Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>I tally 46 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>Two new deals this week: Bain's Offer for <a href="https://www.smartkarma.com/entities/system-information-co-ltd" target="_blank" data-smartkarma-citation="entities:19470:1" rel="noopener">System Information (3677 JP)</a> and DCM's for <a href="https://www.smartkarma.com/entities/keiyo-co-ltd" target="_blank" data-smartkarma-citation="entities:14415:1" rel="noopener">Keiyo Co Ltd (8168 JP)</a>. An Offer for <a href="https://www.smartkarma.com/entities/haitong-international-securities-group-ltd" target="_blank" data-smartkarma-citation="entities:13153:1" rel="noopener">Haitong International Securities  (665 HK)</a> appears imminent.</li>
<li>Key updates took place for: <a href="https://www.smartkarma.com/entities/invocare-ltd" target="_blank" data-smartkarma-citation="entities:9044:1" rel="noopener">Invocare Ltd (IVC AU)</a>, <a href="https://www.smartkarma.com/entities/liontown-resources-ltd" target="_blank" data-smartkarma-citation="entities:20488:1" rel="noopener">Liontown Resources (LTR AU)</a>, <a href="https://www.smartkarma.com/entities/enm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16267:1" rel="noopener">ENM Holdings (128 HK)</a> and <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a>,</li>
</ul>


I tally 46 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals this week: Bain's Offer for System Information (3677 JP) and DCM's for Keiyo Co Ltd (8168 JP). An Offer for Haitong International Securities  (665 HK) appears imminent.
Key updates took place for: Invocare Ltd (IVC AU), Liontown Resources (LTR AU), ENM Holdings (128 HK) and Toyo Construction (1890 JP),


(Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.

Haitong International Securities Group / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/haitong-international-securities-group-ltd" target="_blank" data-smartkarma-citation="entities:13153:1" rel="noopener">Haitong International Securities Group (665 HK)</a> (HITSEC) is suspended pursuant to Hong Kong's Code on Takeovers and Mergers.</li>
<li>The rumour doing the rounds is that <a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:166:1" rel="noopener">Haitong Securities Co Ltd (A) (600837 CH)</a> (HSC) may take private its 73.4%-held Hong Kong-listed investment banking unit.</li>
<li>HITSEC's share performance since 1Q18 has been tragic. Financials have been dire since 2H20.  But expect a punchy premium if HTS does seek to take HITSEC private. </li>
</ul>



Haitong International Securities Group (665 HK) (HITSEC) is suspended pursuant to Hong Kong's Code on Takeovers and Mergers.
The rumour doing the rounds is that Haitong Securities Co Ltd (A) (600837 CH) (HSC) may take private its 73.4%-held Hong Kong-listed investment banking unit.
HITSEC's share performance since 1Q18 has been tragic. Financials have been dire since 2H20.  But expect a punchy premium if HTS does seek to take HITSEC private. 


Haitong Int'l Securities (665 HK): Possible Offer From Parent

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 115.7% as of Sep 22nd.</li>
<li>The average A-H premium changed by -1.1ppt week on week, led by energy, industrials, communication services and offset by consumer discretionary.</li>
<li>We highlight weekly changes in A-H premium for Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 115.7% as of Sep 22nd.
The average A-H premium changed by -1.1ppt week on week, led by energy, industrials, communication services and offset by consumer discretionary.
We highlight weekly changes in A-H premium for Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation.


A-H Premium Weekly (Sep 22nd): Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There have only been 7 new listings on the <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> in the third quarter of the year so far.</li>
<li>Of those stocks, only <a href="https://www.smartkarma.com/entities/keep-inc" target="_blank" data-smartkarma-citation="entities:35947:1" rel="noopener">Keep Inc (3650 HK)</a> has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.</li>
<li>
<a href="https://www.smartkarma.com/entities/keep-inc" target="_blank" data-smartkarma-citation="entities:35947:1" rel="noopener">Keep Inc (3650 HK)</a> is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.</li>
</ul>


There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.

Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.


HSCI Index Rebalance Preview: Low Probability Add in December

Founder of Antler Capital

Stanley Tsai, CFA

Thematic (Sector/Industry)

<ul>
<li>We welcome the regulators' formalization of financial asset classifications. This will gradually remove regulatory arbitrage and pave the way for further bank reintermediation.</li>
<li>The new rules will likely have limited impacts on bond holdings that have active secondary markets, but illiquid debt investment plans will come under more intense regulatory and auditor scrutiny.</li>
<li>We see an impact of 10-15bp on the listed banks' reported NPL ratios. That said, a handful of banks may be at risk of capital shortages if the environment worsens. </li>
</ul>


We welcome the regulators' formalization of financial asset classifications. This will gradually remove regulatory arbitrage and pave the way for further bank reintermediation.
The new rules will likely have limited impacts on bond holdings that have active secondary markets, but illiquid debt investment plans will come under more intense regulatory and auditor scrutiny.
We see an impact of 10-15bp on the listed banks' reported NPL ratios. That said, a handful of banks may be at risk of capital shortages if the environment worsens. 


