In today’s briefing:
- HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- De Grey Mining (DEG AU): Northern Star (NST AU)’s All-Scrip Offer Could Draw Out Competing Suitors
- A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning
- Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Quiddity Leaderboard TDIV Dec 24: Late Changes to Methodology; New Flow Expectations
- TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- MV Australia A-REITs Index Rebalance Preview: One Close Delete & Capping Changes
HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
- The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.
- An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray.
Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- A Bloomberg article mid-day suggested Japan’s Ministry of Health, Labour and Welfare proposed a new “wage growth +1.9%” (vs 1.7% now) return bogey for the US$1.7trln Government Pension Investment Fund.
- The GPIF is conducting its quinquennial review to assess markets, long-term prospects, correlations, etc, to set a CAPM asset allocation mix to meet the bogey.
- The combination of higher USDJPY, Japan inflation, wider valuation spreads, and the prospect of higher yen rates suggests the review might result in lower yen bond allocs, higher equity allocs.
ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
- We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).
CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
- Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH).
- The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.
De Grey Mining (DEG AU): Northern Star (NST AU)’s All-Scrip Offer Could Draw Out Competing Suitors
- De Grey Mining (DEG AU) entered a binding scheme with Northern Star Resources (NST AU) at 0.119 NST shares per DEG share, implying A$2.08, a 37.1% premium to the undisturbed price.
- The scheme is conditional on DEG shareholder approval. Gold Road Resources (GOR AU), the largest shareholder, potentially holds a blocking stake and has not provided an irrevocable.
- The offer is susceptible to a competing offer as it is all-scrip and unremarkable vs peer multiples. Barrick Gold (GOLD US) and Agnico Eagle Mines (AEM US) are potential suitors.
A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning
- The EGM for Korea Zinc (010130 KS) is expected to be held on 23 January 2025. Accordingly, the shareholder registry is expected to be closed around 19 – 23 December.
- By better analyzing the timeline of the M&A of SM Entertainment, we may be able to get better clues to Korea Zinc’s price movement in the next several weeks.
- Notice the double top share price formation of SM Entertainment in 2023 versus the potential double top formation of Korea Zinc in 2024. These trading formations look eerily similar.
Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
- At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
- TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.
Quiddity Leaderboard TDIV Dec 24: Late Changes to Methodology; New Flow Expectations
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
- The base date for the December 2024 review was 25th November 2024. However, after the base date, the index selection methodology has been changed.
- As a result, we are revising our expectations for index changes and flow expectations.
TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.
MV Australia A-REITs Index Rebalance Preview: One Close Delete & Capping Changes
- The review period for the December rebalance ended on 29 November. There could be one deletion, plus there will be capping changes.
- Waypoint REIT (WPR AU) is the lowest ranked current index constituent and is very close to the deletion threshold.
- We estimate the one deletion and capping changes could result in one-way turnover of 3.6% resulting in a one-way trade of A$23m.
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