Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Thematic (Sector/Industry)

<p class="commentable-section">Welcome to the 23rd Edition of the Smartkarma [Guest] Editor's Cut, a weekly summary of the key themes and ideas of the last week's research on Smartkarma along with a little extra that struck me as important. Jon was too busy making Pineapple Passionfruit cheesecake  to do the Editor's Cut so I offered to slice and dice again.</p><div class="side-comment "> </div><p class="commentable-section"><em>Smartkarma is Asia's fastest growing community of Independent and Alternative Investment Research.  In 6 short months Smartkarma has published on ~600 stocks, across 11 GIC sectors, from a community of over 50 insight providers!  Some cool new tools are in the works for Insight providers, some interesting content is on the way, and I am sure next month will bring even more goodies from the SK team.</em></p><div class="side-comment "> </div><div class="side-comment commentable-section">   <div class="side-comment "> </div></div><p class="commentable-section"><em>Right - onto the content, there was a lot to choose from this past week..</em></p><div class="side-comment ">  </div><p class="commentable-section"><em><strong>Top Down</strong>:</em><em>It was a big week. Markets everywhere tumbled. S&amp;P was -5.8% on the week - its worst week since September 2011. Japan was down 5.3% (but 3.3% in USD terms). Shanghai Composite was -11.5%, including some big swings. Most everybody is blaming the weakness on China, which is still one of the best performing stock markets year-to-date.</em></p><p>A week after the PBOC devaluation of the yuan, the market was still talking about the after-effects despite the yuan strengthening several days in a row. This week, Kay Van-Peterson started the week with a note <a href="http://www.smartkarma.com/insights/the-macro-take-cny-devaluation-was-there-for-all-to-see" target="_blank">The Macro Take: CNY devaluation was there for all to see</a> suggesting the PBOC's move was <em>not</em> a one-off and offered trade suggestions  based  on that.  Manu Bhaskaran gave a great review of the PBOC's actions and their impact on Asia in <a href="http://www.smartkarma.com/insights/china-s-yuan-devaluation-spooks-emerging-markets" target="_blank">China's Yuan Devaluation Spooks Emerging Markets</a>. KVP also added in an older piece <a href="http://www.smartkarma.com/insights/the-matrix-a-strategists-roving-thoughts-what-has-five-legs-runs-fast-will-make-you-a-killing" target="_blank">The Matrix: A Strategists Roving Thoughts - WHAT HAS FIVE LEGS, RUNS FAST &amp; WILL MAKE YOU A KILLING</a> with his outlook for the next 12-18mos, suggesting a Fed rate hike, even weaker commodities, more QE globally, and volatility. <a href="http://www.smartkarma.com/insight_providers/72" target="_blank">Jason Tan</a> wrote about <a href="http://www.smartkarma.com/insights/politics-in-asia" target="_blank">Politics in Asia</a> discussing events in Myanmar, Indonesia, and rising tensions on the Korean peninsula. Daniel Tabbush wrote on <a href="http://www.smartkarma.com/insights/corporate-loan-seasoning-in-chinese-and-australian-banks" target="_blank">Corporate Loan Seasoning in Chinese and Australian Banks</a> and the irrepressible Sam Ferraro added to his series <a href="http://www.smartkarma.com/insights/dissecting-quality-when-does-management-quality-and-corporate-governance-matter-most" target="_blank">Dissecting Quality</a> this time discussing Management Quality and Corporate Governance, introducing a fascinating model for scoring complexity and agency costs. And Sam's <a href="http://www.smartkarma.com/insights/weekly-impressions-14ed50ff-bd0e-47da-afcf-6c01913f9722" target="_blank">Weekly Impressions</a> provided some great introspection on the quality of current earnings and pricing of global markets.  </p><p class="commentable-section"><em>In <strong>Event Driven</strong>... </em></p><div class="side-comment "> </div><ul><li class="commentable-section"><em><strong><a href="https://www.smartkarma.com/entities/570" target="_blank">Asciano</a></strong>: </em>On July 1, Brookfield Infra announced a non-binding bid for Aussie infrastructure play Asciano. The Smartkarma community opined <a href="http://www.smartkarma.com/insights/brookfield-infra-asciano-this-train-is-starting-should-you-jump-on" target="_blank">quickly</a> and with <a href="http://www.smartkarma.com/insights/brookfield-asciano-a-bit-more-about-the-ride-itself" target="_blank">interest</a>. This week Brookfield came back with a full bid, with approval from the directors. Crispin wrote about the deal and terms in <a href="http://www.smartkarma.com/insights/this-train-has-started" target="_blank">This Train has Started</a>, and I added <a href="http://www.smartkarma.com/insights/aio-the-initial-arb-equivalency-grids" target="_blank">Initial Arb Equivalency Grids</a> (ask Lee for the most recent updated version) before the open.</li><li class="side-comment "> </li><li><strong> Ta Chong Bank:</strong> Crispin Francis wrote <a href="http://www.smartkarma.com/insights/standing-on-uneven-ground" target="_blank">Standing on Uneven Ground</a> on Ta Chong Bank, given the strange nature of the reported proposed ratio for the Yuanta scrip portion, and followed up with comments about the dividends. </li><li><strong>UNY/FamiMa:</strong> I added a piece about UNY/FamiMa given the <a href="http://www.smartkarma.com/insights/uny-famima-a-flurry-of-articles-what-do-they-mean" target="_blank">Flurry of Media Articles</a> the previous several days. End result is that the Basic Agreement expected in August has been pushed back to September or later.</li><li><a href="http://www.smartkarma.com/insights/quicknote-tpg-iin-deal-accc-risk" target="_blank"><strong>IIN/TPG</strong></a>: On Aug18 the papers came out with an interview with ACCC head Rod Sims saying the bulk of submissions were against the proposed TPG deal for Iinet. I reviewed this and concluded it was likely to go through. On Thursday the ACCC approved.</li><li><strong><a href="http://www.smartkarma.com/insights/skilled-prg-scheme-doc-out-last-friday-franking-eligibility-ends-soonish" target="_blank">Skilled/PRG</a>:</strong> The Scheme Doc was released Friday and terms and calendar are as expected. The deal looks "easy". I review <a href="http://www.smartkarma.com/insights/skilled-prg-scheme-doc-out-last-friday-franking-eligibility-ends-soonish" target="_blank">here</a>. </li><li><strong><a href="http://www.smartkarma.com/insights/6e7e81e7-ac78-4415-9d9d-92b5aef1cf7d" target="_blank">Sinomedia Holdings</a>:</strong> When this 'potential deal' (sale of 53% leading to a GMO) was announced on Jun 11, top-ticking the Chinese stock market, <a href="http://www.smartkarma.com/insights/if-it-looks-like-a-duck-and-quacks-like-a-duck-caveat-emptor" target="_blank">it looked dodgy to us</a>. Since then, the stock fell almost 30% pre-deal to the day before earnings release this week (-49% from the high of the day the deal was announced), and then the bad news arrived. H1 results were horrific in every way. So the stock fell another 23% in two days and the company started buying back shares, being 50+% of the volume each day and buying at the high of the day (which in both cases was the closing print, after rising dramatically in the previous minutes - hmmm). After the close Friday the company announced the Seller had decided to stop discussions. The deal is off. But the company still has issues. Lots more inside!</li></ul><p class="commentable-section">In<em> <strong><em>IPO's &amp; Placements, </em></strong></em>it was a slow week. Sumeet looked at <a href="http://www.smartkarma.com/insights/needs-a-regular-dose-of-supplements-for-propping-up-growth" target="_blank">Vitaco Group</a> running it through Smartkarma's MADS framework and concluded the deal was probably an 'Avoid.'  </p><p class="commentable-section">In <em><strong>Bottom Up</strong></em> situations, Hao Wang came out with a follow up on <a href="http://www.smartkarma.com/insights/what-you-should-know-and-expect-after-huabao-s-profit-warning" target="_blank">Huabao International</a> after their profit warning. Sumeet followed up on microcap <a href="http://www.smartkarma.com/insights/revenue-growth-picking-up-bottom-line-to-follow" target="_blank">UG Healthcare</a> after earnings. And last but not least Kemp Dolliver followed up with an Insight on <a href="http://www.smartkarma.com/insights/china-cord-blood-we-love-a-crowd-fe8220a2-623e-4825-816f-a7ab884b851e" target="_blank">China Cord Blood: We Love a Crowd</a>. </p><div class="side-comment "> </div><p class="commentable-section">All this, a comment on UNY, and <em>much</em> <em>more</em> below the fold!</p>

