In today’s briefing:
- Shin Kong (2888 TT)/Taishin (2887 TT) – Short Timer, FX Risk, Index Flows – Time To Buy Vs Peers
- Gold Miners ETF (GDX US): Impact of Benchmark Change – Update
- S&P/ASX Indices: Proposed Methodology Changes & The BIG September Rebalance
- Greatland Resources (GGP AU): Big Index Inclusions for Recent IPO
- Contact Energy/Manawa Energy: Index Flows as Deal Nears Completion
- Xero (XRO AU): Index Flows Following the Capital Raise
- Quiddity Leaderboard ASX Sep25: Update with New Important Market Consultation Implications
- Xero US1.2bn Placement – Trying to Jump Start US, Again. Might Not Be a Game Changer.
- Innovent Biologics Placement – Second for the Month, Stock Has Doubled but Momentum Is Strong
- Block Deal Sale of 82 Billion Won of SK Eternix by Hahn & Co
Shin Kong (2888 TT)/Taishin (2887 TT) – Short Timer, FX Risk, Index Flows – Time To Buy Vs Peers
- Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) are scheduled to merge in less than 6 weeks.
- The recent TWD strength has meant sharp losses for Shin Kong Life, but the merger agreement the FSC agreed has Taishin explicitly supporting Shin Kong Life.
- There are near-term flows and technical limitations which make this situation interesting again. Grab your shorts! It could be a bumpy ride!
Gold Miners ETF (GDX US): Impact of Benchmark Change – Update
- The VanEck Gold Miners ETF/USA (GDX US) has announced a benchmark change from the NYSE Arca Gold Miners Index to the MarketVector Global Gold Miners Index.
- The benchmark change will result in a bunch of constituent and weight changes in September. Estimated one-way turnover is 16.5% resulting in a one-way trade of US$3.15bn.
- The flow and turnover numbers will change following constituent and capping changes for the MarketVector Global Gold Miners Index at the September rebalance.
S&P/ASX Indices: Proposed Methodology Changes & The BIG September Rebalance
- S&P DJI have proposed methodology changes to the S&P/ASX family of indices to enhance representativeness and more quickly reflecting changing market conditions.
- The main changes are lowering the minimum float threshold, shortening the market cap calculation period and the liquidity calculation period, and including buffers for additions and deletions.
- We currently forecast 47 changes to the S&P/ASX family of indices in September and the short market cap computation period could lead to more change over the next two months.
Greatland Resources (GGP AU): Big Index Inclusions for Recent IPO
- Greatland Resources (GGP AU) started trading on the ASX Ltd (ASX AU) on 24 June after selling shares worth A$504m in a primary and secondary offering across Australia/UK.
- Greatland has a full market cap of A$4.9bn and a high free float since Greatland Gold Plc (GGP LN) was listed on the AIM market of the London Stock Exchange.
- Given the large market cap and high float, the stock could be added to multiple indices over the next few months.
Contact Energy/Manawa Energy: Index Flows as Deal Nears Completion
- Contact Energy (CEN NZ) is acquiring Manawa Energy Ltd (MNW NZ) for NZ$1.12/share in cash and 0.583 Contact Energy shares for each share of Manawa Energy.
- Manawa Energy (MNW NZ) is expected to stop trading after the close on 7 July. There will be passive inflows for Contact Energy (CEN NZ) due to increased index shares.
- As a replacement for Manawa Energy Ltd (MNW NZ), there will be an ad hoc inclusion to the S&P/NZX 50 Index at the close of 7 July.
Xero (XRO AU): Index Flows Following the Capital Raise
- Xero Ltd (XRO AU) has entered into a binding agreement to acquire Melio Limited for an upfront cash consideration of US$2.5bn in cash and Xero Ltd (XRO AU) stock.
- The cash consideration is being funded mainly through a fully underwritten A$1.85bn (US$1.2bn) institutional placement. There is also a non-underwritten Share Purchase Plan to raise around A$200m.
- Given the large size of the institutional placement, there will be an increase in index shares and the passive buying that follows should mop up over 20% of the placement.
Quiddity Leaderboard ASX Sep25: Update with New Important Market Consultation Implications
- Couple of days ago, I published my index change expectations for the ASX index family in the run up to the September 2025 index review (link).
- After market close yesterday, the index provider announced a market consultation on potential changes to the index methodology which could become effective during the September review if it gets approved.
- This is a short insight with our revised ranks for the potential ADDs and DELs assuming the market consultation gets approved.
Xero US1.2bn Placement – Trying to Jump Start US, Again. Might Not Be a Game Changer.
- Xero Ltd (XRO AU) plans to raise around US$1.2bn via an institutional placement to partly fund the US$2.5bn acquisition for Melio.
- The US market has been a growth dampener for Xero for a while. The acquisition is large but might not be a game changer.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Innovent Biologics Placement – Second for the Month, Stock Has Doubled but Momentum Is Strong
- Innovent Biologics Inc (1801 HK) aims to raise around US$500m for R&D and marketing.
- The company has undertaken a number of deals in the past, with the overall results being mixed but recent deals have done well.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Block Deal Sale of 82 Billion Won of SK Eternix by Hahn & Co
- On 25 June, Hahn & Co completed a block deal sale of about 9% stake in SK Eternix at 25,634 won (approximately 11% discount to the previous day’s closing price).
- Despite the expected sharp growth in the company’s sales and profits next year, its valuations have reached very high levels.
- Combined with the recent block deal sales at significant market discount, we believe this is likely to put a break on its share price in the next 3-6 months.
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