In today’s briefing:
- MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning
- Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling
- MSCI SEA EM Nov SAIR: High Impact Deletions Expected
- Weekly Deals Digest (06 Nov) – Perpetual, Pendal, Nitro, ReadyTech, VNET, Singapore Medical, Blibli
- Merger Arb Mondays (07 Nov) – Yashili, Fengxiang, Kingston, Pendal, Perpetual, ReadyTech, Nitro
- Toshiba (6502) – Funding Deadline Risk Was Known 6+ Weeks Ago
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- MSCI India November SAIR: Potential Changes & Higher Foreign Holding
- Elliot Tenders Its Stake
MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning
- We see 1 potential inclusion and 12 potential deletions for the MSCI Korea Index at the November SAIR. The final changes will depend on what day MSCI uses.
- Nearly all the stocks have over 4 days of ADV to trade from passive trackers. There have been big moves on short interest and excess volume on some stocks.
- The announcement will be made Friday morning pre-market open and there could be some big moves in the stocks this week.
Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling
- Mitsui & Co Ltd (8031 JP) on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.
- Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.
- The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There’s also a fair bit of index selling the next 6mos.
MSCI SEA EM Nov SAIR: High Impact Deletions Expected
- There should be quite a few deletions for South East Asia Emerging Markets. The number of potential inclusions is smaller and have a smaller probability of being added.
- While the passive flow on the potential deletions is not massive, the impact in terms of days of ADV to trade is very high in most cases.
- There has been a steady increase in cumulative excess volume on a few of the potential deletions and there will be unwinding against the passive flow.
Weekly Deals Digest (06 Nov) – Perpetual, Pendal, Nitro, ReadyTech, VNET, Singapore Medical, Blibli
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Blibli (1437710D IJ) priced at IDR450, Giant Biogene Holding (2367 HK) solid trading debut.
- Event-Driven developments – Nitro Software Ltd (NTO AU), Perpetual Ltd (PPT AU), ReadyTech Holdings Ltd (RDY AU), China VAST, Singapore Medical (SMG SP), 21Vianet Group (VNET US).
Merger Arb Mondays (07 Nov) – Yashili, Fengxiang, Kingston, Pendal, Perpetual, ReadyTech, Nitro
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), 111 Inc (YI US), Pendal Group (PDL AU), Genex Power Ltd (GNX AU), O2Micro International (OIIM US).
- Lowest spreads – Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Tassal (TGR AU), OZ Minerals Ltd (OZL AU), China Vast Industrial Urban Development (6166 HK), PTB.
Toshiba (6502) – Funding Deadline Risk Was Known 6+ Weeks Ago
- There are several bits of news in the past few weeks indicating financing commitments might not meet the 7 Nov deadline. Principal among them the JIC/JIP split many weeks ago.
- That suggested the 30 Sep and subsequent deadlines would be delayed. And it appears we now have the reason for it, and that is another cause of financing commitment delay.
- This development suggests activists have another quiver in their arrow should privatisation not succeed. Toshiba has cheapened in the meantime.
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
MSCI India November SAIR: Potential Changes & Higher Foreign Holding
- Post the end of the review period, we see 7 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR.
- Inclusion in the index will require passive trackers to buy 6-21 days of ADV on the stocks. That increases to 16-45 days of delivery volume.
- Cumulative excess volume indicates pre-positioning on most potential adds. Foreign Portfolio Investors (FPI) have increased their holding on all potential adds over the July-September quarter.
Elliot Tenders Its Stake
- 4 November was the deadline to tender. PMI threatened to walk away if it didn’t reach 90%. Some funds that opposed the deal trimmed their stakes, likely bought by arbs.
- The FT has reported that Elliot (10.5% stake) has tendered and that by 4 November over 80% acceptances were recorded. PMI is very likely to reach now over 90% acceptances.
- Results will be announced on 7 November, with settlement on 11 November. The squeeze-out procedure is likely be initialed as soon as possible after settlement. Gross spread is 0.87%.
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