Financials

• Based on the close of 8 January, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in March.
• Shaanxi Coal Industry (601225 CH) and China Everbright Bank Co A (601818 CH) could replace Bank Of Ningbo Co Ltd A (002142 CH) and Aier Eye Hospital Group (300015 CH). 
• The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.

• Mitsubishi Corp (8058 JP) is looking to raise US$100m via trimming a portion of its stake in Ayala Corporation (AC PM).
• Despite being not explicitly well flagged, Mitsubishi had sold before back in Jan 2019, and in Mar 2018. Thus, we would argue that the deal here is somewhat expected.
• While the deal would represent 43 days of the stock’s three month ADV, the recent selldowns by Mitsubishi had held up in the first week.

• Only about 1/3 of of the recently announced share buy back is done, the remainder will come from now through end of March 2024.
• Earnings are far higher than the bank’s forecast, and there should be a major revision in coming weeks.
• Credit Saison collaboration and exiting BOJ negative rate policy, should provide a multitude of positives, for revenue growth.

• The upcoming earnings season, along with the forthcoming Budget and Elections, should all contribute to keeping the undertone bullish for the NIFTY Index (NIFTY INDEX). 
• Bandhan Bank Ltd (BANDHAN IN) reported a minor dip in collections for the non-EEB portfolio, which has probably spooked the street.
• Other names discussed include MMFS, POONAWAL, AUBANK, LTFH, and AAVAS.

• A new draft measure suggested Shenzhen is planning to accelerate its shantytown renovation and offer more Affordable Houses to meet demand of low-income groups, mimicking Singapore’s HDB flat policy.
• As China’s property market gradually heading to the Singapore model, we expect the existing home market to enlarge and new home market to shrink.
• We expect Beike existing home business and renovation business to benefit, while new home business hurts. We maintained the stock as BUY rating and TP at US$24.5/ADS.

• The KOSPI 200 INDEX is correcting after a long multi-week rally. Currently down for 2 weeks (to be confirmed this Friday at close), it’s becoming OVERSOLD.
• There is a risk of a large slide during this week, so LONG trades should be taken with a careful, hedged approach, but the LONG reversal is pending…
• The price area between 345 and 334 is where the index could stop its pullback and reverse.

• Steady and strong profit is the key features of Power Finance and this is improving during FY24.
• ROA expansion can continue to reach and possibly surpass the peaks of FY15 and FY16 with loan volume, contained costs, better credit metrics.
• Recent quarterly data shows better loan volume and financial assets expanding more than financial liabilities, with credit costs in reverse.

• Everyone is buzzing with anticipation, predicting a highly favorable year for crypto.
• The general sentiment in the market suggests that 2024 will be a memorable year, drawing parallels to the positive environments witnessed in 2017 and 2021.
• The crypto landscape was overshadowed by the dramatic collapse of FTX in November 2022, making 2022 end on a rather bleak note. 

• The S&P/ASX 200 INDEX is oversold, currently down for 2 weeks (actually the second week down has just started), it has good chances to bounce this week.
• The best set up would be: index closing the week down at the end of this week: GO LONG at Close (or at any high probability support level reached intra-week).
• A reprise of the rally should last into the end of January (or longer).

• We all know about China’s importance in global trade as it is the single most important importer of many key commodities and raw materials.
• This great chart by S&P Global highlights this once again.
• Meanwhile, this importance could at least top out over the next couple of years – as the demographic problem really hits the country.

Edison Investment Research is terminating coverage on Kinarus Therapeutics (KNRS), Numis Corporation (NUM), EMIS Group (EMIS), Pixium Vision (PIX) and Treatt (TET). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via website

• The HSI INDEX index closed December (barely) up, no rally, nullifying completely the MONTHLY time bar count pattern suggesting a LONG MONTHLY trade (the 1-bar reversal has already happened).
• The index is approaching the Q3 support at 16449. A WEEKLY bounce is possible from that level, but we don’t know if the bounce can last more than 1 week.
• If the index keeps going down this week, it could find support between 16500 and 16000. A longer correction could end in the 15800-15600 price area. Use tight stops.

