In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses
- Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know
- KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion
- AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not
- Rakuten Bank IPO – Peer Comparison – SBI Sumishin or Kakaobank?
- Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision
- HSCEI Dividend Futures: Nearing the Pointy End of Results Season
- AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge
- Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea
- Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure
Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
- There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
- Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.
Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know
- Meituan (3690 HK) shares hit accounts on Friday, they showed up in the CCASS data. All but about 2.3mm shares worth. Another 248.8mm shares showed up on Monday.
- That was the Prosus stake, which was expected as of November 2022 (evidently, they did not convert more Tencent shares in the interim.
- The data tells us some things. It does not tell us much else. Be careful of the details.
KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion
- KT Corp (030200 KS) missed out on inclusion to the MSCI Korea Index at the May 2022 SAIR following a drop in foreign room below 15%.
- Bottoming out at 6.5%, foreign room has started to increase again. The last data point shows foreign room at 14.43%, just shy of the 15% threshold for inclusion eligibility.
- If foreign room increases above 15% in the next three weeks, KT Corp (030200 KS) will be added to the MSCI Korea Index at the May QCIR.
AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not
- That was a quick turnaround. Two days after the pre-conditions were satisfied, the Scheme Document for Xinjiang Xintai (603393 CH)‘s privatisation of AAG Energy (2686 HK) has been dispatched.
- The EGM and Court Meeting will take place on the 27 April, with payment, assuming all resolutions get up, on (or before) the 1 June.
- The Independent Financial Adviser, Somerley, considers the terms of the Scheme “fair and reasonable.” However, their analysis clearly shows this is not the case.
Rakuten Bank IPO – Peer Comparison – SBI Sumishin or Kakaobank?
- Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m in its Japan listing in April 2023.
- RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
- In our earlier notes, we have looked at the company’s past performance. In this note, we will undertake a peer comparison.
Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision
- DGB Financial Group’s market cap makes it virtually impossible to get deleted even with Kakao Pay’s GICS change in this June rebalancing.
- It’s unclear whether this has damaged the price impact of K200 inclusion. Nevertheless, the intensity of the pre-rebalancing flow wasn’t aggressive, possibly due to the combination of factors, including this.
- This suggests the possibility of an intense price impact resulting from a more concentrated flow right before the effective date, so we should prepare a setup that considers this.
HSCEI Dividend Futures: Nearing the Pointy End of Results Season
- The HSCEI 2023 dividend futures have dropped over the last week as results have trickled in and some of the larger dividend payers have cut their final dividends.
- Over 50% of the DIPS are confirmed now and that number will increase significantly over the next couple of days as the remaining companies announce their final dividends.
- From our estimates, just over 80% of the DIPS will be confirmed by tomorrow though over 66% of the total DIPS will have CNYHKD risk attached to it.
AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge
- Aag Energy Holdings (2686 HK) scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.
- The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying.
- The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread.
Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea
- Mirae Asset TIGER Fn Semiconductor TOP 10 ETF saw a rapid increase in AUM in a short period. Currently, AUM has reached 126 billion won.
- Compared to the flow size, the price movement magnitude was substantial. What is particularly important is that the correlation between weight change direction and price impact was quite significant.
- Considering Long Short basket trading based on the weight change direction on a day trading window seems worthwhile.
Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure
- Yesterday, Alibaba (ADR) (BABA US) announced its intention to divide its business into six distinct units, each with its own CEO and independent board of directors.
- Tying this with Jack Ma’s rare public appearance in China since the beginning of the tech crackdown, people are speculating that the tech crackdown is over.
- However, if you look at this news more objectively, this split indicates nothing but the tightening of the regulatory framework.
💡 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 Data and News
- ✓ Events & Webinars