In today’s briefing:
- Major M&A Rule Changes Approved by the Korean Government
- The Taiwan Question
- IO Weekly Technicals Review [2024/46]: IO to Rise on Seasonality
- EA Inflation Doesn’t Need A 50bp Cut
- CX Daily: China Digs In to Boost Mining in Democratic Republic of Congo
- India Twin Deficit Watch: Improving Trend Persists Despite EPS and Trade Setbacks
Major M&A Rule Changes Approved by the Korean Government
- On 19 November, the Financial Services Commission (FSC) announced major rule changes on corporate mergers and acquisitions have been approved by the Korean government.
- Revised rules have three specific goals: Improve rules on calculating and determining merger prices when M&As take place between nonaffiliated business entities, strengthen disclosure duties, and improve external evaluation system.
- If the Korean government is really serious about making positive rule changes, they need to apply these new laws not just for NON-AFFILIATED companies but more importantly for AFFIILATED companies.
The Taiwan Question
- We went long Taiwan equities end-2023 in expectation of regional outperformance. The TAIEX is up 31% CYTD. It has further to run. Ignore geopolitics, stay overweight equities and the NT$.
- The economic and corporate earnings outlooks are positive. The Taiwanese business cycle is in a broad-based upswing. Corporate fundamentals are healthy. The investment and credit cycles are strengthening.
- Meanwhile China dependence is declining. Exporters are diversifying away, and manufacturers are sensibly hedging against geopolitical risks and the Chinese economy by investing beyond.
IO Weekly Technicals Review [2024/46]: IO to Rise on Seasonality
- SGX Iron Ore Futures dropped to USD 96.71/ton, down USD 5.49/ton, hitting a low of USD 96.30/ton amid pressure from declining housing prices and industrial output in China.
- Chinese portside inventories increased by 120k tons WoW to 148.51m tons last week, while average daily port discharge volumes rose by 131k tons WoW to 3.18m tons.
- Despite weak economic data from China, SGX Iron Ore Futures may rebound in November-December as pre-Lunar New Year restocking boosts steel demand.
EA Inflation Doesn’t Need A 50bp Cut
- October’s final Euro area inflation print confirmed its surprisingly steep rise to 2% y-o-y. Strength was not only broad across countries but components with median rates rising.
- Underlying inflation pressures were broadly above expectations and target-consistent levels. Upwardly revised labour cost growth won’t help sustain 2% HICP inflation.
- Confirmed price and wage inflation strength adds to hawkish GDP and unemployment news, curbing the case for 50bp to remain less likely than the dovish market hopes.
CX Daily: China Digs In to Boost Mining in Democratic Republic of Congo
- Mining / Cover Story: China digs in to boost mining in Democratic Republic of Congo
- Stabbings /: Eight killed in stabbing at vocational college in East China
- Futures /: Futures firm linked to fugitive tycoon seized by securities regulator
India Twin Deficit Watch: Improving Trend Persists Despite EPS and Trade Setbacks
- For H1FY25, the fiscal deficit was only 29.4% of the FY25 target, with strong income-tax, GST and customs revenue. The 12mma of the fiscal deficit narrowed to 4.6% of GDP.
- Corporate tax revenue grew just 2.3%YoY in H1FY25, reflecting slower profits growth. Stronger government spending likely in H2FY25, but fiscal deficit will still be well below 4.9% of GDP.
- CAD likely to be 1.3% of GDP in H1FY25. Lower oil prices, stronger G&S exports should allow a small CA surplus in H2FY25, shrinking FY25 CAD to 0.2% of GDP.
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