Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

Overweight EM Vs. EAFE; Dollar Weakness Continues

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 13 November. The constituent changes will be effective after the close of trading on 4 December.For the Hang Seng TECH Index, there are 2 inclusions and 2 exclusions.The inclusions are <a href="https://www.smartkarma.com/entities/ming-yuan-cloud-group" target="_blank" data-smartkarma-citation="entities:29268:1" rel="noopener">Ming Yuan Cloud Group (909 HK)</a> and <a href="https://www.smartkarma.com/entities/archosaur-games" target="_blank" data-smartkarma-citation="entities:28948:1" rel="noopener">Archosaur Games (9990 HK)</a>, while the deletions are <a href="https://www.smartkarma.com/entities/hengten-networks-group-ltd" target="_blank" data-smartkarma-citation="entities:3296:1" rel="noopener">HengTen Ltd (136 HK)</a> and <a href="https://www.smartkarma.com/entities/netdragon-websoft-inc" target="_blank" data-smartkarma-citation="entities:3703:1" rel="noopener">Netdragon Websoft (777 HK)</a>. One way turnover is 7.97% due to the inclusions/ exclusions, capping, and free float changes.Both inclusions have 0.67 days of ADV to buy, <a href="https://www.smartkarma.com/entities/hengten-networks-group-ltd" target="_blank" data-smartkarma-citation="entities:3296:1" rel="noopener">HengTen Ltd (136 HK)</a> has 0.6 days of ADV to sell, while <a href="https://www.smartkarma.com/entities/netdragon-websoft-inc" target="_blank" data-smartkarma-citation="entities:3703:1" rel="noopener">Netdragon Websoft (777 HK)</a> has 1 day of ADV to sell.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 13 November. The constituent changes will be effective after the close of trading on 4 December.For the Hang Seng TECH Index, there are 2 inclusions and 2 exclusions.The inclusions are Ming Yuan Cloud Group (909 HK) and Archosaur Games (9990 HK), while the deletions are HengTen Ltd (136 HK) and Netdragon Websoft (777 HK). One way turnover is 7.97% due to the inclusions/ exclusions, capping, and free float changes.Both inclusions have 0.67 days of ADV to buy, HengTen Ltd (136 HK) has 0.6 days of ADV to sell, while Netdragon Websoft (777 HK) has 1 day of ADV to sell.

Hang Seng TECH Index Rebalance: Two Changes as Assets Continue to Grow

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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Back on the 13 September 2019, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hammer Capital tabled a preliminary non-binding <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-announces-receipt-preliminary-non-binding-going-private" target="_blank" rel="noopener">proposal</a> for <a href="https://www.smartkarma.com/entities/bitauto-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:12004:1" rel="noopener">Bitauto Holdings Ltd Adr (BITA US)</a> at US$16/ADS, a ~20.6% premium to last close.
On the 12 June of this year, Bitauto <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-enters-definitive-agreement-going-private-transaction" target="_blank" rel="noopener">announced</a> it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in <a href="https://skr.ma/BkDTp" target="_blank" rel="noopener">Tencent's Potential Downstream Offer For Yixin</a> and <a href="https://skr.ma/dCrB8" target="_blank" rel="noopener">Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO</a>, the deal was done.
Bitauto shareholders <a href="https://ir.bitauto.com/static-files/e04db9da-f521-4630-9b28-4db300df73a7" target="_blank" rel="noopener">approved</a> the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.
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Bitauto owns ~43.72% of shares out in <a href="https://www.smartkarma.com/entities/yixin-group-ltd" target="_blank" data-smartkarma-citation="entities:26008:1" rel="noopener">Yixin Group Ltd (2858 HK)</a>. Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0615/2020061501449.pdf" target="_blank" rel="noopener">unconditional mandatory general</a> offer (MGO). The downstream Offer will be HK$1.9088/share.
The New News
All conditions to the Bitauto merger were fulfilled on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1106/2020110600073.pdf" target="_blank" rel="noopener">4 November</a>. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.
More below the fold.
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Back on the 13 September 2019, Tencent Holdings (700 HK) and Hammer Capital tabled a preliminary non-binding proposal for Bitauto Holdings Ltd Adr (BITA US) at US$16/ADS, a ~20.6% premium to last close.
On the 12 June of this year, Bitauto announced it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in Tencent's Potential Downstream Offer For Yixin and Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO, the deal was done.
Bitauto shareholders approved the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.


Bitauto owns ~43.72% of shares out in Yixin Group Ltd (2858 HK). Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an unconditional mandatory general offer (MGO). The downstream Offer will be HK$1.9088/share.
The New News
All conditions to the Bitauto merger were fulfilled on the 4 November. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.
More below the fold.









Yixin (2858 HK)’s Downstream Unconditional MGO

<a href="https://www.smartkarma.com/entities/get-nice-holdings-ltd" target="_blank" data-smartkarma-citation="entities:16415:1" rel="noopener">Get Nice Holdings (64 HK)</a> (GNH) has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0916/2020091601148.pdf" target="_blank" rel="noopener">announced</a> its Hung Hon Man (CEO), with 29.99%, has made a voluntary cash offer of HK$0.17/share, a tiny premium to the undisturbed price. The Offer is conditional on  Hung and Concert Parties holding more than 50% of the voting rights in GNH.
GNH holds 72.99% in Get Nice Financial (1469 HK) (GNF). Should the Offer for GNH turn unconditional, the Offeror would be obligated to make a downstream Offer for GNF. That Offer price will be HK$0.4726/share, a 33.44% discount to last close.
Chain Principle Offers invariably offer minimum to negative premiums - but the mechanics of how they are calculated are always worth a look. 
As always, more below the fold.

Get Nice Holdings (64 HK) (GNH) has announced its Hung Hon Man (CEO), with 29.99%, has made a voluntary cash offer of HK$0.17/share, a tiny premium to the undisturbed price. The Offer is conditional on  Hung and Concert Parties holding more than 50% of the voting rights in GNH.
GNH holds 72.99% in Get Nice Financial (1469 HK) (GNF). Should the Offer for GNH turn unconditional, the Offeror would be obligated to make a downstream Offer for GNF. That Offer price will be HK$0.4726/share, a 33.44% discount to last close.
Chain Principle Offers invariably offer minimum to negative premiums - but the mechanics of how they are calculated are always worth a look. 
As always, more below the fold.

Get Nice (64 HK)'s VGO. Possible Downstream Offer For Get Nice (1469 HK)

Last Week in Event SPACE: Toshiba, Softbank, Cardinal Resources, Sembcorp, Intouch, SingTel, 58.Com

China

Yixin Group Limited offers an online automobile finance transaction platform. The Company provides loan facilitation, car rental, and other services. Yixin Group operates in China.

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Yixin Group (2858 HK)

Overweight EM Vs. EAFE; Dollar Weakness Continues

Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS...

Vermilion Research

Hang Seng TECH Index Rebalance: Two Changes as Assets Continue to Grow

The first review of the Hang Seng TECH index has 2 inclusions and 2 deletions. Assets benchmarked to the index are north of US$1.1bn and will...

Brian Freitas

Yixin (2858 HK)’s Downstream Unconditional MGO

With Tencent at the helm, investors are playing the back-end. You effectively have a hard floor (or put) on the stock through to early December....

David Blennerhassett

Get Nice (64 HK)'s VGO. Possible Downstream Offer For Get Nice (1469 HK)

Get Nice Holdings (64 HK)has announced its major shareholder, with

David Blennerhassett

Last Week in Event SPACE: Toshiba, Softbank, Cardinal Resources, Sembcorp, Intouch, SingTel, 58.Com

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

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