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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.</p><p>Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.</p><p>We see 28 potential inclusions to the HSCI at the rebalance and 15 potential deletions, plus another 7 close deletions. Only 10 of the potential deletions will be removed from Southbound Stock Connect buy list since the other deletions are either not a part of Stock Connect currently or have listed A-shares.</p><p>The inclusions to the HSCI outperformed the deletions at the March rebalance from review cut-off to announcement of the changes before giving by some of the gains to implementation and then some more for the 1 month post the implementation of the changes.</p>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.We see 28 potential inclusions to the HSCI at the rebalance and 15 potential deletions, plus another 7 close deletions. Only 10 of the potential deletions will be removed from Southbound Stock Connect buy list since the other deletions are either not a part of Stock Connect currently or have listed A-shares.The inclusions to the HSCI outperformed the deletions at the March rebalance from review cut-off to announcement of the changes before giving by some of the gains to implementation and then some more for the 1 month post the implementation of the changes.

HSCI Index Rebalance & Stock Connect: Expected Changes in September

<p>Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.</p><p>The June review will see the inclusion of stocks that were newly listed from 1 January to 31 March and meet the criteria for joining the index.</p><p>Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.</p><div><p>There are a lot of stocks that will join the HSCI and will subsequently be included as a part of the Southbound Stock Connect program - these stocks could be bought by mainland investors and could outperform their peers and the market.</p></div><div><p>There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list while some stocks will be deleted from the HSCI but maintained in Stock Connect since they have listed A-shares.</p></div><div><p>Read on for more details and the stocks affected by the changes.</p></div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.The June review will see the inclusion of stocks that were newly listed from 1 January to 31 March and meet the criteria for joining the index.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.There are a lot of stocks that will join the HSCI and will subsequently be included as a part of the Southbound Stock Connect program - these stocks could be bought by mainland investors and could outperform their peers and the market.There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list while some stocks will be deleted from the HSCI but maintained in Stock Connect since they have listed A-shares.Read on for more details and the stocks affected by the changes.

HSCI Index Rebalance and Stock Connect: Potential Changes in June and September

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>On the 18 December last year, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied (373 HK)</a> made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1218/2020121801069.pdf" target="_blank" rel="noopener">Offer</a> for 75%-held <a href="https://www.smartkarma.com/entities/shk-hong-kong-industries-ltd" target="_blank" data-smartkarma-citation="entities:2399:1" rel="noopener">Shk Hong Kong Industries (666 HK)</a>, by way of a Scheme, at $0.21/share (cash), a 50.00% premium to last close.  The Offer price is final. There is no headcount test as SHK is HK-incorporated.</p>
<p>The Scheme Document has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021001027.pdf" target="_blank" rel="noopener">despatched</a>. The Court Meeting will be held on the 12 March, and assuming Disinterested Shareholders approve the Scheme resolutions, payment is expected on the 3 May.</p>
<p>The IFA - Pelican Financial - considers the Offer terms to be "<em>fair and reasonable</em>". </p>
<p>This looks done.</p>
<p>As always, more below the fold.</p>

On the 18 December last year, Allied (373 HK) made an Offer for 75%-held Shk Hong Kong Industries (666 HK), by way of a Scheme, at $0.21/share (cash), a 50.00% premium to last close.  The Offer price is final. There is no headcount test as SHK is HK-incorporated.
The Scheme Document has now been despatched. The Court Meeting will be held on the 12 March, and assuming Disinterested Shareholders approve the Scheme resolutions, payment is expected on the 3 May.
The IFA - Pelican Financial - considers the Offer terms to be "fair and reasonable". 
This looks done.
As always, more below the fold.

SHK (666 HK): Scheme Doc Out, IFA Says Fair

<div>
<p>Briefly: on the 20 April, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied Group Limited (373 HK)</a> (AGL) made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0420/2020042001582.pdf" target="_blank" rel="noopener">Offer</a> for 75%-held <a href="https://www.smartkarma.com/entities/allied-properties-hk-ltd" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties Hk (56 HK)</a> (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close.  The Scheme Doc was despatched on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0618/2020061800579.pdf" target="_blank" rel="noopener">19 June</a>. The IFA opined the Offer was fair &amp; reasonable. Shareholders approved the Scheme on the 15 July. Then followed a bizarre delay wherein the judge <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1005/2020100502577.pdf" target="_blank" rel="noopener">refused to sanction</a> the Scheme, culminating in the Court of Appeals <a href="https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=132143&amp;currpage=T" target="_blank" rel="noopener">settling the matter</a>, and the Scheme became <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1124/2020112400688.pdf" target="_blank" rel="noopener">effective</a> on the 25 November. </p>
<p>This deal was extensively discussed on Smartkarma, beginning with <em><a href="https://skr.ma/p9urr" target="_blank" rel="noopener">Allied Prop (56 HK): Cash Offer From Parent</a></em>.</p>
</div>
<div>
<h3>The New News</h3>
<p>AGL has now made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1218/2020121801069.pdf" target="_blank" rel="noopener">Offer</a> for 75%-held <a href="https://www.smartkarma.com/entities/shk-hong-kong-industries-ltd" target="_blank" data-smartkarma-citation="entities:2399:1" rel="noopener">Shk Hong Kong Industries (666 HK)</a>, by way of a Scheme, at $0.21/share (cash), a 50.00% premium to last close.  The Offer price is final. SHK is HK-incorporated, therefore there is no headcount test.</p>
<p>Should the Scheme complete - and I see no specific hurdle why it will not - AGL would have privatised its two key holdings, and at 0.4x P/B, may well be the next take-private target. </p>
<p>More below the fold.</p>
</div>


