Daily Brief Financials: Abacus Storage King, USD, LIC Housing Finance, Nikkei 225, Custodian REIT and more

• The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
• The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
• With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.

• The increase in news articles mentioning tariff and trade war risks is making it difficult for cyclical currencies like the euro to factor in any potential growth outside of the US.
• US exceptionalism is evident in strong services ISM and relative equity performance, which is leading to the dollar’s dominance in capital flows.
• The Chinese yuan is facing bearish sentiment due to double-digit drawdowns in onshore equity indices, deepening deflation, weak sentiment in the housing market, and limited policy options for policymakers. Outbound travel restrictions during the Chinese New Year season also add to the pressure on the currency. However, there have been some positive signs in financial flows, such as stabilization in equity flows and increased bond purchases by foreigners. Overall, the outlook for the yuan remains bearish.

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• LIC Housing Finance (LICHF) reported a strong Q3FY24 on the back of a strong NIM. Growth, however, has been tepid as LICHF recently transitioned its technology and organizational structure.
• FY24 has been a consolidation year due to technology and organizational changes; however, LICHF is setting up well to post strong growth in FY25.
• Among other things, affordable housing is going to be a key growth area going forward. Asset quality has been also improving and should further normalize with recoveries and upgradations.

• The Nikkei 225 (NKY INDEX) has been rising for 2 weeks and it is starting to be overbought.
• The index may rise for another week (this week) according to our models, then the chances for a WEEKLY pullback will become substantial.
• Look at resistance targets in the 37200-37900 price area to place SHORT trades, target 1 week, then close the trade.

Custodian Property Income REIT (CREI) has released a trading update for the three months to 31 December 2023 (Q424). The quarterly DPS was fully covered by unaudited EPRA earnings and was in line with the full year target of at least 5.5p; at the current share price the target DPS reflects a yield of 8%.