383}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-25.33%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"120D median"}'>120D median</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.8409818569903948}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MEDIAN(Data!R2C3:R100C3)">1.84098</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.3100448104638489}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-31.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"120D high"}'>120D high</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.0878048780487806}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MAX(Data!R2C3:R100C3)">2.08780</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.391612214614844}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-39.16%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"120D low"}'>120D low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.2691218130311614}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MIN(Data!R2C3:R100C3)">1.26912</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0008456028651014254}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">0.08%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1Y mean"}'>1Y mean</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.8509836907922768}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=average(Data!R2C3:R248C3)">1.85098</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.313772999518574}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-31.38%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1Y median"}'>1Y median</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.9119351100811124}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MEDIAN(Data!R2C3:R248C3)">1.91194</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.3356495315269689}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-33.56%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1Y high"}'>1Y high</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.197309417040359}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MAX(Data!R2C3:R248C3)">2.19731</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.4219316696037747}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-42.19%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"1Y low"}'>1Y low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.2691218130311614}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MIN(Data!R2C3:R248C3)">1.26912</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0008456028651014254}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">0.08%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2Y mean"}'>2Y mean</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.7960316722025786}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=average(Data!R2C3:R476C3)">1.79603</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.2927769561464866}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-29.28%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2Y median"}'>2Y median</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.7972103004291846}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MEDIAN(Data!R2C3:R476C3)">1.79721</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.29324075998835913}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-29.32%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2Y high"}'>2Y high</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2.197309417040359}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MAX(Data!R2C3:R476C3)">2.19731</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-0.4219316696037747}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">-42.19%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"2Y low"}'>2Y low</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.2691218130311614}' data-sheets-numberformat='{"1":2,"2":"#,##0.00000","3":1}' data-sheets-formula="=MIN(Data!R2C3:R476C3)">1.26912</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0008456028651014254}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=(R23C[-1]-R[0]C[-1])/R[0]C[-1]">0.08%</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX &amp; Sanghyun Park"}'>Source: KRX</td></tr>
</tbody>
</table>The duo had undergone a harsh correction (price ratio-wise) in July. Since then, they have drifted sideways within a box.So, this much short-term price diversion is the broadest since late July. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/053/original/chart.png?1600897627" class="editor-image img-responsive" data-smartkarma-image-id="161053"></figure>

Hyundai Mobis is at -2.3σ on a 20D MA relative to its brother, Hyundai Motor ordinary share.





% of sigma

Today
-230.35%


T-1
-91.69%


T-2
-56.45%


T-3
24.66%


T-4
-42.48%


T-5
-9.50%

Source: KRX

The price ratio between them is now practically at a 2-yr low.






Price ratio

Today
1.27019
-


20D MA
1.31611
-


σ
0.01993
-


+1 σ
1.33604
-


-1 σ
1.29618
-


120D mean
1.70105
-25.33%


120D median
1.84098
-31.00%


120D high
2.08780
-39.16%


120D low
1.26912
0.08%


1Y mean
1.85098
-31.38%


1Y median
1.91194
-33.56%


1Y high
2.19731
-42.19%


1Y low
1.26912
0.08%


2Y mean
1.79603
-29.28%


2Y median
1.79721
-29.32%


2Y high
2.19731
-42.19%


2Y low
1.26912
0.08%

Source: KRX

The duo had undergone a harsh correction (price ratio-wise) in July. Since then, they have drifted sideways within a box.So, this much short-term price diversion is the broadest since late July. 

Hyundai Mobis/Motor At -2.3σ: Entry Point for Range Trading

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Thematic (Sector/Industry)

<div>
This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August, 2020. We look at four main aspects - the four wheeler vehicle segment, the two wheeler vehicle segment, vehicle registration data and alternative data search trends. We also now report OEM volumes covering <a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki India (MSIL IN)</a> , <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> ,<a href="https://www.smartkarma.com/entities/eicher-motors-ltd" target="_blank" data-smartkarma-citation="entities:18316:1" rel="noopener">Eicher Motors (EIM IN)</a> and <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> . 
</div>
<div>
August data shows the slight turn in consumers' behaviour towards the segment. With government initiatives now focussed on rejuvenating public transport, consumers are now backing away from private vehicle purchases. There has been an incredible growth in the two-wheeler segment and we also see an optimistic return to normalcy in rural India.
<div class="content-highlight">
This is a Joint insight with <a href="https://www.smartkarma.com/profiles/nitin-mangal" target="_blank" data-smartkarma-citation="accounts:1988" rel="noopener">Nitin Mangal</a> 
</div>
</div>


