Global Research and Evidence Lab 13 August 2024 First Read Synthomer PLC 1H24 results - 5% EBITDA miss, with outlook unchanged Q: How did the results compare vs expectations? A: Synthomer reported 1H24 adjusted EBITDA of £76m, up 4% y/y but 5% below Bloomberg consensus at £80m (UBSe at £77m). Sales came in at £1,051m, up 0.4% y/y and 1% above consensus of £1,041m, driven by price/mix down 7%, volumes up 11% and an FX headwind of 3% y/y. 1H24 adjusted EPS was 1.3p, compared to a loss per share of 8.0p in 1H2 ...

Investment Rating - The report maintains a positive outlook for certain Quantitative Investment Strategies (QIS) while being less constructive on FX DM Carry and Equity Momentum [1][4][28]. Core Insights - The report highlights a shift in the investment hypothesis characterized by lower monetary policy rates in many countries and a soft landing for the global economy, although uncertainty has increased [1][4]. - QIS strategies expected to perform well include Rates Trend, Rates Long Straddle Replication, Equity Value, Equity Quality, and Equity Relative Value with VIX Volatility Carry [1][4][13]. - Strategies anticipated to face challenges include FX DM Carry and Equity Momentum due to recent market volatility and economic uncertainties [1][4][28][29]. Summary by Sections Backdrop - Recent market volatility was driven by soft US employment data and disappointing ISM Manufacturing PMI, leading to increased uncertainty about economic growth and a higher expectation of a Fed rate cut [4][5][9]. Fundamental Outlook - The Chief Global Economist at Morgan Stanley expects a soft landing for the US economy, with policy rates projected to end 2024 at 4.625% in the US, 3.25% in Europe, and 0.25% in Japan [10][11]. Performance of QIS - Year-to-date performance of key QIS strategies averaged +2.2% annualized, outperforming the long-term average of +1.8% [10][11]. - Despite recent volatility, QIS strategies generally delivered positive returns, although some strategies like Trend Following and FX DM Carry underperformed [10][11][16]. Specific Strategies - **Rates Trend**: A constructive outlook for medium-term rates Trend-Following strategies is noted, with signals turning flat to positive for US and European rates [16][20]. - **Long Straddle Replication**: This strategy is expected to benefit from current market volatility, providing convexity to portfolio returns [22]. - **Equity Value and Quality**: These factors are favored for their defensive characteristics in market corrections, with a combination of both recommended [22][23]. - **Equity Volatility Carry**: Implied volatility is above its historical average, indicating a substantial volatility risk premium, presenting an entry point for volatility strategies [22][23]. Challenges for Certain Strategies - **FX DM Carry**: This strategy has underperformed due to a strong JPY and is expected to continue facing negative returns [28]. - **Equity Momentum**: The strategy is anticipated to deliver below-average performance due to reduced signal intensity and heightened market volatility [29].

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The volatility surface has increased, particularly in upper left products, indicating a higher demand for these options [3][7] - The expiry and tail term structures have flattened, suggesting a shift in market expectations regarding interest rate movements [27] - Curve volatility remains elevated and is perceived as rich on an interest rate basis, while forward volatility appears mixed and relatively cheap compared to midcurves and vanilla volatility [3][46] - Implied volatility for U4 expiry CBOT options has decreased but remains above the 75th percentile of realized volatility, indicating persistent market uncertainty [3] Summary by Sections Vanilla Volatility - The vanilla volatility surface has shown an upward trend, particularly in upper left products, with 1-month and 1-year lookbacks indicating that these products are at the upper end of their historical ranges [7] - The implied/realized basis for a 1-week lookback shows the surface is trading cheap, while for a 1-month lookback, only upper right side products are trading above parity [7] - Volatility with expiries greater than 6 months exhibits positive roll-down across tails, especially for belly tails [7] Expiry Switch - The expiry term structures have flattened, particularly in the short-term 3-month to 1-year switches, which are now above parity [27] - A re-steepening of the expiry term structure is anticipated as the market approaches the cutting cycle, although uncertainty regarding the depth of this cycle may lead to short expiry volatility outperforming in the near term [27] Tail Switch - Tail term structures have also flattened, with notable inversion on 10-year to 30-year tail switches, indicating increased uncertainty regarding shorter rates compared to longer rates [32] - All tail switches remain inverted across the term structure, reflecting a shift away from parity since Q4 2023 [32] Curve Volatility - Curve volatility has increased, with the expiry term structure showing an upward slope through the next 3 months, while forward swap curves are inverted through the next 6 months [46] - The surface is trading slightly above parity on an implied/realized basis, indicating a rich pricing environment [46]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - July's exports were likely affected by extreme weather conditions, particularly impacting labor-intensive exports, while imports saw a significant one-off increase [2][3] - The overall outlook remains a soft landing for the global economy, with exports expected to continue supporting growth despite recent declines [3][4] - The increase in imports in July was attributed to volatility in tech imports and a favorable base effect for certain commodities [5][6] Summary by Sections Exports - July's nominal exports fell short of expectations, recording a growth of 7.0% compared to a consensus of 9.5%, with a notable month-on-month decline of 3.2% [4] - The decline was primarily driven by labor-intensive, lower value-added consumer products, which dropped by 6% [4] - Adverse weather conditions, including the highest average temperature since 1961 and significant rainfall, likely contributed to the production challenges [4] Imports - Nominal imports exceeded expectations, rising by 7.2% year-on-year, a significant increase from -2.3% in June [5] - The surge in imports was influenced by high-tech products, which saw growth rates of 15% in July, and electric products, which grew by 18% [5] - Overall, the import trend remains stable, with a three-month moving average of 2.2% year-on-year, aligning with year-to-date growth of 2.8% [5] External Demand - Despite signs of a slowing US economy, the global economist's base case suggests resilience in the US economy [6] - Both official and Caixin PMI indicate softer but still robust new export orders, with expectations for export growth to rebound in August [6]

