Most Read

Sunac China Holdings (1918 HK) is still suspended from trading and could be deleted from the index in July and replaced by SenseTime Group (20 HK) or PetroChina (857 HK).
SenseTime (20 HK) or PetroChina (857 HK), Great Wall (2333 HK) and Zhongsheng (881 HK) could replace Haidilao (6862 HK), CPIC (2601 HK) and Alibaba Health (241 HK) in September.
There will be buying on SenseTime Group (20 HK) from HSCEI INDEX and HSTECH INDEX trackers. But there is also a big lock-up expiry on 29 June.

TOPIX Rebalance: Flows at the Close on 29 June

The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

Prosus, Tencent, JD.com – Good Intentions but Questionable Timing

By Sumeet Singh

Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
In this note, we talk about the implication and timing of today’s announcements.

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Prosus/Naspers – Operation Ouroboros Commences, And It’s Big (Discount, Flows, Index Impact)

I wanted to write this insight over the weekend but could not finish it, but now there is new news to warrant it.
Today, Prosus (PRX NA) announced it had sold the 131,873,028 JD.com Inc. (9618 HK) shares it received in the Tencent (700 HK) distribution. This is as expected. Proceeds were US$3.67bn.
Also announced this morning is “the beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares.” The details are the key to everything.

Before it’s here, it’s on Smartkarma

Jun 27

Most Read: NTT (Nippon Telegraph & Telephone), Gcl Poly Energy Holdings Limited, SenseTime Group, West African Resources, Hanmi Science and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TOPIX Rebalance: Flows at the Close on 29 June
GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp
Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT
KOSPI Size Index Series: September Rebalancing Preview

TOPIX Rebalance: Flows at the Close on 29 June

The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp

There is a risk that the ¥7,000/share bid for Toshiba Corp (6502 JP) gets pulled/lowered in Round 2 because of due diligence, conditionality, market environment, etc.
Hutchison Telecommunications Hong Kong Holdings (215 HK)‘s share price was up 33% month to date, on triple the average daily volume. Then promptly sheds 23% on an even larger volume.
Even if one assumes that Softbank, Baba, and Cornerstones won’t sell, there is still 45% of SenseTime Group (20 HK) of shares out, worth US$11bn, unlocking next week.

Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT

No changes for Asia Pacific at the MSCI Annual Market Classification Review. Lots of improvements needed for Korea to move from EM to DM in June 2025 at the earliest.
Lots of changes expected for the HSCI and S&P/ASX family in September. Emperador Inc (EMP PM) and Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) are potential FTSE inclusions in September.
Shimao Services Holdings Limited (873 HK) started trading on Thursday and MSCI has announced the deletion of the stock from the MSCI China Index at the close on 27 June.

KOSPI Size Index Series: September Rebalancing Preview

We generally detect an increase in the buying volume of local institutions for stocks moving from Large Cap to Mid Cap ahead of the KOSPI size index rebalancing.
At the last close, Mid→Large: Pan Ocean, Hyundai Mipo, BGF Retail, & OCI / Large→Mid: Hanmi Science, KCC, DB Hitek, & KEPCO E&C
The level of price impact/correlation in the last rebalancing was exceptionally high. This is reason enough for us to consider setting up a preemptive position for this rebalancing event.

Before it’s here, it’s on Smartkarma

Jun 26

Most Read: Giordano International, iShares MSCI ACWI ETF, Korea Stock Exchange Kospi 200 Index, SOCAR Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Giordano (709 HK): Cheng Family’s Underwhelming Offer
Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations
Korea May Continue to Fail MSCI DM Inclusion Unless Allowing for K200 Options Listing on SGX
Socar IPO Preview
SOCAR IPO: Another Absurd Valuation

Giordano (709 HK): Cheng Family’s Underwhelming Offer

The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK).
The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering.
The intention is to maintain Giordano’s listing. The Offer Price has not been declared final.

Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

By Joe Jasper

Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.

Korea May Continue to Fail MSCI DM Inclusion Unless Allowing for K200 Options Listing on SGX

The KRX and the MSCI have not agreed on the full right to use the KRX indexes’ price information. This should be the essential cause of Korea’s failed DM inclusion.
The MSCI wants to list the KOSPI 200 Options on the SGX, which the MSCI sees as a prerequisite for taking the lead in the Korean passive market.
Suppose the government takes a forward-looking approach to this issue. In that case, we may see the K200 Options SGX listing that has a bigger market impact before DM inclusion.

