In today’s briefing:
- MBK’s Korea Zinc & Young Poong Precision Tender Results Officially Out
- Korea Value-Up ETFs: Latest Market Info on Initial AUM Setup & Resulting Passive Impacts
- Intouch? Or Perhaps “Out Of” Touch
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Big Impact and US$3bn Round-Trip Trade
- CSI Medical Service Index Rebalance Preview: Four Potential Changes in December
- China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- Dyna-Mac (DMHL SP): No Alternative As Hanwha Group Bumps
- HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- WisdomTree Oct 24 Emerging Market Rebalance: Top Net Buys and Sells Across DGS, SOE & DEM
- A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
MBK’s Korea Zinc & Young Poong Precision Tender Results Officially Out
- MBK officially disclosed that they scooped up 5.34% of the Korea Zinc (010130 KS) shares in the tender that wrapped up today.
- MBK scored a partial win by securing more voting rights than Choi, with unexpected backing from foreign and local institutions, likely due to proration risk over legal issues.
- Still, securing just 5.34% puts MBK in a tough position, requiring them to navigate minority shareholder votes while pushing hard on the legal front to block the buyback.
Korea Value-Up ETFs: Latest Market Info on Initial AUM Setup & Resulting Passive Impacts
- KRX will launch 12 ETFs tracking the Korea Value-Up Index on November 4—9 passive and 3 active—aiming for an initial AUM exceeding 1 trillion KRW.
- KRX is pressuring ETF operators to reveal initial capital by November 4, with expectations to exceed 1 trillion KRW due to government pressure.
- Early signs of position buildup are emerging, so it’s essential to monitor stocks with significant passive impact closely moving forward.
Intouch? Or Perhaps “Out Of” Touch
- Intouch (INTUCH TB)‘s strange journey with Gulf Energy (GULF TB) continues. In April 2021, GULF made a surprising VTO for INTUCH. This past July, the two companies announced an amalgamation.
- The merger was not fair to INTUCH shareholders, with an estimated earnings value destruction of ~26.5% (for FY24E). But that didn’t stop shareholders overwhelmingly approving the 3rd October EGM resolutions.
- What now? The next step is the low-balled VTOs for Advanced Info Service (ADVANC TB) and Thaicom (THCOM TB). Then amalgamation. Then, arguably, the next unorthodox development will take place.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Big Impact and US$3bn Round-Trip Trade
- Using data from the close on 11 October, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 15% and a one-way trade of TWD 49bn (US$1.52bn)
- Shorts have been building up in some of the forecast deletes and in a couple of the forecast adds as well.
CSI Medical Service Index Rebalance Preview: Four Potential Changes in December
- The review period ends on 31 October, the changes should be announced on 29 November and will be effective after the close of trading on 13 December.
- We forecast 4 potential changes for the index in December where there could be buying of 0.5-3x ADV in the adds and selling of between 0.5-1.3x ADV in the deletes.
- The forecast adds have drifted lower versus the forecast deletes following the rally in the markets and the large ETF creations. That could reverse from now till review period end.
China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
- Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
- Index inclusions will commence with the HSCI in March 2025 – that will also result in Stock Connect inclusion. The next index inclusion will take place in June.
Dyna-Mac (DMHL SP): No Alternative As Hanwha Group Bumps
- On the 11th September, Hanwha Ocean (042660 KS) and Hanwha Aerospace (012450 KS), collectively holding 25.36%, made a S$0.60/share cash Offer for shares not owned, conditional on a 50% acceptance.
- The transaction stalled on the 24th September, when the estate of Dyna-Mac’s founding shareholder, Desmond Lim Tze Jong (holding ~35% currently) reckoned the Offer “does not adequately reflect” Dyna-Mac’s value.
- Hanwha Group has now bumped terms by 11.67% to S$0.67/share, best & final. That’s a 35.4% premium to undisturbed, and a decade high. No word, yet, from the Lim estate.
HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- SOUTHBOUND was a net buyer the last five trading days (from before GW to 14 Oct). HUGE gross flows. Decent net flows. Very big in few names (BABA included).
- The Guotai Junnan/Haitong merger pushed H-share brokers hard, but SB wasn’t buying. They bought Alibaba Group Holding (9988 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Xiaomi Corp (1810 HK).
- Things may settle down a little bit as the fiscal policy announcements are out of the way, but I expect the trend is still your friend (until it bends).
WisdomTree Oct 24 Emerging Market Rebalance: Top Net Buys and Sells Across DGS, SOE & DEM
- In this short insight, we include our flow estimates for all additions and deletions taking place in the range of WisdomTree EM Funds at the rebalance this Wednesday (16 October).
- We show the top 40 buys and sells across DEM, XSOE and DGS.
- The top buys include Chc Resources (9930 TT) & Uchi Technologies (UCHI MK). The top sells include Impack Pratama Industri Tbk (IMPC IJ) and Hap Seng Consolidated (HAP MK).
A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- A big “week” of 5 trading days from 30 Sep to 14 Oct, inclusive. Average AH premia dropped a lot. Liquid AH premia dropped less. Brokers are big winners.
- Average AH volatility is super high. Intracorrelation of spreads quite low. Lots of room to market-make wide spreads/high premia. High premia may continue to contract on speculation.
- Sharply differing onshore and offshore opinion regarding the nature and vibe of Chinese stimulus will lead to interesting dispersion. Identify the trend, then market make around it.
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