Most Read

There has been an increase of 700m shares held in HK CCASS for JD.com Inc. (9618 HK) on 11 April.
The largest part of 421.5m shares is likely the conversion of Class B to Class A shares following Richard Liu stepping down as CEO of the company.
The rest is unknown at this point but could be Prosus (PRX NA) moving their shares to HK to sell-down and use the cash to buy back their own stock.

Taste Gourmet: Multibagger Reopening Play

By Sameer Taneja

The relaxing of restrictions by Hong Kong makes Taste Gourmet Group Ltd (8371 HK) a great reopening play, trading at 8.8x FY22e and 5.6x FY23e.
Despite a challenging environment, the company has executed well, maintaining net margins north of 7-8%, which are far superior to other listed competitors.
With >60% payout ratios, it trades at a dividend yield of 6.7%/11.4% FY22e/FY23e. Since 29% of the market capitalization is cash, we are confident in the dividend payments.

Yangzijiang (YZJSGD SP) Spin-Off: Index Treatment

Yangzijiang Shipbuilding (YZJSGD SP) is looking to spin-off its investment segment, Yangzijiang Financial Holding Ltd (YZJFH). The EGM is on 18 April and the book closure is 25 April.
There will be no flows from the MSCI and FTSE trackers given that both stocks should continue to remain members of the MSCI Small Cap and FTSE All-World indices.
There will be a deletion from the FTSE Straits Times Index (STI) (STI INDEX) though, where either YZJSGD, YZJFH or Comfortdelgro Corp (CD SP) will be deleted from the index.

JD.com’s Musical Shares – Less Than You Think

Today, CCASS data showed that 700,000,047 Class A Shares of JD.com Inc. (9618 HK) popped into existence in CCASS (from outside of CCASS the day before). Poof!
They showed up in Deutsche Bank’s CCASS Participant account. Just like the 600,000,000 Class A Shares which popped in on 15 December 2021.
There’s a thing here, and there are things going on in the background, but the things in the foreground are not as menacing as they appear. I explore and explain.

Park24 Placement – Large Deal to Digest and a Long Settlement Period

By Clarence Chu

Park24 Co Ltd (4666 JP) aims to raise around JPY25.5bn (US$210m) via selling 16m new shares at a fixed price of JPY1,644, representing a 9.9% discount to last close.
Proceeds from the deal will be geared towards digital investment towards improving the firm’s business efficiency and for expanding its mobility fleet.
In this note, we will talk about the firm’s track record and run the deal through our ECM framework.

Before it’s here, it’s on Smartkarma

Apr 12

Most Read: GoTo, Emtek, Greatview Aseptic Packaging, KT Corp, Japan Post Insurance and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

GoTo Gojek Tokopedia IPO: Potential LQ45, IDX30, IDX80 Index Fast Entry & Impact
MSCI May 2022 Index Rebalance Preview: Last Week Before the Start of the Review Period
Greatview (468 HK): A Packing Case Pick
MSCI Korea Rebalancing: Cautions with KT & Hyundai Heavy Industries
Topix FFW Transition – Insurance Sector a Big Net Sell

GoTo Gojek Tokopedia IPO: Potential LQ45, IDX30, IDX80 Index Fast Entry & Impact

GoTo (GOTO IJ) lists on the IDX tomorrow. The IDX has GoTo (GOTO IJ)‘s free float at 66% which would mean IDX30, LQ45 and IDX80 Fast Entry index inclusion.
If included in the indices at a free float of 66%, GoTo (GOTO IJ) will have a weight of 13.55% in the IDX30 Index and 12.12% in the LQ45 Index.
Passive trackers will then need to buy 13.2% of the real float on the stock. Active funds will also buy the stock as it would appear in their benchmarks.

MSCI May 2022 Index Rebalance Preview: Last Week Before the Start of the Review Period

This is the last trading week before the review period for the MSCI May SAIR commences next week. This is a short week with a lot of markets closed Friday.
We see 38 potential adds and 63 potential deletes across Asia. Most changes are in China, with the most net deletions in Japan and China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Jindal Steel & Power, Eva Airways, Emtek, China Airlines, Sumber Alfaria Trijaya and KT Corp.

Greatview (468 HK): A Packing Case Pick

By David Blennerhassett

Earlier this year, Jardine Matheson Holdings (JM SP) was understood to be exploring the sale of its 28% stake in Greatview Aseptic Packaging (468 HK).
GA Pack announced its full-year results late last month and for the first time since 2012, opted not to pay a final dividend.
Shares are down 20% since that non-dividend announcement. That’s convenient.

