This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging
- TSMC: +14.2% Premium; Can Consider Going Long at Current Level
- UMC: +1.8% Premium; The ADR Headroom Has Decreased Yet Again
- ASE: +5.4% Premium; Short Interest Surging for The Local Shares
2. Ibiden (4062 JP): Once Again a Long-Term Buy
- Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.
- Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.
- Management’s long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.
3. The Cerebras IPO Stucture Sucks
- I’m not going to write about the technical side at all, as I expect Dylan Patel’s team at SemiAnalysis to do a much better job than I can do alone.
- However, I want to note some of the funniest aspects because landmines are everywhere for this IPO. Of course, it’s driven by G42, but it’s much worse than you think. Here’s the prelim S-1.
- G42 is pretty much the only customer.
4. Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?
- Key iPhone components suppliers’ share prices have substantially underperformed Apple, particularly Largan Precision, Genius Electronic Optical, and Zhen Ding.
- There are reasons for iPhone 16 upgrade optimism. We also note that key suppliers failed to rally with Apple shares post-Fed rate cut.
- Apple suppliers’ 2025E forecasts haven’t fallen much so far, despite the negative stock market reaction. If negative iPhone 16 reports prove exaggerated, Largan, Genius, and Zhen Ding could rebound.
5. Taiwan Tech Weekly: Apple Shifting AR Strategy After Meta Orion Showcase; Apple Supply Chain Monitor
- Apple Set to Launch iPhone SE 4 and Updated iPad Air in Early 2025: Key Developments to Watch
- META’s Orion AR Glasses: Next Major Computing Platform After the Smartphone?
- Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?
6. GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?
- Tier 2 foundry revenue recovery is taking far longer than most expected.
- Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.
- Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Tokyo Metro IPO – Thoughts on Valuation
- Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
- Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.
2. Tokyo Metro (9023 JP) IPO: Valuation Insights
- Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case and Tokyo Metro (9023 JP) IPO: The Bear Case.
- In this note, we discuss valuation. Our analysis suggests that Tokyo Metro is attractively valued at the IPO price compared to peer multiples.
3. Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25
- Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
- Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
- We have looked at the company’s past performance in our previous note. In this note, we will undertake a peer comparison.
4. Rigaku Holdings (268A JP) IPO: The Bull Case
- Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
- In Japan, Rigaku’s XRD (X-ray diffraction) has a high market share of 75%. Around 70% of its revenue is derived from customers outside Japan.
- The bull case rests on high customer switching costs, peer-leading revenue growth, top-quartile profitability, FCF generation, and low leverage.
5. Rigaku IPO – Peer Comparison – Compensating for Smaller Scale with Better Growth and Margins
- Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
- Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
- In our earlier notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison.
6. K Bank IPO – Should Price Below Its Range
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.
7. Swiggy Pre-IPO Tearsheet
- Swiggy (1255298D IN) Swiggy is looking to raise about US$1.25bn in its upcoming India IPO. The deal will be run by Kotak, Citi, Jefferies, Avendus, JPM, BofA and ICICI.
- Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
- The platform can also be used to make restaurant reservations (Dineout), event bookings (SteppinOut), product pick-up/drop-off services (Genie) and other hyperlocal commerce activities (Swiggy Minis).
8. China Resources Beverage Pre-IPO – Updated Thoughts on Valuation
- China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In our earlier notes, we talked about the company’s past performance and provided our initial thoughts on valuations. In this note, we will relook at valuations post its PHIP updates.
9. China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing
- China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.
10. Rigaku Holdings (268A JP) IPO: The Bear Case
- Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
- In Rigaku Holdings (268A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on weakening forward growth indicators, China revenue risk, rising cash conversion cycles, mid-tier FCF margin and large post-IPO share overhang.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
- We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
- If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.
2. Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb
- Tokyo Metro (9023 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
- At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
- The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.
3. HSCEI Index Rebalance Preview: High & Low Probability Changes
- PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
- There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
- There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.
4. Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…
- At end-September, the Nikkei 225 semi-annual review imposed a “cap” on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
- At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
- And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.
5. Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
- Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
- Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid.
- Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.
6. Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
- Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
- If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
- Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.
