Event-Driven

Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

Insiders Related Daisy Partners Sells About 270 Billion Won of Ecopro Co and Ecopro BM

On 29 December, Ecopro Group announced large selling of Ecopro Co Ltd (086520 KS) and Ecopro BM (247540 KS) by Daisy Partners worth 272 billion won in December.
Daisy Partners is a company 100% owned by Chairman of Ecopro Group Lee Dong-Chae and his family members.
Daisy Partners is likely to sell more shares in Ecopro Co and Ecopro BM in the next several years to increase the foundation’s capital to about 500 billion won.

NIFTY Bank Index Rebalance Preview: Canara Bank Could Replace Bandhan Bank

Canara Bank (CBK IN) could replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the March rebalance.
Passive trackers will need to buy 2 days of ADV on Canara Bank (CBK IN) while selling over 1 day of ADV on Bandhan Bank Ltd (BANDHAN IN).
The impact is even higher where passives will need to buy nearly 6x delivery volumes in Canara Bank and sell 3x delivery volumes in Bandhan Bank Ltd.

Pyridam Farma (PYFA IJ): Acquisition of Australian Contract Manufacturer to Add Long-Term Value

By Tina Banerjee

Pyridam Farma (PYFA IJ) is acquiring Probiotec Ltd (PBP AU), a leading contract manufacturer and packer of prescription and OTC pharmaceuticals, complementary medicines, consumer health products, and FMCG.
Under the terms of the scheme, Probiotec shareholders will receive cash consideration of A$3.00 per share. This implies an equity value of ~A$251M for Probiotec and enterprise value of ~A$326M.
The acquisition will add an attractive high-margin revenue stream to Pyridam. Through the acquisition of Probiotec, Pyridam will be capable to reach a wider market, thereby increasing its market share.

Selected European HoldCos and DLC: December’23 Report

By Jesus Rodriguez Aguilar

The discounts to NAV of covered holdcos have mainly widened during December. Discounts to NAV: C.F.Alba, 49.1% (vs. 47.1%); GBL, 36.6% (vs. 34.9%); Heineken Holding, 16.7% (vs. 14.5%);
Industrivärden C, 5.4% (vs.4.9%); Investor B, 13.5% (vs. 14.6%); Porsche Automobile Holding, 37.1% (vs. 39.9%). The spread of Rio DLC widened to 24.2% (vs.17.2%).
What seems interesting: in holding trades, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.

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Jan 01

Daily Brief Event-Driven: Merger Arb Mondays (01 Jan) – Weiqiao Textile and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (01 Jan) – Weiqiao Textile, IRC, IJTT, JSR, Shinko Electric, Hollysys, OreCorp
(Mostly) Asia M&A, Dec 2023: Vinda, Adbri, Perpetual, CPMC, Sigma Health, Shinko Electric

Merger Arb Mondays (01 Jan) – Weiqiao Textile, IRC, IJTT, JSR, Shinko Electric, Hollysys, OreCorp

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 – Irc Ltd (1029 HK), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Adbri (ABC AU), Probiotec Ltd (PBP AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), A2B Australia (A2B AU), T&K Toka Co Ltd (4636 JP), Tokyo Rakutenchi (8842 JP), Pact Group Holdings (PGH AU).

(Mostly) Asia M&A, Dec 2023: Vinda, Adbri, Perpetual, CPMC, Sigma Health, Shinko Electric

For the month of December 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$10bn.
The average premium for the new deals announced (or first discussed) in December was 44.7%. The average YTD is 39% (117 deals).
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

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Dec 31

Daily Brief Event-Driven: HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys
Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT
Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week
A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.
Swire Pacific (A) (19 HK) may still see more outperformance from its latest buyback. But it’s up ~29% since the company announced it was buying both the As and Bs.
Li Ning (2331 HK)‘s shares continue to edge up after its founder recently increased its stake.

Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 18.7bn of A-shares on stronger average activity. BIG net buying flows on Weds and Thursday.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.

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Dec 30

Daily Brief Event-Driven: Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea
EQD | The S&P500 WEEKLY Rally Is At A Crucial Fork: Higher or Lower?

Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea

By Sanghyun Park

The spot prices of the newly listed SSFs generally exhibited a notable upward trend. This trend was consistently more pronounced in KOSDAQ-listed stocks compared to KOSPI-listed ones.
Various factors, including actions by ETF operators, may contribute. Their SSF purchases could deepen contango, leading to temporary spot price increases through arb spread seekers anticipating this development.
We should focus on a potentially consistent price pattern persisting before a sufficient learning effect accumulates. The tight schedule after July increases the likelihood of similar opportunities next March.

EQD | The S&P500 WEEKLY Rally Is At A Crucial Fork: Higher or Lower?

The S&P 500 INDEX has been closing up for 9 consecutive weeks (CC=+9). In theory it could go higher for another 3 weeks, but it is ultra-OVERBOUGHT.
The market has moved past the Tails resistance limit at 4747 this last week, rallying more than +15% from the bottom on October 26th.
A SHORT trade may not be effective but being prepared for a pullback is a good idea, maybe just to add positions at better prices (assuming the rally will continue).

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Dec 29

Daily Brief Event-Driven: StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down
Boart Longyear’s (ASX:BLY) Ignominious Exit
ADNOC/Covestro: Bargaining On
EQD | The Nikkei Will Pullback Within 1-3 Weeks
HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu

StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down

Swire Pacific (19 HK)‘s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Boart Longyear’s (ASX:BLY) Ignominious Exit

Drilling services company Boart Longyear (BLY AU) has agreed to a takeover by American Industrial Partners. Boart’s five largest shareholders – collectively holding 98.86% of shares out – are supportive.
Highly-Leveraged Boart copped the brunt of the GFC, and never fully recovered. American Industrial Partners’ Offer values Boart at A$543mn against its 2007 IPO value of A$2.3bn.
The takeover is expected to be completed in the first quarter of 2024. This is done.

ADNOC/Covestro: Bargaining On

By Jesus Rodriguez Aguilar

Covestro AG (1COV GR) has been the subject of a potential takeover from ADNOC since Bloomberg reported on 20 June. The last reported potential offer is €60/share (c.€11.3 billion).
ADNOC could be willing to offer €64.5 (7.1x EV/EBITDA on mid-cycle €2,110 million EBITDA), but Covestro is rumoured to seek €70/share (typical chemicals 6x on €2,675 million EBITDA, likely demanding).
Considering a takeout price of €60, gross spread is 11.7% and the shares are pricing a 64% probability of deal completion. I’d be long at €53/share, as downside seems limited.

EQD | The Nikkei Will Pullback Within 1-3 Weeks

The Nikkei 225 (NKY INDEX) is about to close up for the 3rd consecutive week (CC=+3), it’s towards the Q3 resistance level at 33984: it’s short-term overbought.
There is a good chance that the index will pull back in the next 1-3 weeks, at the moment it looks like the rally has “stalled”.
The pullback may be an opportunity to buy again, and ride a rebound to previous highs, we will discuss LONG levels in a separated insight.

HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight is Li Ning (2331 HK) and Meitu Inc (1357 HK).

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Dec 28

Daily Brief Event-Driven: Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco
Whispir (WSP AU) Backs Soprano’s Bump
OreCorp (ORR AU): Silvercorp Switches to a Takeover Offer to Counter Perseus

Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs

On 27 December, Kum Yang announced that its shares will be listed on the US stock market in the form of DRs, resulting in its shares rising by 11.7%.
The listing of Kum Yang ADRs is likely to have a short-term positive impact on its share price as this is likely to reduce free float of local common shares.
Nonetheless, over the next 6-12 months, we expect Kum Yang’s share price to trade much lower (30% or more) as its shares are highly overvalued.

Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid

On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
“The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.

Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco

It was reported today that SK Pharmteco completed a 660 billion won in pre-IPO funding valuing the company at 4 trillion won.
Prior to this investment, SK Inc owned a 100% stake in SK Pharmteco. After this investment, it is estimated that SK Inc will own about 83.5% stake in SK Pharmteco.
Our base case valuation of SK Inc is NAV of 19.0 trillion won (NAV per share of 258,967 won), representing a 47% upside from current levels.

