In today’s briefing:
- S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)
- HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
- MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
- MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes
- Toshiba (6502) – Funding Secured!
- 2023 High Conviction – Anycolor (5032) Aiming at TSE Prime and TOPIX – And How!
- China ADRs: PCAOB Resets the Clock on Delistings; Implications
- China ADRs Delisting – Christmas Came a Day Earlier than We Expected – No Delisting Risk for Now
- Discussing Why Meritz Swap Spread Not Being Narrowed & When to Enter
- MinRes’ “Unconditional” Offer For Norwest
S&P/ASX Index Rebalance Preview: A Busy March (Maybe January and February Too)
- We currently see one change each for the ASX20 and ASX100 indices, 4 changes for the S&P/ASX 200 and 10 adds/ 6 deletes for the ASX300 Index in March.
- There could be an addition to the S&P/ASX 200 (AS51 INDEX) in January following Pendal Group (PDL AU)‘s acquisition by Perpetual Ltd (PPT AU).
- PEXA Group (PXA AU) is a potential inclusion to the S&P/ASX 200 (AS51 INDEX) if Link Administration (LNK AU)‘s in-specie distribution of PEXA shares to its shareholders is approved.
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
- Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
- One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
- After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).
MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
- Filo Mining (FIL CN) and Tietto Minerals (TIE AU) are adds while Fresnillo (FRES LN), Galiano Gold (GAU US), Jaguar Mining (JAG CN) and Novo Resources (NVO CN) are deletes.
- One way turnover is estimated at 4.3% resulting in a one-way trade of US$163m. There is over 1 day of ADV to trade on 24 stocks.
- Largest inflows are on Filo Mining (FIL CN) and Tietto Minerals Ltd (TIE AU) while largest outflows are on Fresnillo PLC (FRES LN) and Centerra Gold (CG CN).
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes
- As expected, there are no adds or deletes for the MVIS Global Rare Earth/Strategic Metals Index at the December rebalance.
- There are free float and capping changes that will be implemented at the close on 16 December.
- One way turnover is estimated at 4.26% and will result in a one-way trade of US$31.5m.
Toshiba (6502) – Funding Secured!
- A Nikkei article today suggests FUNDING SECURED for JIP’s deal for Toshiba Corp (6502 JP). Noises 2wks ago suggested this timing for a deal, but there are no terms yet.
- The syndicate, led by SMBC and Mizuho, “has agreed to ¥1.2trln in loans.” The two leads take two-thirds but details suggest not all is as smooth as the headline suggests.
- The remaining questions are whether the major holders will take the bait at that price, and/or whether JIC would come in over the top. I expect yes to the first.
2023 High Conviction – Anycolor (5032) Aiming at TSE Prime and TOPIX – And How!
- “VTuber” (Virtual Youtuber) animated influencer company Anycolor (5032 JP) was listed on 8 June 2022 at ¥1530. The stock popped 214% on Day1.It is up another 60% since then.
- Today Anycolor reported Q2 earnings (result, presentation) and revised its full-year forecast to 30 April. Revenues will be +7-18% vs forecast, OP +18-39%, NP +15-39%. Price is 43x forecast EPS.
- The company also announced it is preparing a Section Transfer application, but gave little more info. So we dig into what THAT means.
China ADRs: PCAOB Resets the Clock on Delistings; Implications
- After getting ‘unprecedented access’ to inspect and investigate audit firms in the PRC, the PCAOB is vacating their 2021 determinations; there will be no ADR delistings in the near future.
- PCAOB inspectors have identified numerous potential deficiencies that are consistent with what the PCAOB has encountered in other first-time inspections around the world.
- The iShares MSCI China ETF (MCHI US), KraneShares CSI China Internet ETF (KWEB US) and NASDAQ Golden Dragon China Index (HXC INDEX) are trading lower in the U.S.
China ADRs Delisting – Christmas Came a Day Earlier than We Expected – No Delisting Risk for Now
- Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history.
- This was on back of the Aug 2022 agreement between PCAOB, CSRC and MOF, which was followed up with a Hong Kong visit by PCAOB officials over Sep-Nov 2022.
- We wrote about this on 14th Dec 2022 and expected the results to be out on Friday (16th Dec), they have come out a day earlier than we expected.
Discussing Why Meritz Swap Spread Not Being Narrowed & When to Enter
- The swap arb spread has been consistently within the 3% to 5% band since November 23, when arb trading should have actually started.
- Meritz Financial’s buyback seems to be making it difficult to build positions on expectations that the price gap relative to Fire and Securities will converge quickly with the swap ratio.
- As the actual risk of repaying financial borrows is small, we should start building up positions two weeks before the end of January, aiming to exit in early or mid-February.
MinRes’ “Unconditional” Offer For Norwest
- Iron ore and lithium play Mineral Resources (MIN AU) is offering one new share for every 1,367 Norwest Energy (NWE AU), an onshore O&G play, in an off-market takeover.
- The implied value of A$0.06/share under the Offer represents a 27% premium to NWE’s one-month VWAP.
- MinRes currently owns 19.9% in Norwest. There is no minimum acceptance condition. This is done and will trade tight.
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