In today’s briefing:
- Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX
- Last Week in Event SPACE: NTT, Frasers Hospitality, Genting/Macau, United Tractor, Arb Shockers
- Takeaways from the Times Neighborhood Investment Debacle
- The Second Leg Down In This Bear Market May Be Happening Now?
- Onewo IPO: Valuation Insights
- Merger Arb Mondays (19 Sep) – Link Admin, Ramsay, Alliance, Genex, Moya, Singapore Medical, VNET
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Moya, Singapore Medical, Link Admin, Giordano,111 Inc, VNET
- 3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea
- That’s It Then As Link Admin Rejects D&D’s Revised Terms
Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- In August, Janaghan Jeyakumar, CFA published his leaderboard and flow estimates for the FTSE Taiwan Dividend+ Rebalance which starts today and runs through next Thursday.
- Late in August, I recommended a basket trade. Since then, the BUY basket has outperformed the SELL basket by 7.6%. Set & Forget it is up 7.2%.
- I provided timing in the basket trade. Now it is time to swing the other way.
Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX
- It was a busy week with a bunch of index rebalances being implemented at the close of trading on Friday.
- We list out potential changes to the STAR50 INDEX, Philippines Stock Exchange PSEi Index (PCOMP INDEX) and SET50 INDEX at the upcoming rebalances.
- There was a large outflow from the iShares MSCI ACWI ETF (ACWI US) for yet another week.
Last Week in Event SPACE: NTT, Frasers Hospitality, Genting/Macau, United Tractor, Arb Shockers
- NTT (9432 JP) results were better than Softbank Corp’s and KDDI’s. The good “drift trade” may still be to be long NTT vs a basket of KDDI and Softbank Corp.
- The Frasers Hospitality (FHT SP) Scheme failed. The non-vocal minority simply didn’t show up. Maybe apathy. Maybe a holiday season. Maybe lack of premium paid encouraged people to not vote.
- In a surprise move, Genting Bhd (GENT MK)– or Genting Malaysia (GENM MK) – has joined the six incumbents in bidding for new casino licences in Macau.
Takeaways from the Times Neighborhood Investment Debacle
- Times Neighborhood (9928 HK) has been a disastrous call since we first highlighted it. In this insight, we reflect upon the red flags we could have done well to spot.
- We cover red flags ranging from the level of precise guidance, pivot in strategy, and the parent’s poor financial health, to the effect on receivables sucking cash from the company.
- Everyone makes mistakes (we are human, after all). We would like to share our experience to educate readers to become better investors and sidestep investments in such names.
The Second Leg Down In This Bear Market May Be Happening Now?
- S&P500 (SPX) likely to test 3200, may be even 3000, as earnings get crushed. It looks like a classic ‘second leg-down’ in the bear market
- Tight Central Bank Liquidity has hit sensitive bond markets driving yields higher, but also causing term premia to worryingly collapse to near all-time lows
- Term premia fall is already set-in-stone and historically has led to much weaker reported corporate earnings some 15 months later. Hence US S&P500 earnings could skid by 20% in 2023
Onewo IPO: Valuation Insights
- Onewo Space-Tech (ONEWO HK) has launched its HKEx listing at HK$47.1-52.7 per share to raise up to US$0.8 billion. Books are open from 19 to 22 September.
- We previously discussed the IPO in Onewo IPO: The Bull Case, Onewo IPO: The Bear Case and Onewo IPO: Trade-Offs Vs Peers.
- Our valuation analysis suggests that the IPO price range is attractive compared to peers with financially sound parentco backgrounds. We would participate.
Merger Arb Mondays (19 Sep) – Link Admin, Ramsay, Alliance, Genex, Moya, Singapore Medical, VNET
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
- Highest spreads – Link Administration (LNK AU), Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Ramsay Health Care (RHC AU), Infomedia Ltd (IFM AU), Genex Power Ltd (GNX AU).
- Lowest spreads – Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), Nearmap Ltd (NEA AU), MACA Ltd (MLD AU), Xiamen International Port H (3378 HK), Link Net (LINK IJ).
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Moya, Singapore Medical, Link Admin, Giordano,111 Inc, VNET
- There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Three new deals were discussed this week: Anthoni Salim’s Exit Offer for Moya Holdings Asia (MHAL SP); 111 Inc (YI US)‘s MBO, and Singapore Medical (SMG SP)‘s MBO.
- Key updates took place for Frasers Hospitality Trust (FHT SP),Link Administration (LNK AU), Giordano International (709 HK), Shidax Corp (4837 JP), and VNET (VNET US).
3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea
- Juice for cash & carry arbitrage doesn’t seem like much. Several names in contango, but the basis widening isn’t at a sufficiently arb-tradable level.
- Reverse cash & carry isn’t all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&E, SKT, Shinhan, and KB deserve our attention.
- A bit uncertain is whether the pattern of “LONG Spot until ex-dividend and Conversion to Short” through cash & carry will repeat itself this time.
That’s It Then As Link Admin Rejects D&D’s Revised Terms
- After 23 months of negotiations, various bids from various parties, culminating in a protracted on-again, off-again, negotiation with Dye & Durham, Link Administration (LNK AU) has called it a day.
- D&D arguably did the right thing and tabled a revised proposal to account for any enforcement process after the UK’s FCA raised redress payments. Link has rejected the revised terms.
- Link will now pursue an in-specie distribution of a minimum of 80% of Link’s shareholding in PEXA Group (PXA AU).
💡 Before it’s here, it’s on Smartkarma
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