In today’s briefing:
- Korea FSC: Major Changes in Foreign Investor Registration & IPO Pricing
- ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care
- SZSE1000 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- Hankook Tire & Chosun Refractories Enter M&A Fight for Korea Zinc: [Young Poong’s Cheap NAV]
- Thailand SET50 Quiddity Dec 22 Final Expectations: DTAC-TRUE Delay Could Cause RATCH-IRPC Surprise
- Samsung Electronics: Likely Focus on Inheritance Taxes Again in 1Q 2023
- EQD | HSBA Vs ICBC (5 HK,1398 HK): Trade a Relative Value Vol Spread -Revisited
- NewMed Energy/Capricorn: Positive Spread
Korea FSC: Major Changes in Foreign Investor Registration & IPO Pricing
- FSC’s unveiled measures: 1. declare a dividend before determining which shareholder to receive, 2. scrap foreign investor ID, & 3. widen price limit on a listing day & allow “test-the-waters”
- These are still drafts, but since they have already been coordinated with the Yoon administration, it is highly likely that they will be implemented in the not-too-distant future.
- FSC will disclose detailed plans next month. We should rush to prepare for them, which significantly impacts the increase in foreign investors’ trading volume and the IPO pricing.
ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care
- There will be 10 changes for the Chinext Price Index and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 December.
- One surprise is the inclusion of Hunan Zhongke Electric Co,Ltd. (300035 CH) in both indices. Four stocks are adds to both indices while two stocks are deletes from both indices.
- The adds have outperformed the deletes over the last 8 months but have given up some of the gains over the last month. There is a big sector skew.
SZSE1000 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- There are 47 changes for the SZSE 1000 index that will be implemented at the close of trading on 9 December.
- We see 51 stocks being added to Shenzhen Stock Connect (47 index adds + 4 existing constituents) and 83 deletions from Stock Connect (15 index adds + 68 existing constituents).
- There could be 4 adds to the MSCI China in February and 11 adds to the FTSE All-World/All-Cap in March. Plus a bunch of deletes at the close 9 December.
Hankook Tire & Chosun Refractories Enter M&A Fight for Korea Zinc: [Young Poong’s Cheap NAV]
- There are increasing evidence that suggests that the M&A fight Korea Zinc (010130 KS) between the Jang and Choi families is becoming more heightened.
- The family of the owners of Hankook Tire and Chosun Refractories have a close relationship with Korea Zinc Vice Chairman Choi and they have become friendly shareholders to Choi.
- Our NAV valuation of Young Poong (000670 KS) suggests NAV of 2.2 trillion won or NAV per share of 1,210,644, which represents a 61% upside from current levels.
Thailand SET50 Quiddity Dec 22 Final Expectations: DTAC-TRUE Delay Could Cause RATCH-IRPC Surprise
- The reference period for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) December 2022 Rebalance is about to come to an end.
- With the market consultation changes confirmed as expected and the DTAC-TRUE merger likely to get delayed to 1Q CY2023, I expect 4 ADDs/DELs in December 2022.
- Ratch Group PCL (RATCH TB) is a potential surprise ADD and IRPC PCL (IRPC TB) is a potential surprise DEL out of the index changes predicted in this insight.
Samsung Electronics: Likely Focus on Inheritance Taxes Again in 1Q 2023
- One of the key events for Samsung Electronics in 1Q 2023 could be additional selling by Lee Jae-Yong and his family members to pay for inheritance taxes.
- Samsung Electronics underperformed significantly versus KOSPI in the first quarter in the past two years.
- As the negative issue of inheritance taxes becomes highlighted once again, this could further negatively impact Samsung Electronics and other Samsung affiliate shares.
EQD | HSBA Vs ICBC (5 HK,1398 HK): Trade a Relative Value Vol Spread -Revisited
- On October 6th we suggested selling HSBC vol vs buying ICBC vol
- We look at the trade performance both in terms of realised and implied vols
- We consider the trading options given the convergence in vols
NewMed Energy/Capricorn: Positive Spread
- The NewMed/Capricorn reverse takeover should be approved at an EGM. Investors opposing the deal (mainly event-driven funds) hold in aggregate at least c. 33.6% of cash-rich Capricorn.
- The approval threshold is 50% (vs. 75% in Tullow’s merger), which should favour the approval. But the +6.9% spread (as of 28 November), reveals it’ll be challenging.
- First Tullow sought CNE’s cash pile, now NewMed seeks CNE’s Middle East assets and a coveted London listing. Unless NewMed sweetens the terms, this deal may not happen either.
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