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Most Read: CNOOC Ltd, Japan Post Insurance, ByteDance, Vedanta Ltd and more

In today’s briefing:

  • CNOOC – MSCI and FTSE Deletion Looming Along with NYSE Delisting
  • The Delayed TOPIX FFW Rebalance: $32bn To Trade
  • Smartkarma Webinar | 2021 High Conviction – Investment Opportunities in China’s Healthcare Industry
  • Aequitas 2021 Asia IPO Pipeline – More Mega IPOs to Come
  • Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More

CNOOC – MSCI and FTSE Deletion Looming Along with NYSE Delisting

By Brian Freitas

Post the US market close on Friday, OFAC updated the Non-SDN Communist Chinese Military Companies List to specifically name China Mobile (941 HK)/ China Mobile Ltd Spon Adr (CHL US), China Telecom Corp Ltd (H) (728 HK)/ China Telecom Corp Ltd (Adr) (CHA US) and China Unicom Hong Kong (762 HK)/ China Unicom Hong Kong (Adr) (CHU US). More importantly, CNOOC Ltd (ADR) (CEO US)/ CNOOC Ltd (883 HK) / CNU CA was also added to the list.

OFAC also issued a General License that authorizes transactions in entities whose name closely matches the name of a Communist Chinese military company identified in the Annex to Executive Order 13959 but that has not been listed on the OFAC’s Non-SDN Communist Chinese Military Companies List, through 9.30am EST on January 28, 2021.

FTSE and MSCI made announcements that they were reviewing the latest OFAC update and would issue further updates in the event of changes to their indices. In FTSE’s case, the announcement will be made in the coming week.

The timing of the CNOOC Ltd (883 HK) deletion is uncertain at the moment. The stock was not included in the Annex to EO 13959 and the latest date it can be deleted is the close of trading on 8 March, though we expect the deletion to happen sooner than that. Impact is pretty big through pre-positions are already being built up on the stock.

The stock is trading cheaper than its peers, both domestic and international. While there could be further downside in the near term due to active and passive selling, there could be upside once the deletion from the MSCI and FTSE indices is out of the way.

The Delayed TOPIX FFW Rebalance: $32bn To Trade

By Travis Lundy

On Friday after the close, the TSE belatedly released its annual TSE Free Float Weight adjustments for stocks with fiscal year ends in March. Normally this comes out in October, and is executed at the end of October, but for the 2020 Free Float Weight Rebalance, as per an announcement made by the TSE on 22 June 2020, special measures were taken in light of the covid-19 pandemic, and the rebalance was delayed by 3 months. 

There are no major surprises that I see. Some buybacks from the market have led to slightly lower FFW coefficients. Some secondary offerings have led to increases in FFW coefficients. As discussed in Japan Post Insurance Update – Three Reasons To Buy. Any Overhang Slightly Higher on Friday, one of the big names to the buy side is indeed Japan Post Insurance (7181 JP).

For more on the rebalance, read on.

[A spreadsheet of all names and impacts is attached at the bottom of the insight]

Smartkarma Webinar | 2021 High Conviction – Investment Opportunities in China’s Healthcare Industry

By Smartkarma Research

We start off 2021 with a look into China’s healthcare industry and the opportunities therein. For this session, we are excited to be joined by Xinyao (Criss) Wang , who will share her high-conviction ideas for the coming year.

The webinar will be hosted on Wednesday, 13 January 2021, 17:00 SGT/HKT.

Xinyao (Criss) Wang is a HK/China Healthcare Analyst with over 10 years of experience in both finance and healthcare, covering clinic operations, investment, and equity research both in China and overseas.

Aequitas 2021 Asia IPO Pipeline – More Mega IPOs to Come

By Zhen Zhou, Toh

In this note, we aim to highlight the Asia Pacific IPO pipeline for 2021. This list has been compiled on a best effort basis from tracking the company filings and through various media and other sources.

For readers who are not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea and A-shares), including China ADRs. Hence, our pipeline will only include companies that fit these criterion.

Feel free to drop us a message for additional information (bookrunners and coverage) on these IPOs

Vedanta (VEDL IN) Promoter To Launch an Open Offer To Buy More

By Travis Lundy

Just over four weeks ago on 8 December 2020, Vedanta Resources (VED LN) promoter Anil Agarwal was on CNBC-TV18 in India saying that the promoter (Vedanta Resources, himself, the associated companies) had no plans at all to increase their stake in VEDL and no plans to make an open offer. He said the same in an interview with ETNow on 10-11 December. 

Eight trading days later, they launched an off-market purchase to buy 4.98% of shares outstanding – the effective limit in any given fiscal year – to buy shares at a price between INR 150.45-160.00. This was discussed in Vedanta Promoter Launches Offer to Buy 4.98%. Early reports were they got less than 5%, and had to pay the top price to get that bit, but the 13D filed on 24 December suggests they got to 2,048,458,132 shares which is 55.1% which was what they were looking to do.

Then the shares went up some more. They immediately went above INR 160, then went higher. 

Less than a week after making that purchase, local media (Economic Times and others) were mentioning the possibility (from “sources”) that Vedanta Resources might come back with an Open Offer for another 10%. 

Since the new year, the shares have popped further, likely in response to sharply higher commodity prices and a sharply higher share price for Hindustan Zinc (HZ IN), which rallied from Rs 240/share at year-end to above Rs 300/share in the first week of the year. 

The NEW News

On 9 January 2021, Vedanta Resources (VED LN) released an announcement that it would launch a Voluntary Open Offer to purchase an additional 371,750,500 shares (10% of shares out) of Vedanta Ltd (VEDL IN) at Rs. 160/share, spending about US$800mm to get there. 

A Detailed Public Statement (“DPS”) will be released on or about 15 January. This starts a two-month-plus process leading to a two-week Open Offer, likely to take place starting in the second half of March. 

More on what this means, how it could play out, etc, below the fold. 

Before it’s here, it’s on Smartkarma