Event-Driven

Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.

REA’s Improved Terms For Rightmove

Rightmove PLC (RMV LN), UK’s largest real estate portal, has twice rejected REA Group Ltd (REA AU) cash/scrip non-binding Offers this month.
REA has upped terms to 341 pence + 0.0422 new REA shares per Rightmove share, or 770p/share, a 39% premium. If completed, Rightmove’s shareholders would own ~20.1% of the MergeCo.
Thrice rejected? I think Rightmove should engage. REA also has until the 30th September to make a formal Offer. Or walk away.

Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp

The new 100% mandatory tender offer rule could push buyers to lower premiums for major shareholders, potentially increasing hostile takeover attempts as costs get shared with minority shareholders.
It looks like MBK is eyeing this situation as a chance to redefine their strategy. This really shows how serious MBK is about the Korea Zinc deal.
Watch for top-tier assets available via hostile takeovers, particularly companies like SK Inc and Lotte Corp, where low shareholder stakes may lead to management conflicts.

What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?

In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.

NSL Ltd (NSL SP): YTL’s Unconditional Offer

Back on the 23rd July, YTL Cement entered into a S&P agreement with 98 Holdings to acquire a 81.24% stake in building material manufacturing/supplier NSL Ltd (NSL SP) at S$0.75/share.
Pre-Conditions are now satisfied, and YTL Cement has launched a mandatory unconditional cash Offer. The Offer price is also S$0.75/share.
Super straightforward deal. And will trade tight to – or through terms. YTL’s intention is to maintain NSL’s listing.

REA/Rightmove: Third Proposal Seems Close to Fair Value

By Jesus Rodriguez Aguilar

The Board of Rightmove PLC (RMV LN) will consider REA Group Ltd (REA AU)‘s third proposal (implied value of 770p/share, 39% premium, 20.4x EV/NTM EBITDA, 28x Fwd P/E).
Using 21.3x NTM EBITDA (comps) would indicate fair value of 805p, 4.5% increase to current offer, implying 29.3x P/E, although proforma leverage would increase to 3.6x.
REA has not stated that the offer is final. Rightmove investors and Board may require further persuasion, as the implied probability of deal success is just 58%.

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Sep 23

Daily Brief Event-Driven: Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
PKSHA Tech (3993 JP) – TOPIX Inclusion in October 2024
Tech M&A: Qualcomm for Intel? No Chance. Here’s Why.
CELSYS (3663 JP) Finally Makes It to Prime Time (TOPIX Inclusion Next Month)
EQD / NSE Vol Update / IVs Ride the Fed Seesaw
Quiddity Leaderboard CSI Medical Dec 24: 5 Changes Possible; Exp ADDs yet to Outperform Exp DELs
Ain Shifts Focus with FrancFranc Acquisition

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price

MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.

KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical

HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS).
Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.

Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK).
Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP).

STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?

90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

PKSHA Tech (3993 JP) – TOPIX Inclusion in October 2024

PKSHA is an AI company. It was before this year, and got a boost this past spring. The stock price rose 60% in two weeks in February and March 2024.
Then it fell more than 50%. Back to late 2023 levels. High growth, growing into its valuations. Now moving to TSE Prime this week, TOPIX next month.
Impact in days of ADV is lower than impact in Real World Float metrics. There are lots of day-traders. This probably has legs.

Tech M&A: Qualcomm for Intel? No Chance. Here’s Why.

By Neil Campling

SAMR would draw out review process for too long for a deal to be approved
Intel faces an existential crisis and even the new Foundry division has issues
A theoretical deal would have little financial synergy and destroy Qualcomm’s gross margins

CELSYS (3663 JP) Finally Makes It to Prime Time (TOPIX Inclusion Next Month)

12 days ago, Janaghan Jeyakumar, CFA published his September version of TOPIX Inclusions: Who Is Ready (September 2024). His chosen name was CELSYS (3663 JP), a long-time TSE-Prime inclusion bet.
This week on the 18th, they announced they were going to enter TSE Prime on 25 September. This was a somewhat well-known known. They were interested and had been.
The stock popped 15% the next day. It’s a small cap, but there is a lot of float.

