In this briefing:
- Weekly Oil Views: Crude in a Leap of Faith to Fresh Five-Month Highs
- HK Connect Discovery Weekly: Air China and Great Wall Motor (2019-04-04)
- Last Week in GER Research: Huya, Bilibili and Qutoutiao
- Nexon Sale: Nexon Japan Tender Price Estimations
- Trade War/China Strategy/Credit Growth/Bonds/Taiwan
1. Weekly Oil Views: Crude in a Leap of Faith to Fresh Five-Month Highs
Crude scored successive new five-month highs last week, with Brent closing above the key $70/barrel psychological mark on Friday.
Tight supply fundamentals remain supportive of crude prices. OPEC reduced its supply further in March, its 11 members that are bound by quotas swinging way beyond 100% compliance with their pledged cuts.
Meanwhile, signs of the US and China inching close to a trade deal and a strong US jobs report on Friday spurred a rush of funds into risk assets and crude went up with the rising tide.
But how far can it rise? Not much from its current levels, we say. It’s important to not forget the Trump factor. The US president loathes high oil prices. His tweets against OPEC may be proving the law of diminishing returns, but he has some other important and effective levers, and he won’t hesitate to use them.
2. HK Connect Discovery Weekly: Air China and Great Wall Motor (2019-04-04)
In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.
We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
In this insight, we will highlight Air China and Great Wall Motor.
3. Last Week in GER Research: Huya, Bilibili and Qutoutiao
Below is a recap of the key IPO/placement research produced by the Global Equity Research team. This week, we update on the bevvy of placements offered by various companies. After placements by Pinduoduo (PDD US) and Sea Ltd (SE US) , we saw more offerings from HUYA Inc (HUYA US) , Bilibili Inc (BILI US) and Qutoutiao Inc (QTT US). We update on these three offerings and perhaps big picture, this could reflect a signalling inflection point in these shares. More details below
In addition, we have provided an updated calendar of upcoming catalysts for EVENT driven names below.
Best of luck for the new week – Arun, Venkat and Rickin
4. Nexon Sale: Nexon Japan Tender Price Estimations
This post estimates Nexon Japan tender price. For this, I use the same approach that a local PE named “MBK Partners” would use based on EBITDA multiple and IRR on a 3 year exit. From their position, the only proven value-up path would be KOSPI moving. MBK must try to stay as conservative as possible. Whatever Netmarble value addition should be an extra when deciding on a tender price. So, I base my estimation solely based on KOSPI moving effect. For this, I use NCsoft as a sole valuation comp.
5. Trade War/China Strategy/Credit Growth/Bonds/Taiwan
China News That Matters
- Praying the US-China end-game is near
- What to do about China?
- Stability, phew. Or just a false dawn?
- OTC bonds sell like hot cakes
- Even worse than a trade war…
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.
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