In today’s briefing:
- Nikkei 225 Vs TOPIX Dynamics
- Merger Arb Mondays (22 May) – HKBN, Newcrest, InvoCare, United Malt, Golden Energy, Penguin, Shinsei
- Taiwan Dual-Listings: TSMC Premium Rallies as Japan & U.S. Entice Further Investment; CHT Discount
- Delta Taiwan Vs. Thailand Monitor: Delta Thai Stages Sharp Rebound; Should SET50 Index Be Fixed?
Nikkei 225 Vs TOPIX Dynamics
- This past week saw dramatic moves in Japanese stock markets. TOPIX +3.1% N225 +4.8% – up the 6th week in a row – closing at their highest in 33 years.
- Flows were positive the week before, and I expect we’ll see next week they were positive this past week. But most striking was the interplay between Nikkei 225 and TOPIX.
- If foreign inflows increase, Nikkei is likely to outperform TOPIX both because of its existence and previous use, and its construction. And that means watching one’s trades, shorts, and executions.
Merger Arb Mondays (22 May) – HKBN, Newcrest, InvoCare, United Malt, Golden Energy, Penguin, Shinsei
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Estia Health (EHE AU), HKBN Ltd (1310 HK), United Malt Group Ltd (UMG AU), Hailan Holdings (2278 HK), Aag Energy Holdings (2686 HK).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), SBI Shinsei Bank (8303 JP), Allkem Ltd (AKE AU), Penguin International (PBS SP).
Taiwan Dual-Listings: TSMC Premium Rallies as Japan & U.S. Entice Further Investment; CHT Discount
- TSMC’s ADR premium has enjoyed a significant rally perhaps due to increased international attention driven by positive U.S. and Japan news flow.
- ASE’s ADR premium has dropped to one of the lower values in its most recent range since the start of 2023, representing a gradual decline in this persistent premium.
- Chunghwa Telecom’s ADR is trading at a discount that likely represents a decent set-up level for this tightly trading spread.
Delta Taiwan Vs. Thailand Monitor: Delta Thai Stages Sharp Rebound; Should SET50 Index Be Fixed?
- Delta Thailand has rallied 22.7% from its recent low, despite the local Thai market declining while the Taiwan market rose.
- Latest Delta Thailand surge unlikely due to Thai market fund flows or company developments. Delta Taiwan generates 2.5x the net profit with similar growth, yet has a smaller market cap.
- Over time, relative pricing should trend in Delta Taiwan’s favor as valuations are likely to drive longer-term performance — Also, should the SET50 Index be fixed? Seems broken.
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