EQD / NSE Vol Update / IVs Ride the Fed Seesaw

By Sankalp Singh

IVs seesawed through the week on account of the Fed meeting. Trading up to 12.7% going into the meeting & selling-off to 11.4% thereafter.
Vol-Curve Term-structure in Contango post Fed meeting – Nifty50 vol curve sheds its inversion & BankNifty vol curve loses its kinked-shape
BankNifty Smile & Skew characteristics extend relative to previous weeks – despite falling IVs & strengthening index.

Quiddity Leaderboard CSI Medical Dec 24: 5 Changes Possible; Exp ADDs yet to Outperform Exp DELs

CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
We expect up to five ADDs and five DELs for the CSI Medical Service index during this index review event based on the latest available data.

Ain Shifts Focus with FrancFranc Acquisition

By Michael Causton

Ain is best known for running prescription pharmacies but also has a lifestyle-oriented cosmetics chain called Ainz & Tulpe.
Without this, the acquisition of FrancFranc would look odd, but the merger of the two will create genuine synergies and a lifestyle business targeting women in their 20s and 30s.
The move makes sense given the pressure on margins in drug dispensing, Ain’s main business.

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Sep 22

Daily Brief Event-Driven: Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF
(Mostly) Asia-Pac M&A: TCM, Auswide, Latin Resources, Platinum Asset, Trancom, Pacific Smiles
Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc
Quiddity Leaderboard ChiNext Dec 24: East Group Intra-Review Deletion Causes Changes to Expectations
Quiddity Leaderboard STAR 50/100 Dec 24: STAR 50 Exp ADD Could Outperform STAR 50 Exp DEL
Weekly Deals Digest (22 Sep) – Fuji Soft, Elan, Trancom, Seven & I, China TCM, Platinum, K Bank

Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF

This KODEX Samsung Group ETF sees 30% AUM outflows pre-rebalancing, with the same chunk flowing back in after, especially noticeable during December.
Over three years, local brokers sold stock baskets before rebalancing, causing notable price impacts. During this time, Samsung affiliates in the ETF delivered 3-4% returns.
ChatGPT said:ChatGPTThis isn’t typical NAV arbitrage; it’s likely an unhedged play. Nonetheless, given the consistent price impact and accessible stock futures, it’s worth considering.

(Mostly) Asia-Pac M&A: TCM, Auswide, Latin Resources, Platinum Asset, Trancom, Pacific Smiles

I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals: scrip mergers forAuswide Bank (ABA AU), Latin Resources (LRS AU) & Platinum Asset Management (PTM AU); and the Tender Offer for Trancom Co Ltd (9058 JP).
Key updates took place on: Pacific Smiles (PSQ AU), China TCM (570 HK), Greatview Aseptic Packaging (468 HK), Shin Kong Financial Holding (2888 TT), and Seven & I Holdings (3382 JP).

Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc

Stay long Shin Kong Financial Holding (2888 TT) and buy more, or get long. CTBC Financial Holding (2891 TT) may make a better run at it, and may even bump.
It’s a hard to be bearish Swire Pacific (A) (19 HK) at 0.34x P/B. Yet the Hong Kong property market remains a challenging space. To put it mildly.
Seven & I Holdings (3382 JP) saw breathless news articles suggesting a foreign takeover became more difficult. Not really.

Quiddity Leaderboard ChiNext Dec 24: East Group Intra-Review Deletion Causes Changes to Expectations

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.

Quiddity Leaderboard STAR 50/100 Dec 24: STAR 50 Exp ADD Could Outperform STAR 50 Exp DEL

STAR 50 index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the December 2024 index rebal event.

Weekly Deals Digest (22 Sep) – Fuji Soft, Elan, Trancom, Seven & I, China TCM, Platinum, K Bank

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: K Bank (279570 KS) has launched an IPO to raise up to US$734 million.
Event-Driven developments: Fuji Soft Inc (9749 JP), Elan Corp (6099 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP), China Traditional Chinese Medicine (570 HK).