MSCI Korea Rebalancing: Cautions with KT & Hyundai Heavy Industries

KT’s inclusion possibility is still high, but if the foreign ownership continues to increase at the current rate until April end, there is a possibility that the inclusion will fail.
Suppose HHI faces a little over a 10% price correction. In that case, its market cap will fall below ₩10T, and it will stand on the screening borderline.
We need to consider closing our LONG positions for these two earlier.

Topix FFW Transition – Insurance Sector a Big Net Sell

The TOPIX Insurance Sector sees the worst net flows as a percentage of index weight among the 33 sectors in the April-June FFW Transition.
On a net basis, rebalance flows favour Japan Post Insurance (7181 JP) vs T&D Holdings (8795 JP) (finishing a buyback) and Dai Ichi Life Insurance (8750 JP) (just finished).
JPI has underperformed both over the last three years despite growing BVPS by more. And earnings should be a blowout.

Before it’s here, it’s on Smartkarma

Apr 11

Most Read: NTT (Nippon Telegraph & Telephone), Tencent, GoTo, Emtek and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The BIGLY TOPIX April 2022 Rebalance – $20bn One-Way Split Over 3 Months
TOPIX FFW Transition – Big Flows from April to June
Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, MSCI, ASX200, CSI300, HDFC/HDFCB, PPT/PDL
GoTo Gojek Tokopedia IPO: Potential LQ45, IDX30, IDX80 Index Fast Entry & Impact
MSCI May 2022 Index Rebalance Preview: Last Week Before the Start of the Review Period

The BIGLY TOPIX April 2022 Rebalance – $20bn One-Way Split Over 3 Months

The TSE launched its new cash equity market structure earlier this week. The TOPIX Index changes include a one-off FFW Methodology Review, where results were announced today.
The changes announced today go part-way to fixing float issues, but there will be follow-on changes in October, and one should expect companies to react with share cancellations.
The big gainer in this TOPIX rebal is NTT (Nippon Telegraph & Telephone) (9432 JP). There are a fair number of “losers.” The 3-month total trade is about ¥2.3trln one-way.

TOPIX FFW Transition – Big Flows from April to June

On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.
From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.
Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, MSCI, ASX200, CSI300, HDFC/HDFCB, PPT/PDL

The S&P/ASX 200 (AS51 INDEX) rebalance takes place at the close on Monday, 11 April with HomeCo Daily Needs REIT (HDN AU) replacing CIMIC Group Ltd (CIM AU).
The review period for the MSCI May SAIR starts on 18 April. There will be adds/deletes, listing switches, and FIF changes (both big and small).
There were big inflows to the iShares MSCI Emerging Markets (EEM US), Vanguard FTSE Emerging Markets ETF (VWO US) and iShares Core MSCI Emerging Markets ETF (IEMG US) ETFs.

GoTo Gojek Tokopedia IPO: Potential LQ45, IDX30, IDX80 Index Fast Entry & Impact

GoTo (GOTO IJ) lists on the IDX tomorrow. The IDX has GoTo (GOTO IJ)‘s free float at 66% which would mean IDX30, LQ45 and IDX80 Fast Entry index inclusion.
If included in the indices at a free float of 66%, GoTo (GOTO IJ) will have a weight of 13.55% in the IDX30 Index and 12.12% in the LQ45 Index.
Passive trackers will then need to buy 13.2% of the real float on the stock. Active funds will also buy the stock as it would appear in their benchmarks.

MSCI May 2022 Index Rebalance Preview: Last Week Before the Start of the Review Period

This is the last trading week before the review period for the MSCI May SAIR commences next week. This is a short week with a lot of markets closed Friday.
We see 38 potential adds and 63 potential deletes across Asia. Most changes are in China, with the most net deletions in Japan and China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Jindal Steel & Power, Eva Airways, Emtek, China Airlines, Sumber Alfaria Trijaya and KT Corp.

