Independent Insight Provider

Hao Wang, CFA

Thematic (Sector/Industry)

This is a very short note on my top 5 trade recommendations in 2016 after the close of 2015 based on my previous note of 2016 outlook (i.e. be aggressive in Q1 but defensive thereafter). The basis are higher commodities prices led by copper, crude and some bulk, and relatively weaker USD. <figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/004/820/original/Fig6.png?1451718588" class="editor-image img-responsive" data-smartkarma-image-id="4820"><figcaption class="figcaption">Top five macro trades in 2016Q1</figcaption></figure>In the above trade recommendations, you also have levels of profit target and stop loss. They are ranked by the ratio of reward/risk. Going forward I will keep updating levels…

This is a very short note on my top 5 trade recommendations in 2016 after the close of 2015 based on my previous note of 2016 outlook (i.e. be aggressive in Q1 but defensive thereafter). The basis are higher commodities prices led by copper, crude and some bulk, and relatively weaker USD. Top five macro trades in 2016Q1In the above trade recommendations, you also have levels of profit target and stop loss. They are ranked by the ratio of reward/risk. Going forward I will keep updating levels…

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

Spark Infrastructure / Equity Capital Markets

Spark Infrastructure plans to raise A$400m through a non-renounceable  entitlement offer, in order to fund its stake in the purchase of TransGrid. We would be inclined to bid for the deal as the acquisition is accretive to earnings and scores well on our framework. <h2>Deal Overview</h2><ul>
<li>Company Name: Spark Infrastructure Group</li>
<li>Ticker: SKI AU Equity</li>
<li>Primary placement -Accelerated Non-renouncable Entitlement Offer</li>
<li>Settlement is longer than normal, with stock settling on 7 Dec, 2015</li>
<li>Fixed deal price:AUD1.88</li>
<li>Last…</li>
</ul>

Spark Infrastructure plans to raise A$400m through a non-renounceable  entitlement offer, in order to fund its stake in the purchase of TransGrid. We would be inclined to bid for the deal as the acquisition is accretive to earnings and scores well on our framework. Deal Overview
Company Name: Spark Infrastructure Group
Ticker: SKI AU Equity
Primary placement -Accelerated Non-renouncable Entitlement Offer
Settlement is longer than normal, with stock settling on 7 Dec, 2015
Fixed deal price:AUD1.88
Last…


FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

Macroeconomics

Little changed to support the rebound in EUR and weakness in the USD on Thursday.&nbsp; In fact dovish ECB comments and on-message statements from senior Fed members suggest the policy divergence is likely to intensify next month.&nbsp; Eurozone industrial production showed a flat trend in recent quarters and US labour data were firm.&nbsp; Eurozone GDP and US retail sales today in focus. A comparison of CAD and AUD reveal much in common, we see downside pressure persisting for both.&nbsp; Weaker oil prices an immediate threat for CAD.&nbsp; Bank of Canada speech tonight in focus.&nbsp; Australian RBA minutes and wage data next week pose downside risk for the AUD.

Little changed to support the rebound in EUR and weakness in the USD on Thursday.&nbsp; In fact dovish ECB comments and on-message statements from senior Fed members suggest the policy divergence is likely to intensify next month.&nbsp; Eurozone industrial production showed a flat trend in recent quarters and US labour data were firm.&nbsp; Eurozone GDP and US retail sales today in focus. A comparison of CAD and AUD reveal much in common, we see downside pressure persisting for both.&nbsp; Weaker oil prices an immediate threat for CAD.&nbsp; Bank of Canada speech tonight in focus.&nbsp; Australian RBA minutes and wage data next week pose downside risk for the AUD.

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

AmpGFX - AUD pulled harder in opposite directions

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:<ul><li>The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossible</li><li>The A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very high</li><li>Recent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performance</li><li>Overall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers</li></ul>

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossibleThe A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very highRecent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performanceOverall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers

Australia

Origin Energy Limited is an integrated energy company. The Company is an energy retailer in Australia across electricity, gas and LPG. Origin Energy also holds a generation portfolio and fuel position and a renewable energy portfolio, as well as unconventional gas and LNG interests.

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Origin Energy (ORG AU)

Top 5 Macro Trades in 2016Q1

This is a very short note on my top 5 trade recommendations in 2016 after the close of 2015 based on my previous note of 2016 outlook (i.e. be...

Hao Wang, CFA

Acquisition Accretive to Cashflows

Spark Infrastructure plans to raise A$400m through a non-renounceable entitlement offer, in order to fund its stake in the purchase of TransGrid....

Sumeet Singh

AmpGFX - CAD and AUD in the hot-seat

Little changed to support the rebound in EUR and weakness in the USD on Thursday. In fact dovish ECB comments and on-message statements from...

Greg Gibbs

AmpGFX - AUD pulled harder in opposite directions

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity...

Greg Gibbs

Ridding itself of the Spectre of Scepter

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The...

Sumeet Singh

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