In this briefing:
- Loyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments
- Korea National Pension Fund Announces a List of 11 Companies They Oppose in Upcoming AGMs
- BREXIT Risk Not Priced In – Watch for Volatility and Weakness – Look to SARS 2003 for Parallels
- Why Did Bank Credit to NBFCs Spurt in September, and Shrink in January?
- Smartkarma’s Week that Was in JP/KR: Nexon, Rakuten, POSCO and Samsung Electronics
1. Loyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments
Japan has a vast number of competing loyalty programmes and until five years ago Japanese consumers would often have as many as 10 loyalty point cards in their wallets.
In recent years consumers have gradually begun to whittle down their choices and today there are clear indications of which schemes will dominate.
Loyalty point schemes have always been key drivers of shopping behaviour but more recently it has become clear that the choice of e-commerce store is often driven by which loyalty point schemes can be used.
At the same time, there are increasing signs that the leading loyalty schemes could take the lead in Japan’s emerging cashless payment sector.
2. Korea National Pension Fund Announces a List of 11 Companies They Oppose in Upcoming AGMs
On March 12th, the Korea National Pension Fund Service (NPS) provided a list of 23 companies where it plan to exercise its voting rights in their AGMs in the next two weeks. Of these 23 companies, the NPS is opposing 11 companies on at least one of their agenda items of their upcoming AGMs, including opposing re-appointment of specific members in the BOD/senior management of these companies.
In the past, NPS’ opposing to certain agendas of the listed companies in Korea in their AGMs were typically announced about a couple of weeks AFTER the AGMs were completed. However, starting in 2019, NPS has changed its policy of announcing which companies they will exercise their voting rights (including the ones they oppose) to prior to the AGM dates.
Interesting, the 11 companies where NPS has opposed various agendas of the AGMs have strongly outperformed the market this year. These 11 companies’ share prices are up on average 8.6% YTD versus KOSPI which is up only 4.7% during the same period.
3. BREXIT Risk Not Priced In – Watch for Volatility and Weakness – Look to SARS 2003 for Parallels
- The risk of Britain crashing out of the European Union (EU) is very real and not currently priced in to markets.
- The idea that the world’s fifth largest economy will abruptly crash out of the world’s largest economy (the EU bloc is larger than the US) and not roil markets is naive.
- UK/EU trading relationship is very significant with 44% of UK exports and 53% of UK imports going to/coming form EU.
- The market needs to consider the impact of three possible outcomes: Negotiated Departure Approved by UK Parliament, Crash Out with No Deal, Delay.
- We believe that any three of these outcomes are a negative for markets with the worst-case being a no-deal crash out.
- Specific names to avoid include: International Consolidated Airlines Group SA (IAG), Easyjet (EZJ), Thomas Cook (TCG), Xpo Logistics Europe SA (XPOP) and H & M Hennes & Mauritz AB (HM-B).
4. Why Did Bank Credit to NBFCs Spurt in September, and Shrink in January?
For the beleaguered non-bank finance company (NBFC) sector, banks are the single largest component of external funding. This source peaked at the end of September 2018, in the aftermath of the default of IL&FS, a private unlisted infrastructure developer and financer. However, in the beginning of the last quarter of the financial year ended March 31, 2019 (4QFY2019), when bank credit in the economy normally peaks, bank credit to NBFCs (as on January 18, 2019) has declined as compared with the previous month. The sharp spurt in bank credit at end-September probably indicates that NBFCs utilised their sanctioned limits with the banks, and top-rated NBFCs took on excessive bank loans to tide over their asset-liability mis-matches in that period. Subsequently, by early January 2019, banks may not have renewed or rolled over the NBFC bank limits, which led to a drawing down of bank credit. It therefore appears that bank finance will continue to remain tight for NBFCs in the last quarter of FY2019, as they sell their assets to banks and restrict asset growth in order to remain liquid.
5. Smartkarma’s Week that Was in JP/KR: Nexon, Rakuten, POSCO and Samsung Electronics
Below is the list of the Japan/Korea-related posts put on the Smartkarma platform during the week of March 4th:
Insight | Insight Provider | Published |
Japan | ||
4/3/2019 | ||
4/3/2019 | ||
4/3/2019 | ||
4/3/2019 | ||
5/3/2019 | ||
5/3/2019 | ||
7/3/2019 | ||
7/3/2019 | ||
8/3/2019 | ||
8/3/2019 | ||
9/3/2019 | ||
9/3/2019 | ||
10/3/2019 | ||
10/3/2019 | ||
South Korea | ||
4/3/2019 | ||
5/3/2019 | ||
6/3/2019 | ||
6/3/2019 | ||
7/3/2019 | ||
7/3/2019 | ||
10/3/2019 | ||
Japan: Moving Average Outliers – AnGes, SanBio, Adastria, AIN, Sumco & Benefit OneGet Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
