Daily Brief Financials: WealthNavi, Dollar Index, Indusind Bank, USD Coin, Shui On Land, Foxtons, Tetragon Financial Group Ltd/F, Princess Private Equity Holdin, Ethereum and more

• Early this morning, a Nikkei article said Mitsubishi UFJ Financial (MUFG) (8306 JP) would buy out the remaining 85% of WealthNavi (7342 JP). Expected to be completed by March.
• MUFJ Bank and WealthNavi signed a Business Alliance in February. WealthNavi issued 9.11mm new shares to MUFJ at ¥1,718/share. That was a discount to market and shares are down ~40%.
• WealthNavi’s AUM is growing (¥1.3trln at end-Oct) and the goal is to launch a money advisory platform by FY2026. Now they need to decide on the premium.

• DXY strength through 1Q25 predicted with positive volatility
• Dollar correlations expected to remain firm, with potential pockets of soft cross correlations
• Systematic FX adoptions models highlight opportunities in FX carry via options, short volume strategy, volume reversal model, and volcurve model for 2025

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• In this insight, we examine the key challenges facing the sector and discuss potential paths forward for MFI-focused lenders. 
• Companies in this sector have seen sharp declines, with stocks down 45% from their 52-week highs and showing negative returns of -37% YTD.
• Considering the Industry data, it would be fair to conclude that the pain in the industry is likely to persist.  CREDAG, SPANDANA, AUBANK, and IIB are key names to watch.

• President-elect Donald Trump has become a prominent figure with the cryptocurrency market, primarily because of his ambitious vision to transform the United States into the “crypto capital of the planet.” This outlook is undoubtedly positive, as the United States holds the title of the largest capital market globally and wields significant influence on the international stage.
• However, many in the crypto market appear to overlook another highly encouraging regulatory development.
• This involves the European Union’s comprehensive Markets in Crypto-Assets (MiCA) regulatory framework, which will be fully implemented across EU member states on December 30th.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Shui On Land
• The US market was closed for Thanksgiving yesterday.
• The Biden administration is weighing additional curbs on the sale of semiconductor and AI memory chips to China, reported Bloomberg on Wednesday.

Foxtons Group’s recent acquisition of estate agents in two London commuter towns highlights the outer-London potential for low-risk, value-added expansion. Furthermore, it adds to the developing success of the company’s strategic vision and implies that medium-term targets are now coming into focus. We have updated our forecasts for the deals, but additional profit from the acquisitions is broadly matched by the increase in employer’s National Insurance costs, hence we retain our valuation of 134p/share and believe that falling interest rates and property market stability are contributing to a buoyant sales market.

Edison Investment Research is terminating coverage on Tetragon Financial Group (TFG). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

Partners Group Private Equity’s (PGPE’s) recent portfolio realisation efforts (supported by the gradual pick-up in M&A activity and an opening IPO window) included, most notably, the sale of SRS Distribution earlier this year (see our September 2024 note for details) and more recently Techem (3.8% of end-Q324 NAV, sold to a trade buyer in October 2024), as well as the successful IPO pricing of Galderma in March and KinderCare in October. The positive valuation effects from these activities (21% weighted average uplift to latest published NAV) were coupled with a 5.1pp contribution to portfolio performance in 9M24 from earnings growth (average 11% increase in last 12-month EBITDA across top 20 holdings) and a slight 1.2pp tailwind from peer multiples. This was partly offset by an increase in portfolio net debt amid several debt package refinancings at a lower spread to strengthen capital structures and in turn support growth. Moreover, the Q324 return was affected by a weakening US dollar, which makes up c 40% of the portfolio’s exposure by currency (although these FX headwinds have more than reversed so far in Q424). As a result, the company posted a moderate 3.1% NAV total return (TR) in 9M24.

• The onchain economy has experienced unprecedented growth in 2024, with a 70% increase in total value locked (TVL) across major networks, surpassing $70 billion.
• Key drivers include the adoption of stablecoins, Layer 2 solutions, gaming, collectibles, and institutional interest.
• Base, an Ethereum Layer 2 incubated by Coinbase, stands out with 1,600% growth in daily transactions and a 470% rise in TVL since January.