Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

The COVID-19 crisis was the dominant issue in 2020, with certain industries (e.g. travel & leisure, gaming and selected retail players) remaining greatly affected. Going forward, the ability to contain the virus, the potential long-term impact on selected industries, and the speed at which economies are re-opened will continue to be major market drivers. On the policy front, the focus should shift to the Biden administration's plans and especially US-China relations, while central banks are expected to remain supportive for now. We cover these topics in our HY Investment Outlook: (1) our high-conviction trade recommendations; (2) ESG developments, with this area rapidly evolving and increasingly being integrated in the investment process; (3) the COVID-19 crisis, along with other key macroeconomic, geopolitical and monetary developments in 2020; (4) developments in European HY markets; as well as (5) how credit stats and liquidity have evolved for the companies and industries under our coverage.

  The COVID-19 crisis was the dominant issue in 2020, with certain industries (e.g. travel & leisure, gaming and selected retail players) remaining greatly affected. Going forward, the ability to contain the virus, the potential long-term impact on selected industries, and the speed at which economies are re-opened will continue to be major market drivers. On the policy front, the focus should shift to the Biden administration's plans and especially US-China relations, while central banks are expected to remain supportive for now.   We cover these topics in our HY Investment Outlook: (1) our high-conviction trade recommendations; (2) ESG developments, with this area rapidly evolving and increasingly being integrated in the investment process; (3) the COVID-19 crisis, along with other key macroeconomic, geopolitical and monetary developments in 2020; (4) developments in European HY markets; as well as (5) how credit stats and liquidity have evolved for the companies and industries under our coverage. 

European High Yield Outlook 2021 & Trade Book For February - Lucror Analytics

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

In late November, I updated my "JAPAN FLOW:  Foreign Investor Flows Still Matter" series with <a href="https://www.smartkarma.com/insights/japan-flow-foreign-investor-flows-still-matter-redux-reduxed-playing-catchup" target="_blank" data-smartkarma-citation="insights:45711" rel="noopener">JAPAN FLOW:  Foreign Investor Flows Still Matter (Redux, Reduxed) - Playing Catchup</a>.The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically based on a relatively simple indicator. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/938/original/Screenshot+2021-02-21+at+6.33.43+PM.png?1613903639" class="editor-image img-responsive" data-smartkarma-image-id="189938"></figure></section>This chart shows 26-week cumulative net buying vs the indicator, which moves faster, but if you break down that average into a shorter-term average, it moves "faster" in response to moves in the light blue line. My conclusion in late November was that foreigners were "behind the curve" and needed to play catchup. That was despite the fact that they had purchased ¥1.5trln of stocks in the previous four weeks. Since end-November, they have net purchased more than ¥1.7 trillion worth of Japanese equities through 12 February (the data through 19 Feb is not available until 26 February). The inputs to the indicator currently suggest it could go either way from here, but as shown in the chart above (the light blue line) it is an oscillator. And generally speaking, when oscillators reach the outer limits of their ranges, they tend to revert. And the dark blue line has a ¥1.4trln "tailwind" over the next 7 weeks. <div class="content-highlight">But foreign investment flows into Japan are basically a WANT function. They buy more if they want to do so. I often find it instructive to look at flows in terms of WANT vs NEED. NEED is more compelling, and there are some compelling "NEED flows" in the next 6 weeks.</div>More below the fold.

In late November, I updated my "JAPAN FLOW:  Foreign Investor Flows Still Matter" series with JAPAN FLOW:  Foreign Investor Flows Still Matter (Redux, Reduxed) - Playing Catchup.The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically based on a relatively simple indicator. This chart shows 26-week cumulative net buying vs the indicator, which moves faster, but if you break down that average into a shorter-term average, it moves "faster" in response to moves in the light blue line. My conclusion in late November was that foreigners were "behind the curve" and needed to play catchup. That was despite the fact that they had purchased ¥1.5trln of stocks in the previous four weeks. Since end-November, they have net purchased more than ¥1.7 trillion worth of Japanese equities through 12 February (the data through 19 Feb is not available until 26 February). The inputs to the indicator currently suggest it could go either way from here, but as shown in the chart above (the light blue line) it is an oscillator. And generally speaking, when oscillators reach the outer limits of their ranges, they tend to revert. And the dark blue line has a ¥1.4trln "tailwind" over the next 7 weeks. But foreign investment flows into Japan are basically a WANT function. They buy more if they want to do so. I often find it instructive to look at flows in terms of WANT vs NEED. NEED is more compelling, and there are some compelling "NEED flows" in the next 6 weeks.More below the fold.

