In today’s briefing:
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Sep25
- Daiichi Sankyo Placement – US$1.2bn Deal but Momentum Isn’t the Best, Last Deal Didn’t Do Well
- MV Australia Equal Weight Index Rebalance Preview: Three Potential Deletions in September
- Hang Seng Indexes: Announcement Tomorrow; Potential Changes & Updated Flows
- HMM Tender Side Play: Targeting a Basis Squeeze Ahead of Sep Expiry
- UK CPI Trend Extends Excess In July
- Korea’s Dividend Narrative Is Back: Unpacking the DP’s New Bill and Its Backstory
- US Government May Acquire Equity Stakes in Samsung Electronics and TSMC
- Lynch Group (LGL AU): (Another) Clean Offer From TPG
- Hansoh Pharmaceutical (3692 HK): Placing Shares to Fund R&D Amid Stellar 1H Performance
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Sep25
- Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 5 September.
- We highlight 6 stocks that have a higher probability of being added to the index. With the index committee entitled to a lot of discretion, there will be differences.
- CATL completes 3 months of listing just prior to the review meeting date and is a dark horse candidate, though the committee could let the stock season for another quarter.
Daiichi Sankyo Placement – US$1.2bn Deal but Momentum Isn’t the Best, Last Deal Didn’t Do Well
- A group of shareholders are looking to raise up to US$1.2bn via selling most of their stake in Daiichi Sankyo (4568 JP) .
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind, the last deal in the stock didn’t do well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
MV Australia Equal Weight Index Rebalance Preview: Three Potential Deletions in September
- Nearing the end of the review period, we forecast no inclusions to the index in September. There could be up to 3 deletions at the review though.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.8% and a round-trip trade of A$232m.
- If there are 3 deletes as forecast, one-way turnover increases to 6.3% resulting in a round-trip trade of A$384m.
Hang Seng Indexes: Announcement Tomorrow; Potential Changes & Updated Flows
- Hang Seng Indexes announces changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index, HSIII Index, HSHKBIO Index and HSCI Index post market close tomorrow.
- The net round-trip trade across the stocks is estimated to be HK$54.3bn (US$6.9bn) with big impact in a lot of names.
- The largest inflows will be in Geely Auto if added to the HSTECH, Pop Mart if added to the HSCEI and HSI, and Horizon Robotics due to a FAF increase.
HMM Tender Side Play: Targeting a Basis Squeeze Ahead of Sep Expiry
- Most traders are starting in September, rolling into October. Sep/Oct spread volume has picked up unusually fast, clearly reflecting hedge demand linked to the tender
- As September expiry approaches, basis-squeeze risk rises, likely pushing September cheap and October expensive, widening the spread — creating a clear side trade opportunity.
- With a basis squeeze expected near September expiry, we could enter a Sep/Oct spread (short Sep, long Oct) and also watch for spot-futures decoupling to play the cash-futures spread.
UK CPI Trend Extends Excess In July
- Another upside surprise in UK CPI inflation extended the accumulated drift to 1.3pp over the past year, yet was only 0.2pp above our old call.
- This outcome matched the BoE’s latest call, with airfares driving the rise, and median pressures holding slightly above a target-consistent pace, so there is less policy impact.
- The MPC was finely balanced in its support for August’s cut, and this rise will not lead dissenters to support past action, let alone another cut, which we still doubt occurs.
Korea’s Dividend Narrative Is Back: Unpacking the DP’s New Bill and Its Backstory
- A new bill cutting Korea’s dividend tax hit the tape, giving local dividend plays an immediate boost on the news flow.
- The presidential office is aligned on pushing the dividend tax below the 27.5% CGT floor. The new party leader is also tightly syncing with the Blue House to avoid clashes.
- The DP’s tax cut move today puts the gov’s dividend narrative back in play with juice. We need setups to ride this theme.
US Government May Acquire Equity Stakes in Samsung Electronics and TSMC
- According to Reuters, the US government may be interested in acquiring equity stakes in Samsung Electronics and TSMC in exchange for CHIPS and Science Act grants.
- The US government is exploring ways to take equity stakes in these two Asian tech giants that have been expanding their semiconductor facilities in the United States.
- If the US government decides to invest $10 billion each in Samsung Electronics and TSMC, they would represent about 3% and 1% of Samsung Electronics and TSMC’s market caps, respectively.
Lynch Group (LGL AU): (Another) Clean Offer From TPG
- Lynch Group (LGL AU), an integrated wholesale floral play, has entered into a Scheme Implementation Deed with Hasfarm Holdings and Darwin Aus Bidco – both of which are TPG entities.
- Hasfarm is offering A$2.245/share, a 28.3% premium to last close. The consideration includes a fully franked dividend of A$0.09/share. It’s April 2021 IPO price was A$3.60/share.
- The Offer has unanimous board support. 38.5% of the register is supportive. Hasfarm has also entered into a call option for 19.9% of shares out. Done deal.
Hansoh Pharmaceutical (3692 HK): Placing Shares to Fund R&D Amid Stellar 1H Performance
- Hansoh Pharmaceutical Group (3692 HK) is placing 108M shares at the price of HK$36.30 per share. 65% of the proceeds will be used for the R&D of new innovative drugs.
- Hansoh’s late-stage pipeline seems to be interesting, as its key focus areas being oncology and metabolic diseases, which are among the fast-growing therapeutic areas, with huge addressable patient population.
- Hansoh has announced better-than-expected 1H25 result, with both revenue and net profit beating consensus. Innovative drugs revenue increased 22% YoY to RMB6B, contributing 82.7% of total revenue.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
