In today’s briefing:
- Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?
- TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025
- EQD | DeepSeek’s New AI: Price Supports and Broader Implications for META, NVDA, S&P 500, Nasdaq 100
- Utilize the Killer Dataset Provided by KRX Through the Value-Up Index
- EQD | Hong Kong Single Stock Options Weekly (January 20 – 24): Rally Continues on Less Participation
- Lifestyle China (2136 HK): Expectations of a Deal Break with a Vote on 20 February
- Dada Nexus (DADA US): JD.com’s Light Non-Binding Offer at US$2 Per ADS
- EQD| Lunar New Year: Do HSI, KOSPI, and FXI Follow a Pattern?
- EQD | Nikkei Index Options Weekly (January 20 – 24): Looking for an Assist
- Weekly Update (APTV, MRP, MEDXF)
Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?
- Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.
- The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.
- The setup very near-term could be pretty interesting, and worth watching.
TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2025.
EQD | DeepSeek’s New AI: Price Supports and Broader Implications for META, NVDA, S&P 500, Nasdaq 100
- News that DeepSeek’s latest AI release appears to be superior to latest OpenAI’s ChatGPT in most (if not all) of the benchmark tasks have apparently shaken markets today.
- DeepSeek may be able to beat its competitors (including other AI developed by other US companies like Meta Platforms (META US) ), using lower cost chips and less data.
- Tech companies like NVIDIA Corp (NVDA US) are falling hard (like -12%) in pre-market, and so are the US Indices. Let’s see where support for reversal rallies can be found.
Utilize the Killer Dataset Provided by KRX Through the Value-Up Index
- The KRX is going all-in, using data transparency to clean up the Value-Up Index, rebuild trust, and keep it in the spotlight.
- This sharpens predictability for June’s rebalancing, enhances market transparency, and attracts foreign investors to GICS-based indices like the KOSPI 200.
- This could transform index dynamics, boosting inflows, liquidity, and global interest, creating a potential alpha opportunity.
EQD | Hong Kong Single Stock Options Weekly (January 20 – 24): Rally Continues on Less Participation
- Information technology very strong with AAC Tech, Sunny Optical, Kingdee Int’l and Byd Elec all posting > 10% weekly gains.
- Gains were positive with helpful seasonals but not as widespread as last week with fewer singles stocks and Sectors participating in the rally.
- China Vanke has big increase in option trading, in particular Calls, with implied vols also rising.
Lifestyle China (2136 HK): Expectations of a Deal Break with a Vote on 20 February
- Lifestyle China (2136 HK)’s IFA opines that Mr Thomas Lau’s HK$0.98 privatisation offer is fair and reasonable. The vote is on 20 February.
- The IFA analysis is flawed. The revised and final offer is light compared to precedent transactions, peer multiples and historical trading ranges.
- The high AGM minority participation rates remain a vote risk, mainly as retail seems firmly against the offer. The 14.0% gross spread is high but justified.
Dada Nexus (DADA US): JD.com’s Light Non-Binding Offer at US$2 Per ADS
- Dada Nexus (DADA US) disclosed a non-binding proposal from JD.com Inc (ADR) (JD US) at US$2.00 per ADS, a 41.8% premium to the undisturbed price of US$1.41 (24 January).
- The offer is light compared to the IPO price (US$16.00), average sell-side price targets (US$2.19) and historical trading ranges.
- The shareholder vote is low-risk (two-thirds voting threshold), as JD.com represents 63.2% of the voting power. The key risk is the timing of a binding proposal.
EQD| Lunar New Year: Do HSI, KOSPI, and FXI Follow a Pattern?
- All three markets exhibited larger average returns in the 5 days leading up to Lunar New Years compared to out-of-sample data.
- The pattern for the period after Lunar New Year does not show the same characteristics as prior to Lunar New Year.
- The strongest returns were seen in FXI with average returns 10X out-of-sample average returns.
EQD | Nikkei Index Options Weekly (January 20 – 24): Looking for an Assist
- Nikkei back at the top of the price range rising 3.85%. Gains may be more limited from here without an assist from the currency.
- Implied vols softened on the week from a combination of factors includes low realized volatility on the week.
- Active trade in Put and Call strikes at the edge of the recent trading range.
Weekly Update (APTV, MRP, MEDXF)
- Aptiv PLC (APTV), an automotive technology supplier, announced on January 22, 2025, that it plans to split into two distinct companies.
- Aptiv will spin-off its electrical systems business.
- The RemainCo will concentrate on technological components, including sensor-to-cloud solutions and autonomous driving software.
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