In today’s briefing:
- CSI300 Index Rebalance: The Surprises Could Outperform
- STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
- ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- Last Week in Event SPACE: Meituan, Link Admin/Pexa, DTAC/True, Medley
- Meituan 105 Buy Support
- Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Chip Eng Seng, Mori Trust, Pendal/Pendal, DTAC/True
- Asia Gaming: Despite Macau Woes, Melco Stock Is Too Cheap to Ignore Now
CSI300 Index Rebalance: The Surprises Could Outperform
- There are 15 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- While most of the deletions are in line with forecasts, there are a few differences on the inclusions as the index committee has used its discretion to overlook some names.
- The Industrials, Materials and Utilities sectors gain index spots at the expense of Health Care, Financials, Consumer Staples and Consumer Discretionary.
STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in December.
- All changes are in line with our forecasts and there appears to be some pre-positioning over the last week as the deletes have sold off hard.
- One-Way turnover is estimated at 5.34% and will result in a one-way trade of CNY 3,766m. The estimated impact on the deletes is higher than that on the adds.
SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
- There are 5 changes for the SSE50 Index that will be implemented at the close on 9 December. Passive selling on a few deletions is pretty large.
- We estimate a one-way turnover of 4.07% at the December rebalance leading to a one-way trade of CNY 3.36bn. Index arb activity could add to the impact on the stocks.
- The adds have dropped over the last few months while the deletes have moved higher. There could be a reversion of that trend till implementation of the changes.
ECM Weekly (27th Nov 2022) – Growatt, Lygend, Sunshine Ins, Weilong, DPC, Daiei, Skymark, GoTo
- 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, things are picking up again going into the year end.
- There were no large placement or blocks this week, although prior lockup linked blocks kept flowing through.
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
Last Week in Event SPACE: Meituan, Link Admin/Pexa, DTAC/True, Medley
- You could imagine people covering their short in Meituan (3690 HK) now. The Hang Seng sell flow on 4 January 2023 is insignificant. But there will be more overhang later.
- If you buy Link Administration (LNK AU) outright, you are buying a package of three potential future takeout targets.
- It’s not certain the scrip terms will continue as stated in the DTAC /True merger, but if they change at all, that would almost certainly require a new shareholder meeting.
Meituan 105 Buy Support
- Meituan (3690 HK) has some big resistance hurdles to overcome and will act as tactical sell levels to seek out the 105 buy zone.
- A tactical bounce back to 165 is on the cards with 168/75 the high degree sell barrier. Secondary trendline resistance rests near 185 as the bigger sell zone.
- The bearish rising wedge stands out as the dominant force. The support break warns of fallout after a bounce attempt back to 168. A weak bounce would turn near 160.
Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights may flag those companies where shares have been pledged. Stocks mentioned include JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Chip Eng Seng, Mori Trust, Pendal/Pendal, DTAC/True
- There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Two new deals were discussed on Smartkarma: the Tangs’ Offer for Chip Eng Seng (CHIP SP); and the Mori Trust Sogo Reit (8961 JP)/Mori Trust Sogo Reit (8961 JP) merger.
- Key updates took place for: Pendal Group (PDL AU)/Perpetual Ltd (PPT AU), Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB), and Lifestyle International Holdings (1212 HK).
Asia Gaming: Despite Macau Woes, Melco Stock Is Too Cheap to Ignore Now
- We calculated the intrinsic value of the stocks is ~30% undervalued at US$6.79 a share.
- The strong Manila market recovery and planned on time opening of Cyprus property does not seem to be baked into the price at writing.
- Macau travel bans will keep MLCO dead pooled, but value lies in its assets still at work
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