Energy Transition | AI | Shifting World Order, Mint Finance

Suhas Reddy

Energy Transition | AI | Shifting World Order

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Thematic (Sector/Industry)

<ul>
<li>Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.</li>
<li>Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.</li>
<li>Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.</li>
</ul>


Growth in commercial real estate to be subdued in 2024 due to weak demand, especially for office spaces.
Concerns over CRE loan defaults grow stronger as the industry faces a liquidity crunch.
Delinquency rates of commercial real estate loans rise for five consecutive quarters till Q32023.


Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> rebalance was implemented at the close on Friday and there were a bunch of review cutoffs on the same day.</li>
<li>Passive Hang Seng trackers need to sell <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> at the close on 4 January following <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> in-specie distribution.</li>
<li>We take a look at flows to Asian focused ETFs over the course of 2022. A lot of winners in terms of AUM, but a few losers too.</li>
</ul>


The Stock Exchange of Thailand SET 50 Index (SET50 INDEX) rebalance was implemented at the close on Friday and there were a bunch of review cutoffs on the same day.
Passive Hang Seng trackers need to sell Meituan (3690 HK) at the close on 4 January following Tencent (700 HK) in-specie distribution.
We take a look at flows to Asian focused ETFs over the course of 2022. A lot of winners in terms of AUM, but a few losers too.


Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Macroeconomics

<ul>
<li>In <a href="https://www.clevelandfed.org/en/newsroom-and-events/publications/cfed-district-data-briefs/cfddb-20210205-did-the-covid-19-pandemic-cause-an-urban-exodus.aspx" target="_blank" rel="noopener">"Did the COVID-19 Pandemic Cause an Urban Exodus?"</a> Stephen Whitaker of the Cleveland Fed recently examined granular US urban migration data for 2020, concluding that the rate of decline in urban inward migration has been a much more significant driver of net urban population flow than active "urban flight"</li>
<li>Average monthly relocations into urban centers were down -18K/month on average or -7.6% from March-December 2020 relative to the previous 3 years, whereas average monthly relocations out of urban centers were up just +10K/month on average or +3.8%</li>
<li>The data potentially implies greater-than-expected pent-up demand for urban housing per "unit" of increased post-pandemic confidence</li>
<li>Our text-mining saw media coverage of the De-urbanization/Urban Flight theme reach peak momentum in Q3 2020; recently, an Urban Recovery/Return to Cities theme is starting to trend higher as normalized post-pandemic urban life finally appears within reach, along with an incipient "return to the office" theme</li>
<li>Early signs of recovery are showing in recent urban housing data from Redfin, RealPage, the National Multifamily Housing Council and Douglas Elliman</li>
<li>A perceived structural overhang on urban life is the notion of permanent WFH; but the outlook for office work appears less dire as post-pandemic confidence improves on the margin</li>
<li>The trajectory of urban migration post-pandemic will have far-reaching implications for a range of themes, from commercial property &amp; REIT recovery to multifamily construction, retail, dining, municipal finances and CPI</li>
</ul><div class="content-highlight">TMI Data Science utilizes Natural Language Processing to build leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macro, equity indexes/ETFs, commodities, currencies, fixed income &amp; equities. </div>


In "Did the COVID-19 Pandemic Cause an Urban Exodus?" Stephen Whitaker of the Cleveland Fed recently examined granular US urban migration data for 2020, concluding that the rate of decline in urban inward migration has been a much more significant driver of net urban population flow than active "urban flight"
Average monthly relocations into urban centers were down -18K/month on average or -7.6% from March-December 2020 relative to the previous 3 years, whereas average monthly relocations out of urban centers were up just +10K/month on average or +3.8%
The data potentially implies greater-than-expected pent-up demand for urban housing per "unit" of increased post-pandemic confidence
Our text-mining saw media coverage of the De-urbanization/Urban Flight theme reach peak momentum in Q3 2020; recently, an Urban Recovery/Return to Cities theme is starting to trend higher as normalized post-pandemic urban life finally appears within reach, along with an incipient "return to the office" theme
Early signs of recovery are showing in recent urban housing data from Redfin, RealPage, the National Multifamily Housing Council and Douglas Elliman
A perceived structural overhang on urban life is the notion of permanent WFH; but the outlook for office work appears less dire as post-pandemic confidence improves on the margin
The trajectory of urban migration post-pandemic will have far-reaching implications for a range of themes, from commercial property &amp; REIT recovery to multifamily construction, retail, dining, municipal finances and CPI
TMI Data Science utilizes Natural Language Processing to build leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macro, equity indexes/ETFs, commodities, currencies, fixed income &amp; equities. 