Before it’s here, it’s on Smartkarma

Apr 10

Most Read: Tabcorp Ltd, Beenos Inc, Shakey’s Pizza, NTT (Nippon Telegraph & Telephone), Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tabcorp (TAH AU): Spin-Off Upside & Index Implications
GoTo May Not Be So Expensive, If You Own It Through Beenos
Shakey’s Pizza: High Conviction Three Bagger, Management Call Provides Superb Guidance For FY22
The BIGLY TOPIX April 2022 Rebalance – $20bn One-Way Split Over 3 Months
Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, MSCI, ASX200, CSI300, HDFC/HDFCB, PPT/PDL

Tabcorp (TAH AU): Spin-Off Upside & Index Implications

If approved, Tabcorp Ltd (TAH AU) will spin-off the Lotteries and Keno business (The Lottery Corporation; TLC) from the Wagering & Media and Gaming Services business (new Tabcorp).
Based on peer valuations, we see an upside of 11% from the last price. The Scheme Meeting is on 12 May and the Second Court Hearing on 20 May.
TLC should remain in all major indices, while new Tabcorp Ltd (TAH AU) could be deleted from the S&P/ASX 50 Index and the MSCI Australia Index.

GoTo May Not Be So Expensive, If You Own It Through Beenos

By Oshadhi Kumarasiri

Beenos Inc (3328 JP) is a relatively small cross-border e-commerce and internet company from Japan with a consolidated GMV of ¥64.7bn last year.
The company also runs an incubator platform to create new businesses and invest in start-ups mainly in emerging regions such as India and South-East Asia.
Down below, we analyse the impact on Beenos’ valuation following GOTO’s impending IPO of which Beenos owns 0.5%.

Shakey’s Pizza: High Conviction Three Bagger, Management Call Provides Superb Guidance For FY22

By Sameer Taneja

Shakey’s Pizza Asia Ventures (PIZZA PM) is a play on F&B normalizing in the Philippines. On our numbers, it trades at a 12.9x PE for FY22 and 10x for FY23.
Quick Service Restaurant (QSR) peers like Domino’s Pizza (DPZ US) and Jubilant Foodworks (JUBI IN) trade at multiples of 39x and 59x fwd PE, making Shakey’s an extremely cheap stock.
Versus the current multiple of 7.9 peso/share, we believe the stock can trade up to 30x PE FY23 implying a 24 peso/share price (200% upside).

The BIGLY TOPIX April 2022 Rebalance – $20bn One-Way Split Over 3 Months

The TSE launched its new cash equity market structure earlier this week. The TOPIX Index changes include a one-off FFW Methodology Review, where results were announced today.
The changes announced today go part-way to fixing float issues, but there will be follow-on changes in October, and one should expect companies to react with share cancellations.
The big gainer in this TOPIX rebal is NTT (Nippon Telegraph & Telephone) (9432 JP). There are a fair number of “losers.” The 3-month total trade is about ¥2.3trln one-way.

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, MSCI, ASX200, CSI300, HDFC/HDFCB, PPT/PDL

The S&P/ASX 200 (AS51 INDEX) rebalance takes place at the close on Monday, 11 April with HomeCo Daily Needs REIT (HDN AU) replacing CIMIC Group Ltd (CIM AU).
The review period for the MSCI May SAIR starts on 18 April. There will be adds/deletes, listing switches, and FIF changes (both big and small).
There were big inflows to the iShares MSCI Emerging Markets (EEM US), Vanguard FTSE Emerging Markets ETF (VWO US) and iShares Core MSCI Emerging Markets ETF (IEMG US) ETFs.

Before it’s here, it’s on Smartkarma

Apr 09

MSCI May Index Rebalance Preview: Potential FIF Changes & Impact

MSCI comprehensively evaluates the free float for stocks at the May SAIR. The changes will be announced on 12 May and implemented at the close on 31 May.
We expect an increase in the FIF for some stocks. Largest inflows are expected on Tencent (700 HK), Kuaishou Technology (1024 HK), JD Health (6618 HK) and KakaoBank (323410 KS).
There is reasonably large short interest on some of the stocks and there could be some short covering on stocks where there could be large passive inflows.

KOSPI 200 Rebalancing D-60: Names for Position Buildups

Since we are currently at a point of two months toward the KOSPI 200 rebalancing, we should start building up positions on stocks with a higher probability among the candidates.
Six additions for position buildups: F&F (383220 KS), Meritz Fire (000060 KS), SD Biosensor (137310 KS), Iljin Hysolus (271940 KS), Hanil Cement (300720 KS), & K Car (381970 KS)
Six deletions for position buildups: Nexen Tire (002350 KS), Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Sk Discovery (006120 KS), Bukwang Pharmaceutical (003000 KS), & Poongsan Corp (103140 KS)

Uranium: Fuelling Fears

By David Blennerhassett

Russia’s invasion of Ukraine is forcing the US and European administrations to wrestle with the vulnerabilities in their uranium supply chains.
The situation is also re-emphasising the spotlight on the future role of nuclear energy in the power grids.
Uranium prices are up 44% since the invasion began, with the price for nuclear fuel at a decade high.

