In today’s briefing:
- Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket
- Index Rebalance & ETF Flow Recap: CSI300/500, Chinext, China Semi Chips, Nifty Next50, SET50, REMX
- HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September
- Heads Up: Selling Event of a 30% Stake in NXC (Nexon Parent Company) Is Coming Soon
- Last Week in Event SPACE:Tax-Loss Selling In Australia, China Conch/Anhui Conch, Canon, Rakuten
- Quiddity TDIV/50/100 Jun 23 Rebal: 15/18 as Expected; Some Surprises, US$1.1bn+ One Way
- Nexon Founder Family Hands Over 4.7 Trillion Won Worth of NXC to Korean Government
- ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share
- Merger Arb Mondays (05 Jun) – Golden Eagle Retail, ENM, AAG, Yashili, Golden Energy, Challenger Tech
- Ohayo Japan |Stocks Soar on Debt Resolution/Jobs/China; NUGGET: Where Nvidia Goes, Advantest Follows
Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article last year shows.
- The general gist of the idea is that retail investors in Australia will take gains on things which run up in price, or get taken over, then look for losses.
- Below I present a study using data from 2012-2022 of how a basket portfolio trade might work.
Index Rebalance & ETF Flow Recap: CSI300/500, Chinext, China Semi Chips, Nifty Next50, SET50, REMX
- It was a busy week with index rebalance implementations and announcements of index changes.
- The coming week has the KOSPI200 and KOSDAQ150 rebalancing on Thursday and a bunch of onshore China indices rebalancing on Friday.
- There were big inflows to China ETFs during the week while the largest inflows went to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF.
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September
- Fenbi Ltd (2469 HK) was added to the Hang Seng Composite Index (HSCI) at the close Friday and will be added to Southbound Stock Connect from open of trading today.
- We see 22 potential adds, 19 potential deletes, couple of close deletes, 5 deletes on prolonged suspension and 4 close liquidity deletes for the HSCI in September.
- There are 11 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.
Heads Up: Selling Event of a 30% Stake in NXC (Nexon Parent Company) Is Coming Soon
- As reported by a local news outlet (YTN), the Korean government will soon list the NXC stake on Onbid, the government’s online auction system (www.onbid.co.kr).
- If the right buyer acquires the 30% stake in NXC, the family members may also sell their stake, leading to an unexpected price impact for Nexon (3659 JP).
- Timing is critical, and the Korean government must aim to list the stake on Onbid as soon as possible, given its current revenue shortfall issue.
Last Week in Event SPACE:Tax-Loss Selling In Australia, China Conch/Anhui Conch, Canon, Rakuten
- Australian tax-loss selling is a thing. Retail investors will take gains on things that run up in price, or get taken over, then look for losses.
- 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.
- Historically, Canon (7751 JP)‘s buybacks are aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles.
Quiddity TDIV/50/100 Jun 23 Rebal: 15/18 as Expected; Some Surprises, US$1.1bn+ One Way
- In this insight, we take a look at the final ADDs/DELs for the TDIV, T50, and T100 Indices for the June 2023 Rebalance.
- Across these three indices there will be 18 changes and 15 of them were in line with expectations.
- Our updated flow expectations show that there could be US$1.1bn one-way flow in the June 2023 rebalance.
Nexon Founder Family Hands Over 4.7 Trillion Won Worth of NXC to Korean Government
- The late Nexon founder Kim Jung-Ju’s family recently paid nearly 4.7 trillion won worth of inheritance taxes to the Korean government by handing over 29.3% stake (paid-in-kind) in NXC Corp.
- We view this handing over the 29.3% stake to the Korean government to be positive overall on Nexon in the near term.
- However, we do not expect this could bring about change in controlling ownership of the Nexon Group in the near term to result in re-rating of the Nexon Group shares.
ENM Holdings (128 HK): Privatisation Bid at HK$0.58 Per Share
- Enm Holdings (128 HK) announced a privatisation offer from Chime Corporation at HK$0.58 per scheme share, a 54.7% premium to the undisturbed price of HK$0.375 per share (24 May).
- The key condition is the scheme be approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No shareholder holds a blocking stake. The offer price is final.
- Detractors will argue the offer is low due to ENM’s net cash (75% of the market cap). However, the offer is reasonable compared to historical multiples and share prices.
Merger Arb Mondays (05 Jun) – Golden Eagle Retail, ENM, AAG, Yashili, Golden Energy, Challenger Tech
- 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), Enm Holdings (128 HK), United Malt Group Ltd (UMG AU), Estia Health (EHE AU), HKBN Ltd (1310 HK), Hailan Holdings (2278 HK).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Challenger Technologies (CHLG SP), Lian Beng (LBG SP), SBI Shinsei Bank (8303 JP), Newcrest Mining (NCM AU).
Ohayo Japan |Stocks Soar on Debt Resolution/Jobs/China; NUGGET: Where Nvidia Goes, Advantest Follows
- OVERSEAS. US Equities Soar on Debt Resolution and Payrolls; Markets continue to price in Fed Pause; Leaks about China Property stimulus support sentiment; Saudi Arabia slashes oil output.
- JAPAN. NKY Futs +1.4% vs Cash; JP bid to continue after US Rally; Inflation pushing households to stocks; Japan prioritizes hydrogen; Companies face a raft of proposals at June AGMs
- NUGGET. Where Nvidia Goes, Advantest Follows; Advantest now simply just a proxy on Nvidia’s share price
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