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Jan 12
0

Most Read: SBI Shinsei Bank, MatsukiyoCocokara, Taste Gourmet Group, Shinko Electric Industries, Astra International, Appier Group, LG Household & Health Care-Pref, Alibaba (ADR), LG Energy Solution and more

By | Daily Briefs, Most Read

In today’s briefing:

  • 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
  • MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
  • Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact
  • Fujitsu (6702) Subsidiary Selldowns To Come
  • JCNC Is Even More Overstretched Vs. Astra
  • January TOPIX FFW Review – Some Big Sells
  • Discussing the Currently Widened Pref-Ord Disparity in Korea
  • Aequitas 2023 Asia IPO Pipeline – Hong Kong
  • LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons
  • Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print

2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines

By Travis Lundy

MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period

By Brian Freitas

  • We expect a number of changes to the MSCI Standard indices for the Asia Pacific region at the first Quarterly Comprehensive Index Review to be implemented on 28 February.
  • As usual, most changes are expected in China with a smattering of adds and deletes for the other markets.
  • On average, the adds have outperformed the deletes over the last few weeks and months and pre-positioning should continue for the next couple of weeks.

Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome Executive Chairman and Co-Founder, Kent Wong and CFO and Company Secretary, Gerald Yu. They will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Friday, 13 January 2023, 14:00 SGT.

About Taste Gourmet

Taste Gourmet Group Limited (8371 HK) is a Hong Kong based restaurant group offering a variety of cuisines under a portfolio of brands to a diversified customer base. Since the opening of its first restaurant in 2007, the group owned and operated a total of 34 restaurants offering Vietnamese, Japanese, Chinese, Western and Drink under 14 brands, comprising 11 self-owned brands such as La’taste Vietnamese Cuisine, Dab-Pa Peking & Szechuan Cuisine, Dab-Pa Peking & Szechuan Bistro, Dab-pa Modern Chinese Cuisine, Urawa Japanese Restaurant, Nabe Urawa, Rakuraku Ramen, Wasyohuya Yamaichi, Moments Together, Yakiniku Guu, San-Kinn; 3 licensed brands known as Parkview, Takano Ramen and Tirpse; and 1 joint venture brand known as Xianghui. 

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Fujitsu (6702) Subsidiary Selldowns To Come

By Travis Lundy

JCNC Is Even More Overstretched Vs. Astra

By David Blennerhassett

  • Jardine Cycle & Carriage (JCNC SP)‘s is currently trading tight at a ~6% discount to NAV.
  • The implied stub and JCNC/Astra International (ASII IJ) ratio are the highest outside the 2008 financial crisis.
  • Key catalysts for JCNC’s outperformance, such as the SIMSCI Index inclusion, have passed.  JCNC is trading rich. Look to reverse the stub.

January TOPIX FFW Review – Some Big Sells

By Travis Lundy

Discussing the Currently Widened Pref-Ord Disparity in Korea

By Sanghyun Park

  • Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).
  • The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.
  • We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.

Aequitas 2023 Asia IPO Pipeline – Hong Kong

By Sumeet Singh

  • In this note, we will take a look at the Asia Pacific IPO pipeline for 2023, starting with Hong Kong. 
  • This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
  • The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons

By Douglas Kim

  • This insight provides a trading strategy on LG Energy Solution (373220 KS) with a focus on the end of the ESOP shares lockup period on 27 January.
  • Currently, LG Energy Solution is trading at P/E of 46.5x in 2024 which is more than 100% higher than the P/E multiples of CATL (20.4x) and Tesla (19.2x) in 2024.
  • Our view is that in the long-term, LG Energy Solution should not trade at such high valuation premium to Tesla given the latter company’s higher return on capital.

Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print

By Mark Chadwick

  • OVERSEAS: SPX +1.3% SOX +1.3%; Optimism on soft inflation print drives stocks; Consumer+Tech lead; Apple to introduce touch screens for Mac; Off-Shore Wind Giant Vesta leads in Europe
  • JAPAN: NKY Futs +0.3% vs Cash; USDJPY steady at ¥132.45; Biz lobby urgest firms to lift wages above inflatio;  Buy U/G in Lastertec, TEL,  Nexon and D/G to Nintendo
  • DAILY NUGGETS:  Fast Retailing has raised the bar for corporate Japan with with their wage hikes.