This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August, 2020. We look at four main aspects - the four wheeler vehicle segment, the two wheeler vehicle segment, vehicle registration data and alternative data search trends. We also now report OEM volumes covering Maruti Suzuki India (MSIL IN) , TVS Motor (TVSL IN) ,Eicher Motors (EIM IN) and Hero Motocorp (HMCL IN) . 


August data shows the slight turn in consumers' behaviour towards the segment. With government initiatives now focussed on rejuvenating public transport, consumers are now backing away from private vehicle purchases. There has been an incredible growth in the two-wheeler segment and we also see an optimistic return to normalcy in rural India.

This is a Joint insight with Nitin Mangal 



India Autos | Auto Tracker for August - YoY Volume Recovery

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<ul>
<li>
DBS, OCBC &amp; UOB averaged 4.2% total returns in August, outpacing 1.6% flat median returns of the top quartile of global banking stocks by market value. Similar performance parallels were observed in the 2020 year to 2 Sep, with the trio averaging 18.2% declines, compared to a 20.2% median decline for the top global quartile. 
	 </li>
	<li>
DBS and OCBC remain amongst the top ten constituents of the FTSE Developed Asia Pacific ex-Japan Sustainable Yield Index. Constituents meet financial and operating strength criteria, with emphasis on strong balance sheets and ability to generate cash flow. 
	 </li>
	<li>With the three banks directed to cap FY20 dividend distributions to 60% of FY19 distributions (to bolster ability to swerve credit needs and absorb potential shocks), potential FY20 dividend yields for the three banks could be as high as 3.5% to 4.0%, based on current market prices.  </li>
</ul>
 

Sector-Driven Performances in 2020 YTD 
DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") all distributed dividends in August, which saw their average 2.6% price return for the month extended to a 4.2% total return. By comparison, the top quartile of global banking stocks by market value generated a median total return of 1.6% over the month.  As illustrated below, the three banks have outpaced the top quartile of global banking stocks over the past five years.
</body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-09/Capture_1.PNG' alt='Total Return' />
 </figure>
 <div class='content-caption'>Total Return</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
The three banks have gradually increasing quarterly Net Interest Income to above S$4 billion in 2QFY15 and above S$5 billion in 2QFY18, maintaining a combined Net Interest Income of S$5.4 billion in 2QFY20 as discussed <a href="https://www.sgx.com/research-education/market-updates/20200820-bank-structured-warrants-recently-strengthened">here</a>. 
For the 2020 year to 2 September, accommodative monetary policy and economic lockdowns have meant that global banks have had to contend with a sudden reduction in interest rate margins and overall demand for financing, while needing to boost loan provisions, hence uniform drivers have seen parallel performances of banking sectors across the globe. Key Banking Sector themes continuing into the second half of 2020 include bank  abilities to generate income, tier 1 capital to risk-weighted assets and non-performing loan ratios. Note that on the ability to generate income, the top quartile of global banks with an ROE less than 4% generated a median decline of 30% in the 2020 year to date.     Dividend Yields Remain Competitive 
With the MAS recently directing the three Banks to cap dividends at 60% of FY19 levels “to bolster the ability to continue to support the credit needs of businesses and consumers as well as absorb economic shocks” the maximum dividends amounts for FY20 are as follows:

<ul>
<li>As DBS paid S$1.23 in FY19, 60% of this amount is S$0.738 max per share in FY20. Theoretically, if DBS would then save S$1.25 billion from the S$3.145 billion paid in FY19.</li>
	<li>As OCBC paid S$0.53 in FY19, 60% of this amount is S$0.318 max per share in FY20 . Theoretically, OCBC would then save S$924 million from S$2.31 billion paid in FY19. </li>
	<li>As UOB paid S$1.30 in FY19,  60% of this amount is S$0.780 max per share in FY20. Theoretically, this would save S$868 million from S$2.17 billion paid in FY19.</li>
</ul>
 

Based on the above caps, the maximum potential FY20 dividend yields for the three banks could still be as high as 3.5% to 4.0%based on current market prices.  The current median indicative dividend yield for the top quartile of global banks by market value is 4.4%. 
 

