In today’s briefing:
- AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
- CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- Tata Steel – ESG Report – Lucror Analytics
- Don’t Get Fooled by the Tight Inventory Narrative – Economic Situation Continues to Worsen
AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- Ahead of Aag Energy Holdings (2686 HK)’s vote on 27 April, the gross spread to Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer sits uncomfortably high at 13.5%.
- The key risk remains that minorities vote down the scheme. Retail forums are active with mixed views on the offer. Peers have also modestly re-rated, which helps the NO camp.
- At the last close, the risk-reward profile is unfavourable as the downside to a scheme fail (-16.0%) is greater than the upside to a scheme pass (+13.5%).
KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
- With 4 trading days left in the review period, we see three potential changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in June.
- Kum Yang (001570 KS), Cosmochemical (005420 KS) and Youlchon Chemical (008730 KS) could replace Dongwon Industries (006040 KS), Hwaseung Enterprise (241590 KS) and Hyundai Home Shopping Network (057050 KS).
- If approved by shareholders, the Dongkuk Steel Mill (001230 KS) split increases the probability of Youlchon Chemical (008730 KS) inclusion and Hyundai Home Shopping Network (057050 KS) could avoid deletion.
CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- With 4 trading days to go the review period, we see 13 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 1.94% at the June rebalance leading to a one-way trade of CNY 5.05bn.
- With the review period nearly complete, the gap between the potential adds and deletes could narrow ahead of the announcement of the changes as pre-positions are built.
Tata Steel – ESG Report – Lucror Analytics
Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Tata Steel’s ESG as “Adequate”, in line with the “Adequate” Social and Governance pillars. The company has a “Strong” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”.
Don’t Get Fooled by the Tight Inventory Narrative – Economic Situation Continues to Worsen
- Don’t get fooled by the tight inventory narrative While many copper bulls continue to write about the low copper inventories I would like to inform you once again that there is simply no correlation between copper inventories and the price of the industrial metal.
- If you want to be precise – you could even make the case that excessive lows in the LME copper inventory data actually mark cyclical highs in the price of the brownish metal.
- US Leading Economic Index’s recession signal deepens in March, Conference Board reports: “The US LEI fell to its lowest level since November of 2020, consistent with worsening economic conditions ahead,” says CB’s senior manager for business cycle indicators.
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