Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World (17 HK)</a>'s 60.88%-held <a href="https://www.smartkarma.com/entities/nws-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3350:1" rel="noopener">NWS (659 HK)</a> at HK$9.15/share, a 22.2% premium to undisturbed.</li>
<li>The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.</li>
<li>The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS' final dividend ex-date. That's worth exploring further.</li>
</ul>


Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)'s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS' final dividend ex-date. That's worth exploring further.


NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie ...

<ul>
<li>Tactically, it isn't attractive owning <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba (6502 JP)</a> at 1% spread. Expect it to trade wider. There is still a fair bit of stock to come down the pipe.</li>
<li>Because of significant business overlap, <a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> looks very similar to <a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">Power Assets Holdings (6 HK)</a>. And CKI is coming up cheap on my monitor versus PAH.</li>
<li>There is less fundamental alpha to <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> than before and more "just keep it because it is going up"-ness to the trade. </li>
</ul>


Tactically, it isn't attractive owning Toshiba (6502 JP) at 1% spread. Expect it to trade wider. There is still a fair bit of stock to come down the pipe.
Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH.
There is less fundamental alpha to Rakuten Bank (5838 JP) than before and more "just keep it because it is going up"-ness to the trade. 


Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int'l Sec

Equity Bottom-Up

CK Infrastructure Holdings / Equity Bottom-Up

<ul>
<li>Because of significant business overlap, <a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> looks very similar to <a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">Power Assets Holdings (6 HK)</a>. And CKI is coming up cheap on my monitor versus PAH. </li>
<li>Preceding my comments on CKI/PAH are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH. 
Preceding my comments on CKI/PAH are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


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>The March rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.</li>
<li>The largest inflows will be on <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>. </li>
<li>The largest outflows will be on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC (883 HK)</a> and <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">SMIC (981 HK)</a>.</li>
</ul>


The March rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK). 
The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).


HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The launch of Hang Seng Stock Connect Hydrogen Energy Index highlights the growing importance of hydrogen energy use and will stimulate more interest in this emerging sector. </li>
<li>
<a href="https://www.smartkarma.com/entities/weichai-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:12508:1" rel="noopener">Weichai Power (2338 HK)</a>, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">Power Assets (6 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-lead-intelligent-equi-a" target="_blank" data-smartkarma-citation="entities:27971:1" rel="noopener">Wuxi Lead Intelligent Equi-A (300450 CH)</a> and <a href="https://www.smartkarma.com/entities/ningxia-baofeng-energy-group-a" target="_blank" data-smartkarma-citation="entities:29945:1" rel="noopener">Ningxia Baofeng Energy-A (600989 CH)</a> are the five largest constituents. </li>
<li>We believe many of these companies are just generating a tiny portion of revenue and profit from the hydrogen initiatives, but the long-term prospects are positive. </li>
</ul>


The launch of Hang Seng Stock Connect Hydrogen Energy Index highlights the growing importance of hydrogen energy use and will stimulate more interest in this emerging sector. 

Weichai Power (2338 HK), ENN Energy (2688 HK), Power Assets (6 HK), Wuxi Lead Intelligent Equi-A (300450 CH) and Ningxia Baofeng Energy-A (600989 CH) are the five largest constituents. 
We believe many of these companies are just generating a tiny portion of revenue and profit from the hydrogen initiatives, but the long-term prospects are positive. 


China's Hydrogen Economy: Newly Launched Hang Seng Stock Connect Hydrogen Energy Index

Hong Kong

Power Assets Holdings Limited invests in power generation, transmission and distribution as well as gas distribution. The Company has investments in Hong Kong, Australia, Canada, China, New Zealand and Thailand.

Power Assets Holdings (6 HK)

NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie ...

Accelerating the timetable such that it closes before the final ex-date would smack of a new low in stinginess. I don't see it. This is trading at...

David Blennerhassett

Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int'l Sec

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: CK Infra Vs. Power Assets

Because of significant business overlap, PAH looks very similar to CKI. Investors may prefer to own CKI or PAH, but not both. I'd prefer to tilt...

David Blennerhassett

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)

The Hang Seng indices rebalance Friday. Capping uses today's closing prices. The one-way trade across all stocks across the indices is estimated at...

Brian Freitas

China's Hydrogen Economy: Newly Launched Hang Seng Stock Connect Hydrogen Energy Index

The launch of Hydrogen Energy Index highlights growing importance of hydrogen energy use and will stimulate more interest in this emerging sector....

Osbert Tang, CFA