In today’s briefing:
- Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
- HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
- HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO
- NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed
- Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades
- EQD / NSE NIFTY50 Vol Update / High & Down Vol State Confirmed. Greenlight for Selling Smile/ Vega.
- Selected European HoldCos and DLC: 2024 Report
Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- 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: Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), ESR Group (1821 HK), Goldlion Holdings (533 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).
Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
- 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: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
- Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Get Nice Financial Group Ltd (1469 HK), Greatview Aseptic Packaging (468 HK), Macromill, Inc (3978 JP), Avjennings Ltd (AVJ AU).
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
- There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
- Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
- The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
- We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
- Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.
HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- SOUTHBOUND gross trading activity was quite light the last two weeks of the year. Non-SB trading of HK was even lighter. Net buying was strong.
- Net buying on tech was VERY big but not on Alibaba Group Holding (BABA US) (small positive) or Meituan (3690 HK) (largest outflow).
- Financials and High Div SOEs are back on the menu. SOUTHBOUND has been a Very Big Percentage of traded volume.
Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO
- Last month, wealth manager Insignia Financial (IFL AU) announced – and subsequently rejected – a A$4.00/share non-binding and indicative proposal from PE outfit Bain Capital.
- The question was whether Bain returned to the well, in a space where Regal (RPL AU) recently binned its Platinum (PTM AU) tie-in; and Perpetual (PPT AU)‘s carve-out has hit a snag.
- Roughly two weeks after that Bain rejection, US-based asset investment manager CC Capital Partners has now tabled a A$4.30/share, in cash, non-binding Offer. That’s probably enough for Insignia to engage.
NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed
- Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) should replace Bharat Petroleum Corp (BPCL IN) and Britannia Industries (BRIT IN) in the NIFTY Index (NIFTY INDEX) in March.
- Passive NIFTY Index trackers will need to trade at least 4.5x ADV and 8.8x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
- There does not appear to be a lot of positioning in Jio Financial Services (JIOFIN IN) and the stock could outperform its peers over the next few months.
Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades
- This Insight analyzes Hang Seng Index (HSI INDEX) tailor-made option strategies over the last five trading days, providing strategy analysis, trends, highlights, and volatility context.
- Despite the holidays and generally low volume, last week saw some interesting strategies traded.
- The highest premium earned was for a January ’25 Butterfly. The largest trade was a January ’25 Bull Call Spread, reflecting the popularity of long volatility strategies and spreads.
EQD / NSE NIFTY50 Vol Update / High & Down Vol State Confirmed. Greenlight for Selling Smile/ Vega.
- IVs higher alongside the underlying index. Weekly expiry (02.01.2025) served as the inflection point sending IVs back down. Monthly IVs: 12.7% (Open) -> 14.4% (02.01.2025) -> 13.3% (Close).
- Vol Term-structure swung between Contango & Backwardation around expiry date. Skew in Monthly contracts compressed as IVs moved higher. Smile unchanged.
- Trading Strategy Implications: Reengage Smile/ Vega harvesting structures. Abandon wait-and-watch stance – “High & Down” vol state confirmed.
Selected European HoldCos and DLC: 2024 Report
- Discounts to NAV of covered holdcos mainly tightened during 2024. Discounts to NAV: C.F.Alba, 11.8% (vs. 50.8% as of Y/E 2023); GBL, 40.9% (vs. 37.4%); Heineken Holding, 15.8% (vs. 16.7%);
- Industrivärden C, 5.5% (vs. 5.5%); Investor B, 4.5% (vs. 12.8%); Porsche Automobile Holding, 32.2% (vs. 36.6%). Rio DLC spread tightened to 23% (vs. 24.2%).
- What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).
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