In today’s briefing:
- KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered
- Snap 2Q22: Why We Buy Meta
- DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision
- NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement
- Japan Stocks on the Move | Nikon, Renesas, Renova
- Last Week in Event SPACE: Toshiba, Swire, SOHO, Link Admin, DIDI Global, 51job
- Index Rebalance & ETF Flow Recap: STAR50, NIFTY50/100, KRX, Tianqi Lithium, Kotak Bank, Emperador
- GEM Weekly (22 Jul 2022): SA Repo Rate; IQIYI, ByteDance, Did Global, Baidu
- Thai Life Insurance IPO Trading – One for Domestics and Cornerstones
KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
- Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
- Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.
Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered
- Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
- The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
- However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.
Snap 2Q22: Why We Buy Meta
- Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business.
- Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.
- The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.
DTAC/True Merger: Shares Decline on Noise About NBTC Subcommittees Voting Decision
- Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) shares declined as reports suggest that NBTC’s subcommittees voted 3:1 AGAINST the merger. True said the reports are false.
- An earlier press conference by CP Group and Telenor ASA (TEL NO) reiterated that the NBTC could only prescribe remedial measures. A court ruling on 16 June supports this view.
- NBTC will allegedly review the subcommittees’ findings on 26-27 July. We think this development results in the NBTC prescribing harsher remedial conditions to the merger rather than blocking it.
NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement
- NTT announced it would build and operate a third trans-Pacific subsea cable (JUNO) with NEC as the vendor and a 2024 activation date
- This also represents the second trans-Pacific cable in five years and the one with the highest capacity to date
- This is not core to NTT’s business but it does highlight how capacity needs are expanding as network speeds accelerate and how those costs can be managed
Japan Stocks on the Move | Nikon, Renesas, Renova
- The Nikkei was up 4.2% over the past 5 days while the yen was slightly stronger (¥138.31 -> ¥136.05
- Japan’s core consumer inflation stayed above the BOJ target of 2% for a third straight month in June as energy prices remain high. No change to BOJ policy.
- Japan warns of rising security threats in annual defense report, including technology supply chains, Russia and China/Taiwan
Last Week in Event SPACE: Toshiba, Swire, SOHO, Link Admin, DIDI Global, 51job
- Toshiba Corp (6502 JP)‘s bidder list is out. It is Bain, Brookfield, JIP-JIC, and CVC. Overall, the impression of this pool of candidates is negative
- Swire Pacific (A) (19 HK) is trading cheap at a look-through forward P/B of 0.26x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x.
- Soho China (410 HK)‘s name was toxic after SAMR dinged Blackstone’s deal. It is no less toxic now. Arguably the upside is greater than the downside. But on what timeframe?
Index Rebalance & ETF Flow Recap: STAR50, NIFTY50/100, KRX, Tianqi Lithium, Kotak Bank, Emperador
- We have gone through days 1-5 of the review period for the MSCI September rebalance. There are multiple review cutoffs in the coming week.
- The announcement of the changes to the LQ45/IDX30/IDX80 indices should be made early in the coming week and implemented at the close on 29 July.
- China had the largest ETF inflows over the last week, while there were outflows from Korea focused ETFs.
GEM Weekly (22 Jul 2022): SA Repo Rate; IQIYI, ByteDance, Did Global, Baidu
- The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
- Macro data points:South African interest rates and inflation data
- Companies mentioned:iQIYI Inc (IQ US), ByteDance (1439927D CH), DiDi Global (DIDI US), Baidu (9888 HK)
Thai Life Insurance IPO Trading – One for Domestics and Cornerstones
- Thai Life Insurance (TLI) raised around US$975m in its Thailand IPO. Cornerstone investors, including GIC, took up around 54% of the deal.
- Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
- In this note, we talk about allocation and the trading dynamics
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