JAPAN FLOW:  Foreign Investor Flows Catching Up ('Need' Vs 'Want' into FY-End)

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> reluctantly sold US$10bn worth of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> shares. I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. We have covered the previous placement in our earlier note, <a href="https://www.smartkarma.com/insights/tencent-placement-huge-deal-in-size-small-in-relative-terms-succumbing-to-the-holdco-discount" target="_blank" rel="noopener">Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount</a>. In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.

On 22nd March 2018, after market close in Hong Kong one of the largest overnight placements was launched. On that day, Naspers (NPN SJ) reluctantly sold US$10bn worth of Tencent Holdings (700 HK) shares. I say reluctantly because Naspers provided a three year lock-up at the time of the deal. That lock-up will expire next month. We have covered the previous placement in our earlier note, Tencent Placement - Huge Deal in Size, Small in Relative Terms - Succumbing to the HoldCo Discount. In this note, I’ll talk about the upcoming lock-up expiry, its implications and the updates since then.

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

2020 saw Asia Pacific activist campaigns down 9.7% YoY. Considering the issues which played out over the year this is a better than expected result. What is key is that Asia remained resilient compared to Europe which saw a 16% YoY decline, in activism campaigns respectively. Sifting through the data highlights some interesting and share price impactful trends when looking at how Activism may play out in 2021.

2020 saw Asia Pacific activist campaigns down 9.7% YoY. Considering the issues which played out over the year this is a better than expected result. What is key is that Asia remained resilient compared to Europe which saw a 16% YoY decline, in activism campaigns respectively. Sifting through the data highlights some interesting and share price impactful trends when looking at how Activism may play out in 2021.

Notes from the Silk Road: Activism - 2020 Review Reveals Some Interesting Trends

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG KS)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day. It also offers the Rocket WOW membership program, a grocery offering (Rocket Fresh), a logistics food delivery offering (Coupang Eats) and digital financial services (Coupang Pay). Coupang, which is backed by <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>, has filed for an NYSE IPO to raise up to $2 billion, according to press reports.<div class="content-highlight">Coupang was a beneficiary of the COVID-19 pandemic resulting in a strong 2020. It is likely that the COVID-19 pandemic has a shifted some customer behaviour permanently in favour of Coupang’ business. Coupang's fundamentals tick all the right boxes and worth a look, in our view.</div>

Coupang (CPNG KS) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day. It also offers the Rocket WOW membership program, a grocery offering (Rocket Fresh), a logistics food delivery offering (Coupang Eats) and digital financial services (Coupang Pay). Coupang, which is backed by Softbank Group (9984 JP), has filed for an NYSE IPO to raise up to $2 billion, according to press reports.Coupang was a beneficiary of the COVID-19 pandemic resulting in a strong 2020. It is likely that the COVID-19 pandemic has a shifted some customer behaviour permanently in favour of Coupang’ business. Coupang's fundamentals tick all the right boxes and worth a look, in our view.

Coupang IPO Initiation: Delivering the Goods

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (9984 JP)

European High Yield Outlook 2021 & Trade Book For February - Lucror Analytics

The COVID-19 crisis was the dominant issue in 2020, with certain industries (e.g. travel & leisure, gaming and selected retail players)...

Lucror Analytics

JAPAN FLOW: Foreign Investor Flows Catching Up ('Need' Vs 'Want' into FY-End)

JAPAN FLOW: There are fundamentals, and there are flows. Japan is driven by both. Japan earnings revisions are finally on their way up. Flows have...

Travis Lundy

Tencent Placement Lock-Up Expiry - US$10bn+ Block and Buyback Linked Holdco Trade

On 22nd March 2018, after market close, one of the largest overnight placements was launched. On that day, Naspers reluctantly sold US$10bn worth...

Sumeet Singh

Notes from the Silk Road: Activism - 2020 Review Reveals Some Interesting Trends

2020 activism numbers are in with some interesting underlying trends reflecting possibilities of how campaigns in 2021 & 2022 may evolve notably...

David Lepper

Coupang IPO Initiation: Delivering the Goods

Coupang, which is backed by Softbank, has filed for an NYSE IPO to raise up to $2 billion, according to press reports. Coupang's fundamentals tick...

Arun George

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