Category

Event-Driven

Jan 03
0

Daily Brief Event-Driven: HSCEI Index Rebalance Preview: Handling Treatment & Changes in March and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
  • NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
  • Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
  • HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
  • Align Partners Goes Activist on Seven Banking Group Companies in Korea
  • Merger Arb Mondays (02 Jan) – Toyo Construction, Origin Energy, Warrego, Nitro, Fengxiang
  • PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: OZ Minerals, Warrego, Shandong Fengxiang, Toyo Construction

HSCEI Index Rebalance Preview: Handling Treatment & Changes in March

By Brian Freitas

  • We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
  • The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
  • If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.

NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In

By Brian Freitas

Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)

By Travis Lundy

HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover

By Brian Freitas

  • We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
  • Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK). 
  • Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.

Align Partners Goes Activist on Seven Banking Group Companies in Korea

By Douglas Kim

  • On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
  • According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
  • Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. 

Merger Arb Mondays (02 Jan) – Toyo Construction, Origin Energy, Warrego, Nitro, Fengxiang

By Arun George

PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow

By Brian Freitas

(Mostly) Asia-Pac Weekly Risk Arb Wrap: OZ Minerals, Warrego, Shandong Fengxiang, Toyo Construction

By David Blennerhassett

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Jan 02
0

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
  • KOSPI200 Index Rebalance Preview (June): Changes from Now to June
  • KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In
  • Hong Kong CEO & Director Dealings (1 Jan): APAC Resources, Ausnutria, Pharmaron, Joinn Laboratories

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation

By Brian Freitas

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

By Brian Freitas

  • A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
  • There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
  • Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.

KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In

By Brian Freitas

  • One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX). 
  • One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
  • The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.

Hong Kong CEO & Director Dealings (1 Jan): APAC Resources, Ausnutria, Pharmaron, Joinn Laboratories

By David Blennerhassett

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Jan 01
0

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: Meituan and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

By Brian Freitas

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Dec 31
0

Daily Brief Event-Driven: Last Week in Event SPACE: Toyo and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Last Week in Event SPACE: Toyo, Takashimaya/H2O, Skyworth, Shandong Fengxiang, O2Micro
  • End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

Last Week in Event SPACE: Toyo, Takashimaya/H2O, Skyworth, Shandong Fengxiang, O2Micro

By David Blennerhassett

  • YFO has played a relatively upfront game for Toyo Construction (1890 JP) – badly at first, then better. 
  • With Takashimaya (8233 JP) and H2O (8242 JP) now more secure and cross-shareholdings more problematic, they will sell off their equity in each other but continue to work on joint projects.
  • Skyworth Group Limited (751 HK)‘s latest buyback offers a minimum proration of 7.8%, although applying the last buyback two years ago, it’s likely to be 13%+.

End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

By Douglas Kim

  • We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.
  • These 57 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. 
  • Among these 57 stocks, the top 5 market cap stocks include Sungeel Hitech, HPSP, CJ CGV, Sillajen, and Eoflow. 

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Dec 30
0

Daily Brief Event-Driven: O2Micro Trading Wide To Terms Ahead Of Shareholder Vote and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • O2Micro Trading Wide To Terms Ahead Of Shareholder Vote
  • Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date
  • JPX-Nikkei 400 Rebal 2023: End-Dec 2022
  • MergerTalk: Regulators May Be Hard Pressed To Prove The Amazon/IRobot Deal Harmful To Competition

O2Micro Trading Wide To Terms Ahead Of Shareholder Vote

By David Blennerhassett

  • Back on the 30 September, O2Micro International (OIIM US), an integrated circuits play, announced a definitive privatisation from management at US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • An EGM will take place on the 31 January. The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. 16.9% of shares out are supportive. 
  • This Offer is expected to close in the 1Q23. The IFA considers the Offer fair. 

Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date

By Sanghyun Park

  • This year is less intense compared to previous years. However, given this year’s overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.
  • Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL’s tax avoidance-driven selling flow.
  • The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.

JPX-Nikkei 400 Rebal 2023: End-Dec 2022

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
  • Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-December 2022.