TMI Snapshot:  De-Urbanization or Urban Recovery?

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/28061" target="_blank" data-smartkarma-citation="entities:28061:1">WeWork </a>(rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late last year (December 2019). The company has not yet set a date for its IPO, but considering that the filing was done just weeks after Uber, WeWork’s IPO debut could also be just around the corner. The company is yet to release its S-1 statement to the public.WeWork seems to be following the footsteps of many unicorns these days, by pursuing a strategy of “growth at any cost”. WeWork’s revenue increased by around 10x over the past three years, but this has come at the expense of heavy losses and significant cash burn. WeWork’s robust growth is no doubt going to be its main selling point in the IPO, but with the recent examples of <a href="https://www.smartkarma.com/entities/430" target="_blank" data-smartkarma-citation="entities:430:1">Uber (UBER US)</a> and <a href="https://www.smartkarma.com/entities/24423" target="_blank" data-smartkarma-citation="entities:24423:1">Lyft Inc (LYFT US)</a> who were penalised heavily by public investors for pursuing unprofitable growth, we are not very confident that investors would buy WeWork’s growth story either.Perhaps the only way that WeWork could justify its unprofitable growth is through some really strong unit economics. However, according to our analysis, WeWork seems to be barely profitable even at the per desk level. WeWork’s higher spending on overheads and leasehold improvements seem to be stressing out its bottom line.

WeWork (rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late last year (December 2019). The company has not yet set a date for its IPO, but considering that the filing was done just weeks after Uber, WeWork’s IPO debut could also be just around the corner. The company is yet to release its S-1 statement to the public.WeWork seems to be following the footsteps of many unicorns these days, by pursuing a strategy of “growth at any cost”. WeWork’s revenue increased by around 10x over the past three years, but this has come at the expense of heavy losses and significant cash burn. WeWork’s robust growth is no doubt going to be its main selling point in the IPO, but with the recent examples of Uber (UBER US) and Lyft Inc (LYFT US) who were penalised heavily by public investors for pursuing unprofitable growth, we are not very confident that investors would buy WeWork’s growth story either.Perhaps the only way that WeWork could justify its unprofitable growth is through some really strong unit economics. However, according to our analysis, WeWork seems to be barely profitable even at the per desk level. WeWork’s higher spending on overheads and leasehold improvements seem to be stressing out its bottom line.

WeWork IPO Preview: “Growth at Any Cost” and Some Really Bad Unit Economics

Amareos

Ryan Shea

Summary: Housing has several characteristics that mean it is almost perfectly designed to be prone to bubble-like behaviour. By definition a bubble occurs when the price of an asset is significantly overvalued making it increasingly difficult to justify based on underlying fundamentals. In such situations it is the overriding optimism of the crowd, with unrealistically high expectations, that acts as the propellant for further gains. Ten years on from the bursting of the US housing market…

Summary: Housing has several characteristics that mean it is almost perfectly designed to be prone to bubble-like behaviour. By definition a bubble occurs when the price of an asset is significantly overvalued making it increasingly difficult to justify based on underlying fundamentals. In such situations it is the overriding optimism of the crowd, with unrealistically high expectations, that acts as the propellant for further gains. Ten years on from the bursting of the US housing market…

The Market Sentimentalist: Global Real Estate – Where Are The Risks Residing?

United States

Vornado Realty Trust is a fully-integrated real estate investment trust. The trust owns, manages and leases office properties in New York City, Washington, DC, and California. The Company also owns retail properties Washington, DC and Puerto Rico.

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Vornado Realty Trust (VNO US)

Rough Road Ahead for US Commercial Real Estate but Industrial CRE Is Rooted to Outperform Others

US CRE shows bleak prospects for 2024 due to structural demand decline for office space. CRE loan delinquency on the rise for five sequential...

Mint Finance

Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A changes). We also highlight large...

Brian Freitas

TMI Snapshot: De-Urbanization or Urban Recovery?

Recent research from the Cleveland Fed suggests greater pent-up demand for urban housing post-COVID. A recovery is already underway, suggesting...

Elan Gore

WeWork IPO Preview: “Growth at Any Cost” and Some Really Bad Unit Economics

WeWork (rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late...

Supun Walpola

The Market Sentimentalist: Global Real Estate – Where Are The Risks Residing?

Summary: Housing has several characteristics that mean it is almost perfectly designed to be prone to bubble-like behaviour. By definition a bubble...

Amareos

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