This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Steno Signals #96 – A major devaluation of the CNY could be imminent
- China is preparing something BIG. That seems more and more obvious to me by the week now. The question is what that BIG thing is.
- China reported a strong 5.2% YoY Q1 despite troubles on the ground, local financial institutions are hoarding bonds because of a weak credit demand growth picture and the Chinese authorities seem to be stockpiling like crazy.
- We have seen plenty of tin-foil theories speculating in the reasons behind those Chinese actions, but maybe China is just preparing a major one-off devaluation of the CNY?
2. Hong Kong: The Glass Is Half Full, Time to BUY Beta
- HSI has now closed above its 3 year downtrend and is poised to advance to its next resistance level
- International brokers finally turning more bullish on the market as the US, Europe and Japan markets turn down
- High beta sectors are set to outperform as global investors reallocate to the cheapest AND 2nd largest tech sector in the world
3. Back Testing the End of Mandatory Lock-Up Periods Monthly Data in Korea
- In this analysis, we provide a back testing analysis of the end of mandatory lock-up periods monthly data in Korea in the past six months.
- All in all, this end of mandatory lock-up period monthly data continues to provide some alpha generating results.
- In the past six months, they have tended to work better in periods when KOSPI declines rather than in periods when KOSPI rises.
4. Will the Ban on Short Selling Stocks in Korea Extended Beyond End of June 2024?
- On 6 November 2023, the Korean government announced that it will temporarily ban short selling stocks until end of June 2024.
- On 25 April 2024, the FSS unveiled for the first time its plan to build a computer system to prevent naked short selling called NSDS (Naked Short Selling Detection System).
- There is a high probability that the the temporary ban on short selling which currently lasts until end of June 2024, could be extended further to 2Q 2025.
5. Great Game: Despite New Aid, Ukraine will lose within 12 months. Plan Accordingly!
- With all eyes on the Middle East for the past weeks and months, we haven’t focused as much on the ongoing war in Ukraine.
- In the big picture, not much has changes on the frontline despite continued heavy losses and a Russian election.
- But now I think it’s time for investors to re-adjust their assessment of the war and consider contingencies for the path ahead.
6. HSCEI Outperformance Is Asia’s Best Kept Secret
- China Enterprise Index (HSCEI) is now the top performing index in Asia on a USD basis
- HSCEI also trades at the lowest P/E multiple in the Asia
- High probability of divergence as US and Europe markets turn down
7. Shipping Watch: No news is bad news (for inflation)
- Headlines in the beginning of 2024 were dominated by shipping and logistic troubles but over the last months that has almost died completely down.
- With “no news” we continue to see spill-overs to goods inflation in coming months.
- In general freight rates have been falling since Jan high but still remain some 50% above 2023 levels
8. Active GEM Funds: Extremes in Positioning & Momentum
- This report identifies stocks at the extremes of their positioning or momentum ranges within our active Global EM fund universe.
- We have pinpointed eight stocks either at their historical positioning extremes or undergoing significant changes in fund ownership, providing detailed ownership profiles for each.
- HDFC Bank loses steam after merger, Nu Holdings surges to new highs, POSCO plunges to new fund ownership lows.
9. The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..
- Welcome to our weekly “the week at a glance” publication where we dissect the most important central bank meetings and key figure releases in a short and sweet format.
- This week we focus on PCE prices, European PMIs and the Bank of Japan.
- Event 1: European PMIs (Tues): A lukewarm, but positive, surprise.
10. Bollinger Bonds
- In our April monthly, we highlighted the combination of fading impulse for momentum stocks (principally tech) and the need for tax related selling in the trading/retail space coming against a background of a correction in the short term bull phase within the longer term bond bear market.
Since the beginning of March, US 10 year yields have gone from 4% to around 4.6%, unwinding the Fed Pivot language that emerged to ‘explain’ the earlier rally.
In our view that was an unlikely ex-post narrative, as is the one emerging now that the Fed will not cut at all.