GoTo IPO Trading – A Test for the Domestic Market

By Sumeet Singh

GoTo was initially aiming to raise around US$1.25bn from a local listing. It managed to raise US$960m after downsizing its deal and pricing close to the midpoint.
GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we’ll talk about the trading dynamics of the deal.

TOPIX Inclusion: Bewith (9216 JP)

By Janaghan Jeyakumar, CFA

Japan-Based BPO company Bewith (9216 JP) was listed in the First Section (now known as the “Prime” Market) of the Tokyo Stock Exchange (TSE) on 2nd March 2022.
When a company gets listed in the TSE First Section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Bewith’s Inclusion Event.

Before it’s here, it’s on Smartkarma

Apr 08

Most Read: Tencent, Orient Overseas International, Toshiba Corp, HomeCo Daily Needs REIT, Nikon Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May Index Rebalance Preview: Potential FIF Changes & Impact
HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?
Toshiba (6502) – 3D Writes Another Letter
ASX200 Index Rebalance: HomeCo Daily Needs REIT (HDN) Replaces CIMIC; More Changes in May & June
BIG Nikon (7731) Buyback – OK But Should Do Better

MSCI May Index Rebalance Preview: Potential FIF Changes & Impact

MSCI comprehensively evaluates the free float for stocks at the May SAIR. The changes will be announced on 12 May and implemented at the close on 31 May.
We expect an increase in the FIF for some stocks. Largest inflows are expected on Tencent (700 HK), Kuaishou Technology (1024 HK), JD Health (6618 HK) and KakaoBank (323410 KS).
There is reasonably large short interest on some of the stocks and there could be some short covering on stocks where there could be large passive inflows.

HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
We list 10 stocks that could be added to the index in June – with one-way turnover close to 6%, the actual number of inclusions will be lower.
We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.

Toshiba (6502) – 3D Writes Another Letter

On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check.
That same day, Bain signed a “Confirmation Agreement” with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check.
Now we have a 3D public letter to the Board demanding 3 measures before the AGM.

ASX200 Index Rebalance: HomeCo Daily Needs REIT (HDN) Replaces CIMIC; More Changes in May & June

HomeCo Daily Needs REIT (HDN AU) will replace CIMIC Group Ltd (CIM AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 11 April.
The change has come earlier than expected as Hochtief hold nearly 90% of CIMIC. Positioning on HDN could be light- the stock could rally over the next couple of days.
There could be another ad hoc change prior to the June rebalance and then there will be more changes at the regular rebalance in June.

BIG Nikon (7731) Buyback – OK But Should Do Better

Nikon Corp (7731 JP) today announced a Very Large Buyback. This is the third buyback it has announced since spring 2019. The first was short. The next two big.
The company also announced a new Medium-Term Management Plan for FY2022-2025 today in which they reiterated their existing Shareholder Return Policy of 40+% payout of stable dividends and opportunistic buybacks.
It’s a decent div, and the buyback is for 6-7% of shares out, but it could do better. The company is hugely cash- and securities holdings-rich. It should do better.

Before it’s here, it’s on Smartkarma

Apr 07

Most Read: Baidu, Air New Zealand, Toshiba Corp, SK Shieldus, Orient Overseas International and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May Index Rebalance Preview: Potential Listing Switches & Implications
Air New Zealand’s Rights Offering – Take Advantage Of the Arb
Toshiba (6502) – 3D Writes Another Letter
SK Shieldus IPO: Offering Details, Valuation Issues, & Index Fast Entry
HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

MSCI May Index Rebalance Preview: Potential Listing Switches & Implications

We expect Baidu (9888 HK), Bilibili (9626 HK), GDS Holdings Ltd (9698 HK) and New Oriental Education & Technology Group (9901 HK) to replace their ADRs in the MSCI indices.
The subsequent increase in CCASS shares and/or shares held outside the ADR depositary will result in an increase in the weights of the stock in the HSCEI INDEX and HSTECH INDEX.
The higher index weight for Baidu (9888 HK) in the HSCEI and potential inclusion of Bilibili (9626 HK) will add downward pressure on the HSCEI 2022/23 dividend steepener.

