In today’s briefing:
- MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
- StubWorld: Swire And China’s Opening
- Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight
- Bubble Warning: China Internet Investment (810 HK) Suspended
- Norwest Energy Rejects MinRes’ Offer
- Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV
- Discussing the Currently Widened Pref-Ord Disparity in Korea
- EQD | SPX and NDX : Its US CPI Time and We Look at Trading Opportunites in the Options Market
- XXXLutz Consortium/Home24: Final Results and Delisting
MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
- We expect a number of changes to the MSCI Standard indices for the Asia Pacific region at the first Quarterly Comprehensive Index Review to be implemented on 28 February.
- As usual, most changes are expected in China with a smattering of adds and deletes for the other markets.
- On average, the adds have outperformed the deletes over the last few weeks and months and pre-positioning should continue for the next couple of weeks.
StubWorld: Swire And China’s Opening
- Retailers /hoteliers will welcome the return of Chinese travellers, with ~US$250bn in annual spending. That should bode well for mall operators like Swire Properties and, in turn, Swire Pacific.
- Preceding my comments on Swire 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%.
Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight
- KT’s foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.
- This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.
- The February inclusion is pretty tight, but May seems like we could be looking out for it.
Bubble Warning: China Internet Investment (810 HK) Suspended
- China Internet Investment Finance Holdings (810 HK) (CII), an investment manager, is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
- CII has thrice responded to unusual price action in its share price in the past four months. Shares are up a staggering ~1,000% in the past six months.
- This insight provides some background information on CII. Trading at 64x book value, this is one avoidable company.
Norwest Energy Rejects MinRes’ Offer
- In its Target Statement released this afternoon, Norwest Energy NL (NWE AU) has rejected Mineral Resources (MIN AU)‘s off-market scrip Offer.
- Norwest concluded the Offer was opportunistic and did not boast an appropriate premium for control.
- MinRes’ Offer closes on the 6 February – unless extended.
Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV
- On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.
- Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.
- This large shares cancellation should have a positive impact on Korea Kolmar Holdings’ share price. It is also trading at 40% discount to its NAV.
Discussing the Currently Widened Pref-Ord Disparity in Korea
- Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).
- The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.
- We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.
EQD | SPX and NDX : Its US CPI Time and We Look at Trading Opportunites in the Options Market
- US CPI data is due on Thursday 12th January and is likley to be another important data point
- SPX Index is down nearly 5% since November and NDX Index is down nearly 8% over the same period
- We look for short-term trading opportunities in the options market
XXXLutz Consortium/Home24: Final Results and Delisting
- The offer has ended. The bidding consortium has secured 92.67% of home24 shares (including capital increase and share purchases). Completion still remains subject to customary antitrust approvals.
- Unsurprisingly, the shares are now trading at a 8.07% discount to the offer price. Delisting is looming and holdouts have not a sell-out right.
- It is still puzzling to me why >7% of shares have not been tendered. The bidders might make a delisting offer, but not necessarily at the offer price.
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