Event-Driven Archives | Page 108 of 188 | Smartkarma

Jafco Co Ltd (8595 JP) announced the reference period VWAP for the Tender Offer Buyback was ¥2,362.4136 vs target ¥2,525. Murakami-san refused to play, so the Tender Offer is cancelled.
This is good news and bad news. The announcement wording doesn’t make JAFCO look good, but they will continue discussions with City Index Eleventh. But there is potential.
I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection (Jonathan Swift, 1729)

China Rebalances at the Close Today- BIG Flows

There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
The round-trip turnover at the close of trading today should be in excess of US$8bn.

Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up

Nitro Software Ltd (NTO AU) has received a revised Potentia off-market takeover offer at A$2.00 per share, an 11.1% premium to its previous offer and in line with Alludo’s offer.
By bumping its offer, adding a scrip alternative and signalling a potentially higher price on due diligence access, Potentia has ramped up the pressure on the Board.
Potentia/Alludo offer remains at the low end of the IE’s valuation range. Alludo would have anticipated this move and likely will have factored in the need to raise its offer.

Infosys (INFY)’s US$1.1bn Buyback

Infosys Ltd (INFO IN) (Infosys Ltd Sp Adr (INFY US)) on 5-6 December announced an on-market buyback of more than US$1.1bn.
The company has done buybacks before, and it is worthwhile looking at the details.
The buy-back looks small, and may be impactful near-term in near-space.

KODEX Battery Rebalancing Results Out: From Today to Next Tuesday

As expected, Sungeel Hitech (365340) made it to the index. And C&I System (222080) and Wonik PNE (217820) were added, whereas Ecopro (086520) and Dongwha Enterprise (025900) were deleted.
Among the existing constituents, Samsung SDI (006400), Ecopro BM (247540), SK Innovation (096770), L&F (066970), and SKC (011790) are expected to have a relatively significant impact.
Looking at the last rebalancing, the impact/price correlation was most significant on Day 1. So, we should consider aiming for LONG/SHORT today for those with a high relative impact.

Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200)
Samsung Electronics (005930)‘ basis does not reflect special dividends, even though speculations have not disappeared entirely.
As the current basis hasn’t widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.

EQD | KOSPI2 Index: Short-Term Trading Opportunity Using Derivatives

KOSPI2 Index failed to break above the 200dma and has retreated
The index has now fallen back towards the 50dma and we see an short-term opportunity to play the upside
Use weekly options to play a short-term bounce and get the best risk-reward

Nitro Software: Potentia Matches KKR’s $2.00/Offer

Potentia Capital has bumped its Offer for Nitro Software Ltd (NTO AU) to A$2.00/share, matching KKR’s earlier Offer.
Potential’s proposal – which also boasts a scrip alternative for those investors wishing to remain invested – is open for tendering, and has no minimum acceptance threshold.
Nitro’s board has yet to provide a view on Potentia’s revised terms.

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Dec 08

Daily Brief Event-Driven: HDFC AMC: Abrdn’s Potential Placement & Index Implications and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HDFC AMC: Abrdn’s Potential Placement & Index Implications
Xingda Int’l (1899 HK): Kicking The Tyres
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
TOPIX Inclusions: Who Is Ready (Dec 2022)
Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate
Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?
Xingda Int’l (1899 HK): Partial MBO

HDFC AMC: Abrdn’s Potential Placement & Index Implications

Abrdn PLC (ABDN LN) is looking to sell its entire 10.21% stake in HDFC Asset Management (HDFCAMC IN) following which it will no longer be a sponsor of HDFC MF.
Depending on who the stake is sold to, there could be an immediate increase in the investability weight in the FTSE All-World Index.
More importantly, the increased free float will result in an increase in the FIF for the MSCI Standard Index and index inclusion could take place in February.

Xingda Int’l (1899 HK): Kicking The Tyres

Xingda International (1899 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
The controlling shareholders – more commonly known as the Five Parties – hold 45.6% of shares out.
Two years ago, Xingda sought to spin-off its key operating vehicle. Perhaps the Five Parties are privatising Xingda, then IPOing Xingda Steel Tyre Cord. Or, cashing out their positions.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

TOPIX Inclusions: Who Is Ready (Dec 2022)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Oct 2022)
At present, there are 60 names that satisfy all of these conditions and there are more names that are close to being in that group.

Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

We’d better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).

Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control

Xingda International (1899 HK) disclosed a partial offer from management to acquire a maximum of 80.0 million shares at HK$1.88 per share, a 24.50% premium to the undisturbed price.
The pre-condition is Executive approval. The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders on the acceptance form.
The partial offer is an opportunistic foray to seize statutory control as it would not be sufficiently enticing to overcome FIL’s 9.99% blocking stake in a privatisation scheme.

Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?

Xingda International (1899 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
It is likely that the management, representing 45.60% of ordinary shares (through a five parties agreement), is seeking to privatise Xingda.
The bid is likely privatisation through a scheme. Due to FIL’s blocking stake, a decent premium is required, such as an offer approaching HK$2.00 (33% premium to the last close).

Xingda Int’l (1899 HK): Partial MBO

Late night Xingda (1899 HK) announced a partial Offer from a consortium comprising management – known as the Five parties – at HK$1.88/share – a 24.5% premium to last close.
The consortium – widely known as the Five Parties – currently holds 45.6%, and the intention of the Offer is to hold 50.01%, or a controlling stake.
There is a minimum/maximum number shares to be acquired under the Offer. I’d expect the minimum acceptance condition to be met.

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Dec 07

Daily Brief Event-Driven: Stock Connect Changes and MSCI/FTSE Deletes on Friday and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Stock Connect Changes and MSCI/FTSE Deletes on Friday
PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake
EQD | SPX Index/NDX Index : Big Data Week Coming Up-We Look at What Is Priced In
DAX, MDAX, SDAX Dec 2022 Rebal: DAX Inclusion for Porsche Is Positive News
STAR50 Index Rebalance Preview: Another Five Potential Changes in March

Stock Connect Changes and MSCI/FTSE Deletes on Friday

The SSE180, SSE380 and SZSE1000 indices rebalance at the close on Friday and that will lead to changes to the list of stocks eligible for Northbound Stock Connect.
Deletion from the Northbound Stock Connect Buy and Sell list will result in MSCI and FTSE deleting stocks from their indices. That selling will take place at the close Friday.
We expect 37 stocks to be deleted from the MSCI and FTSE indices at the close on 9 December – the announcements should be made later today or tomorrow.

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
There are a few other potential changes to the index and the passive flow on the stocks will be material.

Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering

JIP, Toshiba Corp (6502 JP)‘s preferred bidder, is reported to be under pressure from co-investors to cut its offer price. Securing financing continues to be troublesome.
An offer valuing Toshiba less than JPY2.2 trillion would face pushback from the special committee, let alone shareholders. There are no signs of a JIC/Bain coming to the rescue.
While the Toshiba/peers price ratio remains undemanding compared to historical ratios, Toshiba looks expensive vs peers on multiples. With short-term newsflow likely to be incrementally negative, remain on the sidelines.

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake

By Sumeet Singh

Net Protections (7383 JP), a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
In this note, we will talk about the upcoming lock-up expiry on 9th Dec 2022.

EQD | SPX Index/NDX Index : Big Data Week Coming Up-We Look at What Is Priced In

Next week is the last big week of data releases for the year
With CPI data and also a FED meeting there is lots of potential volatility to come
We look at what is priced in to the derivatives market and suggest some trade ideas

DAX, MDAX, SDAX Dec 2022 Rebal: DAX Inclusion for Porsche Is Positive News

The December 2022 index changes for DAX, MDAX, and SDAX were announced late last night (5th December 2022).
Porsche AG (P911 GR)‘s addition to the DAX Index is the main talking point. There are more changes for the MDAX and the SDAX indices.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

STAR50 Index Rebalance Preview: Another Five Potential Changes in March

Nearly 85% of the way through the review period, we see 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
Given the significantly higher market cap of the inclusions using a 6-month minimum listing history, we expect the index committee will continue to use the shorter listing history requirement.
With 5 changes a side, one-way turnover is estimated at 5.15% and will result in a one-way trade of CNY 3,994m. Impact on some deletions is quite high.

