In today’s briefing:
- (Mostly) Asia-Pac M&A: TCM, BusinessOn Comm, Orora, Ramsay Health Care, Namoi Cotton, APM, CPMC
- HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On “Tiny” Overall Volume, ETFs Big
- HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
- Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold
- Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting
- Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche
- [Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come
- Quiddity Leaderboard CSI 300/500 Dec 24: US$4.3bn One-Way Flows; Exp.ADDs Vs DELs Rebound Possible
- HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect
(Mostly) Asia-Pac M&A: TCM, BusinessOn Comm, Orora, Ramsay Health Care, Namoi Cotton, APM, CPMC
- I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
- Two new deals were discussed this week: JTower (4485 JP) and BusinessOn Communication (138580 KS)‘s Tender Offers. Orora (ORA AU) approached by Lone Star. Ramsay Health Care (RHC AU) Offer also rumoured.
- Key updates took place on China Traditional Chinese Medicine (570 HK), Namoi Cotton Co Operative (NAM AU), APM Human Services (APM AU), and CPMC Holdings (906 HK).
HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On “Tiny” Overall Volume, ETFs Big
- SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes.
- Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.
- Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)
HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
- J&T Global Express (1519 HK) and New Oriental Education (9901 HK) will replace JD Logistics (2618 HK) and SenseTime (20 HK) in the HSCEI at the close on 6 September.
- The inclusion of J&T Global Express (1519 HK) is a big surprise and the stock could move higher over the next couple of weeks.
- The non-inclusion of PICC Property & Casualty H (2328 HK) is another surprise since we had the stock highly ranked in the universe.
Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net SELL RMB 5.0bn of A-shares. NORTHBOUND volumes were very, very low overall.
- HK large caps again outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.
Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting
- SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
- Some of our index change expectations have changed since our last insight.
Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche
- The Aussie Tax-Loss Selling Baskets worked very well on the sell side from 30 April through end-June 2024. What now? Unwind.
- CK Infrastructure Holdings (1038 HK) has now submitted an application for a secondary listing, not a dual-primary listing, on the London stock exchange. Admission expected on the 19th August.
- The right trade is to buy JTower (4485 JP) below terms. The really right trade is to already be an owner. IF you’re an arbitrageur, you know what to do.
[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come
- Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;
- Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;
- We raise TP to HK$485 and keep Tencent as our TOP PICK.
Quiddity Leaderboard CSI 300/500 Dec 24: US$4.3bn One-Way Flows; Exp.ADDs Vs DELs Rebound Possible
- 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.
- Our expected ADDs and DELs baskets have changed slightly since our last insight.
HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect
- There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
- We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.
- Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.
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