Whispir (WSP AU) Backs Soprano’s Bump

Soprano has upped its Offer for Whispir Ltd (WSP AU) to A$0.55/share, and has secured board support.
Pendula has a higher (indicative) Offer of A$0.60/share; however Whispir sees Soprano’s terms as superior due to the “conditionality, uncertainty and timing of progressing to a binding transaction with Pendula”.
Soprano’s Offer for Whispir closes on the 10 January – unless extended.

OreCorp (ORR AU): Silvercorp Switches to a Takeover Offer to Counter Perseus

Silvercorp Metals (SVM US) has switched to an off-market takeover offer. The Orecorp Ltd (ORR AU) consideration remains unchanged at A$0.19 cash and 0.0967 SVM shares per ORR share.
The takeover offer is conditional on a 50.1% minimum acceptance condition, achievable in the absence of a superior proposal.
The crucial question is whether Perseus Mining (PRU AU) is comfortable with SVM effectively controlling ORR. We think that there is a low probability of Perseus launching a competing proposal.

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Dec 27

Daily Brief Event-Driven: Fujitsu General (6755) – Fujitsu Wants Out and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue
IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850
EQD | The LONG Case for the Hang Seng Index
Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024
OreCorp: Silvercorp Switches To Off-Market Bid
Quiddity Leaderboard ES50 Sep 24: Engie Close to US$1.2bn Index Flow

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850

IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s revised tender offer of JPY850, 4.7% premium to its previous JPY812 offer. The revised offer has been declared final.
The Isuzu Motors (7202 JP) share repurchase price has risen 4.0% from JPY677 to JPY704. The tender closes on 15 January 2024. All other terms are unchanged.
The shares are trading above the revised terms. A final offer and no competing bidder points to an unfavourable risk/reward profile – a 21% downside on a deal break.

EQD | The LONG Case for the Hang Seng Index

The HSI INDEX closed last week down (CC=-1) at 16340.41, it is now down 5 months in a row (CC=-5), very OVERSOLD.
If this week the index keeps going down, it may find support soon and bounce next week. The alternative scenario is a longer correction, 2 weeks.
Support for a LONG trade, possibly pushed by a MONTHLY reversal, should be found between 16200 and 15950: this is a highly speculative setup given the stubborn downtrend.

Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024

The Korean Supreme Court’s ruling on the stock transfer lawsuit between Hahn & Company private equity fund and Namyang Dairy’s Chairman Hong Won-Sik is confirmed for 4 January 2024.
The expectation of Hahn & Co winning this legal dispute has positively impacted the share price of Namyang Dairy Products.
The higher probability scenario is for the Korean Supreme Court to rule in favor of Hahn & Co, agreeing with the decisions of the two lower courts in Korea.

OreCorp: Silvercorp Switches To Off-Market Bid

On the 24 November, Silvercorp Metals (SVM CN) bumped its Scheme Offer for Orecorp Ltd (ORR AU) to A$0.19 in cash and 0.0967 new Silvercorp shares.
At a 40.1% premium to undisturbed and key shareholder Tim Goyder (5.14%) supportive, this looked done. Then Perseus (PRU AU) built a 19.9% stake and said it would vote no.
After postponing the Scheme meeting, Silvercorp and Orecorp have now agreed to an off-market takeover, on the same terms. The tendering threshold is 50.1%.

Quiddity Leaderboard ES50 Sep 24: Engie Close to US$1.2bn Index Flow

By Janaghan Jeyakumar, CFA

The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
This annual index review usually results in some of the most significant index flow events in Europe every year typically amounting to billions of dollars.
In this insight, we take an early look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.

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Dec 26

Daily Brief Event-Driven: IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively
Japan – Increasing Shorts on Some Interesting Stocks
SBI To Buy Gumi (3903) Shares To Up Stake to Near 30% (And Try To Avoid Impairment)
Meldia DC (1739 JP) – Open House Group Cleans Up Sanei Architecture Sub in TOB.
ABB’s Offer For Symbio (SYM AU): 7th Feb Shareholder Vote
IRC Limited (1029 HK): A Wide Spread as the Conditional Offer Opens
Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer
EQD | KOSPI 200 Shows a Bullish Pattern for the Upcoming Pullback

IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively

IJTT Co., Ltd. (7315 JP) was perhaps one of the lower-priced parent takeovers (Isuzu remains central to the bidder post-buyout) at 0.46x book. Today, the last day, it got bumped.
The new price is ¥850/share vs ¥812/share. +4.7% and a whopping 0.48x book now. ¥850 is where the stock traded just before the announcement. It immediately jumped to ¥875/share.
It appears Isuzu is not getting any more money out of this, but they should be OK. They are buying back in at 0.48x book. With leverage.