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Jan 11
0

Most Read: MatsukiyoCocokara, Kakao Pay, Swire Pacific (A), KT Corp, Fast Retailing, Huazhu Group, China Internet Investment Finance Holdings, Alibaba (ADR), Alibaba Group, Xiabuxiabu Catering Mgt Chn Hldgs and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
  • How Should We Play with Kakao Pay’s MSCI Inclusion Event?
  • StubWorld: Swire And China’s Opening
  • Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight
  • Fast Retailing: Another Beat Would Suggest That FR’s North America & Europe Expansion Is Viable
  • H World (HTHT) Follow-On Offering – A More Genuine Need
  • Bubble Warning: China Internet Investment (810 HK) Suspended
  • Aequitas 2022 IPOs and Placements Performance Review – From the Busiest Year to the Slowest Year
  • Alibaba (9988 HK): Still Significant Upside After Surging
  • Xiabuxiabu (520 HK): GA Clean-Up Trade Not a Concern

MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period

By Brian Freitas

  • We expect a number of changes to the MSCI Standard indices for the Asia Pacific region at the first Quarterly Comprehensive Index Review to be implemented on 28 February.
  • As usual, most changes are expected in China with a smattering of adds and deletes for the other markets.
  • On average, the adds have outperformed the deletes over the last few weeks and months and pre-positioning should continue for the next couple of weeks.

How Should We Play with Kakao Pay’s MSCI Inclusion Event?

By Sanghyun Park

  • Kakao Pay is the only possibility to be included in the February MSCI IR. It comfortably beats both the full market cap and float market cap hurdles.
  • It can be assumed that the full-fledged emergence of local institutional flows targeting MSCI inclusion contributed to some extent to Kakao Pay’s outperformance early this year.
  • More extreme reverse flow trading could emerge. In other words, there is a possibility that the share price will turn into a sell-off even before the MSCI announcement.

StubWorld: Swire And China’s Opening

By David Blennerhassett

  • Retailers /hoteliers will welcome the return of Chinese travellers, with ~US$250bn in annual spending. That should bode well for mall operators like Swire Properties and, in turn, Swire Pacific.
  • 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%.

Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

By Sanghyun Park

  • KT’s foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.
  • This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.
  • The February inclusion is pretty tight, but May seems like we could be looking out for it.

Fast Retailing: Another Beat Would Suggest That FR’s North America & Europe Expansion Is Viable

By Oshadhi Kumarasiri

  • Although it looks quite challenging, we think Fast Retailing (9983 JP) should beat consensus when it reports 1QFY23 results on 12th Jan 2023.
  • We think shares could briefly touch 2021 highs on a relatively strong beat as it would suggest that the company’s aggressive expansion plans in North America and Europe are viable.
  • Thus, we would look to buy Fast Retailing with a short investment horizon. We see considerable downside risks over a full-year period.

H World (HTHT) Follow-On Offering – A More Genuine Need

By Sumeet Singh

  • H World Group (HTHT US) aims to raise around US$260m via a follow-on ADS offering.
  • The company plans to use the proceeds mostly for investment. This will be the first deal by the company post its H-share listing in 2020.
  • In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.

Bubble Warning: China Internet Investment (810 HK) Suspended

By David Blennerhassett

  • China Internet Investment Finance Holdings (810 HK) (CII), an investment manager, is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers. 
  • CII has thrice responded to unusual price action in its share price in the past four months. Shares are up a staggering ~1,000% in the past six months.
  • This insight provides some background information on CII. Trading at 64x book value, this is one avoidable company. 

