Financials

• The UK economy has been facing a series of challenges in recent weeks.
• Economic data has been disappointing, with weak unemployment, earnings, GDP, industrial production, manufacturing, services, and trade balance.
• As I write this report, 10-year UK government bond yields have fallen by 20 basis points (bps) in the past two days. 

• The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.
• Swire Pacific (A) (19 HK) may still see more outperformance from its  latest buyback. But it’s up ~29% since the company announced it was buying both the As and Bs. 
• Li Ning (2331 HK)‘s shares continue to edge up after its founder recently increased its stake. 

• The Aussie Dollar is acting as a delta one to the Chinese Economic data, as the People’s Bank of China (PBOC) remains committed to maintaining the stability of the CNY.
• The AUDJPY has formed an intermediate double-top pattern.
• While it is likely to rebound, it could also be influenced by the difference in export growth between ROW with China and Japan.

• Bank Mandiri (BMRI IJ) stands out from its SOE peers in the progress it has made in digitising its business through the Livin’ mobile app and KOPRA for corporate customers.
• The bank continues to outperform in terms of loan growth and risk management, which is reflected in a higher ROE and lower credit costs as LAR continue to decline.  
• Bank Mandiri should see a strong finish to the year well within guidance, with a healthy outlook for 2024 given its healthy capital position and competitive cost base. 

• The S&P 500 INDEX has been closing up for 9 consecutive weeks (CC=+9). In theory it could go higher for another 3 weeks, but it is ultra-OVERBOUGHT.
• The market has moved past the Tails resistance limit at 4747 this last week, rallying more than +15% from the bottom on October 26th.
• A SHORT trade may not be effective but being prepared for a pullback is a good idea, maybe just to add positions at better prices (assuming the rally will continue).

• Swire Pacific (19 HK)‘s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
• Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• The Nikkei 225 (NKY INDEX) is about to close up for the 3rd consecutive week (CC=+3), it’s towards the Q3 resistance level at 33984: it’s short-term overbought.
• There is a good chance that the index will pull back in the next 1-3 weeks, at the moment it looks like the rally has “stalled”.
• The pullback may be an opportunity to buy again, and ride a rebound to previous highs, we will discuss LONG levels in a separated insight.

• For me, the most unexpected aspect of recent events has been that both bonds and stocks moved up together.
• My expectation for this year was that equities do well.
• But I thought they would eventually shake off bonds. Economic resilience (or in fact acceleration) would then force bond investors to chase equities. 

• Nuvama reported its first quarterly result since its listing, as a demerged entity. It reported strong growth across all its business segments.
• Wealth management revenues grew 30% YoY, adjusted for one-off accounting impact. Cyclical recovery in the capital markets segment further helped.
• Nuvama has potential to scale up rapidly and grow its profitability exponentially led by growth and operating leverage. At the current valuation, an investment in Nuvama has potential to triple.

• On December 6, 2023, Deputy Gov. Ryozo Himino and other policy board members signalled increasing optimism on price and wage increases.
• Himino said at a press conference following a meeting on Wednesday that exiting the negative rate policy would have relatively little impact on Japan’s economy.
• “We will carefully assess the situation and consider the timing and procedure of how to exit” negative rates. 

• The HSI INDEX closed last week down (CC=-1) at 16340.41, it is now down 5 months in a row (CC=-5), very OVERSOLD.
• If this week the index keeps going down, it may find support soon and bounce next week. The alternative scenario is a longer correction, 2 weeks.
• Support for a LONG trade, possibly pushed by a MONTHLY reversal,  should be found between 16200 and 15950: this is a highly speculative setup given the stubborn downtrend.

• There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
• The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
• Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

• The KOSPI 200 INDEX closed  up 8 weeks in a row and breached the Inner Fence resistance target at 349, the index is now very OVERBOUGHT.
• The upcoming pullback could be an occasion to go LONG at better prices: based on pattern analysis there is a chance the correction may be a large one, albeit fast.
• Support levels to buy are in the 346-336 price area.

• Surprising a pessimistic market, global liquidity rebounded, prompting expectations of increased buying pressure in the new year, as the Fed appears to remain on hold.
• The crypto market is expected to benefit from a structural shift, with Bitcoin (BTC) emerging as a frontrunner after breaking out of a prolonged bear market consolidation.
• Solana is anticipated to outperform in the coming year, driven by mean reversion, market share normalization, and narrative developments.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, things started to cool down into the year end with some smaller issuers still trying their luck to get listed before the year ends.
• On the placement front, most of the action continued to come from India. 

• The guest on the show is Michael Lee, a dealer in rare photographs and the director of the Lee Gallery.
• The discussion explores the differences between the primary and secondary markets in art, as well as the challenges of finding liquidity and pricing inventory.
• Michael shares his views on NFTs and explains the capital-intensive nature of being a secondary market dealer in the art industry.

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• Edelweiss reported a decent Q2FY24 with ex-Insurance PAT of INR 153cr vs INR 133cr YoY. All the businesses – ARC, Asset Management and Credit – performed well.
• Edelweiss is making decent progress in the Credit business aided by the co-lending business model. 80% of disbursals in NBFC and 30% in Housing Finance in Q2FY24 were through co-lending.
• Edelweiss is in process of selling a minority stake in its Alternative Asset Management business for value unlocking. It plans to sell 10-20% equity stake for INR 1500-2000cr.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Meituan
2. Lippo Malls Indonesia Retail Trust
3. SK Hynix
4. China Jinmao Holdings
5. Geely Auto

and more…