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Sep 21

Daily Brief Event-Driven: Fuji Soft (9749) – As Bain Prepares to Go Higher and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower
Young Poong Precision (036560 KS) Also Now Trading Through Terms
Details of MBK’s Four Major Concerns on Management of Korea Zinc
Tokyo Metro (9023 JP): IPO Listing & Fast-Entry Approved
Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
Brookfield/Grifols: Recap and Analysis of Latest Developments
EQD | HSI September Rally: What’s Next?

Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower

Yesterday, KKR amended its plans to take over Fuji Soft Inc (9749 JP) by creating a Two-Tender Scheme, effectively lowering the threshold for eventual success through clearly coercive tactics.
3D (23.46%) and Farallon (9.22%) had already tendered. Contractual terms make it difficult (not impossible) to withdraw. Assuming it goes through, KKR has 32.68%, quasi-negative control.
This revised structure is clearly abusive of minorities and NOT the deal Fuji Soft signed. This should cause Fuji Soft to Change their Opinion. Shareholder (and Bain) Pressure would help.

Young Poong Precision (036560 KS) Also Now Trading Through Terms

On the 13th September, MBK joined Young Poong (000670 KS) in seeking control of Korea Zinc (010130 KS) via Partial Tender Offers for KZ and Young Poong Precision (036560 KS).
This situation has been canvassed by analysts here at Smartkarma; with increasing expectation the Choi family makes a counterbid.
This insight analyses the fair value of YPP. No matter how you slice it, the Offer Price is punchy. Perhaps not punchier enough.

Details of MBK’s Four Major Concerns on Management of Korea Zinc

In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.

Tokyo Metro (9023 JP): IPO Listing & Fast-Entry Approved

By Dimitris Ioannidis

Tokyo Metro (TKYMETRO JP) is scheduled to go public on 23 October 2024 with an IPO valuation of ~$4.4bn and a float market cap of ~$2.2bn.
Fast-Entry for the one Global Index is expected at the close of 29 October 2024 with forecasted demand of ~17.4m shares and ~$133m.
Quarterly inclusion at the May 2025 review has a higher probability with a slight price rally or an elevated IPO offering price. Forecasted demand is ~23.2m shares and ~$177m.

Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?

Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.

Brookfield/Grifols: Recap and Analysis of Latest Developments

By Jesus Rodriguez Aguilar

Since Brookfield’s July 8 takeover interest for Grifols was announced, the situation has become complicated, with unclear pricing, funding challenges, and uncertainty about whether an offer will materialize or when.
Grifols operates in a consolidated plasma-derived therapies market with high entry barriers, and its current valuation of 8.6x NTM EBITDAe significantly undervalues it compared to CSL’s 19.2x.
B shares closed on September 20 in Madrid at a 17.3% discount to A shares. Paying this spread would be my favored approach to gain exposure to a potential offer.

EQD | HSI September Rally: What’s Next?

By Nico Rosti

We continue our coverage of the Hang Seng Index : in our previous insight we theorized a continuation of the rally in September.
So far the index is following the path outlined (pullback, then rally). What is going to happen in the next few weeks, if September closes up?
Broadly speaking we see a potential continuation of the rally in October, but there may be some resistance in the short-term.

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Sep 20

Daily Brief Event-Driven: Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure
M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt
Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer
GAPack (468 HK): SAMR Rests On XJF’s Filing
Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc
Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal
Main Takeaways from Today’s MBK Press Briefing About the Korea Zinc Tender
Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar

Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender

KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition.
The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.

Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure

With the 15% ownership cap complicating buybacks, Samsung Fire’s more likely to roll out a dividend-focused value-up play instead.
They’ve flagged a mix of shareholder returns and investments, but the big question is how much will be funneled into returns this year.
If Samsung Fire hits a 50% shareholder return this year, DPS could jump to ₩23,000–₩25,000 with a 6.5% yield, potentially boosting the stock price by 20–30%.

M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)

M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH.
There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily.

StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt

Swire Pacific (19 HK) is coming up “cheap” on my monitor vs. Swire Properties (1972 HK) and Cathay Pacific (293 HK), after Cathay settles its Hong Kong government tab.
Preceding my comments on Swire and Cathay 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%.

Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer

Elan Corp (6099 JP) announced a partial tender offer and capital and business agreement with M3 Inc (2413 JP). M3 aims to make Elan a consolidated subsidiary.
The offer is for a minimum of 30.4 million (50.10% ownership ratio) and a maximum of 33.3 million shares (55.00% ownership ratio) at JPY1,040, 24.0% premium to the undisturbed price.
Irrevocable from tendering shareholders will satisfy the minimum acceptance condition. The offer is unremarkable, suggesting a final proration materially above the minimum of 56.07%.

GAPack (468 HK): SAMR Rests On XJF’s Filing

China’s State Administration for Market Regulation has formally accepted Shandong Xinjufeng Technology (301296 CH) (XJF)’s filing. That’s positive. SAMR previously okayed XJF’s initial 28.22% stake from Jardine Matheson (JM SP).
No new update on co-founders Jeff Bi and Gang Hong’s non-binding Offer.
Separately, the EGM requisitioned by XJF to appoint two XJF-friendly directors progresses.

Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc

Hankyung Business Daily reported that Korea Investment Securities (KIS) is in a serious discussion with the Choi family of Korea Zinc to step up as a white knight.
KIS/Choi family are considering a plan to launch a counterbid against Jang family and MBK by investing around 2 trillion won+ along with other private equity funds.
It is probable that tender offer price of Korea Zinc could be raised by 15-25% due to a likely counterbid and current price trading 7% higher than tender offer price.

Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal

The key issue is if KIS can form a consortium. PEFs are saying the timeline is too tight and are concerned about the unclear exit strategy.
To make this work, PEFs need Choi’s 15.65% Korea Zinc stake as collateral, but much of it is already tied up, limiting cash-raising potential.
They’ll likely continue to leak news to boost the price and buy time. But this will also push MBK to sweeten their offer sooner.

Main Takeaways from Today’s MBK Press Briefing About the Korea Zinc Tender

MBK’s funding plan for Korea Zinc involves using ₩1T from their 6th Buyout Fund and the rest via debt. This setup leaves room to potentially increase the tender price.
The key question is if there’s enough upside at this price. MBK’s silence on abandoning Youngpoong suggests they’re unlikely to fully bail on Korea Zinc even if the tender fails.
With MBK’s strategy leaked, institutions may hesitate, fearing less price drop risk, suggesting a proxy battle could heat up. We should consider spread trading and post-tender price moves.

Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar

CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
Since our last insight in August, there has been a sharp increase in reported AUMs tracking CSI 300 and CSI 500. This has caused our flow expectations to rise sharply.

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Sep 19

Daily Brief Event-Driven: Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event
Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?
MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible
Beijing Fourth Paradigm US$1.1bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity
JSE Sep24 Rebal: Foreign Inward Listings Amongst Top Sells, PPH to Enter Top 40, AMS to Be Deleted

Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event

As of today, it’s clear Choi is struggling to secure white knights, pushing him to double down on political lobbying to stay in the game.
Choi’s aiming for the National Pension Service’s 7.57% voting rights, but with its legal neutrality, the chances of it caving to political pressure are slim.
MBK’s statement today shows confidence that Choi won’t get Fair Trade Commission approval, and that, like Hanwha and LG, Hyundai Motor won’t back him either.

Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?

In late August, Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) agreed to merge in what appeared to be a hastily papered deal discussed here.
CTBC Financial Holding (2891 TT) put forth its own proposal at a big premium. Shin Kong traded up. Both deals need FSC approval. Taishin’s deal has a vote 9 October.
Taishin recently upped terms. And now the FSC has said “no” to CTBC’s proposal. But it’s weird. It’s not “NO”; more like, “not this.” Bit of a sticky wicket here.

MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted

Back on the 19th August, MyState Ltd (MYS AU), Tasmania’s biggest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
Under the terms, MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the combined group.
This is done and is expected to be wrapped up in December. Today is the last day of trading for Auswide cum-FY24 final dividend.

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
We expect up to four ADDs and five DELs for the KOSPI 200 index during this index rebal event based on the latest available data. And we have a trade.

