In today’s briefing:
- MMG (1208 HK) Rights Trading Dynamics
- Swire Properties (1972 HK): Potential Passive Selling & Trade Ideas
- Merger Arb Mondays (24 Jun) – Malaysia Airports, GA Pack, Infocom, Mimasu, Tatsuta, Capitol, MMA
- DMA | JSE June ’24 Rebalance: Estimated Flows (Buys: Banks, Sells: NPN, PRX)
- EQD / NSE Vol Update / IVs Stabilize After Falling Dramatically over past 2 Weeks
MMG (1208 HK) Rights Trading Dynamics
- The MMG (1208 HK) rights, designed to raise US$1.15bn to pay off loans to the parent for the purchase of a large copper asset, start trading 24 June 2024.
- There is some risk up for grabs, and it is likely to trade according to standard Hong Kong Rights Trading Dynamics. Shorts are down somewhat, but covering should be expected.
- There is path-dependency to the Rights Trading, and while they trade for 7 trading days through Tuesday next, one should expect the volume to trade this week.
Swire Properties (1972 HK): Potential Passive Selling & Trade Ideas
- The steady selloff in Swire Properties (1972 HK) could result in the stock being deleted from global passive portfolios in the next couple of months.
- Swire Properties (1972 HK) trades marginally cheaper than its similar sized peers on forward PE and price to book value.
- Swire Pacific (A) (19 HK) owns 82% of Swire Properties (1972 HK) and a big drop in the stock price could see them step in.
Merger Arb Mondays (24 Jun) – Malaysia Airports, GA Pack, Infocom, Mimasu, Tatsuta, Capitol, MMA
- 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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Asia Cement China (743 HK), A8 New Media (800 HK), Malaysia Airports Holdings (MAHB MK).
- Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), Nagatanien Holdings (2899 JP), Chilled & Frozen Logistics Holdings (9099 JP).
DMA | JSE June ’24 Rebalance: Estimated Flows (Buys: Banks, Sells: NPN, PRX)
- In this note we show flow estimates based on passive AUM tracking and hedging the Capped Top 40 SWIX (DCAP), Top 40 SWIX (DTOP & TOPI) and Capped ALSI SWIX.
- Relative to the March rebalance, we expect turnover in the closing auction to be much lower.
- Turnover for the day was R59bn, R44bn traded in the closing auction (harmonisation implemented).
EQD / NSE Vol Update / IVs Stabilize After Falling Dramatically over past 2 Weeks
- Implied Volatilities (IVs) stabilized over the week after falling dramatically since the 04-June-2024 India General Election results.
- No tactical changes required while IVs are stable & “High & Down” Vol-state is maintained.
- Vol Curve continues to be in Contango. Lack of significant event risk should keep term structure locked in its current orientation.
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