Socar IPO Preview

By Douglas Kim

Socar, the largest car sharing platform in Korea, is getting ready to complete its IPO in KOSPI. The IPO base case offering size is from $120 million to $159 million.
The IPO price range is from 34,000 won to 45,000 won. The expected market cap of the company is from 1.2 trillion won to 1.6 trillion won.
Book building for the institutional investors starts on 1 August. Mirae Asset Securities and Samsung Securities are the lead underwriters in this IPO.

SOCAR IPO: Another Absurd Valuation

This IPO’s valuation is the trickiest among Korea’s recent IPOs. Whether all of these ten valuation peers have high enough business relevance to SOCAR is highly doubtful.
Whether SOCAR can evolve from a simple car sharing (or rental) operator to an in-vehicle software platform provider actually determines the success or failure of this IPO.
However, the IPO prospectus available to us lacks the evidence to favorably judge SOCAR’s growth potential. So, I will consider taking this IPO as conservatively as possible.

Before it’s here, it’s on Smartkarma

Jun 25

Most Read: West African Resources, Giordano International, Hutchison Telecommunications Hong Kong Holdings, Kakao Pay, iShares MSCI South Korea Index Fund (ETF) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes
Giordano (709 HK): Cheng Family’s Underwhelming Offer
Hutch Tel (215 HK): Something’s Brewing
Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games
MSCI Annual Market Classification Review: Korea Doesn’t Make It to the Watchlist

S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes

There could be one change to the S&P/ASX 200 (AS51 INDEX) in July following the privatisation of Uniti Group Ltd (UWL AU).
Then there will be a whole bunch of changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index in September as part of the regular rebalance.
There is large short interest on a couple of the potential adds and a lot of the potential deletes. That will drive stock price moves closer to implementation.

Giordano (709 HK): Cheng Family’s Underwhelming Offer

The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK).
The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering.
The intention is to maintain Giordano’s listing. The Offer Price has not been declared final.

Hutch Tel (215 HK): Something’s Brewing

Hutchison Telecommunications (215 HK)‘s share price is up 33% month to date.
The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months.
Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month.

Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games

The MSCI immediately included 4.31% owned by Netmarble in Kakao Games’ float by applying one of the exception rules in Sections 3.2.4 or 3.2.5 of the MSCI GIMI Methodology Book.
The exception rule used here must have been this one: Re-estimating free float figures resulting from the reclassification of shareholders from strategic to non-strategic.
I can’t find a reason why this practice of the MSCI shouldn’t be equally applied to Alipay’s Kakao Pay stake.

MSCI Annual Market Classification Review: Korea Doesn’t Make It to the Watchlist

MSCI had announced the results of the 2022 Global Market Accessibility Review earlier this month. Based on that, no changes were expected at the Market Classification Review.
Earlier this morning, MSCI announced the results of the Market Classification Review and there are no changes for Asia.
Korea has not been placed on the watchlist for an upgrade from Emerging to Developed Market. The earliest that Korea could be reclassified from EM to DM is now 2025.

Before it’s here, it’s on Smartkarma

Jun 24

Most Read: West African Resources, Toyo Construction, Hutchison Telecommunications Hong Kong Holdings, Sichuan Tianqi Lithium Industries, Inc, Kakao Pay and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes
Toyo Cancels Poison Pill At Last Minute – Range to the Upside
Hutch Tel (215 HK): Something’s Brewing
Tianqi Lithium A/H Listing – PHIP Updates and a Closer Look at Valuations
Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games

S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes

There could be one change to the S&P/ASX 200 (AS51 INDEX) in July following the privatisation of Uniti Group Ltd (UWL AU).
Then there will be a whole bunch of changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index in September as part of the regular rebalance.
There is large short interest on a couple of the potential adds and a lot of the potential deletes. That will drive stock price moves closer to implementation.

Toyo Cancels Poison Pill At Last Minute – Range to the Upside

On 24 May, Toyo Construction (1890 JP) (TC) came out fighting against Yamauchi No.10 Family Office (YFO), presenting a poison pill and accusing YFO of “extreme dishonesty” despite standstill agreement.
YFO presented hundreds of pages of defence, TC continued to accuse the YFO co-CIO and others of wrongdoing. To me, TC was clearly acting in bad faith.
After ISS and later Glass Lewis came out against TC’s proposal, YFO continued to ask for the PP to be pulled, TC has finally relented. Now we wait some more.