Beijing Fourth Paradigm US$1.1bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity

By Clarence Chu

Beijing Fourth Paradigm Technology (6682 HK) was listed in Hong Kong on 28th Sept 2023 after raising US$130m. Its one-year lockup will expire on 27th Sept 2024.
Beijing Fourth Paradigm is a platform-centric AI enterprise solutions provider. It was the largest player by revenue in the platform-centric decision-making AI market in China in 2022, as per CIC.
In this note, we will talk about the lock-up dynamics and updates since our last note.

JSE Sep24 Rebal: Foreign Inward Listings Amongst Top Sells, PPH to Enter Top 40, AMS to Be Deleted

By Charlotte van Tiddens, CFA

On Friday in the closing auction, JSE indices will be rebalanced. PPH will enter the Top 40, with AMS falling out.
There are also a number of changes to the ALSI index – PHP & PMR will be added, with THA & TCP falling out.
Hedgers and passives tracking uncapped indices will be sellers of Naspers and Prosus whereas those tracking the capped variants will be buyers.

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Sep 18

Daily Brief Event-Driven: Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
Platinum (PTM AU): Regal’s Indicative Offer
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
TCM (570 HK): Inching Towards Regulatory Sign-Off
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea
Platinum Investment Mgmt (PTM AU): Regal Partners’ Indicative Offer
European Governments’ Bank Sell-Off: Boosting Confidence and Occasionally Free Float
Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report

Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid

Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.

Platinum (PTM AU): Regal’s Indicative Offer

Platinum Asset Management (PTM AU) has confirmed, and is “considering the merits” of an unsolicited confidential, non-binding, indicative proposal from Regal Partners (RPL AU).
Regal has offered, by way of a Scheme, 0.274 Regal shares for every Platinum share. A $0.24/share special dividend is permitted, and added. Regal holds an estimated 5.1% stake.
With funds under management down 27% yoy, a merger with Regal is just the tonic for Platinum’s long-suffering investors. Founder Kerr Neilson, holding 21.7%, will have the final say.

ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)

Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.

TCM (570 HK): Inching Towards Regulatory Sign-Off

In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.

Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index

KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.

Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300

Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively.
The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples.
While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.

NAV Valuation of Young Poong Precision and A Case Study for Future Tender Offers in Korea

Our NAV valuation of Young Poong Precision suggests NAV of 325 billion won or NAV per share of 20,657 won which is 70% higher than current price.
Young Poong Precision tender offer could become one of the most important case studies for future tender offers in Korea.
The biggest component of the NAV is Young Poong Precision’s 1.85% stake in Korea Zinc which is worth 255 billion won (133% of its current market cap).

Platinum Investment Mgmt (PTM AU): Regal Partners’ Indicative Offer

Platinum Asset Management (PTM AU) confirmed it received a non-binding indicative proposal from Regal Partners (RPL AU) at 0.274 RPL shares per PTM share + special dividend of A$0.24.
The implied offer price of A$1.14 per share based on Regal’s undisturbed price of A$3.30 per share is a 15.6% premium to the undisturbed price of A$0.99 (16 September).
Despite the modest takeover premium, the offer is attractive compared to historical and peer multiples. Expect the Board to engage to facilitate an improved binding proposal.

European Governments’ Bank Sell-Off: Boosting Confidence and Occasionally Free Float

By Dimitris Ioannidis

AIB Group (AIBG IE) is expected to experience an increase in free float from 75% to 80% in November 2024 due to the Irish Government reducing its stake this month.
Commerzbank AG (CBK GR) is forecasted to have a ~2% points free float decrease in Global and European Indices as UniCredit bought more than what the German Government sold.
The UK Government continues slashing its stake in NatWest Group (NWG LN) with potential further free float increases coming in November and December 2024.

Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report

By Jesus Rodriguez Aguilar

Since mid-August, share-price spreads have generally widened across our European liquid universe of ordinary and preferred shares (13 have tightened, 4 widened, 2 remained at same level).
Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe, Sixt.
Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.

