In today’s briefing:
- JFE Holdings (5411) – Volume Patterns Indicate Possible Squeeziness
- I-Ne (4933) Offering Priced, Now to a TOPIX Inclusion
- Poly Culture (3636 HK): Pre-Condition Fulfilled
- TOPIX Inclusions: Who Is Ready (Sep 2023)
- Pinduoduo: Short Seller, Grizzly Research Raises Spyware Concerns About TEMU
- Australia: S&P/ASX, REMX, GDXJ, MVA, MVW & Other Index Flows on Friday
- FnGuide Top10 Index Rebalance Preview: Good Historical Performance; One Potential Change in December
- StubWorld: LVS Trading “Cheap” As Macau Recovers
- EQD | Hang Seng Index (HSI) Post-Typhoon WEEKLY Trend Analysis
JFE Holdings (5411) – Volume Patterns Indicate Possible Squeeziness
- On 5 September, JFE Holdings (5411 JP) saw an article out of a capital raising. It was confirmed later in the day. Huge volumes traded. The stock fell sharply.
- The offering supply/demand dynamics are…. complicated. The offering is to foreign instos. The net demand is probably mostly retail and index, and positioning is… also complicated.
- The EPS dilution is already accounted for. The fall against Nippon Steel pretty much does it after considering the discount expected.
I-Ne (4933) Offering Priced, Now to a TOPIX Inclusion
- Skincare/Cosmetics company I-NE (4933 JP) on 31 August (¥2947) announced it would move to TSE Prime on 19 September, and announced a Secondary Offering by CEO Onishi-san to get there.
- There was no greenshoe provided. The stock popped. Then drifted back to ¥3025 and the Offering priced today at ¥2,934/share.
- 75% went to Asian/European (non-US) offshore investors, and the rest to onshore institutions, which is unusual. But now we look to the TOPIX inclusion.
Poly Culture (3636 HK): Pre-Condition Fulfilled
- The pre-condition relating to Poly Culture Group Corp H (3636 HK)’s privatisation offer from Poly Group at HK$8.88 per H Share has been fulfilled.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
- The offer’s 77.6% premium to the undisturbed price and no minimum acceptance condition will help completion. At the last close and for 1 November completion, the gross/annualised spread is 7.1%/64.3%.
TOPIX Inclusions: Who Is Ready (Sep 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Since my last insight, three new TOPIX Inclusion events have been confirmed: M&A Research Institute (9552 JP), FP Partner (7388 JP), and I-NE (4933 JP)
- Separately, Core Concept Technologies Inc (4371 JP) has announced it intends to work towards a Prime Market move in the future.
Pinduoduo: Short Seller, Grizzly Research Raises Spyware Concerns About TEMU
- Grizzly Research’s track record, especially with accusations against well-known Chinese ADRs like NIO (NIO US), ZTO Express Cayman (ZTO US), and Gaotu Techedu (GOTU US), hasn’t been successful lately.
- Despite past setbacks, the company has recently targeted another renowned Chinese ADR, PDD Holdings (PDD US).
- Grizzly Research alleges that Pinduoduo’s shopping app, “TEMU,” is a harmful malware/spyware secretly extracting user data.
Australia: S&P/ASX, REMX, GDXJ, MVA, MVW & Other Index Flows on Friday
- Changes to the S&P/ASX indices, REMX US, GDXJ US, MVA AU, MVW AU and other indices will be implemented at the close on Friday.
- There is over +/-A$5m to trade or +/-3x ADV to trade on nearly 100 stocks and will be a huge volume day for the stocks at the close.
- Use the volume on the buy and sell side to increase/reduce positions especially on the deletes where there will be liquidity to cover shorts on stocks that have dropped significantly.
FnGuide Top10 Index Rebalance Preview: Good Historical Performance; One Potential Change in December
- The Mirae Asset Tiger Top 10 ETF (292150 KS) tracks the FnGuide Top 10 Index and has an AUM of over US$1bn.
- We currently forecast one potential change at the next rebalance in December. There is another set of changes that could also take place.
- There has been a big increase in short interest on a couple of stocks while the rise has been more gradual on the other stocks.
StubWorld: LVS Trading “Cheap” As Macau Recovers
- Las Vegas Sands (LVS US) is coming up “cheap” on my monitor as Macau’s gross gaming revenue touches a new post-Covid high.
- Preceding my comments on LVS are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
EQD | Hang Seng Index (HSI) Post-Typhoon WEEKLY Trend Analysis
- Our previous insight correctly predicted the current pullback for the Hang Seng Index (HSI), now let’s analyze MRM WEEKLY support prices, to identify when/where a bounce could begin.
- The 17835-17105 support price area is where the index should stop and bounce, however depending on the duration of the pullback the % correction could vary wildly.
- If the index is about to bounce, it should bounce this week or the next, if it falls >3 weeks down, it could enter a downward spiral towards 15707.
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