Japan – Increasing Shorts on Some Interesting Stocks

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

SBI To Buy Gumi (3903) Shares To Up Stake to Near 30% (And Try To Avoid Impairment)

Today after the close, SBI Holdings (8473 JP) made an announcement it would buy (up to) 3.0mm shares of Gumi Inc (3903 JP) shares between tomorrow and end-March 2024.
SBI already owns 8.8mm shares, and this would bring them close to 30.0%.
SBI did not specifically say they would buy on market, but the next 400,000 shares would require a large shareholder filing amendment.

Meldia DC (1739 JP) – Open House Group Cleans Up Sanei Architecture Sub in TOB.

Open House (3288 JP) took over Sanei Architecture Planning (3228 JP) this past autumn when banks forced the issue over the former CEO/owner’s mafia ties discovered in an investigation.
Seedheiwa (1739 JP) now better known as Meldia DC, is ~60% held by Sanei Architecture Planning, and 3% by Mr Koike. It has debt. So it needs cleaning up too.
This is too light for minorities, and even lighter for whole co, but it’s a done deal.

ABB’s Offer For Symbio (SYM AU): 7th Feb Shareholder Vote

On the 1st November, cloud communication software outfit Symbio Holdings (SYM AU) backed Aussie Broadband Pty Ltd (ABB AU)‘s reduced cash/scrip Offer of A$2.99-$3.04/share, and entered into a Scheme agreement.
Superloop Ltd (SLC AU), which had previously made two cash/scrip Offers for Symbio, promptly walked.
Symbio’s Scheme Meeting has now been tabled for the 7 Feb, with implementation expected on the 28 February. The IE is supportive. This is done – and trading tight.

IRC Limited (1029 HK): A Wide Spread as the Conditional Offer Opens

The Irc Ltd (1029 HK) IFA opines that a mandatory conditional offer from Nikolai Levitskii (Chairman and 30.61% shareholder) at HK$0.118 per share is fair and reasonable.
The offer is open, with the first closing date of 12 January 2024. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.
While the offer is light, satisfying the minimum acceptance condition is possible. The risk/reward profile is favourable as the upside (25.5% spread) outweighs the downside (5.3% to the undistributed price).

Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

Dazheng (without Recco) has returned with a revised US$29.00 offer for Hollysys Automation Technologies (HOLI US), 9.4% higher than Ascendent Capital’s US$26.50 binding offer.
While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.
Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng’s offer.

EQD | KOSPI 200 Shows a Bullish Pattern for the Upcoming Pullback

The KOSPI 200 INDEX closed up 8 weeks in a row and breached the Inner Fence resistance target at 349, the index is now very OVERBOUGHT.
The upcoming pullback could be an occasion to go LONG at better prices: based on pattern analysis there is a chance the correction may be a large one, albeit fast.
Support levels to buy are in the 346-336 price area.

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Dec 25

Daily Brief Event-Driven: A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
Merger Arb Mondays (25 Dec) – JSR, Benefit One, IRC, Adbri, Link, A2B, Probiotec, Lithium Power
KOSDAQ 150’s New Fast Entry Rule: Top 30 by Market Cap in 15 Trading Days Post-Listing

A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As

The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished.
STILL time to go long Hs vs As for the new year at 52wk wide discounts.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

Merger Arb Mondays (25 Dec) – JSR, Benefit One, IRC, Adbri, Link, A2B, Probiotec, Lithium Power

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 – Irc Ltd (1029 HK), Orecorp Ltd (ORR AU), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Adbri (ABC AU), Probiotec Ltd (PBP AU), Volpara Health.
Lowest spreads – Tietto Minerals Ltd (TIE AU), A2B Australia (A2B AU), IJTT Co., Ltd. (7315 JP), T&K Toka Co Ltd (4636 JP), Tokyo Rakutenchi (8842 JP), Pact Group.

