Smartkarma Daily Briefs

Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

EQD | Kospi Index Options Weekly – January 06 – 10

Strong price action, Kospi rising 2.32% on Monday and finishing the week up 3.24%
Implied vol was virtually unchanged and historic vols came down in the move higher.
Kospi tends to have its largest monthly average absolute price change during January.

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Jan 13

Daily Brief United States: US Treasury (10 Yr Generic) and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

High Government Borrowing: Nuanced Implications for US Treasuries

High Government Borrowing: Nuanced Implications for US Treasuries

By Said Desaque

The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.
High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.
Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors.

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Jan 13

Daily Brief China: ESR Group , Shanghai Henlius Biotech , ZTE Corp H, Xiamen Amoytop Biotech Co Ltd, Bloks Group, Weichai Power Co Ltd H, China National Building Material, SHEIN, Tencent and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
Weekly Deals Digest (12 Jan) – Henlius, GA Pack, Fujitsu General, Fuji Soft, Pressance, LG CNS
HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent
Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance
Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline
A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.
China National Building Material (3323 HK): Buyback Getting Even More Convincing
Poor Performance Before UK Lawmakers Is SHEIN’s Latest Stumble on Journey To London (Or HK?) IPO
EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Smart Share Global (EM US), Pressance Corp (3254 JP), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK).
Lowest spreads: Lifestyle China (2136 HK), Makino Milling Machine Co (6135 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU).

Weekly Deals Digest (12 Jan) – Henlius, GA Pack, Fujitsu General, Fuji Soft, Pressance, LG CNS

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Fujitsu General (6755 JP), Fuji Soft Inc (9749 JP), Pressance Corp (3254 JP), Smart Share Global (EM US).

HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent

SOUTHBOUND gross trading activity was not stronger per day than the previous two weeks. But SB Net Buying was HUGE. The biggest week since global index deletions in January 2021.
The story was similar. On Tuesday in the US, Tencent was put on a DoD list leading to a possible CMC list appearance (which would lead to index deletions).
Tencent saw US$4bn of SOUTHBOUND net buying. SMIC, Xiaomi, and China Mobile were another $1bn.

Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness

By David Blennerhassett

Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.

STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance

95% of the way through the review period, there could be 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index.
We estimate turnover of 4.1% for the STAR50 INDEX and 9.3% for the STAR100 Index. The net round-trip trade is CNY 14.1bn (US$1.9bn).
The forecast adds to the STAR50 INDEX have outperformed the forecast deletes with steady outperformance over the last 3 months; the performance for the STAR100 Index is a lot better.

Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

China National Building Material (3323 HK): Buyback Getting Even More Convincing

By Osbert Tang, CFA

The prices of the construction materials stocks collapsed recently, with China National Building Material (3323 HK) holding firm, thanks to the buyback proposal.
A sustained drop in cement prices and continued weakness in fixed asset investment revealed the challenging demand environment, making CNBM’s offer attractive.
The buyback price equals 25.7x and 10.8x PERs for FY24F and FY25F, representing a hefty premium over peers. We continue to believe this is a good exit opportunity.

Poor Performance Before UK Lawmakers Is SHEIN’s Latest Stumble on Journey To London (Or HK?) IPO

By Daniel Hellberg

SHEIN’s general counsel frustrated UK lawmakers by refusing to answer certain questions
It’s the latest in a series of potential obstacles that could derail a planned London IPO
Add growing concerns over cotton supply chain & new threat from Amazon to existing risks

EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling

Investors haven’t lost their enthusiasm for Tencent. The put/call ratio is a long way from indicating panic.
Implied vols have risen but are far from panic levels with 1M implied at it’s 39th percentile over the past year and 15th percentile since 2001.
Skew has risen significantly for out-of-the-money Puts as spot has moved into a range where there is higher Put positioning vs Call positioning.