Briefly: on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close.  The Scheme Doc was despatched on the 19 June. The IFA opined the Offer was fair &amp; reasonable. Shareholders approved the Scheme on the 15 July. Then followed a bizarre delay wherein the judge refused to sanction the Scheme, culminating in the Court of Appeals settling the matter, and the Scheme became effective on the 25 November. 
This deal was extensively discussed on Smartkarma, beginning with Allied Prop (56 HK): Cash Offer From Parent.


The New News
AGL has now made an Offer for 75%-held Shk Hong Kong Industries (666 HK), by way of a Scheme, at $0.21/share (cash), a 50.00% premium to last close.  The Offer price is final. SHK is HK-incorporated, therefore there is no headcount test.
Should the Scheme complete - and I see no specific hurdle why it will not - AGL would have privatised its two key holdings, and at 0.4x P/B, may well be the next take-private target. 
More below the fold.


SHK (666 HK): Allied Group Further Cleans House With Scheme Offer

<p>In Hong Kong's Court of Appeal this morning, the Court upheld the appeal concerning <a href="https://www.smartkarma.com/entities/allied-properties-h-k-limited" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties (H.K.) (56 HK)</a>'s Scheme, and concluded it would sanction the Scheme and confirm the reduction in capital. </p>
<p>The decision was reached in less than ten minutes, which provides some indication of the flawed decision on the <a href="https://www.smartkarma.com/compose/insight/45601/The%20reasons%20for%20their%20judgment%20%22will%20be%20handed%20down%20in%20due%20course%22." target="_blank" rel="noopener">9 October</a>.</p>
<p>The reasons for the court's judgment "will be handed down in due course". As the appeal submissions and the transaction of the three previous hearings had been studied by the judges prior to today's hearing, and given the celerity with which a decision was reached, it is possible the judgment may be issued within a day or so. </p>
<p>If today, then it is possible cheques under the proposal could be despatched by the 8 December.</p>

In Hong Kong's Court of Appeal this morning, the Court upheld the appeal concerning Allied Properties (H.K.) (56 HK)'s Scheme, and concluded it would sanction the Scheme and confirm the reduction in capital. 
The decision was reached in less than ten minutes, which provides some indication of the flawed decision on the 9 October.
The reasons for the court's judgment "will be handed down in due course". As the appeal submissions and the transaction of the three previous hearings had been studied by the judges prior to today's hearing, and given the celerity with which a decision was reached, it is possible the judgment may be issued within a day or so. 
If today, then it is possible cheques under the proposal could be despatched by the 8 December.

Allied Prop (56 HK): In High Court Today ...

Hong Kong

Allied Group Limited provides investment, finance and corporate management, and consultancy services.  The Company also trades securities, invests in and develops real estate properties and provides building management and maintenance services.

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

Allied Group (373 HK)

HSCI Index Rebalance & Stock Connect: Expected Changes in September

Currently we see 28 potential inclusions & 22 deletions from the HSCI at the Sep rebalance. Most of the inclusions will join Stock Connect while...

Brian Freitas

HSCI Index Rebalance and Stock Connect: Potential Changes in June and September

A look at the potential changes to the HSCI at the June & September reviews and stocks that could be included in/excluded from Stock Connect. These...

Brian Freitas

SHK (666 HK): Scheme Doc Out, IFA Says Fair

It's an okay spread for SHK - gross/annualised spread of 2.9%/14%. I like AGL - I think the Lee family will also privatise the company in the near...

David Blennerhassett

SHK (666 HK): Allied Group Further Cleans House With Scheme Offer

It's an attractive spread to terms here, but not a particularly liquid arb situation. I like AGL as it further simplifies its holdings. I think...

David Blennerhassett

Allied Prop (56 HK): In High Court Today ...

Logic prevailed. Appeal upheld. Scheme to be sanctioned. Possible payment early December. No closure on the erroneous headcount analysis.

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)