Aequitas 2022 IPOs and Placements Performance Review – From the Busiest Year to the Slowest Year

By Sumeet Singh

  • 2022 marked our seventh year covering Equity Capital Markets (ECM) in Asia Pacific. 2022 was rather quiet ending with us covering one of the lowest number of IPOs and placements.
  • We ended 2022 with an accuracy rate of 74.6% across 55 IPOs that we covered and 70.5% across 78 placements. 
  • For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

Alibaba (9988 HK): Still Significant Upside After Surging

By Ming Lu

  • A state-owned company invested in Ant Group which was also founded by Jack Ma.
  • We believe both the revenue growth rate and the operating margin will rise in following quarters.
  • We believe the stock price still has significant upside even after the surge in past four trading days.

Xiabuxiabu (520 HK): GA Clean-Up Trade Not a Concern

By Eric Chen

  • Company’s second largest shareholder General Atlantic sold out entire holdings at 5.9% to 6.4% discount to Monday close. 
  • The placement reflected mainly General Atlantic’s attempt to time market to recoup a 10-year investment instead of any negative read of company fundamentals, in our view.
  • Recent newsflow continues pointing to steady recovery in all business lines of Xiabu group.  Its valuation discount relative to peers  has not captured strong turnaround prospects. Sector top pick. 

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Jan 10
0

Most Read: Li Auto, PEXA Group, Sun*, Yamada Denki, Bilibili Inc, China Education Group, Essential Metals, Lotte Chemical, Yancoal Australia, Kakao Pay and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
  • ASX200 Index Rebalance: PEXA to Replace Pendal
  • Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event
  • Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.
  • Bilibili Follow-On Offering – Seems Opportunistic
  • China Education Group Placement – Recent Momentum Has Been Strong but past Deals Were Mixed
  • Essential Metals (ESS AU): Scheme With Tianqi/IGO
  • Lotte Chemical Offering: Schedule Clarifications & Trading Considerations
  • Quiddity Leaderboard-S&P/​​​​​​​​​ASX Mar 23: Multiple Names with Decent Impact
  • How Should We Play with Kakao Pay’s MSCI Inclusion Event?

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi

By Brian Freitas

ASX200 Index Rebalance: PEXA to Replace Pendal

By Brian Freitas

Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event

By Travis Lundy

  • In mid-December, digital UX creation agency (90% of revenues) and “talent agency” (10%) announced it would move from TSE Growth to TSE Prime mid-December 2022.
  • This was in Janaghan’s “Not Ready” list in TOPIX Inclusions: Who Is Ready (Dec 2022) because it did not meet two of the requirements. But it turns out it did.
  • This is therefore a TOPIX inclusion event at end-January 2023.

Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.

By Travis Lundy

  • Yamada Denki (9831 JP) has bought back nearly 16% of shares out ex-Treasury in the 7.5 months since last fiscal year earnings were announced. It went limit up on Day1.
  • Then it stopped – despite the buyback being 15% of expected volume every day for a year and a HUGE piece of Real World Float.
  • There is 8% left to buy at current prices – 16-18% of volume the next 4.5mos. And it is still a dirt cheap capital structure and somewhat sticky shareholder structure.

Bilibili Follow-On Offering – Seems Opportunistic

By Sumeet Singh

  • Bilibili Inc (BILI US)  aims to raise around US$400m via a follow-on ADS offering.
  • The company plans to use most of the proceeds to redeem its 2026 notes.
  • In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.

China Education Group Placement – Recent Momentum Has Been Strong but past Deals Were Mixed

By Sumeet Singh

  • China Education Group (839 HK) is looking to raise up to US$209m in its top-up placement. 
  • This will be the fourth placement by the group since its listing in 2017, we have earlier looked at the past three placements as well.
  • In this note, we will look  at the deal dynamics and run the deal through our ECM framework.

Essential Metals (ESS AU): Scheme With Tianqi/IGO

By David Blennerhassett

  • Small lithium player Essential Metals (ESS AU) has entered into a Scheme with the Tianqi Lithium JV, comprising Tianqi Lithium (9696 HK) (51%) and IGO Ltd (IGO AU) (49%). 
  • The Scheme Consideration of A$0.50/share is a 45% premium to last close, and a 36.3% premium to the 30-day VWAP. 
  • Standard Scheme conditions apply. FIRB required. The Scheme Booklet is due out in March, with a shareholder meeting expected in April 2023. Possible implementation in May 2023.