7. T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
- Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
- There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
- This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.
8. FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC
- Today is the last trading day in the review period for the October rebalance of the FnGuide Semiconductor Top10 Index.
- Wonik Ips (240810 KS) is a high probability add and ISC Co Ltd (095340 KS) is a high probability delete. This will reverse the changes from the April rebalance.
- Passive trackers will need to buy over 3.5x ADV in Wonik Ips (240810 KS) and sell nearly 2x ADV in ISC Co Ltd (095340 KS).
9. Emart’s Tender Offer for Shinsegae Construction: Arb Trading Angles
- E Mart Inc is launching a tender offer for 27.33% of Shinsegae Eng & Construction, offering ₩18,300 per share, a 14% premium, from September 30 to October 29.
- This tender’s got zero cancellation or proration risk since they’re all in to buy every share tendered. That makes it a prime event for close spread tracking and trading opportunities.
- Emart needs 95% of Shinsegae Construction’s shares to delist, requiring 22% of the remaining 27%. If they can’t get it, a stock swap with Emart shares is likely.
10. Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon
- The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
- Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
- If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. CHINA: Why so Many Investors/Analysts Got It Wrong and What’s Really Happening
- HK/China stock markets are re-rating quickly sentiment became overly pessimistic.
- A stock market bottom precedes a property market bottom by years.
- China’s markets have languished due to the government’s focus on supply-side solutions. That focus has now shifted to include demand-side stimulus efforts as the PBOC Put accelerates.
2. Portfolio Watch: The outlook is brightening into October
- Everything is about the ongoing rally in Chinese equities at the moment, with China now being the best yielding country in the world in equity space after both the PBoC and the Politburo coming through with stimulus proposals, which has caught all China bears on the wrong side of the trade.
- We learned today that the PBoC is cutting the standing lending facility rates by 20 bps, a move not seen since the pandemic broke out.
- They have normally cut the interest rates in the lending facility by 10 bps at a time, so this is likely a sign that they’re truly willing to do something about the slump in growth / real estate.
3. Gap Trade Opportunities in Korean Prefs Vs Common Share Pairs in 4Q 2024
- In this insight, we discuss numerous gap trade opportunities involving Korean preferred and common shares in 4Q 2024.
- Among the 27 major pair trades (prefs vs. common shares), 16 of the pref stocks outperformed their common shares counterparts so far this year.
- The 27 Korean preferred stocks’ average prices increased by 8.3% from end of 2023 to 2 October 2024 (excluding dividends), outperforming their common counterparts which were up on average 5.4%.
4. EM Fixed Income Focus: The impact of geopolitics on EM
- Macro backdrop evolving with upcoming US elections and Middle East tensions impacting EM assets
- Mixed bag on macro side with softer inflation in EM, better revisions in US growth but soft manufacturing PMIs
- China as tiebreaker with further policy support, rally in equities, and implications for Fed and commodities prices; geopolitical risks and US election as wild cards to watch
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
5. China Liquidity Watch: USD easing allowed China to ease, but there is a caveat..
- The USD market will be flooded with liquidity in Q4, accompanied by rate cuts, providing Chinese authorities with a window of opportunity to ease policy.
- However, there is one issue: CNY liquidity is tightening now.
- Welcome to our weekly China Watch, where we examine Chinese assets through the lens of Western investors and markets.
6. The Winners and Losers From Central Bank Stimulus
- Markets have taken on a risk-on tone on the news of global central bank stimulus. Gold has rallied the most as real rates fell, equities rose and bond prices fell.
- But the market’s risk-on psychology appears to be stretched and fragile.
- While the long-term bullish trend is quite real, the consensus is susceptible to reversals should growth disappoint in the near-term.
7. US Rates: Cash on the sidelines or just cash?
- Money fund balances have continued to grow despite Fed rate cuts due to attractive yields relative to other liquidity products
- Most of the cash in money funds is liquidity money, making them a compelling place to park cash
- Money funds tend to see inflows heading into an easing cycle and persist even as the yield curve begins to disinvert or steepen, with outflows only occurring once the curve stabilizes.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
8. Week at a Glance – Squuuuuuuuuueeeeeeze!
- Happy Monday, let’s dive into the most critical stuff we are on the look out for this week.