• The last twelve months were, market-wise, interesting. Multiple things have happened that contributed to changes in my thinking-process.
• Refining thoughts and the mental mechanism I utilize to approach portfolio management should lead to success, or at least that is my hypothesis.
• Continuous learning allows for building more solid premises. Given time, compound interest sharpens them to the point where chances of error are minimum.

• The first week of trading in 2024 was packed with deals and updates for SPACs.
• Three new deals were announced, including a SPAC taking an amusement park-focused tech firm, a helium exploration company, and an insurance brokerage firm public.
• Also, a film studio completes an acquisition ahead of its merger, and a sponsor sells its stake in a SPAC. Read on to find out the latest about all things SPACs. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Jinmao Holdings
• Lippo Malls Indonesia Retail Trust
• Yanlord Land

• Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
• There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
• Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.

• Zetachain is building a bridge into a  smart contract platform in a bid to create a platform for omnichain smart contracts.
• Omnichain smart contracts enable applications to live on multiple chains but still be connected and share liquidity.
• There is opportunity for Zetachain to seize across DeFi, NFTs, and Ordinals. Whether this will happen comes down to strategy execution and ecosystem building.

• EigenLayer emerges as a protocol reshaping the staking paradigm. Going beyond Ethereum’s security, EigenLayer greatly extends the utility of staked ETH.
• UniswapX and other intent based apps will break DEXs out of their growth plateau. 
• Scalability advancements through rollapps and UX improvements from next-gen wallets will make DeFi more viable for end users. 

• New China Life Insurance Co. Ltd. will partner with a unit of China International Capital Corp. (CICC) to set up a $1.4 billion fund to invest in companies with real estate assets, as the state-owned insurer taps the property sector for long-term returns despite a market downturn.
• New China Life said it has reached an agreement with China Capital Investment Group (CCIG) to forge the private fund, in which the insurance company will provide 9.999 billion yuan ($1.4 billion) as the limited partner. CICG will be the general partner with 1-million-yuan investment and will manage the fund.
• The fund, with a term of eight years, will focus on direct and indirect investment in companies holding property projects in their long-term portfolios, according to New China Life.

• Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
• Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
• Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

• Back in October, I wrote in PICC’s (1339 HK) Lifetime Low Implied Stub that People’s Insurance (1339 HK) was trading at an all-time low implied stub. It’s widened further since. 
• Over the past 12-months, excluding PICC’s 68.98% stake in PICC Property & Casualty (2328 HK), the market has assigned HK$42.6bn less for PICC’s steady and profitable life/health insurance stub ops.
• What gives? Falling interest rates is one. EV insurance in another. Yet this bifurcation is extreme.

• Bajaj Finance Ltd (“BAF”) reported key performance metrics for Q3FY24. It reported strong growth, particularly in AUM which grew 7%+ QoQ and 35% YoY to reach INR 311,000cr.
• Customer franchise grew 5%+ QoQ to reach 80.41mm, surpassing the 80mm mark. New loans booked grew to 9.86mm, a growth of 26% YoY and 15%+ QoQ.
• The liability book also did well with deposits growing at around 6% QoQ and 35% YoY to reach INR 58,000cr.

• Nearing the end of the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
• Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 26.9bn. There will be more than 1.5x ADV to sell on nearly all deletes.
• The potential adds have outperformed the potential deletes by 35% over the last two months and some stocks are looking extremely frothy.

• HKEX (388 HK) outlook has been withering for some time, and new data on property transactions, shows that this remains weak.
• SGX (SGX SP) in a less volatile geopolitical financial center, has a much lower market capitalization while its earnings outlook is far stronger.
• Two major differences between these two entities is their ROE and ROA, although the former may be more relevant. SGX (SGX SP) has an ROE that is nearly 50% higher.

• Bank Of Baroda (BOB IN)  has become the second-best PSU bank in India after SBIN, in terms of improvement in asset quality and profitability.
• Medium-Term ROE Forecast 16% to 18%; ROA >1% consistently; Asset Quality problems receding; Strategy is to diversify loan book towards retail further and focus on improving efficiencies
• Despite the recent rally, P/BV is cheap at 0.9x FY25e for high teen ROE business. BOB can easily re-rate to P/BV of 1.3x FY25e in the near term

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Indika Energy
• Lippo Malls Indonesia Retail Trust
• SK Hynix
• Vedanta Resources

• Under the requirements of the Amended Mongolian Banking Law (Feb 2021), Khan Bank (KHAN MO) needed to IPO. It did, and HS Holdings (8699 JP)‘s stake fell to 49.77%. 
• It was de-consolidated. They were locked up for 6mos. The look-through financials are easier now. The company has bought back stock and trades at <0.5x book.
• But the Mongolian Banking Law required one more thing. All D-SIBs had to get all shareholders below 20% by 31 December 2023. It’s not clear that happened. 

