In today’s briefing:
- Dai-Nippon Printing (7912) – Whoomp There It Is! Part Deux
- MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- MV Global Junior Gold Miners Index Rebalance: Over US$500m to Trade
- WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- Merger Arb Mondays (11 Mar) – Shinko, JSR, Azure, Genex, OreCorp, Hollysys, CPMC, Vinda
- EQD | A Systematic Look at the Post Earnings Announcement Drift Across Asia
- Japfa (JAP SP): Evaluating a Potential Privatisation
- A/H Premium Tracker (To 8 Mar 2024): Liquid AH Premia Still Wide
- HK Connect SOUTHBOUND Flows (To 8 Mar 2024); Big Net Buys of SOEs, Finally Tencent a Net Buy
Dai-Nippon Printing (7912) – Whoomp There It Is! Part Deux
- At end-January 2023 it became clear activist Elliott Management had set its sights on Dai Nippon Printing (7912 JP). The stock popped and people got bullish.
- I warned about the “complicated” nature of gains going forward here. Three weeks later they announced details of including ¥100bn of buybacks per year for 3yrs. That’s discussed here.
- I rarely write bearishly about a huge buyback program but from next day open, over 1yr, total return has been 4.9%. Stage 2 starts 11 March with ¥50bn through end-Sep24.
MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) is the largest buy while capping results in NVIDIA Corp (NVDA US) being the largest sell by far.
- Estimated one-way turnover is 8.3% resulting in a round-trip trade of nearly US$3bn. There are a few stocks with more than 0.2x ADV to trade.
MV Global Junior Gold Miners Index Rebalance: Over US$500m to Trade
- Emerald Resources Nl (EMR AU) will be added to the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March while there are 3 deletions for the index.
- The constituent changes along with float and capping changes result in an estimated one-way turnover of 6.4% and a one-way trade of US$263m.
- There are 9 stocks with more than US$10m to trade and 9 stocks with over 2x ADV to trade.
WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
- That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
- The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest buy.
MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- There are no constituent changes for the MVIS Australia Equal Weight Index at the March rebalance.
- Float and capping changes will result in a one-way turnover of 4.4% and in a round-trip trade of A$195m.
- We had Lendlease Group (LLC AU), IDP Education (IEL AU) and nib holdings (NHF AU) as close deletes and they will now have inflows due to capping.
Merger Arb Mondays (11 Mar) – Shinko, JSR, Azure, Genex, OreCorp, Hollysys, CPMC, Vinda
- 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: APM Human Services Internation (APM AU), Probiotec Ltd (PBP AU), Genex Power Ltd (GNX AU), China Traditional Chinese Medicine (570 HK), Genetron Holdings Ltd (GTH US).
- Lowest spreads: Tietto Minerals Ltd (TIE AU), CIMC Vehicle Group Co Ltd (1839 HK), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), Payroll (4489 JP), Welbe Inc (6556 JP).
EQD | A Systematic Look at the Post Earnings Announcement Drift Across Asia
- A cross-country study on the post earning announcement drift effect.
- We explore the use of various options-implied analytics to systematically view returns around earnings announcements.
- Options-Implied Analytics can provide empowering information to better inform investment decisions.
Japfa (JAP SP): Evaluating a Potential Privatisation
- On March 8, Bloomberg reported that Japfa Ltd (JAP SP) owners were considering taking it private and started talks about a loan of around US$150 million.
- Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years.
- An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.
A/H Premium Tracker (To 8 Mar 2024): Liquid AH Premia Still Wide
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND a net buyer every day since the end of Chinese New Year. NORTHBOUND a net seller this week for the first week in 6. AH premia slightly down.
- Wide spreads continue to narrow and narrow spreads continue to widen.
HK Connect SOUTHBOUND Flows (To 8 Mar 2024); Big Net Buys of SOEs, Finally Tencent a Net Buy
- A shares were up small on the week. HK stock indices were down.
- Net SOUTHBOUND buying was HK$17.1bn in the third post-holiday week. SOUTHBOUND has net bought every day since the end of Chinese New Year.
- SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.
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