Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In this weeks recap, we look at:<ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul>There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>.

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

On 30 March, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> announced that it was undergoing a strategic review to consider options for its various businesses. On 6 May, the company announced that it would be transferring its media business to a not-for-profit entity.Then, on 2 August, <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> announced that it was proposing to acquire <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> ex the media business and then delist and privatise SPH. Under the terms of the Scheme, for each share of <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> held, shareholders will receive cash of S$0.668, 0.596 units of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and 0.782 units of <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>.The offer valued <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> at S$2.0987/share (a 11.63% premium to the close of S$1.88/share for SPH) using the closing prices for <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>. Since then, the offer value has dropped to S$2.0507/share while <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> has moved higher to S$1.94/share.On 10 September, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders voted in favour of the spin-off of the media business. This paves the way for the next EGM and Scheme Meeting where <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders will vote on the proposed privatisation by <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>.<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> still trades at a 5.4% discount to the offer value and is lower from the 3.1% discount at the close on 31 August. With around 3 months to go before the privatisation is complete (if voted through), there is good value is arbitraging the spread.

On 30 March, Singapore Press Holdings (SPH SP) announced that it was undergoing a strategic review to consider options for its various businesses. On 6 May, the company announced that it would be transferring its media business to a not-for-profit entity.Then, on 2 August, Keppel Corp (KEP SP) announced that it was proposing to acquire Singapore Press Holdings (SPH SP) ex the media business and then delist and privatise SPH. Under the terms of the Scheme, for each share of Singapore Press Holdings (SPH SP) held, shareholders will receive cash of S$0.668, 0.596 units of Keppel REIT (KREIT SP) and 0.782 units of SPH REIT (SPHREIT SP).The offer valued Singapore Press Holdings (SPH SP) at S$2.0987/share (a 11.63% premium to the close of S$1.88/share for SPH) using the closing prices for Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP). Since then, the offer value has dropped to S$2.0507/share while Singapore Press Holdings (SPH SP) has moved higher to S$1.94/share.On 10 September, Singapore Press Holdings (SPH SP) shareholders voted in favour of the spin-off of the media business. This paves the way for the next EGM and Scheme Meeting where Singapore Press Holdings (SPH SP) shareholders will vote on the proposed privatisation by Keppel Corp (KEP SP).Singapore Press Holdings (SPH SP) still trades at a 5.4% discount to the offer value and is lower from the 3.1% discount at the close on 31 August. With around 3 months to go before the privatisation is complete (if voted through), there is good value is arbitraging the spread.

Keppel Corp / SPH: One Step Closer to Privatisation

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

On Friday 9 September, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders voted to approve the Media Business Spinoff and the Proposed Restructuring which will allow SPH to spin off the various media assets and some supporting assets it has heretofore controlled into a new non-profit Company Limited by Guarantee.The idea is that the "lifting" of the restrictions of the Newspaper Printing and Presses Act (“NPPA”) would then provide SPH "with greater financial flexibility to tailor its capital and shareholding structure to unlock and maximise value for all shareholders."As discussed first in <a href="https://www.smartkarma.com/insights/singapore-press-own-time-own-target-restructuring-lor-come-i-clap-for-you" target="_blank" data-smartkarma-citation="insights:51141" rel="noopener">Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You)</a>, the upside did not seem huge. A few months later SPH decided that the rest of the business would be taken over by <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> in return for a basket of cash, units of <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a> and units in <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a>. This was discussed in <a href="https://www.smartkarma.com/insights/alamak-sph-restructuring-restructured-as-keppel-bo-jios-sph-holders" target="_blank" data-smartkarma-citation="insights:55370" rel="noopener">Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders</a>, and at that, the upside did not seem huge. The price jumped from a div-adjusted S$1.88/share before the Keppel news to S$1.92/unit to close some of the gap. The remaining spread is now quite small at a bit less than 10cts on a forward div-adjusted basis, or about 5%.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/249/original/Screenshot+2021-09-11+at+2.04.22+PM.png?1631340279" class="editor-image img-responsive" data-smartkarma-image-id="229249"></figure></section>From the day before the Keppel announcement until now, the value of the non-cash portion of the Consideration (i.e. the 0.596 units of KREIT and the 0.782 units of SPH REIT) have fallen 2.55% in value while the value of an equal weighted Peer Basket of REITs has fallen 2.45%. That tells you that despite the first-day drop in the value of SPH REIT and Keppel REIT resulting from market participants' expectation that hedging pressure on those two REITs would cause them to underperform the market, the underperformance has been minimal. I expect the high cost of borrow and relative illiquidity of S-REITs has limited the appeal of the arb to arbitrageurs.Now we wait for the EGM to approve the distribution of SPH REIT units and the Scheme Meeting to dispose of the SPH business in return for KREIT units and cash. That should happen in the October/November timeframe.In the meantime, we check progress of the arb, and what the value of the Consideration is compared to a comparable Peer Basket.