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Dec 06

Daily Brief Event-Driven: Where Does Melco’s Discount To NAV Go From Here? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Where Does Melco’s Discount To NAV Go From Here?
Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers
HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)
KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern
Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money

Where Does Melco’s Discount To NAV Go From Here?

On the 26 November, Macau’s government renewed the concession periods of the city’s six incumbent gambling concessionaires for another 10 years.
Genting Malaysia (GENM MK), a last-minute interloper, failed in its bid to secure a license. It scored lowest under the government’s bidding review. MGM China (2282 HK) topped the scoresheets.
As with all incumbents, Melco International (200 HK) and Melco Resorts & Entertainment (MLCO US) eked out strong gains following the renewal. Melco’s current discount to NAV is currently 20%.

Nippon Prologis REIT (3283 JP): Offering Could Be a Catalyst for Outperformance Vs Peers

Japan’s largest logistics REIT Nippon Prologis Reit (3283 JP) (“NPR”) announced a US$170mn follow-on equity offering to fund their recent acquisition of three logistics facilities.
The primary offer quantity will be 76,570 units out of which 44,410 units and 32,160 units are expected to be allocated for domestic and international investors, respectively.
Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

Nearing the end of the review period for the March rebalance, we see China Shenhua Energy Co H (1088 HK) replacing China Feihe (6186 HK) in the HSCEI INDEX.
Estimated one-way turnover is 1.64% resulting in a one-way trade of HK$1.02bn with passives needing to buy 1x ADV on China Shenhua Energy and selling 1.7x ADV on China Feihe.
The change will lead to an increase in the fair value of the HSCEI 2023 dividend futures by over 3 DIPS. Could be more if China Shenhua pays a special.

KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern

We should set the minimum level of the target size to estimate the flow impact on T-1 Effective at ₩15T from ETFs.
We then need to pay attention to the recent trend that an additional flow from NPS appears post-Effective, with a significant portion on T+1~3.
We should revise down our expected rate of return on our early-phase setup aiming at the preemptive trading (T-6W Effective) by NPS.

Star Health IPO Lockup – Owned by Financial Investors, US$3.0bn Worth Shares Are Well in the Money

By Sumeet Singh

In Dec 2021, Star Health (STARHEAL IN) (SHAI), the largest private health and retail health insurance company in India, raised around US$851m in its India IPO.
SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP.
In this note, we will talk about the upcoming lockup expiry.

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Dec 05

Daily Brief Event-Driven: FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive
FTSE EPRA Nareit Index Rebalance: Now One Add for Korea
Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL
Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here
Weekly Deals Digest (04 Dec) – Chip Eng Seng, Bigtincan, Genex, ReadyTech, Warrego, Sunshine,Growatt
Merger Arb Mondays (05 Dec) – Origin Energy, OZ Minerals, Genex, Bigtincan, Pendal, Golden Energy

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive

There are 26 inclusions and 5 deletions for the index resulting in a one-way turnover of 46.3% and a one-way trade of TWD 79.52bn (US$2.6bn). That is HUGE!
There at 14 stocks that have over 5 days of ADV to buy from passive funds while there are 20 stocks with more that 5 days of ADV to sell.
Over the last 2 weeks and 4 weeks, short interest has decreased on most of the adds while increasing on all the deletes and most of the stocks with outflows.

FTSE EPRA Nareit Index Rebalance: Now One Add for Korea

SK REITs (395400 KS) will now be added to the FTSE EPRA Nareit Global Real Estate Index Series after market close on 16 December.
Based on the passive assets estimated to track the FTSE EPRA Nareit Index, there could be around 3.11m shares (US$11.3m; 19.2x ADV) to buy on SK REITs (395400 KS).
SK REITs (395400 KS) trades expensive as compared to ESR Kendall Square REIT (365550 KS) and we’d use an index inclusion driven rally to pare positions in the stock.

Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL

This trade is based on historical patterns described in the FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades AND additional considerations.
Those additional considerations were discussed in Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk and subsequent insights. So far, the trade is +7.1% since 26 October.
The announcement of FTSE TWSE Dividend+ names described in FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations changes the basket slightly for the home stretch.

Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here

Monadelphous (MND AU) will be added to the S&P ASX 200 Index on 16 December 2022.
This is not a surprise. It has been the lead contender for a December ADD slot since the day after the September rebalance was completed (see here).
There is a fair bit of volume to buy, and there are pair trades to do.

Weekly Deals Digest (04 Dec) – Chip Eng Seng, Bigtincan, Genex, ReadyTech, Warrego, Sunshine,Growatt

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Sunshine Insurance (6963 HK) launches a US$950m IPO, Lygend Resources & Technology (2245 HK) debuts flat, Growatt Technology (1833969D CH) puts its US$1 billion IPO on hold.
Event-Driven developments – Chip Eng Seng Corp (CHIP SP), Bigtincan Holdings Ltd (BTH AU), Genex Power Ltd (GNX AU), ReadyTech Holdings Ltd (RDY AU), Warrego Energy (WGO AU).

Merger Arb Mondays (05 Dec) – Origin Energy, OZ Minerals, Genex, Bigtincan, Pendal, Golden Energy

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Origin Energy (ORG AU).
Lowest spreads – Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Uzabase Inc (3966 JP), Lifestyle International Holdings (1212 HK), Nearmap Ltd (NEA AU).

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Dec 04

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: STAR50 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA
Chip Eng Seng (CHIP SP)’s Revised S$0.75 VGO from the Tangs
Warrego (WGO AU)’s Rinehart V Stokes Takeover Tussle in Full Swing
FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations
KOSPI 200 Up/Down Weights: Official Results & Passive Impacts on T-1 Effective
TIGER Top 10 Rebalancing: Four Names to Trade on T-1 Effective
S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
EQD | Tencent (700 HK): We Identify Three Derivative Trades into Year-End
FTSE TWSE 50 & 100 Dec 22 Rebal: Greatek Deletion Confirmed; One Surprise Change

Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA

It was a busy week with the implementation of the MSCI Nov SAIR and the Hang Seng December rebalance, plus a lot of announcements for the FTSE indices.
The coming week has the implementation of the December rebalance for the KOSPI2 INDEX, KOSDAQ 150 Index and a range of indices in China.
Inflows to iShares MSCI Emerging Markets (EEM) and iShares MSCI ACWI ETF (ACWI US) during the week as markets move higher on expectations of slower rate hikes from the Fed.

Chip Eng Seng (CHIP SP)’s Revised S$0.75 VGO from the Tangs

Chip Eng Seng Corp (CHIP SP) disclosed a revised conditional VGO from the Tangs at S$0.75, a 4.2% premium to the previous offer of S$0.72. The offer is final.
The offeror (47.27% of outstanding shares) and immediate family represent 50.49% of outstanding shares or 48.63% of diluted shares, which is just shy of the 50%+ minimum acceptance condition.
The bump was to increase the chances of privatisation rather than hitting the 50%+ minimum acceptance condition. At the last close, the gross spread is 1.4%.

Warrego (WGO AU)’s Rinehart V Stokes Takeover Tussle in Full Swing

Beach Energy (BPT AU)’s revised offer of A$0.25 per share was quickly gazumped by Hancock’s revised off-market proposal of A$0.28 for Warrego Energy (WGO AU). All other terms remain unchanged.
Speculation that Strike Energy (STX AU) would also be a takeover target has resulted in its all-scrip offer rising to A$0.248 per share (at last close).
Expect another round of the takeover battle as the bidders are well capitalised and the strategic importance of Perth Basin as Australia’s premier onshore basin.

FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations

The index changes for the FTSE TWSE Taiwan Dividend+ Index for the December 2022 index review were confirmed after market close on Friday 2nd December 2022.
There will be 26 ADDs and 5 DELs which are mostly in line with Quiddity’s expectations.
In this insight, we take a look at our revised expectations for capping flows taking into account the confirmed index changes for the December 2022 review

KOSPI 200 Up/Down Weights: Official Results & Passive Impacts on T-1 Effective

Names with a significant impact: KT (030200), Shinhan Financial (055550), Korean Air (003490), LG Energy (373220), Dongwon Industries (006040), Lotte Fine Chemical (004000), Meritz Fire (000060), & Mirae Asset (006800)
Limiting the target size of our flow trading to only the fund size that directly mirrors it (₩17.8T) on T-1 Effective will increase our winning rate.
Lately, local pensions have been seen as rather taking advantage of flow trading in index rebalancing events, so I also recommend keeping the trading window fairly tight.

TIGER Top 10 Rebalancing: Four Names to Trade on T-1 Effective

Kakao managed to stay out of the relegation zone. Instead, Kia was pushed to the borderline. But POSCO failed to up its float rate, so Kia stayed in.
Besides that, LG Energy Solution and Celltrion made it to the index, replacing KB Financial and Shinhan Financial.
These passive flows appears to be of sufficient magnitude to cause a substantial price impact on T-1 Effectiveness. But it should also be approached with a fairly short window.

S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year

Pilbara Minerals (PLS AU) will replace Lendlease Group (LLC AU) in the S&P/ASX 50 Index, while Monadelphous (MND AU) will replace St Barbara Ltd (SBM AU) in the S&P/ASX 200.
The largest impact from passive trading will be on Monadelphous (MND AU) while the largest flow will be on Pilbara Minerals (PLS AU).
There appears to be significant short positioning on Lendlease Group (LLC AU) as cumulative excess volume and short interest continue to rise.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

EQD | Tencent (700 HK): We Identify Three Derivative Trades into Year-End

Stock has recovered from an October low but may be running out of steam
Realised vol has been high and implied vols have not fallen as much as other equity assets
We suggest three trade ideas into year-end to take advantage of the vol surface and spot level

FTSE TWSE 50 & 100 Dec 22 Rebal: Greatek Deletion Confirmed; One Surprise Change

The index changes for the FTSE TWSE Taiwan 50 and Taiwan Mid-Cap 100 indices for the December 2022 Rebalance were announced after the close on Friday.
There will be one change for the Taiwan 50 Index and three changes for the Taiwan Mid-Cap 100 Index.
In this insight, we take a closer look at the possible explanations for this surprise and our index flow expectations for this Rebalance event.

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Dec 03

Daily Brief Event-Driven: FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT
Toshiba Privatisation In Trouble
S&P ASX Dec 22 Rebalance: MND Is the Top Pick
STOXX Europe 600 Dec 22 Rebal: Final Changes and Historical Performance Analysis
When Will Samsung Life Insurance Be Forced to Sell Its Stake in Samsung Electronics by the Govt?

FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT

Far Eastern New Century (1402 TT) will replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index at the close on 16 December.
Passive trackers will need to buy 4.8 days of ADV on Far Eastern New Century (1402 TT) and sell 1.9 days of ADV on AU Optronics (2409 TT).
There will be same way flow from FTSE TWSE Taiwan Dividend+ Index trackers on both stocks and that will significantly add to the passive flow.

Toshiba Privatisation In Trouble

After a few successive rounds of Management and Board Proposals were shot down, last March Toshiba Corp (6502 JP) embarked on a process to generate a privatisation proposal.
The result has ended up with one, maybe two privatisation proposals in the offing. The “leading” candidate’s proposal will not fly as proposed. The other is MIA for the moment.
That leaves a complicated situation. Activists+active holders are stuck with Toshiba and vice versa. They want change, and out, and financiers do too. Change happens. The question is how.

S&P ASX Dec 22 Rebalance: MND Is the Top Pick

The index changes for the S&P ASX Index family for the December 2022 Rebalance were announced after the close on Friday 2nd December 2022.
There will be one ADD/DEL for the ASX 50 index and one ADD/DEL for the ASX 200 index.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

STOXX Europe 600 Dec 22 Rebal: Final Changes and Historical Performance Analysis

The December 2022 index changes for the STOXX Benchmark Indices were announced yesterday.
There will be 6 ADDs and 6 DELs for the STOXX Europe 600 Index and 3 ADDs and 1 DEL for the EURO STOXX Index in December 2022.
In this insight, we take a closer look at the index flow expectations and the historical performance of STOXX Europe 600 and EURO STOXX Rebalance events.