KOSDAQ 150’s New Fast Entry Rule: Top 30 by Market Cap in 15 Trading Days Post-Listing

By Sanghyun Park

Fast entry is now permissible for KOSDAQ 150. Within 15 trading days post-listing, the average daily total market cap must rank among the top 30 ordinary stocks on KOSDAQ.
KOSDAQ 150 will also allow newly established entities in corporate spin-offs, following KOSPI 200’s model. Inclusion is granted if the subsidiary ranks within KOSDAQ 150’s top 160 (80%).
The ₩1.5T cutoff for KOSDAQ 150 fast entry suggests potential candidates nearing this threshold, like Oasis, Kurly (and maybe Kakao Entertainment).

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Dec 24

Daily Brief Event-Driven: Newmont’s Upcoming (March 2024) ASX Selldown and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Newmont’s Upcoming (March 2024) ASX Selldown
HK Connect SOUTHBOUND Flows (To 22Dec23); CNOOC/Energy To The Buy Side; Tencent Heavily Sold, Again.
Mainland Connect NORTHBOUND Flows (To 22 Dec 23): CATL Is the BIG BUY This Week
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Adbri, Link Admin, Azure Minerals, Lithium Power, JSR Corp
Last Week in Event SPACE: Benefit One, Hankook, Toyo Construction, Hanwha, Tsuruha, Livent/Allkem
Weekly Deals Digest (24 Dec) – Benefit One, JSR, Weiqiao Textile, A2B, Adbri, Azure, Link, Probiotec

Newmont’s Upcoming (March 2024) ASX Selldown

As warned in Newcrest-Newmont Merger: Fancy Index Shenanigans in October, the merger construct meant flowfront, index flowback, then later index flowback.
We are now between the second and third events. The data on the third is there, but it won’t be obvious to everyone.
There should be a large, not publicly announced, downweight on Newmont (NEM AU) in the March 2024 index review for the major local indices.

HK Connect SOUTHBOUND Flows (To 22Dec23); CNOOC/Energy To The Buy Side; Tencent Heavily Sold, Again.

SOUTHBOUND flows showing reversion tendencies still. Hs up vs As only slightly. Liquid Hs were down vs As.
SOUTHBOUND saw HK$144bn of net INflows on the week to 22 Dec, which was HK$4bn of Tencent net sales and net buying of a bunch of ETFs.
Some banks and energy names were top net inflows as a percentage of ADV. This week was heavy for SOUTHBOUND, quiet for foreigners, next week may be quiet for both.

Mainland Connect NORTHBOUND Flows (To 22 Dec 23): CATL Is the BIG BUY This Week

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net sell RMB 2.2bn of A-shares on sharply lighter activity. Quieter all week.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Adbri, Link Admin, Azure Minerals, Lithium Power, JSR Corp

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals discussed this week, all Down Under: Adbri (ABC AU), Link Administration (LNK AU), Pacific Smiles (PSQ AU), Probiotec (PBP AU), A2B Australia (A2B AU), and Whispir (WSP AU).
Key updates took place on: Azure Minerals (AZS AU), Lithium Power International (LPI AU), JSR Corp (4185 JP), Allkem Ltd (AKE AU), and Toyo Construction (1890 JP).

Last Week in Event SPACE: Benefit One, Hankook, Toyo Construction, Hanwha, Tsuruha, Livent/Allkem

Stay long Benefit One (2412 JP). Dai-Ichi Life can pay more, if pushed on pricing. May not be huge, but it could be a few percent or even 10%.
Hankook & Company (000240 KS)‘s family feud goes public. The public tender looks set to fail. Coal in stockings all-round.
If you had any Toyo Construction (1890 JP) left over from the rally up to ¥1,300+, get out. There may be a better opportunity later, but not here.

Weekly Deals Digest (24 Dec) – Benefit One, JSR, Weiqiao Textile, A2B, Adbri, Azure, Link, Probiotec