- Morning moves: It seems like physical commodities markets are catching up to the China stimulus story from last week, in tandem with the Hang Seng.
- Over the end of last, Japan’s elections pushed USD/JPY lower, leading investors to sell the Nikkei rather aggressively due to a clear hawkish expected lean from the new PM Ishiba.
9. China’s Serial Rate Cuts: What Are Them and Are They Effective in Reviving the Falling Economy (2)
- Our earlier articles state the natures and description of several monetary actions by PBOC last week, highlighting a possibility of stock rallly
- This article on the other hand dicussess the economic benefits of the monetary policies, which are more relevant from the authority’s point of view.
- For stock market still, we believe the RMB 800 billion fund, given a RMB 2-3 trillions daily transaction volume and 60% LTV leverage , has long been dumped into market.
10. Asia Economics: Despite Geopolitical Risks, Emerging Asia Is at an Upward Turning Point
- Economic policy in the US and China, the two most important economic partners for emerging Asia, is turning more supportive of global growth.
- Oil prices are also entering a period of “lower for longer”; Saudi Arabia’s signal of reversing its production cuts will exert downward pressure on oil prices, largely to Asia’s benefit.
- The overall result of these developments is to open up more scope for policy loosening, strengthen export demand and encourage more investments, to emerging Asia’s benefit.
Entity | Insights | Analytics | News | Discussion | Filings | Reports |
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely
- Given UMC’s partnership with Intel to produce chips using Intel’s 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
- Intel’s Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn’t have leading edge fabs nor the balance sheet to build them.
- If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.
2. Memory Monitor: Micron Results Show Clear Signs of Memory Market Upswing; DRAM Growth Upgraded
- Micron’s latest results show a clear improvement in the Memory cycle. The company’s gross margin increased and guided for a further strong margin increase next quarter.
- Micron increased its overall DRAM industry growth forecast while maintaining its NAND flash forecast. Micron reiterated expectations for FY2025E to deliver record revenue for the company, with improving profitability.
- Positive news for fallen Memory industry shares — Within our Memory universe we have Structural Long ratings for Micron Technology (MU US), SK Hynix (000660 KS), and Silicon Motion Technology (SIMO US).
3. Memory Monitor: Upcoming Micron Results & Outlook Key Amid Reports of Inventory Liquidation
- Memory stocks underperformed the market, falling sharply with the recent overall market rout and failing to rebound sufficiently with the latest market rally.
- Leading Memory names Micron, SK Hynix, Samsung are all substantially below their 52-week highs after market reports of slowing memory demand from PC and mobile industries and inventory liquidation.
- Taiwan names Nanya Tech, Silicon Motion, Phison are all we below their highs. Micron results on September 25th MT will provide a major outlook update for the market.
4. Micron. Zoom, Zoom, Zoom, We’re Going To The Moon…
- Q424 revenue $7.8 billion which was $200 million above the guided midpoint, up 14% QoQ and up 93% YoY.
- Q125 revenue of $8.7 billion with gross margin 39.5%. This will be the company’s highest ever quarterly revenue
- On track for ~20% share of a $25 billion HBM market in 2025
5. Micron and WFE
- Just two weeks ago, I wrote about how I thought this was a mid-memory cycle.
- I mainly supported the memory companies if you didn’t read between the lines (ChatGPT o1 (Strawberry) and Memory)
- Fast-forward a week, and it seems that the calls for the end of memory were a bit premature.
6. Silergy (6415.TT): Positive Optimistic Future Outlook
- China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
- Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
- While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Tokyo Metro (9023 JP) IPO: The Bull Case
- Tokyo Metro (TKYMETRO JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government.
- The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout.
2. Tokyo Metro IPO – The Positives – Quasi-Monopoly Status
- Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its upcoming Japan IPO.
- Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
- In this note, we talk about the positive aspects of the deal.
3. New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up
- Besides ranking in the top 50 by market cap, it must also meet a minimum float-adjusted cap for K200 fast entry: at least 50% of the 50th-ranked stock’s market cap.