Air New Zealand’s Rights Offering – Take Advantage Of the Arb

Air New Zealand (AIR NZ) is the latest airline do a Covid Recapitalisation with a “heavy rights issue” where
The dynamics will likely play out somewhat similarly to the way Singapore Air’s did. The initial squeeze and first leg down have.
But that means LOTS of opportunity here for long only, passive, and arbitrageurs alike.

Toshiba (6502) – 3D Writes Another Letter

On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check.
That same day, Bain signed a “Confirmation Agreement” with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check.
Now we have a 3D public letter to the Board demanding 3 measures before the AGM.

SK Shieldus IPO: Offering Details, Valuation Issues, & Index Fast Entry

S1 Corp is more giant in sales and ranks first in the local on-site security market, so it is tough to understand why SK Shieldus should receive a higher valuation.
If the growth story is sexier, the story may be different. Still, many investors will have doubts about whether SK Shieldus’ growth story is convincingly explained in the IPO prospectus.
Even the lower end of the indicative price band is likely to be downwardly corrected in the post-IPO price-finding. Hence, I do not recommend an aggressive approach to this IPO.

HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
We list 10 stocks that could be added to the index in June – with one-way turnover close to 6%, the actual number of inclusions will be lower.
We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.

Before it’s here, it’s on Smartkarma

Apr 06

Most Read: Tokyo Century Corp, Money Forward, Hyundai Heavy Industries, Cosmo Energy Holdings, Baidu and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Japan Index Rebalance Preview: Only Deletions for Now
The TOPIX Liquidity Factor Adjustment – Still a Trade To Do
MSCI Korea May SAIR Screening Status: 2 Certain Adds, 3 Delete Candidates, & 1 Tricky
Activist Murakami-San Goes Substantial on Cosmo Oil (5021)
MSCI May Index Rebalance Preview: Potential Listing Switches & Implications

MSCI Japan Index Rebalance Preview: Only Deletions for Now

As of the close on 1 April, we see 13 potential deletions from the MSCI Japan Index. There could be changes in the next couple of weeks as prices change.
The potential deletions are Tokyo Century, Pola Orbis, Miura, Lion Corp, Tsuruha Holdings, Hino Motors, Benefit One, Stanley Electric, Ryohin Keikaku, Sohgo Security Services, Orix JREIT, Rinnai Corp and Lawson.
Most of the stocks will have over 5 days of ADV to sell from passive funds and there has been an increase in short interest over the last month.

The TOPIX Liquidity Factor Adjustment – Still a Trade To Do

Every year in April there are two TOPIX rebalance changes – the FFW review for July-September FY-end companies, and the annual liquidity factor adjustments.
This year, the former is replaced by the TOPIX FFW Methodology Change for the new Market Structure. This is a big change, but it will not necessarily overwhelm the latter.
Janaghan Jeyakumar, CFA‘s piece of 5 weeks ago discussing the Liquidity Factor basket has seen generally good performance. There are two days to go.

MSCI Korea May SAIR Screening Status: 2 Certain Adds, 3 Delete Candidates, & 1 Tricky

Although this is a semi-annual IR, the number of additions won’t be large. At this point, only Hyundai Heavy Industries (329180 KS) and KT Corp (030200 KS) are screened.
None of the exclusion candidates are below the lower buffer at this point. So, those with the lowest market caps during the review period will be excluded from the Index.
Based on the current share prices, the following three existing constituents have the smallest market cap: Green Cross (006280 KS), Alteogen Inc (196170 KS), and SK Chemicals Co (285130 KS).

Activist Murakami-San Goes Substantial on Cosmo Oil (5021)

Four weeks ago, the sovereign wealth fund of the UAE sold out of a 15% position in Cosmo Energy Holdings (5021 JP) they’d held for 15yrs.
Today we see noted Japanese activist Murakami Yoshiaki and affiliates have purchased 5+% of the company, including a large chunk the day after the block trade.
Oftentimes he buys stakes in industries where consolidation is overdue and/or natural. Construction has been one such sector. Refiners probably need consolidation too, but it’s not clear it’s easy here.