When Will Samsung Life Insurance Be Forced to Sell Its Stake in Samsung Electronics by the Govt?

By Douglas Kim

The debate about whether or not Samsung Life Insurance should sell its stake in Samsung Electronics is being reviewed by the National Assembly once again.
The greater probability event is status quo. The Korean government is not likely to force Samsung Life Insurance to sell its stake in Samsung Electronics in the near term.
Korean government is likely to require Samsung Life Insurance to sell its stake in Samsung Electronics after the Lee family has paid off all their inheritance taxes in 3-4 years.

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Dec 02

Daily Brief Event-Driven: Itochu Keeps Buying Fuji Oil and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Itochu Keeps Buying Fuji Oil, Takeover Offer Could Be Possible With Shares Near The Cyclical Bottom
Hang Seng Indexes: Rebalances Today; Recent Trading Data
Carbon Revolution: SPACed & Smacked
Expect Bigtincan To Reject SQN’s Proposal

Itochu Keeps Buying Fuji Oil, Takeover Offer Could Be Possible With Shares Near The Cyclical Bottom

By Oshadhi Kumarasiri

Itochu Corp (8001 JP) has restarted accumulating Fuji Oil Holdings (2607 JP) shares, with an acquisition of 3.5m shares during the last-quarter to take its ownership percentage in Fuji-Oil to 44%.
With both earnings and valuations at a cyclical bottom, Itochu could be encouraged to accumulate more Fuji Oil shares in the short term, resulting in Fuji Oil outperforming its peers.
We think even a takeover offer could be possible while the share price is hovering near the cyclical bottom.

Hang Seng Indexes: Rebalances Today; Recent Trading Data

The December rebalance of the HSI INDEX, HSCEI INDEX and HSTECH INDEX takes place at the close today. One-way flow is estimated at HK$8.4bn.
There are 3 adds for the HSI INDEX and 4 adds/ 4 deletes for the HSCEI INDEX. There are float changes for a few stocks as well as capping changes.
There is excess volume on most adds/deletes post announcement and short interest has also picked up significantly.

Carbon Revolution: SPACed & Smacked

Following a one-month suspension, carbon-fibre wheel maker Carbon Revolution Ltd (CBR AU) announced it will merge (and delist from the ASX) with Twin Ridge Capital, a US-listed SPAC.
CBR said it also requires upward of A$30mn in bridging finance to fund near-term costs (through to June 2023). The share price promptly tanked 50% upon the resumption of trading.
It’s an intriguing situation with an implied notional share price of A$1.49/share under the merger, versus the current price of A$0.15. So I dig a little deeper.

Expect Bigtincan To Reject SQN’s Proposal

Software provider Bigtincan Holdings Ltd (BTH AU) has announced an indicative proposal, by way of Scheme, from PE outfit SQN Investors at A$0.80/share, a 17.6% premium to last close.
Due diligence has not yet been afforded. SQN currently holds a 13.6% stake.
BTH also highlighted it has had preliminary discussions with other interested parties. Expect BTH’s board not to engage with SQN at this price.

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Dec 01

Daily Brief Event-Driven: FTSE China 50 Index Rebalance: JD Health and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
CES China Semiconductor Chips Index Rebalance: Four Changes in December
Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe
FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022
CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations
FTSE UK Dec 22 Rebal: Quiddity Announcement Day Thoughts
Reinhart Edges Stokes In Tussle For Warrego Energy
EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Revisited

FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT

JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.

CES China Semiconductor Chips Index Rebalance: Four Changes in December

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.

Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe

In March 2022, Toyo Construction (1890 JP) agreed to be taken over by equity affiliate stake owner INFRONEER Holdings (5076 JP) at what was a low price.
Nintendo Founder Family Office “YFO” objected, and bought 25+% of the company, then offered to buy it out 30% higher. Toyo Construction objected.
Four months later they finally signed an NDA and then started negotiating. Early in November the target date for a Tender Offer start by YFO was pushed to early December.