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Sep 17

Daily Brief Event-Driven: Auckland Airport (AIA NZ) Placement: Index Impact and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Auckland Airport (AIA NZ) Placement: Index Impact
Seven & I Holdings (3382 JP): Core Designation Does Not Change Couche-Tard’s Calculus
Insights on the Odds of MBK Ramping up the Tender Price by 20%
Latin Resources (LRS AU)’s Scheme With Pilbara Minerals
Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
EQD | The Nikkei 225’s Trend Is Not Looking Good
Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer

Auckland Airport (AIA NZ) Placement: Index Impact

Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.

Seven & I Holdings (3382 JP): Core Designation Does Not Change Couche-Tard’s Calculus

On 13 September, the Ministry of Finance of Japan added 7&I to a list of “core” designated companies based on results of voluntary inquiries to all listed companies.
Several media reports suggest that the change in 7&I’s designation to core would complicate the proposed acquisition by Alimentation Couche-Tard (ATD CN). The core designation will not change Couche-Tard’s strategy.
The change to 7&I’s designation to core will paradoxically push Couche-Tard to firm up its revised offer. An undemanding valuation protects the downside of a no-deal situation.

Insights on the Odds of MBK Ramping up the Tender Price by 20%

MBK can cut their target volume to 12% and, with 2 trillion won, raise the tender price to ₩800,000, leaving them a 20% cushion.
MBK’s tight schedule aims to hit the 6.98% target while minimizing price volatility and market risk by shortening the offer window.
MBK plans to sweeten the deal by about 20%, similar to Hankook, aiming for a 6.98% target with a 20% price hike from the start.

Latin Resources (LRS AU)’s Scheme With Pilbara Minerals

Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with significantly larger peer, Pilbara Minerals (PLS AU). Timing appears fortuitous.
PLS is offering 0.07 new PLS shares for each LRS share held. LRS shareholders will own ~6.4% of the combined entity. LRS’ largest shareholder, José Luis Manzano (7.9%), is supportive.
The scrip terms back out an implied price of A$0.20/share or a 67% premium to last close. This is done. And trading accordingly. Expected implementation late November, early December.

Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term

By Sumeet Singh

Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.

EQD | The Nikkei 225’s Trend Is Not Looking Good

By Nico Rosti

Although the Nikkei 225 INDEX was rallying strong early in the year, from mid-March the rally started to falter, and after a fake recovery into July, it fell again, lower.
Should the index go lower from last week’s Close at 36581.76, the next paragraphs of this insight will indicate what price levels are strong support to buy.
The only doubt we have is that the index’s overall trend does not look good. A correction to 33000 (or lower) is a possibility – a negative YEARLY performance.

Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer

After Crescent Capital ‘s National Dental Care’ (NDC) A$2.05/share Offer, by way of Scheme, failed on the 9 August. it was just a question of when Genesis re-loaded its Offer.
Genesis has now announced a A$1.90/share off-market Offer ( its 29 July A$1.90/share approach was a Scheme), conditional on a 90% minimum acceptance. Pricing falls within the IE’ fair value range.
Pacific Smiles (PSQ AU)‘s board previously gave unanimous support for NDC’s prior A$1.90/share Offer. The question is whether the 90% hurdle is met. I think it will.

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Sep 16

Daily Brief Event-Driven: The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard
Quiddity Leaderboard HSTECH Dec 24: One Change Possible; US$538 Capping Flows One-Way
MV Australia A-REITs Index Rebalance: Ingenia Communities Deleted
Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat
Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac
MV Australia Equal Weight Index Rebalance: One Add, Two Deletes, Capping to Drive Flow
MV Global Rare Earth/Strategic Metals Index Rebalance: One Deletion & Other Changes

The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard

On Friday 13 September, the Ministry of Finance of Japan released revisions to the list (Japanese, English) of company classifications under the Foreign Exchange and Foreign Trade Act (FEFTA)
It appears 72 names were newly upgraded to “Core” (“3”), 21 newly listed companies (since the last list in Nov 2021) were labeled “3”, and six lost their Type3 designation.
Seven & I Holdings (3382 JP) saw breathless news articles Friday suggesting a foreign takeover became more difficult. Not really.

