Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).</li>
<li>Today is the base date for the September 2024 index rebal event and the expected ADDs/DELs  discussed in this insight are our final index change expectations.</li>
<li>Separately, we also have a look at the T50/100 index implications of the <a href="https://www.smartkarma.com/entities/shin-kong-financial-holding" target="_blank" data-smartkarma-citation="entities:15351:1" rel="noopener">Shin Kong Financial Holding (2888 TT)</a> - <a href="https://www.smartkarma.com/entities/taishin-financial-holding" target="_blank" data-smartkarma-citation="entities:715:1" rel="noopener">Taishin Financial Holding (2887 TT)</a> merger situation.</li>
</ul>


The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
Today is the base date for the September 2024 index rebal event and the expected ADDs/DELs  discussed in this insight are our final index change expectations.
Separately, we also have a look at the T50/100 index implications of the Shin Kong Financial Holding (2888 TT) - Taishin Financial Holding (2887 TT) merger situation.


Quiddity Leaderboard T50/​​​100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences

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

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pharmaessentia-corp" target="_blank" data-smartkarma-citation="entities:16461:1" rel="noopener">Pharmaessentia Corp (6446 TT)</a> could replace <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> in the Taiwan Top 50 ETF in September. <a href="https://www.smartkarma.com/entities/airtac-international-group" target="_blank" data-smartkarma-citation="entities:20538:1" rel="noopener">Airtac International (1590 TT)</a> has possibly just avoided deletion.</li>
<li>Short interest has been dropping in <a href="https://www.smartkarma.com/entities/pharmaessentia-corp" target="_blank" data-smartkarma-citation="entities:16461:1" rel="noopener">Pharmaessentia Corp (6446 TT)</a> as the stock has rallied, while cumulative excess volume has continued to increase steadily.</li>
<li>Shorts have increased in <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> as the stock price dropped. There has been no increase in volume on the recent upmove indicating a possibility of further downside.</li>
</ul>



Pharmaessentia Corp (6446 TT) could replace Nanya Technology (2408 TT) in the Taiwan Top 50 ETF in September. Airtac International (1590 TT) has possibly just avoided deletion.
Short interest has been dropping in Pharmaessentia Corp (6446 TT) as the stock has rallied, while cumulative excess volume has continued to increase steadily.
Shorts have increased in Nanya Technology (2408 TT) as the stock price dropped. There has been no increase in volume on the recent upmove indicating a possibility of further downside.


Taiwan Top 50 ETF Rebalance Preview: One Change Expected in Sep

<ul>
<li>Using the last close, there could be one change for the Taiwan Top 50 ETF in September with <a href="https://www.smartkarma.com/entities/pharmaessentia-corp" target="_blank" data-smartkarma-citation="entities:16461:1" rel="noopener">Pharmaessentia Corp (6446 TT)</a> replacing <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a>. </li>
<li>There is one other constituent that is close to deletion zone while there are a couple of non-constituents that could move into inclusion zone over the next couple of weeks.</li>
<li>Short interest has been dropping in <a href="https://www.smartkarma.com/entities/pharmaessentia-corp" target="_blank" data-smartkarma-citation="entities:16461:1" rel="noopener">Pharmaessentia Corp (6446 TT)</a> and increasing in <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> over the last few weeks.</li>
</ul>


Using the last close, there could be one change for the Taiwan Top 50 ETF in September with Pharmaessentia Corp (6446 TT) replacing Nanya Technology (2408 TT). 
There is one other constituent that is close to deletion zone while there are a couple of non-constituents that could move into inclusion zone over the next couple of weeks.
Short interest has been dropping in Pharmaessentia Corp (6446 TT) and increasing in Nanya Technology (2408 TT) over the last few weeks.


Taiwan Top 50 ETF Rebalance Preview: One Change Right at the Cusp

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

<ul>
<li>Nanya Tech reported a continued net loss in its latest 2Q24 results; the company's gross margin has rebounded into positive territory but only marginally so.</li>
<li>Server end demand strong, however PC and mobile remain flattish; the company expects some improvemnt in PC and mobile driven by AI trends but conservative on the impact for 2024E.</li>
<li>We believe the Street may need to reduce their 2024E estimates; margin rebound is too small and guidance remains very conservative. We see near-term downside risk for Nanya Tech shares.</li>
</ul>


Nanya Tech reported a continued net loss in its latest 2Q24 results; the company's gross margin has rebounded into positive territory but only marginally so.
Server end demand strong, however PC and mobile remain flattish; the company expects some improvemnt in PC and mobile driven by AI trends but conservative on the impact for 2024E.
We believe the Street may need to reduce their 2024E estimates; margin rebound is too small and guidance remains very conservative. We see near-term downside risk for Nanya Tech shares.


