In today’s briefing:
- Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index
- StubWorld: China Conch Trades Cheap. As Does Anhui
- Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
- CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- Full Details & Trading Ramifications of Official Revisions to CFD Trade Rules in Korea
- Rakuten Bank (5838 JP) – Attractive Versus Domestic Neobank Peers, with Added Technical Support
Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index
- The index announcements regarding the the changes to indices following the Rakuten (4755 JP) offering have been a bit weird.
- Some of that may have to do with timing. Some is just weird
- The result is that there is less to buy this week than I previously expected, and the buying gets dragged out longer.
StubWorld: China Conch Trades Cheap. As Does Anhui
- The China Conch Venture Holdings (586 HK) / Anhui Conch Cement (600585 CH) ratio is at an all-time low. The implied stub is re-testing its all-time low.
- Preceding my comments on China Conch/Anhui 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%.
Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
- In mid-January this year, Mitsui & Co Ltd (8031 JP) announced it would buy out minorities in Relia Inc (4708 JP) (longtime known as Moshi Moshi), a BPO/RPA/AI services company.
- I said the deal was too cheap, with 44% upside to the midpoint of Target Advisor’s DCF fair value range. Investors needed to exercise their cowbell to get more.
- Since then, TOPIX has returned ~15%, A peer basket 16%, H2 was possibly kitchen-sinked, but no Mar-2024 forecasts were provided. The Tender starts tomorrow. Noise is still warranted.
CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 9 June.
- The inclusions will also be added to other indices over the next couple of weeks and there will be inflows from multiple index trackers.
- The adds have outperformed and with 9 trading days to implementation of the changes and the inclusions also being added to other indices, there could be further outperformance near-term.
ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- There will be 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 June.
- One-Way turnover for the Chinext Price Index is estimated at 3.17% while the one-way turnover for the ChiNext50 Index is 6.61%. The one-way trade across both indices is CNY 2.72bn.
- The adds have outperformed the deletes by a huge margin over the last 3 months and there could be profit taking into implementation.
Full Details & Trading Ramifications of Official Revisions to CFD Trade Rules in Korea
- It’s crucial to note that margin balances from CFDs will also be disclosed through each brokerage’s Home Trading System (HTS), providing insight into the risk of margin call-triggered covering trades.
- It has been challenging to discern which are being targeted for illegal trading operations using CFDs. The disclosure of CFD margin balances can be an indicator to address this issue.
- This may lead to a short-term selling spiral on suspected stocks, where illegal trading forces rush to liquidate their positions, and additional selling pressure targeting such activities exacerbates the situation.
Rakuten Bank (5838 JP) – Attractive Versus Domestic Neobank Peers, with Added Technical Support
- Rakuten Bank’s imminent TOPIX index inclusion is a further share price support, to a neobank with a fundamentally attractive outlook
- Rakuten Bank trades on a LTM PE multiple of 10.9x, LTM PBV ratio of 1.5x and an ROE of 13.8%, the best ROE to PBV ratio of its neobank peers
- Aside from its premium long-run growth prospects and low prospective PEG ratio, Rakuten Bank is also the lowest cost to serve Japanese neobank
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