FTSE Global Sustainable Yield Index Series 
The FTSE Global Sustainable Yield Index Series is reviewed semi-annually in March and September using data at the close of the last business day of February and August. This means, results of the FTSE Developed Asia Pacific ex Japan Sustainable Yield Index which includes as many as 17 Singapore stocks, are expected to be released within the week. DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") have remained in the top 10 constituent weights of the FTSE Developed Asia Pacific ex-Japan Sustainable Yield Index at the end of August. United Overseas Bank ("UOB") and Hong Kong listed CK Hutchison Holdings places were displaced as the 10 heavyweights in August by Korea-listed Hyundai Motor and Hong Kong listed Sun Hung Kai Props. 
The FTSE Global Sustainable Yield Index Series examines the financial and operating strength of prospective constituents with specific emphasis on companies with strong balance sheets and the ability to generate cash flow. Financial and operational strength metrics include Return on Assets, cash-flow from operations, accruals and changes in leverage. Note that other screening criteria include the pay-out ratio and incidence of historic or forecast dividend cuts (for the Factsheet and more detailed methodology, click <a href="https://www.ftserussell.com/products/indices/sustainable-yield?utm_source=MG&amp;utm_medium=EDM&amp;utm_campaign=alwayson&amp;utm_term=180219&amp;utm_content=HOTW">here</a>), hence the upcoming rebalance results will be of particular relevance to the Singapore Banking Sector.  To follow the FTSE Index announcements: click <a href="https://www.ftserussell.com/products/index-notices/Home/GetNotices/ALL">here</a>.
</body></html>





DBS, OCBC &amp; UOB averaged 4.2% total returns in August, outpacing 1.6% flat median returns of the top quartile of global banking stocks by market value. Similar performance parallels were observed in the 2020 year to 2 Sep, with the trio averaging 18.2% declines, compared to a 20.2% median decline for the top global quartile. 
	 
	
DBS and OCBC remain amongst the top ten constituents of the FTSE Developed Asia Pacific ex-Japan Sustainable Yield Index. Constituents meet financial and operating strength criteria, with emphasis on strong balance sheets and ability to generate cash flow.  
	 
	With the three banks directed to cap FY20 dividend distributions to 60% of FY19 distributions (to bolster ability to swerve credit needs and absorb potential shocks), potential FY20 dividend yields for the three banks could be as high as 3.5% to 4.0%, based on current market prices.  

 

Sector-Driven Performances in 2020 YTD  
DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") all distributed dividends in August, which saw their average 2.6% price return for the month extended to a 4.2% total return. By comparison, the top quartile of global banking stocks by market value generated a median total return of 1.6% over the month.  As illustrated below, the three banks have outpaced the top quartile of global banking stocks over the past five years.



      
    
    Total Return


The three banks have gradually increasing quarterly Net Interest Income to above S$4 billion in 2QFY15 and above S$5 billion in 2QFY18, maintaining a combined Net Interest Income of S$5.4 billion in 2QFY20 as discussed here.  
For the 2020 year to 2 September, accommodative monetary policy and economic lockdowns have meant that global banks have had to contend with a sudden reduction in interest rate margins and overall demand for financing, while needing to boost loan provisions, hence uniform drivers have seen parallel performances of banking sectors across the globe. Key Banking Sector themes continuing into the second half of 2020 include bank  abilities to generate income, tier 1 capital to risk-weighted assets and non-performing loan ratios. Note that on the ability to generate income, the top quartile of global banks with an ROE less than 4% generated a median decline of 30% in the 2020 year to date.      Dividend Yields Remain Competitive  
With the MAS recently directing the three Banks to cap dividends at 60% of FY19 levels “to bolster the ability to continue to support the credit needs of businesses and consumers as well as absorb economic shocks” the maximum dividends amounts for FY20 are as follows:


As DBS paid S$1.23 in FY19, 60% of this amount is S$0.738 max per share in FY20. Theoretically, if DBS would then save S$1.25 billion from the S$3.145 billion paid in FY19.
	As OCBC paid S$0.53 in FY19, 60% of this amount is S$0.318 max per share in FY20 . Theoretically, OCBC would then save S$924 million from S$2.31 billion paid in FY19. 
	As UOB paid S$1.30 in FY19,  60% of this amount is S$0.780 max per share in FY20. Theoretically, this would save S$868 million from S$2.17 billion paid in FY19.

