Category

Daily Briefs

Oct 21
0

Daily Brief United States: CVRx , Copper and more

By | Daily Briefs, United States

In today’s briefing:

  • CVRX: Great Technology that Now Has a Bright Future
  • Copper Tracker Oct 21st, 2024: The China Malaise Sets In

CVRX: Great Technology that Now Has a Bright Future

By Pyari Menon

  • CVRx (CVRX US) was up 19% (including after hours) as the AMA accepted CPT Category I codes for Barostim. Codes are to be implemented on January 1, 2026
  • With Category I CPT codes CVRX should see the benefits of clinical validation, regulatory de-risking, reimbursement potential, increased market access and significant improvement in revenue potential
  • Barostim is the only neuromodulation device for heart failure and resistant hypertension, positioning CVRx as a compelling acquisition target due to its unique technology and strong market potential.

Copper Tracker Oct 21st, 2024: The China Malaise Sets In

By Sameer Taneja

  • Copper prices were down slightly, WoW, by 0.3% YoY, as the effect of China’s stimulus plan announcements waned, with investors viewing them more skeptically.
  • With 58% of the metal’s demand arising from China, we expect the short-term malaise to be felt unless China makes punchier fiscal stimulus announcements soon. 
  • We believe high-quality equities like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) will continue to be resilient and prefer exposure to copper in those names.

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Oct 21
0

Daily Brief China: China Traditional Chinese Medicine, Cambricon Technologies Lt, JD.com Inc (ADR), China Resources Beverage, Alibaba Group Holding , Singamas Container Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
  • SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
  • JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance
  • Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified
  • China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com
  • Singamas (716 HK): Positive Readthrough from CIMC

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech

By Xinyao (Criss) Wang

  • The “industry clearing”  of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
  • For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
  • China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

By Brian Freitas

  • With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
  • We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
  • The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance

By Ming Lu

  • On October 18, JD denies there is a run on JD Finance.
  • Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
  • We believe the event will negatively impact JD and benefit Alibaba.

Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified

By Xinyao (Criss) Wang

  • The whole industry has entered a medium to low-speed growth stage, and the industry’s future growth rate will remain single-digit growth. So, CR Beverage’s future performance decline is inevitable.
  • Due to serious homogenization/competition of packaged drinking water market, there’s not much room for innovation/iteration. CR Beverage’s sales-driven model is hard to bring “new story” to break through the dilemma. 
  • CR Beverage is clearly inferior to Nongfu Spring. Its valuation should be lower than Nongfu Spring. We think reasonable valuation of CR Beverage is about US$4 billion (or lower).

China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com

By Ming Lu

  • Alibaba is selling Sun Art, a listed supermarket subsidiary, as Sun Art’s revenue is shrinking.
  • Alibaba gained 6 million new retailers on its Taobao Tmall platform year to date.
  • In September Tesla’s sales volume increased by 66% YoY and all major Chinese NEV grew strongly.

Singamas (716 HK): Positive Readthrough from CIMC

By Osbert Tang, CFA

  • With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
  • Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
  • An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.

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Oct 21
0

Daily Brief Japan: Fuji Soft Inc, Fujikura Ltd, Seven & I Holdings, Exedy Corp, Tokyo Metro, Nikkei 225, Sanwa Holdings, Mazda Motor and more

By | Daily Briefs, Japan

In today’s briefing:

  • Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
  • Fujikura (5803 JP): Positioning & Potential Passive Buying
  • Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac
  • [JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run
  • ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
  • EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst
  • Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
  • Unloved Japan Roundup: Bracing for Q3

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

By Arun George

  • The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
  • Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
  • KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

Fujikura (5803 JP): Positioning & Potential Passive Buying

By Brian Freitas

  • Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
  • Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
  • The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac

By Arun George

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

By Travis Lundy

  • This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
  • The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
  • If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still. 

ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the live IPOs front,  the coming week will see a whole lot of listings across the region.
  • On the placements front, there were mainly deals in Australia this week.

EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst

By Gaudenz Schneider

  • Nikkei 225 (NKY INDEX) option implied volatility is stabilizing at an elevated level. This Insight analyses term structure, skew, open interest, and more.
  • We identify a tactical option opportunity that profits from the current volatility structure.
  • Are Consumer Price Index and Bank of Japan interest rate decision announcements systematically followed by unusually large market moves? We run the numbers. 

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

  • Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
  • Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
  • Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion. 

Unloved Japan Roundup: Bracing for Q3

By Michael Allen

  • Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
  • Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
  • But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.

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Oct 21
0

Daily Brief India: NIFTY Index and more

By | Daily Briefs, India

In today’s briefing:

  • EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size

EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size

By Sankalp Singh

  • SEBI-Mandated structural changes continue to percolate through for Options Markets. Position limits & lot sizes have been increased drastically, tilting regulations away from Retail & towards more Institutional participation.
  • IV levels are in the middle of their 12-month ranges. Vol-Regime Model currently in “High & Down” state – grind lower in IVs projected. 
  • In spite of a stronger underlying index, upcoming Bank earnings results have supported BankNifty IVs.  

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Oct 21
0

Most Read: China Traditional Chinese Medicine, Fuji Soft Inc, Horizon Robotics, Fujikura Ltd, Shinhan Financial, Cambricon Technologies Lt, Exedy Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price
  • TCM (570 HK): Likely Rush for The Exits As Deal Busts
  • Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter
  • Horizon Robotics (9660 HK) IPO: The Bear Case
  • Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
  • China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
  • Fujikura (5803 JP): Positioning & Potential Passive Buying
  • Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming
  • SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
  • [JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price

By Arun George

  • Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
  • This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
  • Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

TCM (570 HK): Likely Rush for The Exits As Deal Busts

By David Blennerhassett

  • China Traditional Chinese Medicine (570 HK)  (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
  • As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
  • This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next?  The immediate question now is downside support on Monday.  

Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter

By Travis Lundy

  • On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
  • Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
  • Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

Horizon Robotics (9660 HK) IPO: The Bear Case

By Arun George

  • Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
  • In Horizon Robotics (9660 HK) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on high related parties’ revenue, customer concentration risk, pricing pressure, uncertain path to profitability, high cash conversion cycle and FCF burn.

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

By Arun George

  • The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
  • Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
  • KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech

By Xinyao (Criss) Wang

  • The “industry clearing”  of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
  • For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
  • China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.

Fujikura (5803 JP): Positioning & Potential Passive Buying

By Brian Freitas

  • Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
  • Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
  • The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming

By Brian Freitas

  • The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
  • Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
  • With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

By Brian Freitas

  • With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
  • We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
  • The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

By Travis Lundy

  • This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
  • The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
  • If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still. 

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Oct 21
0

Daily Brief Industrials: Fujikura Ltd, Tokyo Metro, Sanwa Holdings, Singamas Container Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Fujikura (5803 JP): Positioning & Potential Passive Buying
  • ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
  • Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
  • Singamas (716 HK): Positive Readthrough from CIMC

Fujikura (5803 JP): Positioning & Potential Passive Buying

By Brian Freitas

  • Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
  • Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
  • The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the live IPOs front,  the coming week will see a whole lot of listings across the region.
  • On the placements front, there were mainly deals in Australia this week.

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

  • Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
  • Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
  • Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion. 

Singamas (716 HK): Positive Readthrough from CIMC

By Osbert Tang, CFA

  • With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
  • Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
  • An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.

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Oct 21
0

Daily Brief Energy/Materials: Iron Ore, Copper and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning
  • Copper Tracker Oct 21st, 2024: The China Malaise Sets In

Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning

By Sameer Taneja

  • After a brief spell of iron ore prices rising to 108 USD/ton, prices have retraced to 102 USD/ton (-3% WoW) but remain broadly in the 95-130 USD/ton band.
  • Investors were disappointed with China’s announced stimulus measures, citing their vagueness and lack of a specific timetable, resulting in the positive sentiment waning over the last two weeks.
  • We update investors on Vale’s (VALE US) recent proposal to the government to settle the Mariana Dam disaster.