MergerTalk: Regulators May Be Hard Pressed To Prove The Amazon/IRobot Deal Harmful To Competition

By Robert Sassoon

  • Amazon’s pursuit of robotic vacuum manufacturer iRobot is being scrutinized by the FTC,  a merger which we think the regulator will be hard pressed  to prove is harmful to competition.
  • However, although unlikely, the pending ruling next month on the FTC’s unusual lawsuit against Meta’s acquisition of virtual reality start-up Within  could rewrite regulatory guidelines for vertical mergers 
  • The 27% spread offers a potentially lucrative trade generating double-digit IRR even if deal completion is delayed by regulatory review, although it might be wise to entertain some  downside protection

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Dec 29
0

Daily Brief Event-Driven: Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
  • Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market

By David Blennerhassett

  • The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
  • Shareholders who tender will be paid within 7 business days. 
  • An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

By Brian Freitas

  • Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
  • The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
  • Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

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Dec 28
0

Daily Brief Event-Driven: Another Skyworth (751 HK) Partial Buyback and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Another Skyworth (751 HK) Partial Buyback
  • Launching KRX CSI Joint EV & Semiconductor ETFs

Another Skyworth (751 HK) Partial Buyback

By David Blennerhassett

  • Skyworth Group Limited (751 HK) has announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.  
  • On 17 June 2020, Skyworth announced a partial buyback – 12.83% of shares out or 392.8mn shares, at HK$2.80/share, a 32.1% premium to last close. 
  • Upon successfully completing this partial offer, Stephen Wong & concert parties would hold >50%, prior to the excise of any outstanding options. 

Launching KRX CSI Joint EV & Semiconductor ETFs

By Sanghyun Park

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Dec 27
0

Daily Brief Event-Driven: Toyo Construction (1890) Investors/Traders Beware and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toyo Construction (1890) Investors/Traders Beware
  • Takashimaya and H2O Cancel Tie-Up
  • XXXLutz Consortium/​Home24: Additional Acceptance Period

Toyo Construction (1890) Investors/Traders Beware

By Travis Lundy

  • On 13 December, Toyo Construction (1890 JP) suitor YFO issued a press release which was not to the liking of Toyo Construction. A day later, Toyo Construction offered its own.
  • YFO responded on the 21st, saying ToyoKen’s PR was inaccurate. Not quite a week after that, ToyoKen announced one tiny subsidiary(Tecos) would absorb another (portable toilet rental co Orient Ecology).
  • Synergies? None. Growth? None. Scale? Nope. Was this for some other reason investors need to worry about? Maybe.

Takashimaya and H2O Cancel Tie-Up

By Michael Causton

  • Takashimaya and H2O Retailing entered what felt like a forced engagement of convenience in 2008 when all their other competitors were busy merging.
  • Although discussions for a full merger were held, in truth, thea agreement was more about practical collaboration to create more efficiencies. 
  • With both firms now more secure and cross-shareholdings more problematic, they will sell off their equity in each other but continue to work on joint projects.

XXXLutz Consortium/​Home24: Additional Acceptance Period

By Jesus Rodriguez Aguilar

  • XXXLutz consortium secures 80.94% of home24 shares. The Additional Acceptance Period runs until 28 December. More shares will be tendered and delisting will eventually take place in 2023, in my view.
  • My updated fair value estimate is €7.44/share (average of DCF and comparables, as per the tables below), just 0.8% below the offer price, hence my TP remains unchanged at €7.50.
  • Gross spread is 0.93%. The risk of being stranded with a delisted stock encourages tendering at €7.50.

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Dec 26
0

Daily Brief Event-Driven: Merger Arb Mondays (26 Dec) – Nippon Steel Trading and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals
  • S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes
  • Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals

By Arun George

S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes

By Brian Freitas

  • Global Industry Classification Standard (GICS) structure updates will lead to changes to the S&P/ASX All Technology Index at the March rebalance.
  • To better reflect the GICS changes and reduce constituent turnover, S&P DJI has proposed changes to the index universe for constituent selection.
  • We expect there will be 4 deletions from the index in March, but that could increase to 10 if the changes are not adopted.

Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

By Arun George

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Dec 25
0

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers
  • Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
  • Estimating Fund Size Tracking KOSPI MID Cap Index

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers

By David Blennerhassett

  • For OZ Minerals (OZL AU),  look elsewhere unless you are VERY bullish copper. But if you are VERY bullish copper, buy copper options rather than the embedded option in OZL. 
  • Game on as Warrego Energy (WGO AU) shareholders weigh the pros and cons of Hancock’s all-cash Offer against Strike Energy (STX AU)‘s “superior” scrip proposal. 
  • Jafco Co Ltd (8595 JP) succumbed to greenmail and tried to boost the price to explain the exit they were going to give Murakami-san. It didn’t work. 

Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI

By Brian Freitas

Estimating Fund Size Tracking KOSPI MID Cap Index

By Sanghyun Park

  • About ₩3T trillion is presumed to flow from NPS to KOSPI MID. Then, ₩0.8T from local publicly raised funds should be sitting in KOSPI MID. Adding these two alone amounts ₩4T.
  • Of course, this is ACTIVE. In other words, they do not need to proceed with universe changes due to rebalancing at the same pace as ETFs.
  • Nevertheless, we should note that the domestic fund industry does not allow a large gap with BM. Hence, at least ₩4T of funds follow KOSPI MID quite tightly.

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