In today’s briefing:
- AT1 Bonds; Life After Credit Suisse
- Asia Gaming: The Melco Dilemma Favors the Pure Play US Traded ADR
- President Xi’s Visit to Russia – For Russia-Ukraine War Or For The BRICS Currency?
- SPAC Talk: The SVB Collapse and SPACs
- Commodity Analysis – Copper Futures
- China TMT Update(Mar.21): BILI/BIDU/BABA/3635.JP/BGNE – Douyin Launches “Qingtao”, Similar to BILI
- Weekly Sustainable Investing Surveyor: Week Ended March 17, 2023
AT1 Bonds; Life After Credit Suisse
- The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal
- AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed
- The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise
Asia Gaming: The Melco Dilemma Favors the Pure Play US Traded ADR
- We have guided buy on MGM the parent as well as MGM China for exposure to both Asia and US post covid recovery. This is different: pure play only.
- The Melco Hong Kong traded parent offers exposure to Macau, Manila and the new Cyprus properties. But we believe the ramping of GGR will be stronger in Macau than elsewhere.
- The stock is up nearly 4X its October low. We see its current price attractive for a speedier upside than its parent.
President Xi’s Visit to Russia – For Russia-Ukraine War Or For The BRICS Currency?
- The cooperation between China and Russia will be extensive and far-reaching.After the historic reconciliation between Saudi Arabia and Iran, there’s expected to be a series of major international changes ahead.
- The highlight of Xi-Putin meeting could be to promote the BRICS currency. This means that global de-dollarization has officially begun, which will be a fatal blow to the US dollar.
- The future game rule in this world is no longer be decided by the US alone. We suggest that investors change their way of thinking, because the world has changed.
SPAC Talk: The SVB Collapse and SPACs
- In the ordinary course of SPAC business. In what has become the norm in SPAC land these days, we can report another flurry of liquidation announcements.
- As we begin the second half of the month, the liquidation count for March, including those that have been completed or are scheduled to be completed for the remainder of month, has already passed 34, involving the return of $10.9 billion to their Class A shareholders.
- The prospects of more liquidations being added to the March list remain high.
Commodity Analysis – Copper Futures
- According to Graph 2, during the period October 7, 2022 – January 6, 2023, an overall bullish trend was reflected in the prices of Copper.
- During the examined period there were broadly three secondary movements.
- From October 7th, until November 11th, an upward trend was observed.
China TMT Update(Mar.21): BILI/BIDU/BABA/3635.JP/BGNE – Douyin Launches “Qingtao”, Similar to BILI
- BILI: Douyin launches a new APP “Qingtao”, similar to BILI (-)
- Baidu’s ERNIE Bot exceeds expectations from user feedbacks (+); BABA/3635JP: <Three Kingdoms: War Chess Version> performance slightly above average (+/+)
- BeiGene’s termination of DKK1 collaboration with Leap is likely because its PD-L1 already got positive Phase III result on the same indication（/）
Weekly Sustainable Investing Surveyor: Week Ended March 17, 2023
- WTR Sustainable Index: During the week ended March 17, 2023, the WTR Sustainable Index underperformed the broader market, rising 1.2% W/W versus the S&P 500 Index (up 1.4%), the Russell 2000 Index (down 2.6%), and the Nasdaq Composite Index (up 4.4%).
- Advanced Transportation Solutions (69.3% of the index) drove the index performance, rising 3.3%, while Industrial Climate and Ag Technology (22.8% of the index) was down 2.0% and Energy Technology was down 5.8%.
- Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 23.6x versus 17.6x for the S&P 500.
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