In today’s briefing:
- TOPIX Rebalance: Flows at the Close on 29 June
- Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
- Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
- SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake
- Tianqi Lithium H Share Listing: AH Discount Views
TOPIX Rebalance: Flows at the Close on 29 June
- The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
- One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
- Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.
Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
- Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
- Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
- In this note, we talk about the implication and timing of today’s announcements.
Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
- Prosus (PRX NA)/ Naspers (NPN SJ) hold 28.78% of Tencent (700 HK) and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.
- At 3-5% of Tencent (700 HK)‘s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers’ discount to NAV shrinks considerably.
- Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on Tencent (700 HK) in the near future.
SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake
- Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.
- The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.
- In this note, we will talk about the lock-up dynamics and recent updates.
Tianqi Lithium H Share Listing: AH Discount Views
- Sichuan Tianqi Lithium Industries, Inc (002466 CH) has upped its targeted H Share raise from US$1.0-1.5 billion to US$1.5–2.0 billion. The listing will kick off on Thursday.
- In Tianqi Lithium H Share Listing: Riding the Wave, we noted that Tianqi is well-placed to leverage the high lithium prices to deliver growth, margin and cash generation.
- In this note, we examine the likely discount that Sichuan Tianqi Lithium Industries, Inc. (TIANQI HK) will offer its H Shares in comparison to the A Shares.
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