 

Based on the above caps, the maximum potential FY20 dividend yields for the three banks could still be as high as 3.5% to 4.0%based on current market prices.  The current median indicative dividend yield for the top quartile of global banks by market value is 4.4%.   
 

FTSE Global Sustainable Yield Index Series  
The FTSE Global Sustainable Yield Index Series is reviewed semi-annually in March and September using data at the close of the last business day of February and August. This means, results of the FTSE Developed Asia Pacific ex Japan Sustainable Yield Index which includes as many as 17 Singapore stocks, are expected to be released within the week.  DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") have remained in the top 10 constituent weights of the FTSE Developed Asia Pacific ex-Japan Sustainable Yield Index at the end of August. United Overseas Bank ("UOB") and Hong Kong listed CK Hutchison Holdings places were displaced as the 10 heavyweights in August by Korea-listed Hyundai Motor and Hong Kong listed Sun Hung Kai Props.  
The FTSE Global Sustainable Yield Index Series examines the financial and operating strength of prospective constituents with specific emphasis on companies with strong balance sheets and the ability to generate cash flow. Financial and operational strength metrics include Return on Assets, cash-flow from operations, accruals and changes in leverage. Note that other screening criteria include the pay-out ratio and incidence of historic or forecast dividend cuts (for the Factsheet and more detailed methodology, click here), hence the upcoming rebalance results will be of particular relevance to the Singapore Banking Sector.   To follow the FTSE Index announcements: click here.



Hyundai Motor stocks are again moving up.As of noon in the local time, Hyundai Motor's ordinary share is up 3.49%, followed by all three preferred shares whose gains range from 3.34% (1P) to 6.20% (3PB).Also, Kia is up 1.52%, and Mobis moves up by 2.21%.Glovis is gaining the most, among the subsidiaries, with 4.15%.Then, sigma on a 20D MA?Everyone seems to be within a controllable range relative to the Motor ordinary share.But the Glovis/Mobis pair is in a substantial diversion at a 2.42σ favoring Glovis.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/057/original/12.png?1598843388" class="editor-image img-responsive" data-smartkarma-image-id="156057"></figure>

Hyundai Motor stocks are again moving up.As of noon in the local time, Hyundai Motor's ordinary share is up 3.49%, followed by all three preferred shares whose gains range from 3.34% (1P) to 6.20% (3PB).Also, Kia is up 1.52%, and Mobis moves up by 2.21%.Glovis is gaining the most, among the subsidiaries, with 4.15%.Then, sigma on a 20D MA?Everyone seems to be within a controllable range relative to the Motor ordinary share.But the Glovis/Mobis pair is in a substantial diversion at a 2.42σ favoring Glovis.

Hyundai Motor Stocks Moving: Trade Glovis/Mobis Pair

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

Asian Governance: Diversity & Incentives Through the Cultural Lens

South Korea

Hyundai Motor Company manufactures, sells, and exports passenger cars, trucks, and commercial vehicles. The Company also sells various auto parts and operates auto repair service centers throughout South Korea. Hyundai Motor provides financial services through its subsidiaries.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hyundai Motor (005387 KS)

Hyundai Mobis/Motor At -2.3σ: Entry Point for Range Trading

???

Sanghyun Park

India Autos | Auto Tracker for August - YoY Volume Recovery

This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August,...

Pranav Bhavsar

Singapore Banks Amongst August Advancers

DBS, OCBC & UOB averaged 4.2% total returns in August, outpacing 1.6% flat median returns of the top quartile of global banking stocks by...

Singapore Exchange Ltd (SGX)

Hyundai Motor Stocks Moving: Trade Glovis/Mobis Pair

Hyundai Motor stocks are again moving up.As of noon in the local time, Hyundai Motor's ordinary share is up 3.49%, followed by all three preferred...

Sanghyun Park

Asian Governance: Diversity & Incentives Through the Cultural Lens

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and...

Bondcritic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)