Nanya Technology: Latest Results & Guidance Make 2024E Consensus Hard to Achieve; Underperform

<ul>
<li>Data Centers -- Traditional Data Center Recovery Starting; In Addition to HBM Demand, SSD Memory Seeing Strength for AI Applications</li>
<li>PCs -- Upcycle to Accelerate "Late CY2024E", Driven by Windows 12 and End of Windows 10</li>
<li>Mobile Devices -- Moderate Growth in CY2024E; Potential for Smartphone Upgrade Cycle Acceleration</li>
</ul>


Data Centers -- Traditional Data Center Recovery Starting; In Addition to HBM Demand, SSD Memory Seeing Strength for AI Applications
PCs -- Upcycle to Accelerate "Late CY2024E", Driven by Windows 12 and End of Windows 10
Mobile Devices -- Moderate Growth in CY2024E; Potential for Smartphone Upgrade Cycle Acceleration


Memory Monitor: Micron's Shares May Be Falling But Results' Industry Implications Are Positive

Taiwan

Nanya Technology Corp. manufactures and markets dynamic random access memories (DRAMs).  The Company sells its products in Taiwan and exports worldwide.

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Nanya Technology (2408 TT)

Quiddity Leaderboard T50/100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences

We expect Nuvoton Technology (4919 TT) to be deleted from the T100 index in September 2024. Since this name is a TDIV member, it is likely to be...

Janaghan Jeyakumar, CFA

Taiwan Top 50 ETF Rebalance Preview: One Change Expected in Sep

PharmaEssentia could replace Nanya Tech in the Taiwan Top50 ETF. Shorts have been covering Pharmaessentia and building positions in Nanya Tech....

Brian Freitas

Taiwan Top 50 ETF Rebalance Preview: One Change Right at the Cusp

There could be one change for the Taiwan Top 50 ETF in September. Review cutoff is two weeks away and there are some stocks that are close to the...

Brian Freitas

Nanya Technology: Latest Results & Guidance Make 2024E Consensus Hard to Achieve; Underperform

Continued net loss in 2Q24, with marginal gross margin improvement. Server demand strong, but PC and mobile flat. Street may need to lower 2024E...

Vincent Fernando, CFA

Memory Monitor: Micron's Shares May Be Falling But Results' Industry Implications Are Positive

Discusses the recovery of traditional data centers, strength in SSD memory for AI applications, upcycle in PCs driven by Windows 12, and potential...

Vincent Fernando, CFA

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Quiddity Leaderboard T50/​​​100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences

We expect Nuvoton Technology (4919 TT) to be deleted from the T100 index in September 2024. Since this name is a TDIV member, it is likely to be...

Janaghan Jeyakumar, CFA

Taiwan Top 50 ETF Rebalance Preview: One Change Expected in Sep

PharmaEssentia could replace Nanya Tech in the Taiwan Top50 ETF. Shorts have been covering Pharmaessentia and building positions in Nanya Tech....

Brian Freitas

Taiwan Top 50 ETF Rebalance Preview: One Change Right at the Cusp

There could be one change for the Taiwan Top 50 ETF in September. Review cutoff is two weeks away and there are some stocks that are close to the...

Brian Freitas

Nanya Technology: Latest Results & Guidance Make 2024E Consensus Hard to Achieve; Underperform

Continued net loss in 2Q24, with marginal gross margin improvement. Server demand strong, but PC and mobile flat. Street may need to lower 2024E...

Vincent Fernando, CFA

Memory Monitor: Micron's Shares May Be Falling But Results' Industry Implications Are Positive

Discusses the recovery of traditional data centers, strength in SSD memory for AI applications, upcycle in PCs driven by Windows 12, and potential...

Vincent Fernando, CFA

Quiddity Leaderboard T50/100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences