In today’s briefing:
- JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
- Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI
- Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- FP Partner (7388 JP) Offering-To-Get-Float-To-Get-TOPIX-Inclusion
- Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)
- Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding
- STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
- Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity
- Ohayo Japan|US Equities Gain Post Powell’s Speech; JAPAN X: JP Bank’s $7bn Boost for Local Startups
JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally.
- It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too.
- FUD and Flows mean that it is likely to continue to trade wide for the near future.
Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
- In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
- SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
- The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.
Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI
- The JPX Nikkei 400 index rebalance will take place on Wednesday, MSIC on Thursday and HSI, HSCEI, HSTECH and HSCI on Friday.
- There are review cutoffs for the MVIS family of indices, and multiple announcements of changes to various indices during the week.
- There were inflows to mainland China ETFs, iShares India ETF (INDA), Ishares India Small-Cap (SMIN) and iShares EmergingMarkets ex China (EMXC) while there were outflows for iShares Emerging Markets (EEM).
Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
- Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
- We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.
FP Partner (7388 JP) Offering-To-Get-Float-To-Get-TOPIX-Inclusion
- On 22 August, TSE Growth-listed insurance agent FP Partner (7388 JP) announced a special dividend, a secondary offering of 1.4mm shares, and a move to TSE Prime.
- The equity offering is designed to raise tradable share percentage to meet the TSE Prime listing requirement. The move to Prime on 11 September means a TOPIX inclusion end October.
- The pattern of “Offering To Get Float to Get TOPIX Inclusion” is well-trod. This one has some interesting dynamics.
Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)
- This week it is changed from H/A Discount to A/H Premium, by popular demand. Some Northbound data is added. We kept the unicorn.
- Last week saw a win/loss ratio of 21:13. Average recommended pair on the week earned 0.9% if Sunday recos executed Monday close, 1.35% if executed Monday VWAP.
- 6 Unwinds and 3 new trades recommended this week. As always, feedback desired to make this even better.
Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – ARM Holdings (1822695D US), Integral Corporation (5842 JP) and S.F. Holding (002352 CH) IPOs.
- Event-Driven developments – Boustead Plantations (BPLANT MK), UMW Holdings (UMWH MK), Eoflow (294090 KS), Golden Eagle Retail (3308 HK), Costa Group Holdings (CGC AU), Metro Pacific Investments Co (MPI PM).
STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
- As expected, the index committee has used a 6-month minimum listing history and that results in two changes to the SSE STAR50 (STAR50 INDEX) in September.
- Piotech (688072 CH) and Hwatsing Technology (688120 CH) will replace Suzhou Nanomicro Technology (688690 CH) and Zhuhai CosMX Battery (688772 CH) in the index.
- One-Way turnover is estimated at 2.83% and will result in a one-way trade of CNY 3,562m. There does not appear to be a lot of pre-positioning on the stocks.
Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity
- On Friday after the close, SBI Holdings (8473 JP) – which currently owns 24.63% of Medical Data Vision (3902 JP) – announced it would buy another 2,043,200 shares.
- This market purchase would lift them to just under 30% by year-end.
- There have been similar trades done by others in the past and they were worth looking at.
Ohayo Japan|US Equities Gain Post Powell’s Speech; JAPAN X: JP Bank’s $7bn Boost for Local Startups
- OVERSEAS: US Equities rise for the first week in four; Jackson Hole: Powell leaves open possibility of further hikes/ECB’s Largarde strikes hawkish tone for EU; China’s Economic Pain to Continue
- JAPAN: NKY Futures +0.7% Premium vs Cash; USDJPY 146.4; BOJ’s Ueda at Jackson Hole says Japan inflation below target; Kishida’s Approval rating improves; Japan to double EV Charging Stations.
- JAPAN X: Japan Post Bank’s Trillion Yen Boost set to propel the Japan start up ecosystem to new highs – while creating a new revenue stream for the bank.
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