MSCI May Index Rebalance Preview: Potential Listing Switches & Implications

We expect Baidu (9888 HK), Bilibili (9626 HK), GDS Holdings Ltd (9698 HK) and New Oriental Education & Technology Group (9901 HK) to replace their ADRs in the MSCI indices.
The subsequent increase in CCASS shares and/or shares held outside the ADR depositary will result in an increase in the weights of the stock in the HSCEI INDEX and HSTECH INDEX.
The higher index weight for Baidu (9888 HK) in the HSCEI and potential inclusion of Bilibili (9626 HK) will add downward pressure on the HSCEI 2022/23 dividend steepener.

Before it’s here, it’s on Smartkarma

Apr 05

Most Read: HDFC Bank, NIO Inc, HDFC Limited, Jindal Steel & Power, Pendal Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HDFC/HDFCB Merger: Mega Merger & Index Treatment
Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)
Shocker! HDFC Bank To Merge With HDFC Limited
MSCI India Index Rebalance Preview: Potential Changes in May
Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

HDFC/HDFCB Merger: Mega Merger & Index Treatment

HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) are looking at a mega-merger where HDFC shareholders will receive 42 shares in HDFCB for every 25 HDFC shares held.
Regulatory and other approvals are expected to take around 18 months and the merger will create a US$145bn behemoth. Some regulatory approvals could be tougher to get than others.
HDFC Limited (HDFC IN) is a member of the FTSE All-World and MSCI India indices, while HDFC Bank (HDFCB IN) is not. The index treatment is tricky.

Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)

NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO.
Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies.

Shocker! HDFC Bank To Merge With HDFC Limited

This is at a time a shocker and at a time, not. Because of rising regulatory requirements for NBFCs, this was to be expected at some point.
The deal pays Limited shareholders a slight premium vs previous close, but enables them to exit without a holdco discount.
Early days yet regulatorily speaking, but accretive, and it makes a lot of sense. It will be appreciated.

MSCI India Index Rebalance Preview: Potential Changes in May

As of the close on 1 April, we expect Tata Elxsi Ltd (TELX IN) and Jindal Steel & Power (JSP IN) to be included in the MSCI India Index.
Potential deletions at the May SAIR are HDFC Asset Management Co Ltd (HDFCAMC IN), Indraprastha Gas (IGL IN), Mrf Ltd (MRF IN) and Petronet LNG (PLNG IN).
Passive trackers will need to buy between 3-4 days of ADV on the inclusions and sell between 4-16 days of ADV on the deletions.

Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

Earlier today, Perpetual Ltd (PPT AU) made a conditional, non-binding indicative proposal for Pendal Group (PDL AU) to acquire 100% of the shares by way of a Scheme of Arrangement.
Pendal Group (PDL AU) shareholders will receive 1 share of Perpetual Ltd (PPT AU) for every 7.5 shares of PDL plus A$1.67/PDL share in cash.
This is a highly opportunistic offer and it is unlikely that Pendal Group (PDL AU)‘s Board will support the proposal. There could be further improved proposals that come in.

Before it’s here, it’s on Smartkarma

Apr 04

Most Read: JD.com Inc., Lenovo, KraneShares CSI China Internet ETF, NIO Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, KOSDAQ150, HSCEI, KT Corp, JD.com, Tabcorp
HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?
New CSRC “Provisions” Take a Step Towards Meeting PCAOB Requirements
ECM Weekly (3rd Apr 2022)- JD, Tencent, Prosus, One Store, SK Shieldus, FWD, Ferretti, Recbio, Belle
Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)

Index Rebalance & ETF Flow Recap: MSCI, KOSDAQ150, HSCEI, KT Corp, JD.com, Tabcorp

There are two weeks to the start of the review period for the MSCI May SAIR. There are expected to be many changes to the stocks and their FIFs.
There will be passive buying in JD.com Inc. (9618 HK) from Hang Seng trackers in June, while KT Corp (030200 KS) is a high probability MSCI inclusion in May.
There were big inflows to the iShares MSCI Emerging Markets (EEM US) ETF and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week.

HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)‘s real float. Short interest is over 17 days of ADV.

New CSRC “Provisions” Take a Step Towards Meeting PCAOB Requirements

The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.
On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules.
Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?

ECM Weekly (3rd Apr 2022)- JD, Tencent, Prosus, One Store, SK Shieldus, FWD, Ferretti, Recbio, Belle

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.
Placements continued to flow in, at a slower pace than last week, with Malaysia and ANZ chipping in.
While the HK IPO scene failed to produce anything noteworthy with its two listing, South Korea appears to be leading the charge, once again.

Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)

NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO.
Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies.

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