Welcome to the 23rd Edition of the Smartkarma [Guest] Editor's Cut, a weekly summary of the key themes and ideas of the last week's research on Smartkarma along with a little extra that struck me as important. Jon was too busy making Pineapple Passionfruit cheesecake  to do the Editor's Cut so I offered to slice and dice again. Smartkarma is Asia's fastest growing community of Independent and Alternative Investment Research.  In 6 short months Smartkarma has published on ~600 stocks, across 11 GIC sectors, from a community of over 50 insight providers!  Some cool new tools are in the works for Insight providers, some interesting content is on the way, and I am sure next month will bring even more goodies from the SK team.     Right - onto the content, there was a lot to choose from this past week..  Top Down:It was a big week. Markets everywhere tumbled. S&amp;P was -5.8% on the week - its worst week since September 2011. Japan was down 5.3% (but 3.3% in USD terms). Shanghai Composite was -11.5%, including some big swings. Most everybody is blaming the weakness on China, which is still one of the best performing stock markets year-to-date.A week after the PBOC devaluation of the yuan, the market was still talking about the after-effects despite the yuan strengthening several days in a row. This week, Kay Van-Peterson started the week with a note The Macro Take: CNY devaluation was there for all to see suggesting the PBOC's move was not a one-off and offered trade suggestions  based  on that.  Manu Bhaskaran gave a great review of the PBOC's actions and their impact on Asia in China's Yuan Devaluation Spooks Emerging Markets. KVP also added in an older piece The Matrix: A Strategists Roving Thoughts - WHAT HAS FIVE LEGS, RUNS FAST &amp; WILL MAKE YOU A KILLING with his outlook for the next 12-18mos, suggesting a Fed rate hike, even weaker commodities, more QE globally, and volatility. Jason Tan wrote about Politics in Asia discussing events in Myanmar, Indonesia, and rising tensions on the Korean peninsula. Daniel Tabbush wrote on Corporate Loan Seasoning in Chinese and Australian Banks and the irrepressible Sam Ferraro added to his series Dissecting Quality this time discussing Management Quality and Corporate Governance, introducing a fascinating model for scoring complexity and agency costs. And Sam's Weekly Impressions provided some great introspection on the quality of current earnings and pricing of global markets.  In Event Driven...  Asciano: On July 1, Brookfield Infra announced a non-binding bid for Aussie infrastructure play Asciano. The Smartkarma community opined quickly and with interest. This week Brookfield came back with a full bid, with approval from the directors. Crispin wrote about the deal and terms in This Train has Started, and I added Initial Arb Equivalency Grids (ask Lee for the most recent updated version) before the open.  Ta Chong Bank: Crispin Francis wrote Standing on Uneven Ground on Ta Chong Bank, given the strange nature of the reported proposed ratio for the Yuanta scrip portion, and followed up with comments about the dividends. UNY/FamiMa: I added a piece about UNY/FamiMa given the Flurry of Media Articles the previous several days. End result is that the Basic Agreement expected in August has been pushed back to September or later.IIN/TPG: On Aug18 the papers came out with an interview with ACCC head Rod Sims saying the bulk of submissions were against the proposed TPG deal for Iinet. I reviewed this and concluded it was likely to go through. On Thursday the ACCC approved.Skilled/PRG: The Scheme Doc was released Friday and terms and calendar are as expected. The deal looks "easy". I review here. Sinomedia Holdings: When this 'potential deal' (sale of 53% leading to a GMO) was announced on Jun 11, top-ticking the Chinese stock market, it looked dodgy to us. Since then, the stock fell almost 30% pre-deal to the day before earnings release this week (-49% from the high of the day the deal was announced), and then the bad news arrived. H1 results were horrific in every way. So the stock fell another 23% in two days and the company started buying back shares, being 50+% of the volume each day and buying at the high of the day (which in both cases was the closing print, after rising dramatically in the previous minutes - hmmm). After the close Friday the company announced the Seller had decided to stop discussions. The deal is off. But the company still has issues. Lots more inside!In IPO's &amp; Placements, it was a slow week. Sumeet looked at Vitaco Group running it through Smartkarma's MADS framework and concluded the deal was probably an 'Avoid.'  In Bottom Up situations, Hao Wang came out with a follow up on Huabao International after their profit warning. Sumeet followed up on microcap UG Healthcare after earnings. And last but not least Kemp Dolliver followed up with an Insight on China Cord Blood: We Love a Crowd.  All this, a comment on UNY, and much more below the fold!

iShares MSCI Global Min Vol Factor ETF (ACWV US)

iShares MSCI All Country Asia ex-Japan ETF (AAXJ US)

iShares MSCI All Country Asia ex-Japan ETF

Ja Solar Holdings Co., Ltd. (Ads) (JASO US)

Brookfield Infrastructure Partners L.P. (BIP US)

Best of Smartkarma: The Guest Editor's Slice & Dice #23