- Even if new stocks meet KRX’s float cap, their actual float share volume may still be low, risking inflation from local pension funds’ preemptive passive inflows post-listing.
- This could reduce predictability for KOSPI 200 fast entry, increasing price swings post-listing and forcing traders to develop new volatility strategies after IPOs.
4. K Bank IPO – Peer Comparison – Lags Its Main Peer on Most Fronts
- K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
- K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
- In our previous note, we have looked at the company’s past performance. In this note, we will undertake a peer comparison.
5. Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive
- Sino American Silicon Products (5483 TT) is looking to raise US$287m in its GDRs offering. Proceeds will be used to purchase overseas raw materials, repay bank loans and purchase machinery.
- Similar to previous GDR listings, the deal has had a long drawn out approval process. Thus, the deal is a very well flagged one.
- The deal is a relatively large one to digest at 15.7 days of the stock’s three month ADV.
6. ECM Weekly (23rd Sep 2024) – Tokyo Metro, Midea, Intermestic, Sagility, Belstar, Kuaishou, Bajaj HF
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, Midea Group Co Ltd A (000333 CH) and Bajaj Housing Finance (BHF IN) hogged much of the limelight this week as well.
- On the placements front, there were a few large US$400m+ placements across the region this week.
7. Tokyo Metro (9023 JP) IPO: The Bear Case
- Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- In Tokyo Metro (9023 JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on mid-tier revenue growth, low revenue diversification, the highest leverage among peers and a sizeable post-IPO share overhang.
8. Rigaku IPO – The Positives – Catering to a Range of End Industries, and Track Record Has Been Strong
- Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
- Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
- In this note, we will talk about the positive aspects of the deal.
9. Rigaku Holdings IPO: Initial Thoughts
- Rigaku Holdings (268A JP) provides cutting-edge analytical solutions centered on X-ray technology globally. The company is one of the largest players globally in X-ray diffraction instrument market.
- The company has filed for an IPO on the Tokyo Stock Exchange and plans to raise proceeds of around US$900m from the IPO at a potential valuation of US$2bn.
- In this insight, we discuss Rigaku’s business model, key drivers, financials and outlook for the company.
10. K Bank IPO: Valuation Insights
- K Bank (279570 KS) is a Korean internet bank. It has launched an IPO to raise up to US$734 million.
- We previously discussed the IPO in K Bank IPO: The Bear Case and K Bank IPO: The Bull Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that K Bank is unattractively valued in the IPO price range. We would pass on the IPO.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. The Biggish Sep 2024 “Thursday-Friday Trade”
- Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
- There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
- This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.
2. China’s [Maybe] Biggish [Quasi?] Bazooka
- Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
- The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
- Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.
3. Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
- MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
- MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
- MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.
4. Korea Exchange Announces The Korea Value Up Index
- Korea Exchange announced the long awaited Korea Value Up Index (“K Value Up Index”) (composed of 100 stocks) today.
- Korea Exchange used a 5-step screening process to select the 100 companies in this index including market cap, profitability, shareholder returns, market evaluation, and capital efficiency.
- This Value Up index is part of the bigger “Corporate Value Up ” program in Korea. These efforts to improve Korea’s corporate governance policies is a marathon, not a sprint.
5. Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason
- Significant peer price performance declines leaves IPO valuation stretched, the desired discount multiple to attract interest has suddenly become a premium
- Investor interest in memory semiconductors, AI derivative stocks has cooled
- Peer price sell-offs are extreme but could quickly change, reflecting the highly cyclical nature of the sector
6. STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
- 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
- We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
- The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.
7. KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
- HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
- Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS).
- Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.
8. All the Scoop on the Korea Value-Up Index
- The index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.
- Some companies not fitting the ‘value-up’ narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index’s original goal.
- Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.
9. What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?
- In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
- The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
- Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.
10. MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision
- Hankyung reports MBK will raise Korea Zinc’s tender offer to ₩750,000 (14%) and Young Poong Precision’s to ₩25,000 (25%) before today’s market opens.
