Daily Brief Financials: Japan Post Bank, Kenedix Office Investment Co, JPMorgan Chase & Co, Rakuten Bank , Ruentex Development, Thai Credit Bank PCL, Bandhan Bank Ltd, King’s Town Bank, Country Garden Holdings Co, BlackRock Greater Europe Inves and more

• At the October rebalance, Free Float Weight (FFW) will be reduced on 284 stocks and increased on 458 stocks. 43 stocks will be removed from Phased Weight Reduction.
• Estimated one-way turnover is 1.77% resulting in a one-way trade of ¥1.45tn. 364 stocks have over 4 days ADV to trade, 97 stocks have over 8 days ADV to trade.
• Over the last 6 months, the stocks with inflows (>US$25m) have outperformed the stocks with outflows (>US$25m) with most of the outperformance coming in the last three months.

• The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
• With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
• All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.

• India’s inclusion in global bond indexes by JP Morgan is significant, but the expected foreign inflow is relatively small, not likely to impact exchange rates or interest rates significantly.
• The bond inclusion won’t strengthen the Rupee against the Dollar due to limited foreign inflows. A slight reduction in interest rates is expected with JP Morgan’s inclusion.
• Indian bonds offer attractive yields, but rising US bond yields and rupee depreciation could affect foreign investor interest. This development could lead to improved fiscal policies and Indian bond markets.

• Rakuten Bank (5838 JP) (RB),  the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
• RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• In this insight, we discuss a pair trade between CTCI (long) and Ruentex Development (short). 
• We believe CTCI Corp is more attractive than Ruentex Development mainly due to different types of business mix and valuations. 
• CTCI’s construction of refinery plants, waste water treatment, and power plants could thrive in higher oil price environment. Ruentex’s construction of residential and commercial buildings could experience lower demand. 

• Thai Credit Bank PCL (3674238Z TB) is looking to raise US$300m from its upcoming Thailand IPO via selling a mix of primary and secondary shares in its Thailand IPO.
• TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
• In this note, we will talk about the positive aspects of the deal.

• In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
• At present, I do not see any changes for the SENSEX index. For the BSE 100 and BSE 200 indices I see six and five changes respectively.
• Some of these changes are different from those expected in my last insight. However, the changes expected in this insight will be my final expectations for the December 2023 Rebalance.

• Fair value gains are the single most important driver of good net profit at King’s Town Bank (2809 TT) in the most recent quarter.
• Monthly revenue figures show strong 179% growth YoY in September, which we can see before any 3Q23 release.
• Credit costs rose from 43bps to 83bps of loans from 1Q23 to 2Q23, which is a significant increase, may be more reflective of underlying operations.

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
• Country Garden Holdings Co

BlackRock Greater Europe Investment Trust (BRGE) manager Stefan Gries seeks high-quality growth stocks that he can hold for the long term. The manager prides himself on being an ‘investor in businesses, not a trader in shares’ and stresses that his selective approach of focusing on the best businesses that are based in Europe means that investors do not need to have a positive view on the European economy to consider the trust. BRGE has a solid five- and 10-year record of outperformance versus the Europe ex-UK market, despite a difficult period in 2022 when growth stocks came under pressure in a rising interest rate environment. The trust also ranks favourably versus the averages of its peers in the AIC Europe sector over the last one, three, five and 10 years.