Copper Tracker Oct 21st, 2024: The China Malaise Sets In

By Sameer Taneja

  • Copper prices were down slightly, WoW, by 0.3% YoY, as the effect of China’s stimulus plan announcements waned, with investors viewing them more skeptically.
  • With 58% of the metal’s demand arising from China, we expect the short-term malaise to be felt unless China makes punchier fiscal stimulus announcements soon. 
  • We believe high-quality equities like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) will continue to be resilient and prefer exposure to copper in those names.

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Oct 21
0

Daily Brief Industrials: Fujikura Ltd, Tokyo Metro, Sanwa Holdings, Singamas Container Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Fujikura (5803 JP): Positioning & Potential Passive Buying
  • ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
  • Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
  • Singamas (716 HK): Positive Readthrough from CIMC

Fujikura (5803 JP): Positioning & Potential Passive Buying

By Brian Freitas

  • Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
  • Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
  • The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the live IPOs front,  the coming week will see a whole lot of listings across the region.
  • On the placements front, there were mainly deals in Australia this week.

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

  • Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
  • Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
  • Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion. 

Singamas (716 HK): Positive Readthrough from CIMC

By Osbert Tang, CFA

  • With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
  • Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
  • An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.

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Oct 21
0

Daily Brief TMT/Internet: Fuji Soft Inc, Cambricon Technologies Lt, Taiwan Semiconductor (TSMC) – ADR and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
  • SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
  • Taiwan Dual-Listings Monitor: TSMC Premium Remains Elevated; ASE Domestic Short Interest Hits Highs

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

By Arun George

  • The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
  • Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
  • KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

By Brian Freitas

  • With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
  • We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
  • The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

Taiwan Dual-Listings Monitor: TSMC Premium Remains Elevated; ASE Domestic Short Interest Hits Highs

By Vincent Fernando, CFA

  • TSMC: +18.7% Premium; Trading Range Sustaining at an Elevated Level
  • UMC: -1.8% Discount; Good Level to Go Long the Spread
  • ASE: 0.0% Premium; Good Level to Go Long the Spread

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Oct 21
0

Daily Brief Financials: Shinhan Financial, Nikkei 225, NIFTY Index, Kaspi.KZ and more

By | Daily Briefs, Financials

In today’s briefing:

  • Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming
  • EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst
  • EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size
  • Kaspi.kz: Kazakhstan’s Super-App Acquiring Turkey’s E-Commerce Leader

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming

By Brian Freitas

  • The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
  • Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
  • With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst

By Gaudenz Schneider

  • Nikkei 225 (NKY INDEX) option implied volatility is stabilizing at an elevated level. This Insight analyses term structure, skew, open interest, and more.
  • We identify a tactical option opportunity that profits from the current volatility structure.
  • Are Consumer Price Index and Bank of Japan interest rate decision announcements systematically followed by unusually large market moves? We run the numbers. 

EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size

By Sankalp Singh

  • SEBI-Mandated structural changes continue to percolate through for Options Markets. Position limits & lot sizes have been increased drastically, tilting regulations away from Retail & towards more Institutional participation.
  • IV levels are in the middle of their 12-month ranges. Vol-Regime Model currently in “High & Down” state – grind lower in IVs projected. 
  • In spite of a stronger underlying index, upcoming Bank earnings results have supported BankNifty IVs.  

Kaspi.kz: Kazakhstan’s Super-App Acquiring Turkey’s E-Commerce Leader

By Alec Tseung

  • On Oct 17th, Kaspi.kz, Kazakhstan’s super-app, signed a stock purchase agreement to acquire a 65.4% stake in Hepsiburada, a leading e-commerce platform in Turkey. 
  • The transaction is still subject to regulatory approval; Hepsiburada’s share price in the US increased by ~60% on Friday after the announcement.
  • The acquisition makes a lot of strategic sense which would elevate Kaspi.kz to a position to target a combined market of >100 million population (vs. currently 20 million).

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