Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of TWSE Stocks as of Sep 23rd which has an aggregated short interest worth USD12.3bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Eva Airways, Powerchip Semiconductor, AUO Corp, Formosa Plastics, Realtek, Yageo.</li>
</ul>


We analyzed the changes in short interest of TWSE Stocks as of Sep 23rd which has an aggregated short interest worth USD12.3bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Eva Airways, Powerchip Semiconductor, AUO Corp, Formosa Plastics, Realtek, Yageo.


TWSE Short Interest Weekly (Sep 23rd): Eva Airways, Powerchip

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/elan-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:19789:1" rel="noopener">Elan Microelectronics (2458 TT)</a> will be removed from the FTSE Taiwan Mid Cap 100 Index on September 16th. As a result, it could see 12+ days of volume of selling.</li>
<li>We had a call with management. Guidance and product performance implies the company has relative strength vs. its end-market demand weakness.</li>
<li>The stock has already underperformed notebook-related peers by a wide margin, hence a further underperformance caused by passive selling could open up a rebound opportunity,</li>
</ul>



Elan Microelectronics (2458 TT) will be removed from the FTSE Taiwan Mid Cap 100 Index on September 16th. As a result, it could see 12+ days of volume of selling.
We had a call with management. Guidance and product performance implies the company has relative strength vs. its end-market demand weakness.
The stock has already underperformed notebook-related peers by a wide margin, hence a further underperformance caused by passive selling could open up a rebound opportunity,


Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>US bans high end chip sales to China, Nvidia shares sink in reaction, as do Nvida suppliers and the overall sector.</li>
<li>Broadcom's fiscal Q3 results beat expectations and its optimistic outlook bucks the industry trend.</li>
<li>Yulon motors soars 9%; its JV with Hon Hai has received 10,000 EV pre-orders in two days.</li>
</ul>


US bans high end chip sales to China, Nvidia shares sink in reaction, as do Nvida suppliers and the overall sector.
Broadcom's fiscal Q3 results beat expectations and its optimistic outlook bucks the industry trend.
Yulon motors soars 9%; its JV with Hon Hai has received 10,000 EV pre-orders in two days.


Taiwan Tech Weekly: More Nvidia Issues, Broadcom Surprises, Yulon Soars

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.</li>
<li>Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> has seen the largest short covering as the stock has tumbled in the last couple of weeks.</li>
</ul>


We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.
Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.

China Merchants Bank H (3968 HK) has seen the largest short covering as the stock has tumbled in the last couple of weeks.


Asia Short Interest: Large Moves in April

Taiwan Tech Focused Senior Analyst

Patrick Liao

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>Novatek had reported a flattish sales outlook in 1Q22, and all of revenue, GM and OPM were expected to NT$35.8~36.8bn, 48~51% and 34~37% respectively, while revenue was at -1.92~+0.82% QoQ. </li>
<li>We think the high inventory days of supply chain is giving a good chance to expand into China foundry for production, especially SMIC.</li>
<li>We think Novatek would maintain its solid dividend policy for EPS NT$63.87 in 2021, and it’s pay-out ratio is 80% in the past.</li>
</ul>


Novatek had reported a flattish sales outlook in 1Q22, and all of revenue, GM and OPM were expected to NT$35.8~36.8bn, 48~51% and 34~37% respectively, while revenue was at -1.92~+0.82% QoQ. 
We think the high inventory days of supply chain is giving a good chance to expand into China foundry for production, especially SMIC.
We think Novatek would maintain its solid dividend policy for EPS NT$63.87 in 2021, and it’s pay-out ratio is 80% in the past.


Novatek (3034.TT): A Good Year Ahead, and Likely to Expand to SMIC for Wafer Foundry

Taiwan

AU Optronics Corp. manufactures and markets thin film transistor-liquid crystal displays (TFT-LCDs) and plasma display panels (PDPs).  The Company sells its products in Taiwan and exports worldwide.

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AU Optronics (2409 TT)

TWSE Short Interest Weekly (Sep 23rd): Eva Airways, Powerchip

We analyzed TWSE short interest report for the past week and highlight short interest changes in Eva Airways, Powerchip Semiconductor, AUO Corp,...

Ke Yan, CFA, FRM

Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence

We had a call with management. Guidance and product performance implies the company has relative strength vs. its end-market demand weakness.

Vincent Fernando, CFA

Taiwan Tech Weekly: More Nvidia Issues, Broadcom Surprises, Yulon Soars

Nvidia shares sink in reaction to US banning high-end chip sales to China, Taiwan's Nvida suppliers and the overall sector fall as well. Broadcom...

Vincent Fernando, CFA

Asia Short Interest: Large Moves in April

Short notional in Korea and Taiwan has been increasing as the market has been moving lower. Shorts on China Merchant Bank have been covered in...

Brian Freitas

Novatek (3034.TT): A Good Year Ahead, and Likely to Expand to SMIC for Wafer Foundry

In 1Q22, Novatek reported revenue, GM and OPM expected to NT$35.8~36.8bn, 48~51% and 34~37% respectively, which revenue was at -1.92~+0.82% QoQ. We...

Patrick Liao

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