In today’s briefing:
- LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
- Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
- LG Energy Bookbuilding: Detailed Results
- China Property Services: Pair Trades in a Beaten Down Industry
- FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March
LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
- The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
- A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
- Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.
Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
- An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
- That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
- The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions.
LG Energy Bookbuilding: Detailed Results
- This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
- Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
- As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.
China Property Services: Pair Trades in a Beaten Down Industry
- Stocks in the China Property Services industry have taken a beating over the last year on heightened regulatory fears, placements and potential stake sales by their large property developer holders.
- The Hang Seng Property Service and Management Index (HSPSM) has underperformed the Hang Seng Mainland Property Index (HSMPI) over the last 3 months and there could be some recovery.
- We take a look at some pair trades that could provide outperformance in the short-term with a lower level of risk.
FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March
- A ground rule change will see Foreign Ownership Restrictions and Minimum Foreign Headroom Requirements applied to the FTSE China A50 Index (XIN9I INDEX) universe from the March rebalance.
- There will be plenty of stocks that will see their investability weight reduced. We estimate a one-way turnover of 15.2% and one-way trade of CNY 8.04bn due to the change.
- Bank Of Ningbo Co Ltd A and Will Semiconductor Ltd are locked in a race for index inclusion in March, while Chongqing Zhifei Biological Products (300122 CH) could be deleted.
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