In today’s briefing:
- FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
- CES China Semiconductor Chips Index Rebalance: Four Changes in December
- Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe
- FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
- End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022
- CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations
- FTSE UK Dec 22 Rebal: Quiddity Announcement Day Thoughts
- Reinhart Edges Stokes In Tussle For Warrego Energy
- EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Revisited
FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
- JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
- The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
- Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.
CES China Semiconductor Chips Index Rebalance: Four Changes in December
- There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
- Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
- Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.
Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe
- In March 2022, Toyo Construction (1890 JP) agreed to be taken over by equity affiliate stake owner INFRONEER Holdings (5076 JP) at what was a low price.
- Nintendo Founder Family Office “YFO” objected, and bought 25+% of the company, then offered to buy it out 30% higher. Toyo Construction objected.
- Four months later they finally signed an NDA and then started negotiating. Early in November the target date for a Tender Offer start by YFO was pushed to early December.
FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
- Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
- Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.
Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
- On 17 Feb 2022, Janaghan Jeyakumar, CFA wrote about Appier Group (4180 JP) suggesting it was a TOPIX inclusion candidate in the not-distant future.
- In mid-August 2022, he reiterated his opinion. Three days later, the company said they had applied for TSE Prime membership. We are coming up on the timing for an announcement.
- It would mean buying, but the shareholder structure is interesting, and intentions are not easy to read. But if they announce imminently, the calendar makes the event even more interesting.
End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022
- We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.
- These 58 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
- Among these 58 stocks, the top 5 market cap stocks include HYBE, Kakao Games, WCP, Sillajen, and Duksan Neolux.
CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations
- KRX unveiled the rebalancing results of the CSI KRX China-Korea indices for Korean constituents yesterday.
- There is still insufficient evidence data to estimate specific passive impact. The previous rebalancing in June showed no clear correlation between constituent changes and price impact.
- Although it may be risky to trade on this rebalancing, monitoring the correlation of their passive impact at this point, one year after the release, seems worthwhile.
FTSE UK Dec 22 Rebal: Quiddity Announcement Day Thoughts
- The December 2022 Rebalance of the FTSE UK Index series will be based on the closing prices of 29th November 2022.
- The results will be announced after market close later today (30th November 2022).
- Below are Quiddity’s final expectations for index changes and flow parameters for the December 2022 Rebalance event. You have the day to trade this.
Reinhart Edges Stokes In Tussle For Warrego Energy
- Gina Rinehart’s Hancock Prospecting has joined the bidding war for Warrego Energy (WGO AU) with a A$0.23/share, all cash, off-market Offer versus Beach Energy (BPT AU)‘s management-backed A$0.20/share Scheme Offer.
- Hancock has already lodged the Bidder’s Statement. There is no minimum acceptance condition attached to this offer.
- Warrego currently recommends Beach’s Offer, subject to no superior proposal emerging. Beach has matching rights under the SID entered into on the 14 November.
EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Revisited
- Chinese equities have been on a volatile path but are finally gaining some upside momentum
- Dollar seems to have peaked and USDCNH is retreating with renewed optimism for the Chinese economy reopening.
- We revisit the trade and look at potential restructuring options
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