• KRX’s lack of a standardized English translation platform may lead to non-standardized terminology and varying translation quality. KRX stresses cross-checking Korean and English disclosures due to potential errors. 
• The 3-day lag between Korean and English disclosures poses timeliness challenges, requiring consistent cross-checking. Overall, the process for foreign investors using Korean market disclosure sites remains largely unchanged.
• The common procedure should still be to first check disclosures using English titles, then convert to Korean for reading. If English disclosures exist, utilize them for cross-checking.

• Shriram Finance (SHFL IN) is a high probability add and UPL Ltd (UPLL IN) is a high probability delete at the NIFTY Index (NIFTY INDEX) rebalance in March.
• There is a lower probability of Bharat Electronics (BHE IN) or Trent Ltd (TRENT IN) replacing Bharat Petroleum Corp (BPCL IN) at the rebalance.
• Jio Financial Services (JIOFIN IN), Avenue Supermarts Ltd (DMART IN) and Zomato (ZOMATO IN) will enter the running once added to the F&O segment of the market.

• Canara Bank (CBK IN) could replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the March rebalance.
• Passive trackers will need to buy 2 days of ADV on Canara Bank (CBK IN) while selling over 1 day of ADV on Bandhan Bank Ltd (BANDHAN IN). 
• The impact is even higher where passives will need to buy nearly 6x delivery volumes in Canara Bank and sell 3x delivery volumes in Bandhan Bank Ltd.

• During the period under consideration, i.e. November 15th to December 15th, 2023, the EUR/USD exchange rate fluctuated between 1,084 and 1,095 in the initial period until November 27th, 2023.
• After reaching 1,099 on November 28th, the exchange rate followed an immediate downtrend until the 11th of December (except for one session), although it remained higher than the levels seen at the beginning of November.
• Conversely on December 12th, the pair recorded an ascent, finally settling at 1.0894.

• Oasis Management has become a major shareholder in Lifenet in November. Together with another activist investor, Effissimo Capital (the largest shareholder), they now control >30% of the company.
• Company announced some new partnerships/initiatives to drive growth but they don’t seem to be materially different from what it has been doing to turn around its declining VoNB.
• Unless we can see a sustained trend of improving VoNB, it’s difficult to justify the premium valuation vs. the other more established peer.

• American Airlines Group delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• The financial results for the third quarter showcased high revenues of approximately $13.5 billion, driven by a resilient demand environment and significant travel rewards program revenue.
• American Airlines experienced steady domestic demand, with international demand fueling revenue growth, particularly in the Atlantic, Caribbean, and Central America regions.

• AIG delivered mixed results for the previous quarter, with revenues well below analyst expectations, but managed an earnings beat.
• In the third quarter, AIG continued to achieve remarkable results, demonstrating significant progress in strategic, operational, and financial objectives across the organization.
• They had adjusted after-tax income of $1.2 billion, a 92% YoY increase, and consolidated net investment income reaching $3.3 billion, a 29% YoY increase.

• MetLife managed to exceed Wall Street’s revenue and earnings expectations, underscoring the company’s sustained business momentum.
• Adjusted earnings per share, excluding these items, stood at $1.95, reflecting a significant 43% increase from the previous year.
• In the US Group Benefits sector, MetLife achieved an all-time high in adjusted earnings, totaling $483 million, a 16% year-over-year increase.

• S&P Global delivered strong financial performance in the third quarter, with an 11% increase in revenue and a 10% rise in adjusted EPS.
• S&P Global’s strategic growth areas are accelerating, particularly in sustainability and energy transition, and private markets.
• S&P Global’s Ratings division saw a robust quarter with 21% growth year-over-year, driven by a favorable environment for issuers.