Lotte Chemical Offering: Schedule Clarifications & Trading Considerations

By Sanghyun Park

  • The subscription starts on January 19, so the pricing is January 16, three trading days earlier. The shorting restriction runs until January 16, which means the 16th is inclusive.
  • There was no arb spread opening during the last four trading days of the subscription rights trade period. Nonetheless, this event had some impact on Lotte Chemical’s futures trading.
  • Considering this, the trade that can be considered at this point would be unhedged shorting. We target potential inflow to adjust the second issuing price downwardly and post-listing overhangs.

Quiddity Leaderboard-S&P/​​​​​​​​​ASX Mar 23: Multiple Names with Decent Impact

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for S&P ASX 20, 50, 100, 200, 300 in the run up to the March 2023 Rebalance.
  • I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance. 
  • For ASX 300, there could be 14 ADDs and 12 DELs in the March 2023 Rebalance including some high impact names based on days-to-trade.

How Should We Play with Kakao Pay’s MSCI Inclusion Event?

By Sanghyun Park

  • Kakao Pay is the only possibility to be included in the February MSCI IR. It comfortably beats both the full market cap and float market cap hurdles.
  • It can be assumed that the full-fledged emergence of local institutional flows targeting MSCI inclusion contributed to some extent to Kakao Pay’s outperformance early this year.
  • More extreme reverse flow trading could emerge. In other words, there is a possibility that the share price will turn into a sell-off even before the MSCI announcement.

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Jan 09
0

Most Read: Li Auto, PEXA Group, SBI Shinsei Bank, Yamada Denki, Alibaba (ADR), Taiwan Semiconductor (TSMC) – ADR, Sun*, Halcyon Agri, Ant Financial Services Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
  • ASX200 Index Rebalance: PEXA to Replace Pendal
  • Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa
  • Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.
  • ECM Weekly (8th Jan 2022) – Sinohytec, Beauty Farm, Sula, Kfin, Bionote, Meidong, CIFI, Jinxin Fert
  • PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix
  • Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%
  • Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event
  • Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston
  • Ant Group: Shareholder Restructuring Announced and the Lack of IPO Plan Are Negatives Surprise

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi

By Brian Freitas

ASX200 Index Rebalance: PEXA to Replace Pendal

By Brian Freitas

Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa

By David Blennerhassett

  • SBI Holdings (8473 JP) is still expected to buy out SBI Shinsei Bank (8303 JP) minorities sooner rather than later
  • Not one to rest on its laurels, Hancock immediately bumped its Offer for Warrego Energy (WGO AU) to A$0.36/share, up from A$0.28/share, provided it gets to 40%. We need more popcorn.
  • APCM reckons Korean banks can pay out more than 50% of net income to their shareholders annually.   

Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.

By Travis Lundy

  • Yamada Denki (9831 JP) has bought back nearly 16% of shares out ex-Treasury in the 7.5 months since last fiscal year earnings were announced. It went limit up on Day1.
  • Then it stopped – despite the buyback being 15% of expected volume every day for a year and a HUGE piece of Real World Float.
  • There is 8% left to buy at current prices – 16-18% of volume the next 4.5mos. And it is still a dirt cheap capital structure and somewhat sticky shareholder structure.

ECM Weekly (8th Jan 2022) – Sinohytec, Beauty Farm, Sula, Kfin, Bionote, Meidong, CIFI, Jinxin Fert

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs
  • On the IPO front,  only the smaller issuers were active with most following through on year end listing plans.
  • On placements front, HK market got going in a jiffy, riding on the coattails of China reopening.

PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix

By Travis Lundy

  • On Friday after the close, S&P DJI Indices announced that PEXA Group (PXA AU) would replace Pendal Group (PDL AU) in the S&P ASX 200 on 12 January at close.
  • This is unsurprising. Pendal was scheduled to exit in January due to takeover. PEXA was already an interim S&P ASX 200 member after the distribution by Link Administration (LNK AU).
  • The timing is conveniently in the timeframe for the LNK distribution of PXA shares to its shareholders implemented on the 10th. 

Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%

By Vincent Fernando, CFA

  • TSMC’s ADR premium is entering the higher end of its range since early 2022. Earnings coming this week.
  • UMC’s ADR has flipped from a discount to a moderate premium. Earnings are ahead as well.
  • ASE Technology’s ADR premium has reached 6.1%, high even for this usually higher-premium trading pair.

Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event

By Travis Lundy

  • In mid-December, digital UX creation agency (90% of revenues) and “talent agency” (10%) announced it would move from TSE Growth to TSE Prime mid-December 2022.
  • This was in Janaghan’s “Not Ready” list in TOPIX Inclusions: Who Is Ready (Dec 2022) because it did not meet two of the requirements. But it turns out it did.
  • This is therefore a TOPIX inclusion event at end-January 2023.

Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston

By Arun George

Ant Group: Shareholder Restructuring Announced and the Lack of IPO Plan Are Negatives Surprise

By Victor Galliano

  • The announced restructuring of Ant Group holding companies will block founder Jack Ma from achieving majority voting on the board following the implementation of the holdcos adjustment
  • The majority of board directors will be “independent” post the holdco restructuring and they are likely to drive a more social policy focused agenda, as the 2021 sustainability report suggests
  • We see these developments, and especially the lack of IPO plan, to be negative for non-government aligned Ant Group shareholders, such as the international private equity groups and especially Alibaba

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Jan 08
0

Most Read: XPeng, Li Auto, Brilliance China Automotive, Bumi Resources Minerals Tbk, Jinko Solar, Sun Kwang, Meituan, SBI Shinsei Bank, PEXA Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
  • HSI Index Rebalance Preview: Better Late Than Never?
  • HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
  • LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
  • CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
  • KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In
  • Meituan 4Q Food Delivery Updates
  • Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa
  • ASX200 Index Rebalance: PEXA to Replace Pendal

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

HSCEI Index Rebalance Preview: Handling Treatment & Changes in March

By Brian Freitas

  • We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
  • The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
  • If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.

HSI Index Rebalance Preview: Better Late Than Never?

By Brian Freitas

  • There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
  • We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
  • All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

By Brian Freitas

  • We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
  • We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation

By Brian Freitas

CSI300 Index Rebalance Preview: Early Look at Potential Changes in June

By Brian Freitas

  • Two thirds of the way through the review period, we see 15 potential index changes at the June rebalance that will be implemented at the close on 9 June.
  • We estimate a one-way turnover of 2.35% at the June rebalance leading to a one-way trade of CNY 5.57bn.
  • The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last six months, though there is some near-term deterioration.

KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

By Brian Freitas

  • One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
  • One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
  • The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

Meituan 4Q Food Delivery Updates

By Xin Yu, CFA

  • Food delivery daily order growth gradually recovered in late Dec
  • Instashopping continued its growth momentum. Community group purchase has transformed into Next Day Delivery
  • With the recovery of restaurants and travel post re-opening, Meituan is expected to be one of the biggest beneficiaries.

Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa

By David Blennerhassett

  • SBI Holdings (8473 JP) is still expected to buy out SBI Shinsei Bank (8303 JP) minorities sooner rather than later
  • Not one to rest on its laurels, Hancock immediately bumped its Offer for Warrego Energy (WGO AU) to A$0.36/share, up from A$0.28/share, provided it gets to 40%. We need more popcorn.
  • APCM reckons Korean banks can pay out more than 50% of net income to their shareholders annually.   

