Daily Brief Financials: Kenedix Office Investment Co, DBS, Swire Properties, Financial Select Sector SPDR F, Agile Property Holdings and more

• The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
• The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
• The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.

• There is no refuting the strong net interest income figures at DBS, although it seems toppy
• DBS took credit costs/assets at 4bps in 2Q23 vs 13bps average during FY18, FY19 quarterly
• There are not many banks that we can turn too with over 50% QoQ decline in credit costs

• Swire Properties is one of the largest office and retail landlords in HK.  Office is facing headwind despite should see recovery in the long-term.  HK retail is recovering.
• Swire announced to spend 100bn to expand its portfolio in terms of capital management, yet it did not announce a share buyback that many investors would like to see
• Lack of share buyback, with weak HK office and China retail, could drag Swire’s share price.  Despite we see value in the stock, it could remain as value trap

• Fitch’s U.S. credit downgrade has done little to change the intermediate-term trend; we continue to believe the path of least resistance is higher for the major equity indexes.
• We remain bullish on the S&P 500, and we expect to see support at its 50-day MA moving forward (currently 4415).
• Short term supports we are watching include 4460-4475 on the S&P 500, $371.50 on the $QQQ, and $190-193 on the $IWM.

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.

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