In today’s briefing:
- CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
- Newmont’s Indicative Offer for Newcrest Mining (NCM AU)
- Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition
- Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe
- BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit
- Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate
- Introducing ARIRANG K-Defense, Sector ETF Currently in the Limelight in Korea
- Weekly Deals Digest (05 Feb) – Pertamina Geothermal, Hesai, Halcyon, Toshiba, Pushpay, O2Micro
CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
- Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
- The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.
Newmont’s Indicative Offer for Newcrest Mining (NCM AU)
- Newmont Mining (NEM US) has made an indicative, non-binding and conditional proposal to acquire Newcrest Mining (NCM AU). The exchange ratio is 0.38 Newmont shares for each Newcrest share.
- At Newmont Mining (NEM US)‘s last close, this values Newcrest Mining (NCM AU) at A$27.4/share and at an equity value of A$17.3bn, a 22% premium to the last close.
- Newmont Mining (NEM US) intends to list CDIs on the ASX following the acquisition and that will have implications for changes in the S&P/ASX family of indices.
Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition
- Mitsui & Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
- Also like Q2, they announced a buyback – this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
- This creates interesting index flows over the next several months, and other trading cos have live buybacks too.
Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Origin Energy (ORG AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Toyo Construction (1890 JP).
- Lowest spreads – Essential Metals (ESS AU), Tyro Payments (TYR AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Kanematsu Electronics (8096 JP), Elmo Software (ELO AU).
BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit
- Bangkok Bank (BBL TB) has outperformed Kasikornbank PCL (KBANK TB) by 33% over the last 11 months and the price ratio is nearing the high end of the historical range.
- The number of NVDRs issued on Bangkok Bank Public (BBL TB) have continued to increase while decreasing on Kasikornbank PCL (KBANK TB).
- Bangkok Bank Public (BBL TB) now trades at a higher forward PE as compared to Kasikornbank PCL (KBANK TB) and the gap in price to book has narrowed significantly.
Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate
- In this insight, we take a look at the potential index changes for the Hang Seng Index (HSI INDEX) in March 2023.
- We believe Healthcare names could be given top priority when selecting additions for the upcoming rebalance.
- The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.
Introducing ARIRANG K-Defense, Sector ETF Currently in the Limelight in Korea
- ARIRANG K-Defense Industry Fn ETF (449450 KS) shows the fastest AUM/ADV growth among recently listed sector ETFs. It is virtually the only one enjoying the influx of local retail investors.
- The increasing trend of ETF AUM, coupled with the growing interest of local retail investors in the defense sector, will likely lead to flow improvement in each constituent.
- The passive impact of some stocks in the upcoming rebalancing is expected to expand to 0.4-0.5x ADTV. Notable names in this regard are Hanwha Corporation and SNT Motiv.
Weekly Deals Digest (05 Feb) – Pertamina Geothermal, Hesai, Halcyon, Toshiba, Pushpay, O2Micro
- 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 – Pertamina Geothermal (0125738D IJ) launches a US$600 million IDX IPO and Hesai Group (HSAI US) launches a US$171 million Nasdaq IPO.
- Event-Driven developments Halcyon Agri (HACL SP), Toshiba Corp (6502 JP), Nissin Electric (6641 JP), Techno Associe (8249 JP), Pushpay Holdings (PPH NZ), Nitro Software Ltd (NTO AU), O2Micro International (OIIM US).
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