In today’s briefing:
- Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved
- GIC Buying in LG Energy Solution? According to Hankyung
- SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics
- FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac (2890) Could Replace PSMC (6770)
- Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
- Hoya (7741) – Record Revenues/Earnings, a Small Buyback, but Nikkei 225 Flows May Dominate
- FTSE China A50 Index Rebalance: One Change Could Become Two
- CK Group Wants to Sell Its Stake in AMTD Group
- MicroStrategy (MSTR US): Saylor Mirrors Bitcoin’s Fall
- Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+
Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved
- The data is largely unchanged since the Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out set of predictions published 15 days ago.
- The consultation results are out. They are as expected too. This has the hallmarks of a VERY well-signalled trade. But it’s a biggie. The funding trade alone is ¥600bn.
- Because of the data, market conditions, and the variability of choice at the edges, I believe that warrants particular strategy.
GIC Buying in LG Energy Solution? According to Hankyung
- Hankyung, published an article that GIC (the Government of Singapore Investment Corp) is in the process of buying a stake in LG Energy from LG Chem.
- Hankyung is one of the two most well-established economic daily newspapers in Korea, along with Maekyung. So, we must see that this article has considerable credibility.
- GIC will likely close the deal before an additional passive flow event kicks in. LG Chem is also highly likely to prefer to close the deal as soon as possible.
SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics
- SJM Holdings (880 HK) announced earnings on Monday and a HK$3bn Rights Issue last night designed to inject capital into Macau gaming licensee SJM Resorts.
- An increase in share capital is required to pre-qualify for then tender process where the Macau Govt would allocate a 10-year gaming concession starting 1 Jan 2023.
- 54.7% SJM Holder/Parent Sociedade de Turismo e Diversões de Macau (STDM) had previously extended a loan to SJM designed to allow SJM to inject capital to SJM Resorts.
FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac (2890) Could Replace PSMC (6770)
- As of the last close, we see SinoPac Holdings (2890 TT) replacing Powerchip Semiconductor Manufacturing Corp (6770 TT) in the FTSE TWSE Taiwan 50 Index at the September rebalance.
- However, Powerchip Semiconductor Manufacturing Corp (6770 TT) is a high probability inclusion to the FTSE All-World Index that will be implemented at the same time.
- Passive trackers will need to buy 6 days of ADV on SinoPac Holdings (2890 TT). The impact is lower on PSMC (6770 TT) but short interest is very high.
Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
- Alibaba’s revenue stopped growing for the first time on record.
- We still believe the revenue growth rate will recover in the December quarter.
- We believe the stock price will have at least an upside of 29% after a significant plunge.
Hoya (7741) – Record Revenues/Earnings, a Small Buyback, but Nikkei 225 Flows May Dominate
- Hoya Corp (7741 JP) today announced great Q1 earnings and a bullish above-consensus revenue forecast for this fiscal year. It also announced a small share buyback.
- However, the dominant factor in flows near-term will be pre-positioning for a possible Nikkei 225 inclusion in September. That is what will push the stock around. In or not.
- Hoya has recently outperformed a Peer Basket despite forward expected EPS and EBIT not seeing relative improvement. That suggests some relative risk if it doesn’t get selected for Nikkei 225.
FTSE China A50 Index Rebalance: One Change Could Become Two
- Aier Eye Hospital Group (300015 CH) could replace China Pacific Insurance (Group) Co., (601601 CH) in the FTSE China A50 Index (XIN9I INDEX) at the September rebalance.
- The inclusion of PetroChina (601857 CH) in the FTSE All-World Index could result in another change to the XIN9I Index with Zhangzhou Pientzehuang Pharmaceutical (600436 CH) at risk of deletion.
- There has been no announcement from FTSE yet on the potential increase in the number of index constituents from 50 to 100, though that could happen any time.
CK Group Wants to Sell Its Stake in AMTD Group
- AMTD Digital’s stock price has started to sink and now there are news that the Cheung Kong (CK) Group (HK) wants to sell its stake in AMTD Group Co.
- The discussion of the CK Group disposing its stake in AMTD Group altogether is likely to further negatively impact AMTD Digital’s share price.
- Li Ka-Shing and his family probably want to distance themselves from all the unnecessary media attention given to AMTD Digital (HKD US) and AMTD Idea Group (AMTD US).
MicroStrategy (MSTR US): Saylor Mirrors Bitcoin’s Fall
- Microstrategy Inc (MSTR US)‘s Michael Saylor will now assume the new role of Executive Chairman and Phong Le, MSTR’s President, will serve as the company’s new CEO.
- As Executive Chairman, Saylor will focus more on MSTR’s bitcoin acquisition strategy and related bitcoin advocacy initiatives.
- With one of the most bullish and influential players in the industry now focusing on crypto, this should be considered bullish, according to some media reports. That’s a desperate takeaway.
Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+
- Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
- GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
- In this note, we talk about the not-so-positive aspects of the deal.
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