In today’s briefing:
- Meituan (3690 HK) – US$16bn of Shares To Be Delivered This Week
- The BIG March 2023 “Wednesday Thursday Trade”
- MSCI Korea May QCIR: Potential Changes, Impact, Positioning & Short Interest
- Korean Government’s Official Statement on Foreign Ownership Limits & The Names Still to Watch
- SSE50 Index Rebalance Preview: BIG Outperformance Over the Last Month
- S.M. Entertainment: Proration Musings
- S&P/ASX Index Rebalance Preview: Changes from Now to June
- Potential Inclusions & Exclusions in KOSDAQ 150 Rebalance in May 2023
- Harita Nickel IPO Valuation – Capacity Ramp Ups Will Pay Dividends in the Long Run
- Good Morning Japan |SPX Reclaims 4000! NUGGET: Asahi Kasei-M&A Gone Bad, Writedown, Struggles Remain
Meituan (3690 HK) – US$16bn of Shares To Be Delivered This Week
- In early 2022, Tencent (700 HK) made clear it was on a divestment path – disposing of investments able to support themselves – possibly “obliged” after 2021’s China internet mess.
- In August, Reuters suggested Meituan (3690 HK) was next. Tencent denied it, but in November with Q3 earnings, announced a January 2023 distribution with March 2023 settlement.
- US$16bn of Meituan shares get delivered on 24 March 2023 – this Friday. That’s a lot. But this time is different than last time.
The BIG March 2023 “Wednesday Thursday Trade”
- Every year it’s the same trade. But it isn’t really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
- But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.
- And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.
MSCI Korea May QCIR: Potential Changes, Impact, Positioning & Short Interest
- We currently forecast 2 potential inclusions and 3 potential deletions for the MSCI Korea Index at the May QCIR. That will change over the next few weeks till cutoff date.
- Passive trackers are estimated to buy between 0.6-3.3 days of ADV on the potential inclusions while selling between 6.9-14.2 days of ADV on the potential deletions.
- Short interest on the potential deletions has moved significantly higher in the last few weeks and there will be pre-positioning on the stocks.
Korean Government’s Official Statement on Foreign Ownership Limits & The Names Still to Watch
- Hankyung exclusively reported that the Korean regulators were considering abolishing the foreign ownership limit. This morning, the Ministry of Economy and Finance released a statement that this report is untrue.
- Nevertheless, circumstantially, given the current government’s all-out effort to make it to MSCI Developed Market status, there is a high possibility that it will resurface not too far from now.
- Four out of the 33 foreign ownership-restricted stocks will likely be immediately affected: SKT, KT, and Korea Gas (MSCI inclusion) and SBS (flow improvement).
SSE50 Index Rebalance Preview: BIG Outperformance Over the Last Month
- Nearly 90% through the review period, we see 6 potential adds and 5 potential deletes in June. However, there can be a maximum of 5 changes at a rebalance.
- We estimate a one-way turnover of 5.07% at the June rebalance leading to a one-way trade of CNY 3.97bn. Index arb activity could add to the impact on the stocks.
- The potential adds have outperformed the potential deletes by 17% over the last month and by 21% over the last two months.
S.M. Entertainment: Proration Musings
- After HYBE (352820 KS) conceded to Kakao Corp (035720 KS) earlier this month, S.M.Entertainment Co (041510 KS)‘s shares have declined 23%.
- Kakao’s Partial Offer of ₩150,000/share closes on the 26 March.
- Unadjusted proration is 36.8%, conservatively rising to 48.5%. It may settle at 61% if HYBE maintains its position – but that is probably a tad optimistic.
S&P/ASX Index Rebalance Preview: Changes from Now to June
- There could be an addition to the S&P/ASX 100 Index and S&P/ASX 200 (AS51 INDEX) in April following OZ Minerals Ltd (OZL AU)‘s acquisition by BHP Group Ltd (BHP AU).
- Then there could be another change for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in June.
- Passive trackers will need to trade between 4.5-18 days of ADV on the potential adds/ deletes. Short interest has started to increase on a couple of stocks.
Potential Inclusions & Exclusions in KOSDAQ 150 Rebalance in May 2023
- In this insight, we discuss the potential inclusions and exclusions of the upcoming KOSDAQ 150 rebalance in May 2023.
- The next round of KOSDAQ 150 rebalance will be announced in May and it will be effective as of end of May 2023.
- Typically, the potential inclusions and exclusions to KOSDAQ 150 make their biggest moves in the one to three months prior to the rebalance announcements.
Harita Nickel IPO Valuation – Capacity Ramp Ups Will Pay Dividends in the Long Run
- PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
- PT Trimegah Bangun Persada Tbk (Harita Nickel, HN) is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
- In this note, we will look at our earnings assumptions, and share our thoughts on valuation.
Good Morning Japan |SPX Reclaims 4000! NUGGET: Asahi Kasei-M&A Gone Bad, Writedown, Struggles Remain
- OVERSEAS. SPX reclaims 4000 level with 2nd day of gains; 8/11 SPX sectors up as VIX collapses; Fed Decision Day on Wed-Expect No surprises; INTEL headwinds on China curbs
- JAPAN. NKY Futs +0.6% vs Cash; USDJPY 132. 4; Japan set to rally after the Spring transition break;US accepts Japan’s EV subsidy appeal=+ve auto parts; More inflation support from govt.
- NUGGET. Asahi Kasai – M&A Gone Bad, Writedown, Struggles Remain. Future profitability of the LiB Separator business in question.
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