In today’s briefing:
- CATL (300750 CH): Index Inclusion as Potential Listing Nears
- Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light
- ASX200 (AS51 INDEX) Outlook: Rallying Out of a Bear Market Amid Passive Flows And Sector Strength
- East Buy Holdings (1797 HK): Potential KWEB Deletion in June
- SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- [Japan Activism] ISS Comes Out Supporting Orbis Against Tsuruha/Welcia Merger Ratio
- CATL H Share Listing: PHIP Reinforces the Investment Case
- HEW: Doves Disappointed By Patience
- Shionogi & Co (4507 JP): Torii Acquisition to Broaden Portfolio; High R&D to Dent Profitability
- A/H Premium Tracker (To 9 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
CATL (300750 CH): Index Inclusion as Potential Listing Nears
- Reports continue to indicate a US$5bn raise for CATL H-shares with a discount of up to 10% to CATL (300750 CH) and with cornerstone investors taking up half the deal.
- The company is currently gauging investor demand. The IPO could open next week and the H-shares could list later this month.
- Index Fast Entry largely depends on the cornerstone investor allocation. Float higher than 50%/60% is required for Fast Entry to global indices.
Laopu Gold (6181 HK): US$300m Primary Placement & Index Inclusion Green Light
- Full circulation implementation at the beginning of April derailed Laopu Gold (6181 HK)‘s chances of global index inclusion in May.
- The company has now launched a US$300m primary placement that will significantly improve chances of inclusion in the same global index in August.
- Laopu Gold (6181 HK) will also be added to another global index in September, so there are a few index inclusions likely for the stock this year.
ASX200 (AS51 INDEX) Outlook: Rallying Out of a Bear Market Amid Passive Flows And Sector Strength
- Over the past three weeks, the S&P/ASX 200 (AS51 INDEX) has staged one of the strongest rebounds since the early April Trump-tariff shock, rallying approximately +15% from its 16-month low.
- Several factors are driving the rally: recent passive flow activity, as highlighted by Brian Freitas but also broad-based sector strength, with notable gains in energy, healthcare, and consumer staples.
- Despite a positive outlook, our models indicate the index is currently OVERBOUGHT. This insight breaks down the key details.
East Buy Holdings (1797 HK): Potential KWEB Deletion in June
- East Buy Holding (1797 HK) was deleted from the Hang Seng TECH Index in March and could be deleted from the KraneShares CSI China Internet ETF (KWEB US) in June.
- There are other ETFs that track the same index (and similar indices), and those trackers will be selling East Buy Holding (1797 HK) too.
- There has been some short covering in the stock recently, but short interest is pretty high as a percentage of float. Watch out for short covering that offsets passive selling.
SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- With the review period complete, there could be two changes for the S&P BSE SENSEX Index (SENSEX INDEX) at the June rebalance.
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are high probability inclusions while Indusind Bank (IIB IN) and Nestle India (NEST IN) are high probability deletions.
- Indusind Bank (IIB IN) is also a potential NIFTY Index (NIFTY INDEX) deletion in September and there will be continued pressure on the stock.
[Japan Activism] ISS Comes Out Supporting Orbis Against Tsuruha/Welcia Merger Ratio
- Large Tsuruha Holdings (3391 JP) investor Orbis Investments last month said they were against the Tsuruha/Welcia merger ratio. They wanted a cash takeover above Aeon’s Oasis buy price from 2024.
- Influential shareholder proxy advisor ISS has apparently come out recommending shareholders vote against. That’s a start, but the hard work needs to be Orbis talking to domestic passive managers.
- Getting 90% of foreign active managers as of end-February would make it a very close-run thing, but Orbis really needs some more to show up against the ratio.
CATL H Share Listing: PHIP Reinforces the Investment Case
- Contemporary Amperex Technology (CATL) (300750 CH), the world’s largest supplier of EV and ESS batteries, has filed its PHIP for an H-Share listing to raise US$5 billion.
- I previously discussed the H Share listing in CATL H Share Listing: The Investment Case and CATL H Share Listing: AH Discount Views.
- In this note, I examine the latest results and developments outlined in the PHIP. Overall, the PHIP reinforces my positive view.
HEW: Doves Disappointed By Patience
- The BoE and Fed decisions disappointed dovish hopes for action by sensibly waiting to see some signs that easing is appropriate. Caution reduces the risk of a policy mistake.
- Inflation in the US, plus unemployment and GDP in the UK, are the scheduled economic highlights for us next week. The UK data may prove more resilient than feared again.
- An absence of bad news can allow the good vibes to keep flowing from recent resilient data and trade policy progress, but investors seeking to sleep easy may wish to hedge.
Shionogi & Co (4507 JP): Torii Acquisition to Broaden Portfolio; High R&D to Dent Profitability
- Shionogi & Co (4507 JP) is acquiring Torii Pharmaceutical, as well as the pharmaceutical business of Japan Tobacco and U.S. group company Akros Pharma (sub-subsidiary of Japan Tobacco) for ~¥160B.
- With minimum overlap in focus areas, Shionogi believes that the transaction will create a leading company that delivers innovative pharmaceuticals. However, R&D expenses of the combined company will remain elevated.
- Considering the promising pipeline, we are hopeful on the long-term growth prospect of the combined company. Shionogi is scheduled to announce FY25 result on May 12.
A/H Premium Tracker (To 9 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- AH spreads are basically flat on the shortened week. AH premia rose in Pharma and Tech, fell in Industrials, Finance, and Banks.
- All eyes will be on what happens in Geneva. I personally don’t expect much.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
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