Hutch Tel (215 HK): Something’s Brewing

Hutchison Telecommunications (215 HK)‘s share price is up 33% month to date.
The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months.
Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month.

Tianqi Lithium A/H Listing – PHIP Updates and a Closer Look at Valuations

By Sumeet Singh

Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
TL was the largest producer of mined lithium globally in terms of output and ranked third in terms of revenue generated from lithium in 2020, according to Wood Mackenzie .
In this note, we take a closer look at valuations and where peers are trading in terms of A/H premium.

Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games

The MSCI immediately included 4.31% owned by Netmarble in Kakao Games’ float by applying one of the exception rules in Sections 3.2.4 or 3.2.5 of the MSCI GIMI Methodology Book.
The exception rule used here must have been this one: Re-estimating free float figures resulting from the reclassification of shareholders from strategic to non-strategic.
I can’t find a reason why this practice of the MSCI shouldn’t be equally applied to Alipay’s Kakao Pay stake.

Before it’s here, it’s on Smartkarma

Jun 23

Most Read: Huitongda, Toshiba Corp, Thai Beverage, West African Resources, Emperador Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCI Index Rebalance and Stock Connect: Potential Changes in September
Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability
ThaiBev’s BeerCo IPO: What’s It Worth?
S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes
Emperador (EMP PM): FTSE Inclusion Likely in September

HSCI Index Rebalance and Stock Connect: Potential Changes in September

We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.

Oops, Price Leaks Early on Toshiba – Now We Have To Think About Probability

An article this morning in the Yomiuri suggested JIC was bidding, even though they have not been in any “lists of 8 bidders” I have seen. The market yawned.
An article this evening says bidders are offering “up to ¥7,000/share” but there is a range of pricing and conditions. Not surprising, but we know little.
Shareholder structure matters. This has been event-y for a long time so I expect not many new buyers are ready to come in. This just shifts the range. And risk.

ThaiBev’s BeerCo IPO: What’s It Worth?

By Arun George

Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results.
The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion.

S&P/ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes

There could be one change to the S&P/ASX 200 (AS51 INDEX) in July following the privatisation of Uniti Group Ltd (UWL AU).
Then there will be a whole bunch of changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index in September as part of the regular rebalance.
There is large short interest on a couple of the potential adds and a lot of the potential deletes. That will drive stock price moves closer to implementation.

Emperador (EMP PM): FTSE Inclusion Likely in September

Emperador Inc (EMP PM) passes the FTSE Median Liquidity test and the inclusion thresholds for full market cap and investable market cap and could be added in the FTSE GEIS.
The inclusion should take place at the September SAIR and that would require passive funds to buy over 84m shares. That is over 35 days of ADV.
A potential secondary listing in Singapore has moved the stock in the past and that could be another trigger for the stock to move higher.

Before it’s here, it’s on Smartkarma

Jun 22

Most Read: Huitongda, Com7 PCL, Alibaba Group, Toshiba Corp, Thai Life Insurance and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCI Index Rebalance and Stock Connect: Potential Changes in September
SET50 Index Rebalance: BLA, JMT, JMART Added; COM7, RATCH, STGT Out
Alibaba: More Money to Be Made on The Short Side
Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance
Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging

HSCI Index Rebalance and Stock Connect: Potential Changes in September

We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.

SET50 Index Rebalance: BLA, JMT, JMART Added; COM7, RATCH, STGT Out

Bangkok Life Assurance (BLA), JMT Network Services (JMT) and Jaymart (JMART) will replace Com7 (COM7), Ratch Group (RATCH) and Sri Trang Gloves (STGT) in the SET50 INDEX.
Estimated one-way turnover is 2.1% and will result in a one-way trade of THB 1,914m. There is little funding flow on the other index stocks.
The inclusion of Bangkok Life Assurance (BLA TB) is a minor surprise. The deletion of Com7 PCL (COM7 TB) is a much bigger surprise.

Alibaba: More Money to Be Made on The Short Side

By Oshadhi Kumarasiri

After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.

Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance

Toshiba Corp (6502 JP) sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.
The event-i-ness of Toshiba keeps it “supported” while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness.
Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next “transparency” likely comes in November.

Thai Life Insurance Pre-IPO – Industry Dynamics and Domestic Peer Comparison Aren’t Very Encouraging

By Sumeet Singh

Thai Life Insurance is looking to raise up to US$1bn in its upcoming Thailand IPO.
Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
In this note, we will talk about the industry dynamics and undertake a peer comparison versus its domestic peers.

