In today’s briefing:
- MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps
- StubWorld: PPB In The Doghouse, But These Levels Are Excessive
- Canvest (1381 HK): Regulatory Precondition Satisfied
- India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
- EquiLend Gets in on Korea’s Securities Lending Digital Shift: Trading Impact
- Asset Sales as a Catalyst for Share Price Recovery
- Canvest (1381 HK): SAFE In The Bag, But Oddly, Still Not Free From Pre-Cons
MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps
- With 6 days left to review cutoff, there are 2 potential adds and 3 potential deletions for the MV Australia Equal Weight Index at the March rebalance.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 3% and a round-trip trade of A$159m.
- The final list of inclusions/exclusions will depend on price movements till next Friday and whether the provider makes any significant changes to the free float of stocks in the universe.
StubWorld: PPB In The Doghouse, But These Levels Are Excessive
- PPB Group (PEP MK)‘s grains & agri arm, and four other feedmillers, has been labelled a cartel and fined by the Malaysian competition watchdog. A judicial review is ongoing.
- Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Canvest (1381 HK): Regulatory Precondition Satisfied
- The regulatory precondition concerning Canvest Environmental Protection Group (1381 HK)’s privatisation offer from Grandblue Environment Co A (600323 CH) has been satisfied.
- The sole remaining precondition concerns resolving loan guarantee issues. Canvest is taking steps to resolve these issues, and satisfying this precondition is low-risk.
- Despite peers’ re-rating, the offer remains attractive, and the vote is low-risk. At the last close, the gross/annualised spread was 4.5%/15.0% for a mid-June payment.
India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
- The Index Maintenance Sub-Committee of NSE Indices will meet on 21 February to conduct a semi-annual and quarterly review of stocks in various Nifty equity indices.
- The changes will be announced after market close tomorrow and will be implemented at the close of trading on 28 March.
- Based on the forecast index changes and capping changes for a few indices, the round-trip trade will be over US$2.5bn and many stocks will have over 0.5x ADV to trade.
EquiLend Gets in on Korea’s Securities Lending Digital Shift: Trading Impact
- The remaining third of Korea’s local securities lending market is moving to digital, potentially sparking a whole new trading landscape.
- Integrating EquiLend with local platforms boosts post-short-selling volume and shifts a large portion of manual trades into the digital space.
- This could spark new algo trading strategies, and with short selling resuming March 31, we’ll need to track how the flow evolves.
Asset Sales as a Catalyst for Share Price Recovery
- Telefónica is actively pursuing asset sales in Latin America and Europe, aiming to streamline operations and reduce net debt. The company anticipates generating approximately €3.27 billion from these transactions.
- Assuming minimal tax liabilities due to potential offsets from existing losses, the net proceeds could be applied directly to debt reduction, representing an 11.4% decrease in net debt (2.5x EBITDA).
- Telefónica’s dividend remains well covered, with a dividend yield of 7.2% for 2025e, significantly above the 10-year Spanish bond yield (3.2%).
Canvest (1381 HK): SAFE In The Bag, But Oddly, Still Not Free From Pre-Cons
- After Canvest Environmental Protection Group (1381 HK) announced on the 23rd Jan it had secured Mofcom approval, after securing NDRC earlier that month, that left SAFE. Or so I thought.
- SAFE has now been secured, yet two pre-cons concerning certain (internal) guarantees remain outstanding. It’s rare to see SAFE sign off with other pre-cons still hanging.
- The consolation here is that KM Lai (ED, DC) and Loretta Lee (ED, CL) are on the hook for a chunk of change if they cause the proposal to lapse.
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