In today’s briefing:
- Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- Quiddity STAR 50/100 Sep 24 Rebalance: 100% Hit Rate; US$1bn+ One-Way Flows
- STAR50/STAR100 Index Rebalance: Adds Rally, Deletes Drop as Positioning Builds Up
- Merger Arb Mondays (02 Sep) – Canvest, China TCM, GA Pack, CPMC, Shinko, Arvida, SilverLake
- Bajaj Housing Finance IPO: Offering Details & Index Inclusion
- CPMC Holdings (906.HK) Privatization Update – ORG Is Pushing Baosteel to Raise Its Offer
- HK Connect SOUTHBOUND Flows (To 30 Aug 2024); Weak Econ Data, But a Rebound in SB Net Buys
- Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (July and August 2024)
- A/H Premium Tracker (To 30 Aug 2024): SB/NB Volumes Down, NB Net Now Impossible to Track
- EQD / NSE Vol Update / Skew & PCR Indicate Active Use of OTM Puts to Hedge NIFTY50 at All-Time-Highs
Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- On 30 August, 7&i shareholder Artisan Partners (holder since 2019, now at 1%) wrote an open letter to the Board of Directors of Seven & I Holdings (3382 JP)
- There are several comments in bold. “It is imperative that the board of directors negotiate with ACT immediately to achieve the best possible outcome for shareholders” is one.
- The letter is a bit preachy, a bit fluffy, and a bit misleading in parts. But it requests the Company brief shareholders on the negotiations by 19 September 2024.
Quiddity STAR 50/100 Sep 24 Rebalance: 100% Hit Rate; US$1bn+ One-Way Flows
- The September 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 30th August 2024.
- There will be 2 changes for the STAR 50 index and 6 changes for the STAR 100 index.
- The STAR 50 and STAR 100 rebalances will collectively trigger one-way flows of more than US$1bn during the September 2024 index rebal event.
STAR50/STAR100 Index Rebalance: Adds Rally, Deletes Drop as Positioning Builds Up
- There are 2 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the September rebalance that will be implemented at the close on 13 September.
- There are no surprises for the SSE STAR50 (STAR50 INDEX) while there are 3 surprise adds for the STAR100 Index with the profitability criterion being ignored.
- The adds to the SSE STAR50 (STAR50 INDEX) have outperformed the deletes over the last month and positioning is larger in some stocks compared to others.
Merger Arb Mondays (02 Sep) – Canvest, China TCM, GA Pack, CPMC, Shinko, Arvida, SilverLake
- 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), Canvest Environmental Protection Group (1381 HK), China Traditional Chinese Medicine (570 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK).
- Lowest spreads: Tohokushinsha Film (2329 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP), Second Chance Properties (SCE SP), Fancl Corp (4921 JP), Alps Logistics (9055 JP).
Bajaj Housing Finance IPO: Offering Details & Index Inclusion
- Bajaj Housing Finance (BHF IN) is looking to list on the exchanges by selling INR 65.6bn of stock at a valuation rumoured to be between INR 560-590bn.
- The anchor allocations will be completed later this week, and the stock is expected to start trading on 16 September.
- Bajaj Housing Finance (BHF IN)‘s maximum float will be around 10% and that will limit inclusion to just one global index in the following 6 months.
CPMC Holdings (906.HK) Privatization Update – ORG Is Pushing Baosteel to Raise Its Offer
- Huarui Offer has been approved by SAMR, which marks a solid step forward.Meanwhile, ORG’s management stated that the reduction of Huangshan Novel shares is to raise funds to acquire CPMC.
- While Baosteel may want to “test the waters”, the signals ORG is sending is it will make every effort to advance the acquisition of CPMC and is accelerating the process.
- The return on Huarui Offer isn’t attractive.We recommend waiting for Baosteel to raise its Offer, or simply choosing to add more positions in China TCM, whose privatization is more lucrative.
HK Connect SOUTHBOUND Flows (To 30 Aug 2024); Weak Econ Data, But a Rebound in SB Net Buys
- SOUTHBOUND was a net seller the prior week for HK$1.5bn, the first week in 29 where SB was a net seller. It was all ETFs. Stocks were a net buy.
- This week, they reverted to net buying. Financials and Utilities were strong net buys. ETFs again a net sell. Total SOUTHBOUND volumes also picked up.
- SOEs, SOE Banks, Energy, Utilities, and finally Anta Sports Products (2020 HK) saw net buying after salutary earnings.
Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (July and August 2024)
- In this insight, we discuss the alpha generation through companies that have been buying back their shares in the Korean stock market in July and August 2024.
- On average, the share buyback announcements by 46 companies represented 2% of outstanding shares.
- Major companies that have announced share buybacks in Korea in the past two months include KT&G, Mirae Asset Securities, and POSCO Holdings.
A/H Premium Tracker (To 30 Aug 2024): SB/NB Volumes Down, NB Net Now Impossible to Track
- Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. SOUTHBOUND gross volumes up, but not high.
- SOUTHBOUND rebounded cutting its weekly net sell streak at one. ETFs again a net sell. NORTHBOUND net data is not not released on a daily/weekly basis; only quarterly.
- As expected (with AH 20d Premia returns at multi-year highs 3wks ago), AH Premia fell slightly, narrow premia falling more than wide premia. I continue to expect more H-vs-A gains.
EQD / NSE Vol Update / Skew & PCR Indicate Active Use of OTM Puts to Hedge NIFTY50 at All-Time-Highs
- Recovery in Risk-Premia was short-lived. Pressure from a lack of upcoming event-risk has driven short-dated IVs lower.
- Nifty50 at All-Time-Highs – PCR & Skew extend further towards puts. Implying active hedging of core long equity positions using OTM puts.
- “High & Down” Vol-state persists. Expect a continued slide lower in IVs. Retain previous week’s tactical stance – allocations to Short Iron Condors & Skew Harvesting structures.
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