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Jan 13

Daily Brief Japan: Seven & I Holdings, TSE Tokyo Price Index TOPIX, Nikkei 225 and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking
“Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?
EQD | Nikkei Index Options Weekly – January 06 – 10

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven & I Holdings (3382 JP) MBO.
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing.
The article suggests that the MBO valuation could be lower than previously reported. However, 7&i’s underlying value supports a JPY8 trillion MBO valuation (market cap).

“Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?

By Aki Matsumoto

The improvement in ROA was not as large as that of ROE, which raises concerns that the improvement in profitability may be running out of steam.
Improvements in corporate governance in 2024 were even lower than in 2023. The repetitive loss of enthusiasm after danger past is seen in % Independent Directors, Nomination/Compensation Committee, etc.
The reason why stock valuations little increased despite Foreign Ownership’s 2024 increase might have to do with the fact that improvements in corporate governance have not spread to all companies.

EQD | Nikkei Index Options Weekly – January 06 – 10

Weak price action to start the year for the Nikkei with little direction from USD/JPY which was grinding higher throughout the week.
Volatility at the start of the week helped push short term historic vol higher with at-the-money implied vol up about 1 point.
Volumes picked up substantially over year-end levels with Puts making up 53.5% of all contracts traded.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
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Jan 13

Most Read: WuXi XDC Cayman , CSSC (Hong Kong) Shipping Co Ltd, ESR Group , Pressance Corp, Shanghai Henlius Biotech , Xiamen Amoytop Biotech Co Ltd, Jusung Engineering, Bloks Group, Seven & I Holdings, Weichai Power Co Ltd H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well
BUY/SELL/HOLD: Hong Kong Stock Update (January 10)
Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap
Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance
FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline
Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking
A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well

By Sumeet Singh

WuXi AppTec (2359 HK) aims to raise around US$150m via selling around 3% stake in WuXi XDC Cayman (2268 HK).
WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will talk about the placement and run the deal through our ECM framework.

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

By David Mudd

Hong Kong and China shares have outperformed most Asian markets over the last year. In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.
CSSC (Hong Kong) Shipping Co Ltd (3877 HK) was rated BUY after reporting strong results. Analysts have a target price of $2.50 on the stock.
Bosideng International Holdings (3998 HK) has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Smart Share Global (EM US), Pressance Corp (3254 JP), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK).
Lowest spreads: Lifestyle China (2136 HK), Makino Milling Machine Co (6135 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU).

Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

Four-Plus years ago, Open House (3288 JP) bought the stake in Pressance Corp (3254 JP) owned by its embattled CEO (who had been arrested for a scandal).
Four years ago, Open House launched a partial tender and capital injection to go to ~65%. A takeout was a matter of time.
That time has come. Today Open House announced a Tender Offer to take Pressance fully-private. This is an easy deal. A done deal. Done too cheap.

Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness

By David Blennerhassett

Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.

STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance

95% of the way through the review period, there could be 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index.
We estimate turnover of 4.1% for the STAR50 INDEX and 9.3% for the STAR100 Index. The net round-trip trade is CNY 14.1bn (US$1.9bn).
The forecast adds to the STAR50 INDEX have outperformed the forecast deletes with steady outperformance over the last 3 months; the performance for the STAR100 Index is a lot better.

FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly

Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven & I Holdings (3382 JP) MBO.
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing.
The article suggests that the MBO valuation could be lower than previously reported. However, 7&i’s underlying value supports a JPY8 trillion MBO valuation (market cap).

