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. Easy Money to Low PBR Stocks in KOSPI 200 Is Now Over – What’s Next?
- There are 92 stocks in KOSPI 200 that are trading at less than 1x PBR. These 92 stocks are up on average 6% YTD.
- Among these 92 stocks, 40 of them are trading at below 0.5x PBR. These 40 stocks are up on average 8.2%.
- In this insight, we argue that the “easy money” of making money by increasing capital allocation to low PBR stocks in Korea is nearly over in the near term.
2. Portfolio Watch – Have markets traded the cyclical rebound in advance?
- Welcome to our weekly portfolio watch, which today will be all about the (potential) upcoming rebound in the cyclical momentum.
- As always we share our trade thoughts and ideas and provide you with our current allocation.
- Yesterday’s PPI came in hot as we expected (0.6% MoM in core PPI vs 0.1% expected), which serves as an early sign of a reacceleration in inflationary pressures, which have been our base case since the continuation of the tensions in the Red Sea: It looks like the increase in US freight rates has started to impact producer prices.
3. The Week That Was in ASEAN@Smartkarma – BBNI’s Aspirations, Oceanagold IPO, and Thailand’s Recovery
- The past week saw insights on Bank Negara Indonesia (BBNI IJ), Bank Mandiri (BMRI IJ), OceanaGold Philippines, Sam Holdings IPO, and the most SET50 Index rebalance.
- There were also macro insights on Thailand with some optimism, Vietnam as it starts to recover, Malaysia with lingering concerns, and the Philippines, as the BSP keeps rates on hold.
- 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 Southeast Asia.
4. Positioning Watch – Low FX volatility provides cheap leverage for a rebound in manufacturing
- Hello everyone, and welcome back to our weekly Positioning Watch.
- Markets were caught on the wrong side of expectations last week with PPI coming in substantially hotter than expected, but equity sentiment has remained decent outside of some profit taking in Tech, as the cocktail of better liquidity conditions and a brightening economic outlook is likely to prevail – and positioning provides very decent opportunities to trade the potential comeback for cyclical assets.
- As this week’s chart of the week we present to you what looks to be the theme of Q1 2024, and the reason why right now is not a good time to be contrarian: momentum is king, and “go with the flow” currently performs WAY better than cherry-picking the good old value stocks.
5. Indonesia Politics: Prabowo Wins, But Does Indonesia?
- Ex-General Prabowo Subianto got third-time lucky in his bid for the presidency. We caution, however, that things will not be “business as usual” under the erratic strongman.
- Contrary to his campaign rhetoric of providing “continuity Jokowi”, we argue that Prabowo will not pursue several positive aspects of the Widodo agenda with the same vigour.
- Short-Term political intrigue and long-run degradation in governance are material risks given the election results and preceding developments, These are due cause for worry.
6. Energy Cable: All the upside left in Henry Hub
- Greetings from a rainy and cold Copenhagen.
- Since we haven’t talked about natural gas for a while we will start out here before turning to crude.
- Last week saw Henry Hub making lows last seen during the first wave of Covid in the spring of 2020.
7. Great Game – Asian elections and Ukraine outlook
- Welcome to this week’s rundown of international events and the impact on your portfolio.
- There is still some time to go on my cease-fire prediction from last week, so let’s focus on some other topics that we’re talking about right now.
- As a new addition to our offering, we’re experimenting with video editions of certain articles as many of you have requested.
8. US CPI Inflation 3.09% y-o-y (consensus 2.9%) in Jan-24
- The US CPI inflation rate for January 2024 exceeded expectations, slowing down to 3.09% y-o-y, marking the lowest growth since June 2023.
- The US Core CPI inflation rate stayed at 3.9% y-o-y.
- This rate was 0.2pp above consensus expectations, further supporting the hawkish surprise.
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9. India Politics: Opposition Coalition Fractures, Boosting Modi’s Chances
- The opposition INDIA coalition is facing severe setbacks in their efforts to form a united front against prime minister Modi and the ruling BJP.
- While the BJP was always the favourite to win the next elections, the fragmentation of opposition forces opened a wider path for a landslide majority win.
- How Modi uses his political capital in such an event will be pivotal to whether India can take advantage of its current position in the world.
10. The Weekly Market Monitor – The 34-Year Wait Is Over!
- First, Japan entered a recession, and a week later, the Nikkei hit an all-time high after 34 years. Any idea why this is?
- The Institute of International Finance (IIF) has updated its global debt chart. Be aware that it does NOT show the true underlying trend.
- You are only allowed to trade Chinese equities if you are going to buy them. China will have a serious long-term issue in attracting fresh capital.
