In today’s briefing:
- Southeast Asia EM: Potential Passive Flows in February
- Korea: Surging Share Cancellations in 2024
- A/H Premium Tracker (To 9 Feb 2024): Liquid AH Premia Near Multi-Yr Wides, Narrow AH Premia Wider
- Mainland Connect NORTHBOUND Flows (To 9 Feb 2024): Decent Net Momo Buying, Especially in Financials
- Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place
- MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete
- Merger Arb Mondays (12 Feb) – JSR, Benefit One, Lawson, Welbe, YSK, Hollysys, Silver Lake
- HK Connect SOUTHBOUND Flows (To 9 Feb 2024); Net Tech Selling STILL, Net SOE Buying, STILL
- Quiddity HSCEI Mar 24 Flow Expectations: Zhongsheng (881 HK) Downtrend Could Continue
- Second Time Around
Southeast Asia EM: Potential Passive Flows in February
- There could be large passive flows for stocks in Malaysia and Thailand in the next few weeks. Impact is especially high where there could be passive outflows.
- YTL Corp (YTL MK) and YTL Power International (YTLP MK) are likely to have passive inflows.
- Dialog Group (DLG MK), Berli Jucker (BJC TB), Osotspa Public Company Limited (OSP TB) and Banpu Public (BANPU TB) could have outflows.
Korea: Surging Share Cancellations in 2024
- We discuss the surging share cancellations in Korea in 2024. As of 8 February 2024, Korean companies have announced 3.3 trillion won worth of shares to be completed this year.
- At current blistering pace, it is likely that the share cancellations in Korea could jump at least 100% YoY to jump more than 10 trillion won in 2024.
- Some of the leading Korean companies including Samsung C&T and KT&G that have announced share cancellations this year continue to outperform the market on average.
A/H Premium Tracker (To 9 Feb 2024): Liquid AH Premia Near Multi-Yr Wides, Narrow AH Premia Wider
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND and NORTHBOUND flows net positive. AH premia on average rose so Hs underperformed As by 1.75%. Narrow premia pairs saw AH premia rise most.
- Watch the SOE stock price KPI space. Wouldn’t be short SOEs vs Privates on H/A basis. Low-hanging fruit with some SOEs having large cash balances.
Mainland Connect NORTHBOUND Flows (To 9 Feb 2024): Decent Net Momo Buying, Especially in Financials
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net BUY RMB 16.1bn of A-shares on VERY strong average activity after +9.9bn and +12.1bn RMB the two weeks before. Some National Team buying this week.
- Renewables selling was tempered. Finance and Industry saw large net buying. Five of the top ten buys among liquid NORTHBOUND stocks were finance. Info Tech saw net selling. Again.
Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- The index changes for HSTECH index for the March 2024 index rebal event will be announced on 16th February 2024.
- In this insight, we take a final look at the expected index changes and our latest flow expectations.
MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete
- The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
- The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
- With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.
Merger Arb Mondays (12 Feb) – JSR, Benefit One, Lawson, Welbe, YSK, Hollysys, Silver Lake
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Welbe Inc (6556 JP), Probiotec Ltd (PBP AU), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Genetron Holdings Ltd (GTH US), Lithium Power International (LPI AU).
- Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), QV Equities Ltd (QVE AU), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), Irc Ltd (1029 HK).
HK Connect SOUTHBOUND Flows (To 9 Feb 2024); Net Tech Selling STILL, Net SOE Buying, STILL
- A bad week for HK and Chinese shares. National Team buying seems lighter into the waning days of the Year of the Rabbit.
- Net SOUTHBOUND buying was HK$4.0bn in the shortened pre-holiday week.
- Remarkable this past week, again, was the tendency to net sell names which were down hard, and net buy names which have been performing well.
Quiddity HSCEI Mar 24 Flow Expectations: Zhongsheng (881 HK) Downtrend Could Continue
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- The index changes for HSCEI index for the March 2024 index rebal event will be announced on 16th February 2024.
- In this insight, I have shown how my flow expectations have changed since I published my last HSCEI insight on 6th December 2023.
Second Time Around
- The Della Valles and LVMH-backed L Catterton announced an agreement to launch a voluntary tender offer to buy 36% of Italian luxury group Tod’s SpA (TOD IM) at €43/share to take it private.
- In spite of the 31% premium to the 3-month VWAP, and the loss of brand equity by Tod’s the offer seems cheap on a multiples basis, considering turnaround potential.
- Considering a 95% squeeze-out threshold, 80.4% of the float must tender, which is high. A sweetening may be needed, although the offeror threatens with a merger with itself to delist.
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