Before it’s here, it’s on Smartkarma

Jun 21

Most Read: Ping An Insurance (H), SK Telecom, Softbank Group, Com7 PCL, Policybazaar and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Ping An A/H: Position for Premium Contraction
A Detailed Guide About Korea’s FOL Stocks & MSCI Treatments
Softbank – Director Shuffling At The AGM
SET50 Index Rebalance: BLA, JMT, JMART Added; COM7, RATCH, STGT Out
India: AMFI Stock Reclassification Preview

Ping An A/H: Position for Premium Contraction

The Ping An AH premium has traded around 10% over the last few days – this is near its historical highs and close to where reversals take place from.
The AH premium of the broader market is below its highs, while the AH premium on large cap financials has been trending lower over the last few months.
Northbound Stock Connect holdings on the A-shares have been decreasing, while Southbound Stock Connect holdings on the H-shares have been increasing over the last few months.

A Detailed Guide About Korea’s FOL Stocks & MSCI Treatments

Korea has a total of 33 FOL stocks. The Korean government restricts foreign ownership in major national infrastructure operators such as broadcasting companies, airlines, and telecommunication companies.
They each have a different FOL % in the range of 0-49.99%, and five are currently included in the MSCI Standard: SKT, LG Uplus, CJ ENM, KEPCO, & KAL.
Those located on the borderline that will trigger a meaningful event in the MSCI Standard Index are the three telecom companies: SKT, KT, & LG Uplus.

Softbank – Director Shuffling At The AGM

By Mio Kato

With Softbank’s AGM coming up we examine some of the curious events that surround the firm as usual.
Following in the footsteps of former governance director Yuko Kawamoto, VC founder Lip-Bu Tan has also penned a curious resignation message.
Then there are the continuing questions surrounding Kenneth Siegel and his reappointment is not guaranteed in our view.

SET50 Index Rebalance: BLA, JMT, JMART Added; COM7, RATCH, STGT Out

Bangkok Life Assurance (BLA), JMT Network Services (JMT) and Jaymart (JMART) will replace Com7 (COM7), Ratch Group (RATCH) and Sri Trang Gloves (STGT) in the SET50 INDEX.
Estimated one-way turnover is 2.1% and will result in a one-way trade of THB 1,914m. There is little funding flow on the other index stocks.
The inclusion of Bangkok Life Assurance (BLA TB) is a minor surprise. The deletion of Com7 PCL (COM7 TB) is a much bigger surprise.

India: AMFI Stock Reclassification Preview

Nearing the end of the review period, we see 5 stocks moving from MidCap to LargeCap, 2 new listings added to LargeCap and 7 stocks moving from LargeCap to MidCap.
We see 7 stocks moving from SmallCap to MidCap, 3 new listings added to MidCap, and 12 stocks moving from MidCap to SmallCap.
Stock migrating upward have, on average, outperformed stocks that are downward migrations. Stocks moving from MidCap to LargeCap have performed the best.

Before it’s here, it’s on Smartkarma

Jun 20

Most Read: SenseTime Group, SK Telecom, Infomedia Ltd, Ping An Insurance (H), Hana Tour Service and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSCEI, LQ45, Kakao Pay, Thai Life
SK Telecom / KT Corp: Foreign Room, Passive Flow & Trade Update
Merger Arb Mondays (20 Jun) – Link Admin, Infomedia, ResApp, Ramsay Health, Frasers Hospitality
Ping An A/H: Position for Premium Contraction
TIGER Theme ETF “Tour Leisure” Rebalancing Projections: Hanatour, Asiana, Kangwon Land, & T’way Air

Index Rebalance & ETF Flow Recap: HSCEI, LQ45, Kakao Pay, Thai Life

It was a busy Friday with multiple implementations of the June rebalance – FTSE All-World/All-Cap, FTSE China 50/A50/TW50, S&P/ASX, REMX and GDXJ among others.
We highlight potential upcoming changes to the HSCEI INDEX and LQ45 Index, when Kakao Pay (377300 KS) could be added in MSCI Korea & the Thai Life IPO index inclusion.
There were large inflows to China and Korea focused ETFs during the week.

