In today’s briefing:
- Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
- FSS Officially Rolls Out New Ex-Div Rule for Quarterly Divs; Sammy May Finally Join the Change
- Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL
- [Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
- Implication of Deepseek on China Data Centers: Buy GDS and VNET, Not Too Late to Chase the Rally!
- EQD| HSI: 99th Percentile 2-Week Move on Low Volatility. What’s Next?
- EQD| HSCEI Index Options Weekly (Feb 10-14): Tactical Hedges for an Extended Rally
- EQD| HSI Index Options Weekly (Feb 10-14): Reduce Positions with Short Volatility Edge
- EQD | China Mobile (941 HK) – Four Option Strategies for the Extended Bull Run.
- High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
- The changes to the Nikkei 225 (NKY INDEX) as part of the March rebalance should be announced in just over 2 weeks. We expect 2-3 changes at the review.
- The forecast adds have massively outperformed the forecast deletes and the Nikkei225 Index over every time period going back 3 months with the largest outperformance in the last month.
- Positioning appears to be stretched in one forecast add while there appears to be under positioning in a couple of the forecast deletes.
FSS Officially Rolls Out New Ex-Div Rule for Quarterly Divs; Sammy May Finally Join the Change
- Starting this year, both year-end and interim divvies follow the new rule, with ex-div dates set after the payout is confirmed.
- Quarterly dividend arbitrage will heat up, especially for high-yield bank stocks, attracting traders to cash in on the spread.
- Samsung Electronics is likely to update bylaws at the March AGM, with Q1 payout ex-div dates set after the dividend is confirmed.
Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Contemporary Amperex Technology (CATL) (300750 CH) filed for an H Share listing to raise US$5 billion, and Hexaware Technologies (HEXW IN) seeks to raise US$1 billion.
- Event-Driven developments: Trend Micro Inc (4704 JP), Kaonavi Inc (4435 JP), Zenhoren (5845 JP), HKBN Ltd (1310 HK), Fosun Tourism (1992 HK), Paragon REIT (PGNREIT SP).
[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
- The data observation period is done. No rank changes in the top candidates since mid-Jan. Capping for Fast Retailing (9983 JP) is confirmed.
- For me, it is 2 or 3 ADDs, depending. Kokusai Electric (6525 JP) is still tops. BayCurrent Consulting (6532 JP) second. Shift Inc (3697 JP) third.
- Kokusai is +26.7% in 5 weeks since I wrote bullishly, despite news/confirmation of getting the boot from a global index at end-Feb. Baycurrent is +39.7% (link). Now we count flows.
Implication of Deepseek on China Data Centers: Buy GDS and VNET, Not Too Late to Chase the Rally!
- We believe the recent launches of AI Model will challenge the assumptions of AI training costs, and we are still in early stages of AI revolution
- It will maintain a sustainable growth of AI infrastructure like data centers, instead of reducing the demand. GDS and VNET are well positioned to capture this tailwind
- VNET and GDS were up 303% and 268% for last 12 months, we think it is not too late to chase the rally
EQD| HSI: 99th Percentile 2-Week Move on Low Volatility. What’s Next?
- HSI’s 10-day return of 11.84% ranks it just below the 99th percentile of all 10-day moves since 2000.
- This move has been unusual given the low level of historic volatility, ranking it as one of the lowest vol moves of this magnitude.
- The current move is abnormal for its return relative to volatility – we dig deeper into how returns and volatility are likely to evolve.
EQD| HSCEI Index Options Weekly (Feb 10-14): Tactical Hedges for an Extended Rally
- HSCEI sets new 52-week high by a hair. Rally over the last 10 days ranks in the 97th percentile since 2000.
- Spot and implied maintain a positive correlation which will see implieds come off should this rally reverse course.
- We recommend two trades for those looking to tactically lighten positions into the rally.
EQD| HSI Index Options Weekly (Feb 10-14): Reduce Positions with Short Volatility Edge
- Rally over the past 2 weeks has landed it in the 99th percentile since 2000 and has also been accompanied by low volatility.
- The up-trend has a number of characteristics similar to the 21% rally in May 2024 and is in line with levels from which market has failed to advance.
- Given how price and vol are likely to evolve over the next month we suggest tactical positions to reduce position size
EQD | China Mobile (941 HK) – Four Option Strategies for the Extended Bull Run.
- China Mobile (941 HK) experienced a 6.8% increase over five consecutive positive weeks. This Insight builds on the work of quantitative analysis identifying resistance and support levels.
- This Insight presents four different options strategies to combine quantitative insights with volatility and option analysis.
- Option strategies cater for both bullish, bearish, or neutral views, and can be tailored to fit a given risk budget.
High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
- Freee KK (4478 JP) reported 2QFY06/2025 results on Friday which beat consensus estimates. The company also reported a second consecutive quarter of operating profits in 2Q.
- Despite cutting down significantly on selling and marketing, freee has managed to maintain growth. The company also has revised upwards its OP guidance and expects positive adj. free cashflows.
- Though freee’s share price has moved up 35% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) should further drive share price up.
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