- Hankyung and Maeil are top sources for market scoops, so it’s almost certain MBK leaked the tender price hike ahead of today’s trading.
- MBK leaves Choi just five trading days to respond. Korea Zinc plans to raise ₩400 billion, but it’s still not enough for a counter-bid.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Korea Value Up Index – Surprising Inclusions and Exclusions
- There are some major surprises (both inclusions and exclusions) in the Korea Value Up index.
- In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&T and LG Corp) are surprising exclusions in the index.
- There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).
2. Global Commodities: All systems go for precious metals
- Gold prices have been supported by rising interest rates and central bank demand, but investor flow is now becoming the key driver for further sustained rally.
- Physical demand in China has decreased, but investor demand, particularly in ETFs, has been increasing over the past four months.
- The upcoming direction of gold prices will depend on the pace of Fed cuts and the shift in investor ownership from money market funds to gold ETFs.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
3. Overview #10 -China Knocks It Out of the Park
- A review of recent events/data impacting our investment themes or outlook
- China announces a barrage of fiscal and monetary stimulus plans
- New LDP leader and Japan Prime Minister impacts the markets
4. Direct-reduced iron: India carving its path to meet ‘green’ steel ambitions
- Direct Reduced Iron (DRI) is playing a significant role in India’s steel industry, accounting for 33% of total steel output
- India’s DRI market is characterized by rapid growth driven by steel production targets and sustainable steel making practices
- DRI production is concentrated in central and eastern parts of India, with states like Chhattisgarh and Odisha being prominent producers and trade hubs.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
5. Indonesia: Sentiment Weakens as Key Sectors and Stocks Lose Ground
- Indonesia’s exposure among EM funds is beginning to taper, with 2.3% of funds closing positions and 6.3% shifting to underweight over the past six months
- Bank Central Asia and Bank Rakyat reached record ownership highs this year but have since faced closures by select funds
- On the fund level, closures have outpaced openings, led by Aubrey and BlackRock, with the majority of funds now holding allocations below 5%.
6. Toby Rodes – Unlocking Value in Japan (EP.407)
- Toby Rhodes became interested in Japan due to his grandfather’s stories about the country and its culture
- Toby is the co-founder and managing partner of Konami Capital, a value and quality oriented manager of small cap Japanese equities
- He discusses the past false starts of Japanese activism, recent changes in corporate governance, and Konami’s process for taking advantage of opportunities in the Japanese market
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
7. OVER THE HORIZON: HK/CHINA No Longer the Stock Market Pinata!
- HK/China markets have entered a Bull market trend which was sparked by Beijing’s multi-faceted stimulus program.
- An overhang of extreme pessimism on China’s economy and markets will gradually dissipate as the media/analyst narrative will follow the market higher.
- As discussed in previous insights, a turn in sentiment is the key to not only moving the market but also to reviving the Chinese consumer.
8. Positioning Watch – Markets Are Moving Away from the US (in FI)
- Hello everyone, and welcome back to our weekly positioning update!
- Everything is about China these days, with both the PBoC and the Politburo preparing stimulus packages to save the Chinese economy from its nasty downturn.
- While the stimulus initiatives are not very large, relatively speaking (roughly a percentage of GDP on average across stimulus packages), markets clearly see the heavy amounts of proposed stimulus as a “whatever it takes” signal, sparking a strong momentum trend in the Hang Seng and China proxies.
9. Indonesia Strategy – Caught in a Perfect Updraft?
- Indonesia has been the recipient of significant investment flows for foreign investors with more of a “risk on” environment with a large portion flowing into Indonesian banks.
- Indonesia stacks up from an investment perspective with a stable political environment, solid GDP growth of around 5% YoY, rising flows of FDI, and a more stable IDR.
- Despite the JCI knocking on all-time highs, valuations continue to look attractive with prospects of a better 2H2024 and lower interest rates. Top picks: Banks, property, consumer, and selective elsewhere.
10. China Steps Up Monetary Support, But Not a Game Changer
- China has surprised and cut the 7 day reverse repo rate by 20bps to 1.5%, with a 50bps cuts in the RRR rate.