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Jan 13

Daily Brief Industrials: Weichai Power Co Ltd H, Hutchmed China Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.
HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

By Xinyao (Criss) Wang

HUTCHMED announced the disposal of 45% equity interest in SHPL for US$608 million, including selling 35% equity interest to GP Health Service Capital and 10% equity interest to Shanghai Pharma.
There’re synergies between SHPL and Shanghai Pharma regarding TCM business. It’s necessary for HUTCHMED to sell non-core JV to reserve cash flow in advance to focus on innovative drug business.
The entire valuation of SHPL reaches RMB10 billion, or about 15x P/E. If HUTCHMED’s innovative drug business can bear fruit, its valuation has more room to grow in the future.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 13

Daily Brief Energy/Materials: China National Building Material and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

China National Building Material (3323 HK): Buyback Getting Even More Convincing

China National Building Material (3323 HK): Buyback Getting Even More Convincing

By Osbert Tang, CFA

The prices of the construction materials stocks collapsed recently, with China National Building Material (3323 HK) holding firm, thanks to the buyback proposal.
A sustained drop in cement prices and continued weakness in fixed asset investment revealed the challenging demand environment, making CNBM’s offer attractive.
The buyback price equals 25.7x and 10.8x PERs for FY24F and FY25F, representing a hefty premium over peers. We continue to believe this is a good exit opportunity.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 13

Daily Brief Financials: ESR Group , US Treasury (10 Yr Generic), Nikkei 225 and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
High Government Borrowing: Nuanced Implications for US Treasuries
EQD | Nikkei Index Options Weekly – January 06 – 10

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Smart Share Global (EM US), Pressance Corp (3254 JP), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK).
Lowest spreads: Lifestyle China (2136 HK), Makino Milling Machine Co (6135 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU).

High Government Borrowing: Nuanced Implications for US Treasuries

By Said Desaque

The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.
High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.
Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors.

EQD | Nikkei Index Options Weekly – January 06 – 10

Weak price action to start the year for the Nikkei with little direction from USD/JPY which was grinding higher throughout the week.
Volatility at the start of the week helped push short term historic vol higher with at-the-money implied vol up about 1 point.
Volumes picked up substantially over year-end levels with Puts making up 53.5% of all contracts traded.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 13

Daily Brief Industrials: Weichai Power Co Ltd H, Hutchmed China Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.
HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

HUTCHMED to Divest 45% Stake in Non-Core Joint Venture with Shanghai Pharma

By Xinyao (Criss) Wang

HUTCHMED announced the disposal of 45% equity interest in SHPL for US$608 million, including selling 35% equity interest to GP Health Service Capital and 10% equity interest to Shanghai Pharma.
There’re synergies between SHPL and Shanghai Pharma regarding TCM business. It’s necessary for HUTCHMED to sell non-core JV to reserve cash flow in advance to focus on innovative drug business.
The entire valuation of SHPL reaches RMB10 billion, or about 15x P/E. If HUTCHMED’s innovative drug business can bear fruit, its valuation has more room to grow in the future.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 13

Daily Brief TMT/Internet: ZTE Corp H, Jusung Engineering, Tencent, Korea Stock Exchange KOSPI 200, Cellnex Telecom Sau, Plover Bay Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent
FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling
EQD | Kospi Index Options Weekly – January 06 – 10
Cellnex’s Strategic Divestment of Swiss Subsidiary
Plover Bay 1523 HK FY24 Earnings Preview: What Should We Expect in FY25
China Consumption Weekly (13 Jan 2025): NEV 2024, Tencent in Blacklist, Energy Monster Going Private

HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent

SOUTHBOUND gross trading activity was not stronger per day than the previous two weeks. But SB Net Buying was HUGE. The biggest week since global index deletions in January 2021.
The story was similar. On Tuesday in the US, Tencent was put on a DoD list leading to a possible CMC list appearance (which would lead to index deletions).
Tencent saw US$4bn of SOUTHBOUND net buying. SMIC, Xiaomi, and China Mobile were another $1bn.

FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly

Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling

Investors haven’t lost their enthusiasm for Tencent. The put/call ratio is a long way from indicating panic.
Implied vols have risen but are far from panic levels with 1M implied at it’s 39th percentile over the past year and 15th percentile since 2001.
Skew has risen significantly for out-of-the-money Puts as spot has moved into a range where there is higher Put positioning vs Call positioning.

EQD | Kospi Index Options Weekly – January 06 – 10