In today’s briefing:
- Guotai Junan/Haitong Sec Merger: The Many Index Flows Around the Corner
- PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON
- SLB Development (SLB SP): Ong Family’s S$0.23 Scheme Offer
- Indian Renewable Energy (IREDA IN) QIP: Index Implications
- Bank Central Asia (BBCA IJ) – Strong Finisher
- EQD / NSE NIFTY50 Vol Update / India Budget Event Dominates Local Options Markets.
Guotai Junan/Haitong Sec Merger: The Many Index Flows Around the Corner
- Haitong Securities (H) (6837 HK) and Haitong Securities (A) (600837 CH) shares will stop trading after 5 February following the merger with Guotai Junan Securities (2611 HK).
- There will be small buying in Guotai Junan Securities (2611 HK) at the close on 5 February and there should be more buying in the A-shares and H-shares in March.
- There will also be a stock added to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) to bring the number of index constituents back to 300.
PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON
- As forecast, Areit (AyalaLand REIT) (AREIT PM) and China Banking (CBC PM) will replace Nickel Asia (NIKL PM) and Wilcon Depot (WLCON PM) in the Philippines Stock Exchange PSEi Index.
- Passive trackers will need to buy between 14-44 days of ADV in the adds while selling between 17-54 days of ADV in the deletes.
- The stocks have already moved a lot over the last few months and positioning has built up over that period. There could still be outperformance ahead of the passives trading.
SLB Development (SLB SP): Ong Family’s S$0.23 Scheme Offer
- SLB Development (SLB SP) disclosed a scheme privatisation from Lian Beng (LBG SP) at S$0.23 per share, a 36.1% premium to the undisturbed price of S$0.169 (22 January).
- The Ong family previously privatised Lian Beng, the parent company. The offer price, which is equal to the IPO price, is attractive compared to peer multiples and historical trading ranges.
- The scheme vote is low-risk, as no disinterested shareholder holds a blocking stake, and the offer is attractive. Expect a scheme meeting in April.
Indian Renewable Energy (IREDA IN) QIP: Index Implications
- IREDA has announced a Qualified Institutional Placement (QIP) of a maximum of INR 50bn as long as the Government of India’s holding does not drop by more than 7%.
- There will be passive buying at the time of settlement of the QIP shares while the increase in float will bring the stock closer to inclusion in another global index.
- With the stock close to index inclusion level and down 37% from its peak, there could be positioning in the stock for passive inflows.
Bank Central Asia (BBCA IJ) – Strong Finisher
- Bank Central Asia booked a solid finish to 2024, with strong loan growth across the board driven by corporate and SMEs leading, whilst its CASA continued to grow, protecting NIMs.
- The bank continue to cement its position as Indonesia’s leading transactional bank with +21% growth in 2024 to a record 36bn transactions, with its mobile banking leading the way.
- BCA continues to grow channels inclusing branches and ATMS to supplement its mobile banking growth. Loan growth may slow slightly this year but BCA stands out from peers on funding.
EQD / NSE NIFTY50 Vol Update / India Budget Event Dominates Local Options Markets.
- Monthly Options contracts experiencing large IV markups on account of India Budget event. IVs have traded up to 18.0%. YTD vol increase marks a significant shift in the Vol-regime.
- Gamma offered & Vega bid – Weekly Options contracts relatively out-of-favour while Monthly & Quarterly contracts are being marked up.
- Skew & Smile characteristics have compressed slightly. Vol term-structure continues to trade with “inverted-V” shape.
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