- Combined with other measures this is a step-up in support and could help GDP on the margin, but the measures are not game changers as monetary policy is currently ineffective.
- While further fiscal easing will likely arrive in the next few weeks, we still maintain our forecast of 4.0% GDP growth for 2025.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Returning to Higher Trading Range? ASE’s Two Upcoming Events
- TSMC: +16.6% Premium; Returning to the 15 – 20% Trading Range?
- UMC: +0.5% Premium; Near the Middle of the Historical Trading Range
- ASE: +5.2% Premium; Participating in Two Investor Conferences in Next Two Weeks
2. Lattice Semiconductor
- It’s an exciting time when your favorite semiconductor CEO comes out of “retirement” to return as a CEO.
- Mine is personally Ford Tamer, who drove Inphi to ship the best DSP in the market against much larger competitors at a much faster pace.
- In my opinion, Inphi was almost a miracle story in semiconductors. It was a literal David versus Goliath, and the man who led the team was Ford.
3. Intel. US DoD & AWS Deals Are Distractions While The Head Remains Firmly In The Sand
- US DoD & AWS deals are little more than distractions from the main event
- Making Intel Foundry a subsidiary won’t make one whit of a difference but may just be the next step in its eventual spin-off
- The core issue, the GM collapse in Q224, was not addressed in the BM update from the CEO. That’s a problem.
4. Taiwan Tech Weekly: TSMC Apple Arizona Production Milestone, Samsung 3nm Yield Still Weak Vs. TSMC
- TSMC’s U.S. Production Strategy Achieves Major Milestone – Begins Production of Apple A16 Chips in Arizona
- Reports of Apple’s Disappointing Initial iPhone 16 Sales Data; Key Taiwan Suppliers Top Losers Recently
- Samsung Falling Behind TSMC – New Report of Low Yields Continuing to Plague Samsung’s 3nm AI Processors
5. Hezbollah’s Pager Explosions and South Korea’s Security Breach – Implications for Tech Supply Chains
- Explosive pagers linked to Hezbollah attacks spark controversy for a Taiwanese brand.
- Not just Lebanon – today it was reported that the South Korean military removed Chinese-made CCTV cameras after secret backdoors were detected.
- A counter-intuitive conclusion: Despite recent news, is the trend ultimately positive for Taiwanese tech hardware makers?
6. PC Monitor: Microsoft Copilot Wave 2 Unveils Major AI Boost; Reiterate Structural Long for PC Makers
- Microsoft today announced a major Copilot update, called “Wave 2”, introducing a new collaborative interface and enhanced Copilot capabilities across all major Office apps.
- Copilot continues to gain momentum with large corporations, as Microsoft announced today that Vodafone has adopted it for 68,000 employees.
- We remain Structurally Long PC Makers – We continue to believe Microsoft’s Copilot will drive PC upgrades as users recognize the productivity benefits of faster ‘AI PCs’.
7. Current Semi Surge Still Strong
- The semiconductor market is currently enjoying an AI-driven demand surge
- The past two demand-driven surges have turned into collapses as growth returned to the long-term trend
- When we compare the past two cycles to the current one, it appears that a collapse could occur relatively soon
8. ChatGPT o1 (Strawberry) and Memory
- Strawberry was a breakthrough. Some people ask, “What’s the big deal?” but feasibly, there is a new scaling law working in tandem with training, and that’s the Chain of Thought / Inference.
- The chart below is a bit confusing, but the conclusion is the longer the model “thinks,” the better the answer.
- The new model has another log-linear scaling law. It pretty much computes, and the Bitter Lesson wins again.
9. Global Semi Sales Strength Continues In July. How Long Can It Last?
- Global semiconductor sales for the month of July 2024 amounted to $51.3 billion, representing an increase of 18.7% increase YoY and a 2.7% increase MoM
- The July revenue number was the second highest monthly semiconductor revenue ever recorded, the highest being $51.7 billion in May 2022
- Increasing memory prices along with modest recoveries in both PC and Smartphone unit shipments will continue to drive semi sales higher through EOY 2024.
10. Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity
- Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management’s guidance looks conservative.
- KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
- The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.