Quiddity Leaderboard HSTECH Dec 24: One Change Possible; US$538 Capping Flows One-Way

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
At present, we see one ADD and one DEL. If this index change takes place, there could be US$538mn capping flows one-way.

MV Australia A-REITs Index Rebalance: Ingenia Communities Deleted

Ingenia Communities (INA AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in September. There are float changes and capping changes too.
Estimated one-way turnover is 2.9% and will result in a one-way trade of A$19m.
After declining over the last year, shorts have started to tick higher in Ingenia Communities (INA AU).

Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.
Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.
The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.

Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Raysum Co Ltd (8890 JP), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), China Traditional Chinese Medicine (570 HK).
Lowest spreads: Fuji Soft Inc (9749 JP), Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Tohokushinsha Film (2329 JP), Alps Logistics (9055 JP).

MV Australia Equal Weight Index Rebalance: One Add, Two Deletes, Capping to Drive Flow

Pro Medicus Ltd (PME AU) will be added to the MV Australia Equal Weight Index while IGO Ltd (IGO AU) and nib holdings (NHF AU) will be deleted.
Constituent changes, float changes and capping changes result in a one-way turnover of 6.9% leading to a round-trip trade of A$330m.
Shorts are pretty big in Pro Medicus Ltd (PME AU) while there has been a recent spike in short interest for IGO Ltd (IGO AU).

MV Global Rare Earth/Strategic Metals Index Rebalance: One Deletion & Other Changes

Sayona Mining (SYA AU) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close of trading on 20 September.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 5.7% and in a round-trip trade of US$35m.
The largest inflows will be in Eramet, Tronox and Lithium Americas Argentina while the largest outflows will be from Lynas Corp, Sayona Mining and MP Materials (MP US).

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Sep 15

Daily Brief Event-Driven: MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec
HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!
China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass
A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance
Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.

MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in September but there are a lot of float and capping changes.
TSMC – ADR and NVIDIA are the largest sells with buying spread across ASML Holding NV, Qualcomm Inc, Applied Materials and Micron Technology.
The selling in NVIDIA Corp (NVDA US) will add to the selling from the Technology Select Sector SPDR (XLK US) due to the market consultation.

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal

Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high.
This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.

(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals: Hotel Property (HPI AU), Guotai (1788 HK)/Haitong (6837 HK), Joban Kosan (9675 JP), Dyna Mac (DMHL SP), Korea Zinc (010130 KS)/Young Poong Precision (036560 KS), Hulic (3003 JP).
Key updates took place on Namoi Cotton Co Operative (NAM AU), Seven & I Holdings (3382 JP), Fuji Soft (9749 JP), Descente (8114 JP), & Silverlake Axis (SILV SP).

Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec

Alibaba Group Holding (9988 HK) was (finally) included in the Shanghai/Shenzhen-HK Connect programs; on the same day a Cayman court uplifted a BABA dissenter’s merger price by 659%.
MBK has teamed up with Young Poong (000670 KS) to secure control of Korea Zinc (010130 KS) via Partial Tender Offers for Korea Zinc and Young Poong Precision (036560 KS)
Like all long-dated arbs, Shinko Electric (6967 JP) is really about buying dips, then lightening up when it gets tighter, as long as the opinion about eventual result/path is unchanged.

HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!

SOUTHBOUND was a net buyer this week. Over five days, it was +HK$12.5bn on high gross volume, but all of that net buying was on Alibaba Group Holding (9988 HK).
Alibaba Group Holding (9988 HK) became SOUTHBOUND-eligible on Tuesday, and mainland buyers bought US$2.1bn of BABA shares, more than total SOUTHBOUND net buys.
Gross volumes were highest in months. This was a big week. Even bigger than just BABA. After BABA the story was banks buying.

China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

By Xinyao (Criss) Wang

Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.

A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance

Repeat of last week: Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. But SOUTHBOUND gross volumes way up.
AH Premia rose slightly as HK-listed shares outperformed mainland share indices. The HK/mainland spread is consistently better than H/A performance. It’s not clear why. This week no exception.
This week will see limited H/A action because of the long Mid-Autumn Festival. Hopes are high for non-durables purchases this month. Maybe even homes. But I am skeptical…

Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way