In today’s briefing:
- KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts
- SoftBank Group (9984 JP); Arm IPO, Priced for Disappointment
- VNG (VinaGame) IPO Preview
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Slowing Growth
- Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)
KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts
- After results were transitioned to non-public information, it has been observed that results are reflected in prices significantly later, with substantial price impact occurring close to the rebalancing trading day.
- Even though the AUMs have recently decreased, the passive impact size is quite substantial, considering a recent pattern of price impact concentrating within a maximum of about two trading days.
- A heavy Long-Short setup on these pairs, DearU / Douzone Bizon and SK Biopharmaceuticals / SK Bioscience (302440 KS), is something we should very actively consider.
SoftBank Group (9984 JP); Arm IPO, Priced for Disappointment
- SoftBank’s internal transaction acquiring the 25% Arm stake held by SVF1 valued Arm at USD64bn; the IPO valuation range is from USD48bn to USD52bn
- This valuation range implies an Nvidia-like price to prospective 2024E sales multiple range of 22x-25x; the prospectus reveals risks with Arm China, and confirms its lacklustre revenue and earnings growth
- Given SoftBank’s largely negative track record on the after-market performance of its investee companies IPOs and SPOs; we expect further downside to SoftBank’s share price
VNG (VinaGame) IPO Preview
- VNG (VinaGame) (VNG US) is getting ready to complete its IPO on the NASDAQ exchange in the next several months. VNG operates the dominant chat app Zalo in Vietnam.
- VNG is reminiscent of Kakao Corp (035720 KS) in its early years of operations when it captured a dominant portion of Korea’s chat app market through its KakaoTalk app.
- Although the company has yet to provide a firm timeline of the IPO, there is likely to be eye-popping demand for the IPO shares of VNG.
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Slowing Growth
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
Remain Overweight Japan and India; Key Supports Holding; Buys in Energy, Tech/Services (India)
- We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)
- The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).
- Japan and India remain top overweights, with many of today’s buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.
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