ASX200 Index Rebalance: PEXA to Replace Pendal

By Brian Freitas

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Jan 07
0

Most Read: XPeng, SBI Shinsei Bank, Brilliance China Automotive, Li Auto, Bumi Resources Minerals Tbk, Ping An Insurance (H), Adani Enterprises, Weimob Inc., KakaoBank and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
  • 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
  • HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
  • HSI Index Rebalance Preview: Better Late Than Never?
  • LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
  • Ping An A/H Premium: Buy the A’s, Sell the H’s
  • SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
  • Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
  • Potential Block Deal Targets in Korea for a Preemptive Position Buildup

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

HSCEI Index Rebalance Preview: Handling Treatment & Changes in March

By Brian Freitas

  • We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
  • The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
  • If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.

2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines

By Travis Lundy

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

By Brian Freitas

  • We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
  • We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

HSI Index Rebalance Preview: Better Late Than Never?

By Brian Freitas

  • There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
  • We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
  • All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.

LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation

By Brian Freitas

Ping An A/H Premium: Buy the A’s, Sell the H’s

By Brian Freitas

SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro

By Brian Freitas

  • A third of the way through the review period of the June rebalance, we see one potential index change with Adani Enterprises (ADE IN) replacing Wipro Ltd (WPRO IN). 
  • Adani Enterprises (ADE IN) could move lower in the short-term due to the public issue of shares but should find support from passive buying from local and global index trackers.
  • Wipro Ltd (WPRO IN) has underperformed most of its peers by a wide margin over the last year and the passive selling could provide an entry point.

Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong

By Clarence Chu

  • Weimob Inc. (2013 HK) is looking to raise about US$205m in its primary placement to fund R&D, upgrade marketing systems, and for general working capital purposes.
  • On an ADV basis, the deal is a relatively small one at just 3.6 days of the firm’s three month ADV.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

Potential Block Deal Targets in Korea for a Preemptive Position Buildup

By Sanghyun Park

  • TPG and Anchor experienced EOD risk due to the recent plunge in Kakao Bank’s stock price. So, they will sell shares if the current price rise continues a little further.
  • All three PEs of Shinhan Financial are currently expected to be seeking an early exit although they expressed last year that they would remain strategic shareholders.
  • Other notable targets are Hahn & Co’s Hanon Systems and K Car and MBK Partners’ ConnectWave, likely via a phased stake sale in tranches.

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Jan 06
0

Most Read: SBI Shinsei Bank, Li Auto, Brilliance China Automotive, Jinko Solar, Artspark Holdings, Ping An Insurance (H), Halcyon Agri, Weimob Inc., SK Square and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
  • HSI Index Rebalance Preview: Better Late Than Never?
  • HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
  • CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
  • TOPIX Inclusions: Who Is Ready (Jan 2023)
  • Ping An A/H Premium: Buy the A’s, Sell the H’s
  • Halcyon Agri: MGO One Step Closer As SASAC Approves SPA
  • Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
  • Korea M&A Outlook in 2023: What’s for Sale?

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines

By Travis Lundy

HSI Index Rebalance Preview: Better Late Than Never?

By Brian Freitas

  • There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
  • We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
  • All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

By Brian Freitas

  • We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
  • We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

CSI300 Index Rebalance Preview: Early Look at Potential Changes in June

By Brian Freitas

  • Two thirds of the way through the review period, we see 15 potential index changes at the June rebalance that will be implemented at the close on 9 June.
  • We estimate a one-way turnover of 2.35% at the June rebalance leading to a one-way trade of CNY 5.57bn.
  • The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last six months, though there is some near-term deterioration.

TOPIX Inclusions: Who Is Ready (Jan 2023)

By Janaghan Jeyakumar, CFA

Ping An A/H Premium: Buy the A’s, Sell the H’s

By Brian Freitas

Halcyon Agri: MGO One Step Closer As SASAC Approves SPA

By David Blennerhassett

  • Back on the 16 November, Halcyon Agri (HACL SP) announced Sinochem, holding 65.2% of shares out, had entered into an SPA to sell 36% to China Hainan Rubber (601118 CH).
  • Upon completion of the SPA, Hainan Rubber will make an MGO, conditional on a 50% tendering acceptance.  Sinochem has provided an undertaking not to tender its remaining 29.2% stake. 
  • Halcyon has now announced SASAC has given the green light for the SPA. Outstanding conditions include MoC and NDRC. Those approvals should fall into place shortly.

Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong

By Clarence Chu

  • Weimob Inc. (2013 HK) is looking to raise about US$205m in its primary placement to fund R&D, upgrade marketing systems, and for general working capital purposes.
  • On an ADV basis, the deal is a relatively small one at just 3.6 days of the firm’s three month ADV.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

Korea M&A Outlook in 2023: What’s for Sale?

By Douglas Kim

  • More than 20 trillion won (US$16 billion) worth of deals are up for M&As in 2023.
  • However, due to high interest rates and differences on valuations among buyers and sellers, the M&A market in Korea is likely to continue to be weak in 2023.
  • In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.

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Jan 05
0

Most Read: Brilliance China Automotive, SBI Shinsei Bank, Jinko Solar, Adani Enterprises, Acotec Scientific Holdings, Hyundai Mipo Dockyard, Futu Holdings Ltd, Halcyon Agri, Li Auto, Warrego Energy and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
  • 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
  • CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
  • SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
  • Acotec (6669 HK): Boston Scientific’s Partial Offer Open For Tendering
  • What Is NPS Buying & Selling?
  • Futu Holdings: Cross-Border Broking In Crosshairs
  • Halcyon Agri (HACL SP) MGO: SPA Effective, Next Is Satisfaction of Conditions Precedent
  • HSI Index Rebalance Preview: Better Late Than Never?
  • Warrego (WGO AU): Has MinRes Gatecrashed the Party?

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

By Brian Freitas

  • We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
  • We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines

By Travis Lundy

CSI300 Index Rebalance Preview: Early Look at Potential Changes in June

By Brian Freitas

  • Two thirds of the way through the review period, we see 15 potential index changes at the June rebalance that will be implemented at the close on 9 June.
  • We estimate a one-way turnover of 2.35% at the June rebalance leading to a one-way trade of CNY 5.57bn.
  • The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last six months, though there is some near-term deterioration.

SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro

By Brian Freitas

  • A third of the way through the review period of the June rebalance, we see one potential index change with Adani Enterprises (ADE IN) replacing Wipro Ltd (WPRO IN). 
  • Adani Enterprises (ADE IN) could move lower in the short-term due to the public issue of shares but should find support from passive buying from local and global index trackers.
  • Wipro Ltd (WPRO IN) has underperformed most of its peers by a wide margin over the last year and the passive selling could provide an entry point.

Acotec (6669 HK): Boston Scientific’s Partial Offer Open For Tendering

By David Blennerhassett

  • On the 12 December, Acotec Scientific (6669 HK) announced a HK$20/share partial Offer from Boston Scientific, a 31.6% premium to last close, but below August 2021’s IPO price of HK$23.80/share.  
  • Boston Scientific will acquire at least 156.7mn shares (50.01%), up to 203.7mn (65%). Irrevocables total 60.14%, comprising shares held by CA Medtech/CPE Investment, Jing Li (chairman, CEO), and Bliss Way.
  • The Composite Doc is now out and the Offer is open for acceptances. This Offer is done. The key question is the final proration. 

What Is NPS Buying & Selling?

By Douglas Kim

  • In this insight, we discuss a list of 60 stocks in Korea where NPS recently added or reduced 1% or more stake (27 adds and 33 reduce). 
  • Among the stocks NPS increased its stake, many of them are clear beneficiaries of the end of zero COVID policies in China including Hotel Shilla, Amorepacific Corp, and GKL. 
  • Among the top market cap stocks where the NPS decreased its stake by 1% or more, they include Lg Innotek, Hyundai E&C, Hyundai Mipo, and Posco International. 

Futu Holdings: Cross-Border Broking In Crosshairs

By David Blennerhassett

  • Just one day ahead of its dual primary listing in Hong Kong, Futu Holdings Ltd (FUTU US) postponed its Listing by Introduction. 
  • According to the China Securities Regulatory Commission, Futu has been illegally operating cross-border securities trading without approval.
  • Suitably, the share prices of Futu and UP Fintech (TIGR US), another online brokerage forced to quit accepting new onshore investors. It’s probably too premature to buy the dip.

