Daily Brief Financials: Korea Stock Exchange Kospi Index, KakaoBank , Baillie Gifford China Growth Trust PLC, Consorcio ARA, Sino-Ocean Group and more

• The major framework of this realignment is likely decided, integrating KOSPI and KOSDAQ into a tiered system based on liquidity, market cap, and financial status, with periodic replacements.
• The KOSPI 200’s continued existence is uncertain under the new realignment plan, which may shift its role to the value-up index, resembling Japan’s market restructuring model.
• The first-tier market’s entry requirements will likely reflect value-up index criteria, suggesting greater speculative money movement toward the value-up index starting in September.

• Kakao’s Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company’s legal troubles.
• Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
• Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.

Baillie Gifford China Growth Trust (BGCG) focuses on innovative, growing Chinese companies with exposure to the massive opportunities generated by China’s vast market, its positive long-term economic outlook and its transition to a more diversified, innovation-led growth model. BGCG’s performance has lagged the declining market over recent years, despite the strong operational performance of most of its portfolio holdings. But the Chinese New Year heralded an improvement in market sentiment and, in recent months, BGCG has made outright gains and outperformed the market. In the three months to end-June 2024, the trust returned 3.3% in NAV terms, compared to a benchmark return of 0.4%. Its managers are cautiously optimistic about the prospects for the economy and the trust, and they have been taking advantage of still low valuations to enhance exposure to China’s best high-growth companies across a range of industries.

• The housing sector in Mexico has solid fundamentals, with attractive growth expectations for listed developers considering their healthy financial position and access to financing sources.
• As a result, these companies are poised to capture the increased demand that the housing deficit generates during the coming years.
• Since the start of the bankruptcy processes of the three largest housing developers (GEO, HOMEX, and URBI) in 2014, housing production has maintained a downward trend.

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.

• Powerlong Commercial Management Holdings
• Reliance Industries
• Sino-Ocean Service