9 August 2024 | 10:36PM HKT _ Focus Media Information Tech (002027.SZ) 2Q24 Review: Accelerating ad revenue with 5% dividend yield; Buy Buy 0007.SZ 12mPrie Target: Rmb7.50 Prie: Rmb5.78 Upside: 9.8% We maintain our Buy rating on Focus Media while raise our 12-m TP to Rmb7.5 (30% upside) post its strong 2Q24 results (see our note) and mgmt call.The stock has dropped 3% post results despite the headline revenue beat (+10% yoy vs. ÍGSe of +4%, Visible Alpha Consensus of +4%), NI beat (+13% yoy, 9% ahead of GSe ...

12 August 2024 | 2:24AM HKT Angel Yeast (600298.SS): Earnings Review: DD% yoy growth in Jul but mainly on low base; Sequential improvement expected for 2H24 The Company reported 1H24 results on Aug 7th with better-than-feared NI mainly on admin cost savings and government grants while sales broadly in line. The company hosted online briefing on Aug 9, at 10AM HKT, key highlights include: 1) Recent update: In domestic, the company registered strong DD% growth in July but still tracked behind the monthly targ ...

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies covered [5]. Core Insights - The report discusses the relationship between economic conditions and political factors, emphasizing that the Federal Reserve does not consider political factors in its decision-making process [2][3]. - It highlights that perceptions of the economy are influenced by various underlying variables such as unemployment and wage growth, rather than solely by stock market performance [1][2]. - The report indicates that political sentiment can affect consumer behavior, but it does not significantly impact actual consumer spending [1][2]. Summary by Sections Economic Conditions - The report notes a slowing economy, leading to expectations of the Federal Reserve making four interest rate changes in 2024, which may be an overestimation [1]. - It emphasizes that voters' perceptions of the economy are often colored by their political affiliations, with Republicans and Democrats viewing economic conditions differently based on the party in power [1][2]. Political Influence - The report suggests that while political events can elevate sentiment when a party wins elections, the actual impact on consumer spending during negative periods is limited [1][2]. - It discusses the mixed evidence regarding how much households adjust their spending based on political sentiment [1]. Market Predictions - The report mentions that prediction markets show a roughly 50/50 chance for either candidate to win the White House, indicating uncertainty in the political landscape [2].

9 August 2024 | 10:25PM SGT _ EM Weekly Fund Flows Monitor All EM Asian markets saw foreign selling this week, led by A-shares and Taiwan; US$18bn outflows since July peak; Not much HF de-grossing in Japan Foreign (FII) flows / positioning n EM Asian region saw selling (-US$6.5bn) across markets this week, led by A-shares (-US$2.1bn) and Taiwan (-US$2bn). Korea (-US$1.2bn), India (-US$1.1bn) and ASEAN (-US$0.1bn) also saw net outflows wow. n EM Asia ex-China has seen little net foreign buying this year afte ...

11 August 2024 | 4:13PM HKT _ China Insurance Framing and quantifying industry responses to lower yields; Buy China Life H, Ping An H/A, NCI H up to Neutral In response to declines in long-term bond yield, the regulator has asked lifers to reduce product pricing rates and improve expense efficiency, in order to stabilize long-term margin. We believe share prices have not reflected the potential benefits of lifers' responses in a lower yield environment. Within, we provide a framework to quantify the negativ ...

China: PBOC reiterated supportive stance and called for refinement of monetary policy framework in Q2 monetary policy report 10 August 2024 | 6:30PM HKT Bottom line: The PBOC maintained an easing bias in its Q2 monetary policy report with more focus on counter-cyclical adjustment to support economic growth and refinement of monetary policy framework. In the statement, the central bank pledged to "create a favorable monetary and financial environment for achieving the full-year economic and social developmen ...