In today’s briefing:
- The Week That Was in ASEAN@Smartkarma – Bukalapak’s Storefront, Grab’s MSCI Boost, and Unilever Indo
- The Ideal Short Characteristics
- UK: RPI MIPs on a Slower Ramp Higher
- Alpha Bites: Receive Mexico 5y Vs Pay South Africa 5y Local Rate
The Week That Was in ASEAN@Smartkarma – Bukalapak’s Storefront, Grab’s MSCI Boost, and Unilever Indo
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week saw insights on Bukalapak (BUKA IJ) outlining its online storefront strategy and on MSCI Index inclusions, which impacts Grab (GRAB US) and Sea Ltd (SE US).
- We also look at Unilever Indonesia (UNVR IJ) post results plus OVO’s multi-finance move, and Astra International‘s move into warehousing with Logos.
The Ideal Short Characteristics
- Over the past 30 days, the best shorts have fallen by 27%, on average, versus Two Rivers’ universe return of -5.3%.
- They were smaller cap, higher growth and higher beta than our universe. They were the weakest momentum stocks, trading at 11% of their 52 week ranges.
- They were less levered (net cash in many cases), more heavily shorted and traded at much higher multiples than the average stocks in our universe.
UK: RPI MIPs on a Slower Ramp Higher
- The Bank of England’s rapid rate hiking cycle remains set to have a relatively small impact on the RPI’s mortgage interest payments component.
- Variable rates have much less weight in the UK mortgage market nowadays.
- Moreover, the changes we observed in Jan and Feb were surprisingly small as most lenders appear to have been slow passing on the hikes.
Alpha Bites: Receive Mexico 5y Vs Pay South Africa 5y Local Rate
- Rates in Mexico have underperformed recently as the central bank delivered another 50 bp hike and the US curve is starting to price an increasing number of rate hikes.
- The sell-off in Mexico looks overdone as inflation expectations remain well-anchored and the current pricing of rate hikes implies a real policy rate much higher than in the past.
- Hedging the receiving position in Mexico with South Africa makes sense as US rates are vulnerable to a further correction and rates in South Africa have hardly sold off.
Before it’s here, it’s on Smartkarma