SK Telecom / KT Corp: Foreign Room, Passive Flow & Trade Update

On 20 May, we recommended selling SK Telecom (017670 KS) and buying KT Corp (030200 KS). That trade is up 12% over the last month.
Foreign investors have sold 2.5m shares of SK Telecom (017670 KS) in the last month while buying 2.8m shares of KT Corp (030200 KS).
With the price ratio trading at a 4 year low, we feel is is time to start unwinding the trade and waiting for a little bit before reversing it.

Merger Arb Mondays (20 Jun) – Link Admin, Infomedia, ResApp, Ramsay Health, Frasers Hospitality

By Arun George

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
The highest spreads are Sezzle Inc (SZL AU), Link Administration (LNK AU), 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Resapp Health (RAP AU).
The lowest gross spreads are Irongate Group (IAP AU), AKM Industrial (1639 HK), Beijing Enterprises Urban Resources (3718 HK), Hwa Hong Corp (HWAH SP), Uniti Group Ltd (UWL AU).

Ping An A/H: Position for Premium Contraction

The Ping An AH premium has traded around 10% over the last few days – this is near its historical highs and close to where reversals take place from.
The AH premium of the broader market is below its highs, while the AH premium on large cap financials has been trending lower over the last few months.
Northbound Stock Connect holdings on the A-shares have been decreasing, while Southbound Stock Connect holdings on the H-shares have been increasing over the last few months.

TIGER Theme ETF “Tour Leisure” Rebalancing Projections: Hanatour, Asiana, Kangwon Land, & T’way Air

This ETF’s AUM has decreased by 17% over the past three months to ₩200B. It has 18 constituents, and it is unlikely that there will be any addition/deletion.
The first thing to note is Hana Tour because the increase in the number of shares through an offering will be reflected its the market cap right before the rebalancing.
Among the top stocks by market cap, Asiana Airlines (020560 KS) (+0,.20x ADTV) and Kangwon Land (035250 KS) (-0.21x ADTV) will likely have a significant passive impact.

Before it’s here, it’s on Smartkarma

Jun 19

Most Read: Sea Ltd, GoGoX Holdings, Russell 2000 Index, Sk Chemicals Co Ltd/New, World Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sea Ltd (SE US) – Navigating Challenging Waters With Sails Set
GOGOX IPO: Growth at All Costs
US Small Caps Macro Buy Zone
MSCI Korea August QIR Preview
Japan Apparel Rethink: World Tries Diversification

Sea Ltd (SE US) – Navigating Challenging Waters With Sails Set

By Angus Mackintosh

There has been a recent press commentary about Sea Ltd laying off staff, which although unpleasant reflects management’s decisive and pragmatic decision-making style which is no bad thing.
It is unclear how many staff are being laid off and where but it seems that Indonesia is not impacted in a big way and core markets continue to perform.
We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and Sea Ltd (SE US) is batting above its peers.

GOGOX IPO: Growth at All Costs

By Arun George

GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It has passed the listing hearing for an HKEx IPO to raise US$100-150 million.
In GOGOX IPO Initiation: A Less than Perfect Delivery, we noted that as the losses are expected to persist over the next three years, we would avoid the IPO.
In this note, we examine the PHIP for the 2021 results and recent developments. The fundamentals remain unattractive and we would give the IPO a pass.

US Small Caps Macro Buy Zone

By Thomas Schroeder

We continue to see US equity downside risk on the back of earnings estimates seeing further downgrades. Small caps are at/near some interesting macro support.
RTY met key support to establish a perform position as the SPX finds a foothold into late June. Near term cycle date due early this week.
June bottoming cycle into July ahead of a more bullish August that then runs into the dreaded weak September cycle.

MSCI Korea August QIR Preview

Small Caps → Standard migrations do not seem to happen at all in this QIR. Similarly, there will likely be no deletion of the existing constituents.
Among the Outside IMIs, Kakao Pay is the only one that has the possibility of inclusion. However, it also has uncertainty about the float rate in this QIR.
For FOL stocks, the telcos are on the event-triggering borderline. In particular, SKT deserves attention. But its foreign room is now above 3%, so its deletion possibility is getting slimmer.

Japan Apparel Rethink: World Tries Diversification

By Michael Causton

The outlook for big apparel remains uncertain; most executives are optimistic about a rebound in sales of premium apparel brands, they are also running around looking for ways to diversify.
Despite years of closing stores and a recent re-listing, World Co Ltd (3612 JP) remains in uncertain territory as it tries to boost sales of key brands.
More brands may need to close but the apparel firm is at least investing in new ventures, even if small scale.

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