On Friday 9 September, Singapore Press Holdings (SPH SP) shareholders voted to approve the Media Business Spinoff and the Proposed Restructuring which will allow SPH to spin off the various media assets and some supporting assets it has heretofore controlled into a new non-profit Company Limited by Guarantee.The idea is that the "lifting" of the restrictions of the Newspaper Printing and Presses Act (“NPPA”) would then provide SPH "with greater financial flexibility to tailor its capital and shareholding structure to unlock and maximise value for all shareholders."As discussed first in Singapore Press Own Time Own Target Restructuring Lor... (Come I Clap For You), the upside did not seem huge. A few months later SPH decided that the rest of the business would be taken over by Keppel Corp (KEP SP) in return for a basket of cash, units of SPH REIT (SPHREIT SP) and units in Keppel REIT (KREIT SP). This was discussed in Alamak! SPH Restructuring Restructured as Keppel Bo Jios SPH Holders, and at that, the upside did not seem huge. The price jumped from a div-adjusted S$1.88/share before the Keppel news to S$1.92/unit to close some of the gap. The remaining spread is now quite small at a bit less than 10cts on a forward div-adjusted basis, or about 5%.From the day before the Keppel announcement until now, the value of the non-cash portion of the Consideration (i.e. the 0.596 units of KREIT and the 0.782 units of SPH REIT) have fallen 2.55% in value while the value of an equal weighted Peer Basket of REITs has fallen 2.45%. That tells you that despite the first-day drop in the value of SPH REIT and Keppel REIT resulting from market participants' expectation that hedging pressure on those two REITs would cause them to underperform the market, the underperformance has been minimal. I expect the high cost of borrow and relative illiquidity of S-REITs has limited the appeal of the arb to arbitrageurs.Now we wait for the EGM to approve the distribution of SPH REIT units and the Scheme Meeting to dispose of the SPH business in return for KREIT units and cash. That should happen in the October/November timeframe.In the meantime, we check progress of the arb, and what the value of the Consideration is compared to a comparable Peer Basket.

SPH Shareholders Approve Spinoff - There's Still a Spread To Earn

The Rights of <a href="https://www.smartkarma.com/entities/sembcorp-marine-ltd" target="_blank" data-smartkarma-citation="entities:11:1" rel="noopener">Sembcorp Marine (SMM SP)</a> started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. 
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/288/original/Screenshot+2021-09-07+at+12.03.08+PM.png?1630987559" class="editor-image img-responsive" data-smartkarma-image-id="228288"></figure>
</section>
If there were borrow on SMM left, it would be a great arb.
As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. 
They have the rest of today and tomorrow to trade. 
There is also an "MGO Option." And this bit is interesting.

The Rights of Sembcorp Marine (SMM SP) started trading on 31 August, trading rich the first day, as expected, then falling. After closing at half a cent on the first day of trading, they are now trading at 0.001-0.002 despite Sembcorp Marine shares trading at 8.5-8.6 cts. 



If there were borrow on SMM left, it would be a great arb.
As it is, every long-only holder who is UP money in their portfolio should, if they can, sell the SMM shares and replace with SMM Rights. It will give them a 5% spread on their SMM shares. 
They have the rest of today and tomorrow to trade. 
There is also an "MGO Option." And this bit is interesting.

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Bond market data and technology, BondEvalue

BondEvalue

Bond market data and technology

BondEvalue is a Singapore-based Fintech that specializes in bond market data and technology. The company's information services business offers bond market data on hard-currency corporate & sovereign bonds across Asia, Middle East, Europe and the Americas. The data, which includes bond prices, yields, news and analytics, is offered to end investors via interactive Mobile and Web Apps. Investors can sign up for a free trial of the service either via the company's website (https://bondevalue.com) or by downloading the BondEvalue Mobile App (http://onelink.to/wej7jq). BondEvalue is also developing an electronic bond exchange, BondbloX in Singapore that allows investors to trade bonds electronically in smaller sizes (US$1,000 or equivalent). For more information, visit https://www.bondblox.com/

Bond Market Data and Technology

Credit

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and 0.7% respectively. Saudi’s TASI was also up 0.6% while UAE’s ADX was down 0.1%. Brazil’s Bovespa also closed 0.8% higher. The Chinese Vice President said that Beijing will back private business in a bid to boost investor confidence. Asian markets had a mixed start – HSI and Nikkei gained 1% and 0.9% in early trade. Shanghai was broadly flat. Singapore’s STI was down 0.2%. US 10Y Treasury yields climbed another 2bp to 1.34%. EU Main CDS and Crossover CDS spreads tightened by 0.5bp and 2.7bp respectively. Asia ex-Japan CDS spreads widened 0.1bp.

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

Singapore

Keppel Corporation Limited's core businesses are offshore and marine, infrastructure, property investment and development, telecommunications and transportation, energy, and engineering.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Keppel Corp (KEP SP)

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

Keppel Corp / SPH: One Step Closer to Privatisation

SPH shareholders have voted in favour of the spin-off of the media business. This paves the way for the next EGM to vote on the privatisation by...

Brian Freitas

SPH Shareholders Approve Spinoff - There's Still a Spread To Earn

SPH shareholders approve the Media Biz spinoff, now there are ~4mos left until payout (assuming EGM/Scheme Mtg in Oct/Nov gives the thumbs up)....

Travis Lundy

One More Day To Trade Sembcorp Marine Rights, Harvest the Spread, or Buy The MGO Option

Last Day+ for the Sembcorp Marine Rights - Replacement Trade for long-only/passive investors, and MGO option for arbs/events. There is some...

Travis Lundy

DBS, Keppel, China Everbright Launch Bonds; Macro; Rating Changes; Talking Heads; New Issuances; ...

US markets remained closed for labor day celebrations. European markets notched the best day in six weeks – DAX, CAC and FTSE were up 1%, 0.8% and...

BondEvalue

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)