Chinese Banks: New Asset Classification Rules | You Can Run but You Can't Hide

China

China International Capital Corporation Ltd. (CICC) operates as an international investment bank. The Company provides financial services, including investment banking, capital markets, securities sales and trading, fixed income, asset management, and private equity. China International Capital also offers individual wealth management and research services.

China International Capital Corporation (3908 HK)

Industrial Securities Co., Ltd. is a securities company.  The Company's business covers securities brokerage, investment consulting, securities trading, financial advisory, securities underwriting and sponsorship, proprietary trading, asset management, investment funds marketing as well intermediary services for futures companies.

China Merchants Securities Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities underwriting, and other services. China Merchants Securities also operates investment management.

China Merchants Securities Co Ltd (A) (600999 CH)

GF Securities Co Ltd. is a securities firm. The Company offers investment banking services including equity and bond underwriting, mergers and acquisitions consulting, financial consulting, brokerage services, and asset management services.

CSC Financial Co., Ltd. provides investment management services. The Company offers investment banking, wealth management, and trading and institutional client services. CSC Financial conducts its business in Hong Kong.

SDIC Capital Co.,Ltd operates finance investment and management businesses. The Company focuses on securities, trust, fund, futures, insurance, and other finance areas. SDIC Capital also conducts investment banking and other self operation businesses.

China Galaxy Securities Co., Ltd. provides securities services. The Company provides securities underwriting, securities brokerage, securities investment advisory, securities transaction, and other services. China Galaxy Securities provides its services throughout China.

China Huarong Asset Management Co Ltd. provides a variety of financial services. The Company offers asset management, banking, securities services, financial leasing, trust services, and investment services. China Huarong Asset Management maintains branch locations throughout China.

Soochow Securities Company Limited provides securities-related services such as brokerage, investment and financial advisory, underwriting and sponsorship, proprietary trading, asset management and investment fund distribution. The Company also provides intermediary services to futures companies.

Caitong Securities Co.,Ltd. operates securities businesses. The Company provides securities brokerage, securities underwriting, asset management, credit trading, investment banking, and securities consulting services. Caitong Securities also conducts futures and fund management businesses.

Affiliated Managers Group, Inc. is a global asset management company that invests in boutique investment management firms.  The Company allows the firms in which it invests operational autonomy while providing assistance in strategic matters, marketing, distribution, product development, and operations.

Financiere de Tubize SA is a holding company which invests in establishing, developing, controlling, and transforming companies.  The Company invests in the chemical, pharmaceutical and film sectors.

Hargreaves Lansdown PLC provides investment management services. The Company offers its services in stock brokerage, pension fund management, financial planning, and asset and wealth management. Hargreaves Lansdown serves investors in the United Kingdom.

Investec PLC is an international specialist bank and asset manager.  The Group provides corporate and investment banking, private banking, securities trading, asset management, property trading and management and trade finance services. Dually-listed company with INL SJ.

Investec Limited is an international investment and private banking group. The Group provides corporate and investment banking, private banking, securities trading, asset management, property trading and management and trade finance services.  Dually-listed company with INVP LN.

IGM Financial, Inc. offers a variety of personal financial planning services. The Company provides mutual funds, Guaranteed Investment Certificates, insurance products, and mortgage loans.  IGM operates throughout Canada.

Janus Henderson Group plc operates as an investment management company. The Company provides investment advisors for equities, fixed income, property, and private equity sectors. Janus Henderson Group serves customers worldwide.

Hamilton Lane Incorporated provides private markets investment solutions. The Company conceives, structures, build outs, manages, and monitors portfolios of private markets funds and direct investments. Hamilton Lane operates worldwide.

Futu Holdings Limited operates as a holding company. The Company, through its subsidiaries, offers an online brokerage platform that enables individual investors to trade in listed stocks. Futu Holdings serves customers in the United States, China, and Hong Kong.

Singapore Exchange Limited owns and operates Singapore's Securities and derivatives exchange and their related clearing houses.  The Company also provides ancillary securities processing and information technology services to participants in the financial sector.

Haitong Securities Co., Ltd. is a securities firm which acts as a broker, dealer for securities. The Company also provides investment advisory, placing and underwriting, nominee and custodian services.

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Haitong Securities Co Ltd (H) (6837 HK)

(Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Haitong Int'l Securities (665 HK): Possible Offer From Parent

I think an Offer price >HK$1.00/share is a reasonable guesstimate. Recent results don't exactly engender confidence in a significant turnaround in...

David Blennerhassett

A-H Premium Weekly (Sep 22nd): Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium Corporation

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Wuapptec Co Ltd, Fuyao Glass Industry, Tianqi Lithium...

Ke Yan, CFA, FRM

HSCI Index Rebalance Preview: Low Probability Add in December

Only Keep (3650 HK) had a chance of being added to the HSCI in Dec. Coming in right at the cutoff, price moves over the next two weeks are...

Brian Freitas

Chinese Banks: New Asset Classification Rules | You Can Run but You Can't Hide

New asset classification rules have officially been announced. We see this as a long-term positive for the sector as regulators continue to bring...

Stanley Tsai, CFA

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