Halcyon Agri (HACL SP) MGO: SPA Effective, Next Is Satisfaction of Conditions Precedent

By Arun George

  • The SPA for China Hainan Rubber Industry (601118 CH) to acquire 36.00% of Halcyon Agri (HACL SP)’s outstanding shares from Sinochem International Corporation A (600500 CH) at US$0.315 is effective. 
  • Conditions precedent which relate to Chinese regulatory approvals should be satisfied shortly. Completion will trigger an MGO at US$0.315 or S$0.423 (US$/S$ rate fixed on the closing date). 
  • The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities acceptance rate. We think that this is achievable as the offer is attractive. 

HSI Index Rebalance Preview: Better Late Than Never?

By Brian Freitas

  • There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
  • We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
  • All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.

Warrego (WGO AU): Has MinRes Gatecrashed the Party?

By Arun George

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Jan 04
0

Most Read: XPeng, Li Auto, Meituan, Bumi Resources Minerals Tbk, DMCI Holdings, Jb Financial Group, Oriental Land, Acotec Scientific Holdings, Brilliance China Automotive and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
  • HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
  • LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
  • PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
  • KOSPI200 Index Rebalance Preview (June): Changes from Now to June
  • Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
  • Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Now Open
  • HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

By Brian Freitas

  • Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
  • The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
  • Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

HSCEI Index Rebalance Preview: Handling Treatment & Changes in March

By Brian Freitas

  • We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
  • The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
  • If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

By Brian Freitas

LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation

By Brian Freitas

PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow

By Brian Freitas

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

By Brian Freitas

  • A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
  • There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
  • Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.

Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)

By Travis Lundy

Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Now Open

By Arun George

  • Acotec Scientific Holdings (6669 HK)’s partial offer from Boston Scientific (BSX US) at HK$20 per share is now open. The IFA opines it to be fair and reasonable.
  • The partial offer is conditional on the offeror hitting 50.01% voting rights. Irrevocables ensure that it will be declared unconditional on or before the first closing date (26 January).
  • Based on a minimum proration of 71.31% and at the current share price of HK$17.20 per share, the estimated breakeven price is HK$10.38 per share.

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

By Brian Freitas

  • We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
  • We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

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Jan 03
0

Most Read: Meituan, Bumi Resources Minerals Tbk, XPeng, Page Industries, Jb Financial Group, Alibaba Group, Sun Kwang, Li Auto, Oriental Land, Shinhan Financial and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
  • LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
  • HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
  • NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
  • KOSPI200 Index Rebalance Preview (June): Changes from Now to June
  • Alibaba – Cash Cows in Trouble & Rapidly Rising COVID Creates New Headwinds
  • KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In
  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
  • Align Partners Goes Activist on Seven Banking Group Companies in Korea

Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

By Brian Freitas

LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation

By Brian Freitas

HSCEI Index Rebalance Preview: Handling Treatment & Changes in March

By Brian Freitas

  • We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
  • The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
  • If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.

NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In

By Brian Freitas

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

By Brian Freitas

  • A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
  • There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
  • Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.

Alibaba – Cash Cows in Trouble & Rapidly Rising COVID Creates New Headwinds

By Oshadhi Kumarasiri

  • After bouncing more than 60% from a near-all-time low, Alibaba Group (9988 HK)’s progress seems to have ended abruptly with the share-price holding flat for almost a month in December-2022.
  • Meanwhile, the company’s cash cows, Taobao and Tmall are losing market share. Rapidly rising COVID infections create new headwinds that could affect business performance for at least two more quarters.
  • With the shares trading near the top end of the new downward trend channel, we are short Alibaba as earnings are expected to miss consensus estimates in the next two-quarters.

KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

By Brian Freitas

  • One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
  • One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
  • The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)

By Travis Lundy

Align Partners Goes Activist on Seven Banking Group Companies in Korea

By Douglas Kim

  • On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
  • According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
  • Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. 

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