In today’s briefing:
- CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon
- T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?
- Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech
- STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month
- A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold
- Weekly Deals Digest (26 Nov) – JSR, Taisho, Origin, OreCorp, Eoflow, Hollysys, Zeekr, Tata Tech
- Last Week in Event SPACE: JSR, Prosus/Tencent, Hollysys, Tata Consultancy, Geely, EOFlow
- Mainland Connect NORTHBOUND Flows (To 24 Nov 23): Chongqing Changan (Bought) Vs BYD (Sold)
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma
- SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep
CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon
- There are 3 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 8 December.
- Hygon Information Technology C (688041 CH) will be added to a global index in a week and then there will be multiple index inflows at the close on 8 December.
- After underperforming from May to September, the adds have gained ground on the deletes over the last two months and there could be further outperformance over the next two weeks.
T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?
- In August, T&K Toka Co Ltd (4636 JP) announced a TOB by Bain with a clearance hurdle of selling a 3.51% stake in Hangzhou Toka Ink (SH:688571) before launch.
- Friday, the company announced that they put up a 3.6% stake for auction, with the sale to be executed that day. That likely triggers an early launch of the TOB.
- The TOB Price is offensively cheap at 0.63x “official” book, and 0.53x book adjusted for equity affiliate price. The shares have traded through terms since launch. This should get bumped.
Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech
- The capping for the Hang Seng family of indices will use closing prices from 28 November while implementation will take place at the close on 1 December.
- The changes for the next S&P/ASX 200 (AS51 INDEX) rebalance will be announced after the close of trading on 1 December.
- It was another week of inflows for the iShares Emerging Markets (EMXC US) to take units outstanding to a new high.
STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month
- As expected, the index committee has used a 6-month minimum listing history and that results in one change to the SSE STAR50 (STAR50 INDEX) in December.
- Sichuan Biokin Pharmaceutical (688506 CH) will replace Ninebot (689009 CH) in the index at the close on 8 December.
- One way turnover is estimated at 2.18% and will result in a one-way trade of CNY 3,065m. Sichuan Biokin Pharmaceutical (688506 CH) has moved up and there will be pre-positioning.
A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold
- The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- Hs with H/A pairs under-perform their As on average. H/A Pair intracorrelation is up and A premia continue to trend better.
- SOUTHBOUND and NORTHBOUND were net sells overall. Everybody sold tech.
Weekly Deals Digest (26 Nov) – JSR, Taisho, Origin, OreCorp, Eoflow, Hollysys, Zeekr, Tata Tech
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Asahi Group Holdings (2502 JP)‘s US$1.3 billion secondary offering; ZEEKR (ZK US), Tata Technologies (TATATECH IN) and Cainiao Smart Logistics Network (1437124D HK) IPOs
- Event-Driven developments – JSR Corp (4185 JP), Taisho Pharmaceutical Holdin (4581 JP), Origin Energy (ORG AU), Orecorp Ltd (ORR AU), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US).
Last Week in Event SPACE: JSR, Prosus/Tencent, Hollysys, Tata Consultancy, Geely, EOFlow
- Now the time decay to expected approvals and tender offer start for JSR Corp (4185 JP) are getting steep. Time to Fight The FUD.
- The accretion trade is going to plan as Prosus NV (PRX NA) sells Tencent (700 HK); and Prosus and Tencent both back their own shares.
- Hollysys Automation Technologies (HOLI US)‘s board capacity to sabotage calling an SGM has finally run out of puff.
Mainland Connect NORTHBOUND Flows (To 24 Nov 23): Chongqing Changan (Bought) Vs BYD (Sold)
- This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
- The same few names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Zhongji Innolight, etc, but the nets are changing (and Chongqing Changan)
- Last week, NORTHBOUND were again net sellers (RMB -3.16bn), but Shanghai saw net buys. The top two flows were Chongqing Changan Automobile Company (200625 CH) to buy, BYD to sell.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma
- I tally 39 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- One new deal discussed on Smartkarma this week: Taisho Pharmaceutical Holding (4581 JP)‘s MBO.
- Key updates on: Origin Energy (ORG AU), Healius (HLS AU), OreCorp (ORR AU), Haitong Int’l (665 HK), JSR Corp (4185 JP), Eoflow (294090 KS), T&K TOKA, and Hollysys (HOLI US).
SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep
- There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 8 December. There is over 1x ADV to trade on some stocks.
- We estimate a one-way turnover of 5.4% at the December rebalance leading to a one-way trade of CNY 4.85bn. Index arb activity could add to the impact on the stocks.
- The adds, deletes and SSE50 Index (SSE50 INDEX) have moved nearly in lockstep since May and the passive flows could move things around a bit.
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