In today’s briefing:
- Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
- BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel
- Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar
- US Banks – Office Exposures, Interest Spread Trends to 3Q23
- Japanese Banks – Stay the Bullish Course
- Freedom Holding: A Kazakh Scam Being Uncovered?
- Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities
- More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto
Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
- Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn.
- Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
- The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.
BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel
- BFI Finance‘s 3Q2023 results reflected the lingering impact of May’s Malware incident which interrupted collections but this situation has now been remedied and the company can resume rebuilding its book.
- 4Q2023 will likely see further write-offs but an improvement in credit costs but the company will remain cautious on building its book with a full recovery expected in 2H2024.
- BFI Finance remains the best-quality multi-finance company in Indonesia, with a low cost of funds and a differentiated target market of used 4W and 2W non-dealer loans. Valuations are attractive.
Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Golden Solar New Energy Technology Holdings (1121 HK).
US Banks – Office Exposures, Interest Spread Trends to 3Q23
- US Banks’ office credit exposures represent a big part of the sector’s credit quality concerns, given the decline in office space occupancy and rising interest rates
- Industry data shows that bank funding costs are rising fast, and 3Q23 bank spread trends are mixed; banks with greater mortgage exposure are potentially at greater risk of narrowing spreads
- We stick with Capital One for its high lending spreads, negligible mortgage exposure and limited office credit exposure with high coverage; Capital One also has healthy overall NPL coverage
Japanese Banks – Stay the Bullish Course
- So far in 4Q23, Japanese banks’ share prices have registered a mixed performance, in part due to the unsettled global market conditions; yet the Japanese bond yield curve keeps steepening
- We assess the top twelve Japanese commercial banks by market capitalisation, and we believe that Japanese banks remain good value with, a rare thing, improving fundamentals
- Ahead of the September results, we stick with our buys on Resona, Mizuho and SMFG; Resona has lagged deserving to re-rate further, and we add Hachijuni to our buy list
Freedom Holding: A Kazakh Scam Being Uncovered?
- Hindenburg Research published a short-selling report accusing the company and its Chairman & CEO of evading sanctions, fabricating revenue, market manipulations, etc.
- One area that could warrant more attention is the acquisitions Freedom carried out over the past 18 months, where numerous target companies were personally invested by its Chairman & CEO.
- In Kazakhstan, it’s difficult to have full visibility into these target companies’ shareholders and for whom exactly Freedom was providing liquidity.
Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities
- The MSCI ACWI index (ACWI-US) continues to test major support at $90.50-$91.50, though no decisive break yet; as long as this support area holds, we remain constructive on global equities.
- MSCI EM (EEM-US) continues to test $37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) are testing supports at $45 and $65-$66, respectively
- Remain overweight and add exposure to Japan; the TOPIX remains in a 1.5-year RS uptrend (vs. MSCI ACWI), and continues to hold above 5-month support at 2200-2215
More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto
- Traditional equities confer specific rights to their holders, such as voting power and dividends. Tokens offer distinct advantages, including implementation versatility, composability—especially within DeFi—and other functionalities unattainable with securities.
- The innovative designs of tokens play a pivotal role; they not only channel value back to the token holders but also exert a direct impact on the token’s market value.
- In this report, we explore four value accrual mechanisms implemented by tokens. These include: (i) Buyback and Burn; (ii) Real Yield; (iii) Tax-Tokens; and (iv) Book Value Tokens
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