FTSE EPRA Nareit Index Rebalance: One Deletion for Australia

There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.

Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?

On 17 Feb 2022, Janaghan Jeyakumar, CFA wrote about Appier Group (4180 JP) suggesting it was a TOPIX inclusion candidate in the not-distant future.
In mid-August 2022, he reiterated his opinion. Three days later, the company said they had applied for TSE Prime membership. We are coming up on the timing for an announcement.
It would mean buying, but the shareholder structure is interesting, and intentions are not easy to read. But if they announce imminently, the calendar makes the event even more interesting.

End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022

By Douglas Kim

We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.
These 58 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
Among these 58 stocks, the top 5 market cap stocks include HYBE, Kakao Games, WCP, Sillajen, and Duksan Neolux.

CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations

KRX unveiled the rebalancing results of the CSI KRX China-Korea indices for Korean constituents yesterday.
There is still insufficient evidence data to estimate specific passive impact. The previous rebalancing in June showed no clear correlation between constituent changes and price impact.
Although it may be risky to trade on this rebalancing, monitoring the correlation of their passive impact at this point, one year after the release, seems worthwhile.

FTSE UK Dec 22 Rebal: Quiddity Announcement Day Thoughts

The December 2022 Rebalance of the FTSE UK Index series will be based on the closing prices of 29th November 2022.
The results will be announced after market close later today (30th November 2022).
Below are Quiddity’s final expectations for index changes and flow parameters for the December 2022 Rebalance event. You have the day to trade this.

Reinhart Edges Stokes In Tussle For Warrego Energy

Gina Rinehart’s Hancock Prospecting has joined the bidding war for Warrego Energy (WGO AU) with a A$0.23/share, all cash, off-market Offer versus Beach Energy (BPT AU)‘s management-backed A$0.20/share Scheme Offer.
Hancock has already lodged the Bidder’s Statement. There is no minimum acceptance condition attached to this offer.
Warrego currently recommends Beach’s Offer, subject to no superior proposal emerging. Beach has matching rights under the SID entered into on the 14 November.

EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Revisited

Chinese equities have been on a volatile path but are finally gaining some upside momentum
Dollar seems to have peaked and USDCNH is retreating with renewed optimism for the Chinese economy reopening.
We revisit the trade and look at potential restructuring options

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Nov 30

Daily Brief Event-Driven: HSI and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
JPX-Nikkei 400 Rebal 2023: End-Nov 2022
StubWorld: Iljin Holdings – Discounts On Discounts
Doosan Bobcat Block Deal Sale – Overhang Remains
Sunshine Insurance (6963 HK) IPO – Index Inclusion Timeline
Philip Morris/Swedish Match: Squeeze-Out

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)

The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on Alibaba Group, Haier Smart Home, Kuaishou Technology, Li Auto, PetroChina, Tencent, JD.com, China Resources Mixc Lifestyle Services and Tingyi Holding.
The largest outflows will be on SMIC, NetEase, AIA Group, HSBC Holdings, China Construction Bank, Alibaba Health Information Technology, Innovent Biologics, China Mobile, Ping An Insurance and ICBC.

JPX-Nikkei 400 Rebal 2023: End-Nov 2022

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-November 2022.

StubWorld: Iljin Holdings – Discounts On Discounts

Iljin Holdings (015860 KS)‘s implied stub is around levels just prior to the onset of Covid, despite strong subsequent deconsolidated earnings. 50.1%-held Iljin Diamond (081000 KS) is itself heavily discounted.
Preceding my comments on Iljin are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Bobcat Block Deal Sale – Overhang Remains

By Douglas Kim

Doosan Bobcat Inc (241560 KS) announced a block deal sale of 5 million shares. representing 5% of outstanding shares.
There are three major reasons why we have a negative view of the block deal sale and on Doosan Bobcat.
Two of these reasons include an overhang associated with remaining shares which could be sold as well as a potential downturn in construction markets in North America and Europe.

Sunshine Insurance (6963 HK) IPO – Index Inclusion Timeline