In today’s briefing:
- Significant Developments Emerged Today for Korea’s Value-Up
- Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto
- EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24
- Nippon Steel/United States Steel Corp
Significant Developments Emerged Today for Korea’s Value-Up
- Deputy PM Choi Sang-mok commits to aggressively pursue separate taxation of dividend income, marking a shift towards concrete action for value-up policies.
- Ever since the introduction of the Value-up policy earlier this year, the primary incentive championed by the local capital market has been the separate taxation of dividend income.
- Hence, the government’s official commitment to this marks a crucial step in reshaping the Value-up momentum.
Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto
- 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: Qantm Intellectual Property (QIP AU), Southern Cross Media (SXL AU), Azure Minerals (AZS AU), QV Equities Ltd (QVE AU), Hollysys Automation Technologies (HOLI US), Shinko Electric.
- Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU), Lawson.
EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24
- Unprecedented levels of FII option-buying & increasing geo-political risk causing IVs to re-price higher.
- Skew/ Smile characteristics of the Vol Surface reflect increased risk aversion but not it panic mode – yet.
- BankNifty IVs exhibiting unusual “kink-in-the-curve”. Enter barbell structures to position for reversion in curve shape.
Nippon Steel/United States Steel Corp
- On 18 April, a White House official said that any review of the deal between Nippon Steel Corporation (5401 JP) and United States Steel (X US) by CFIUS will continue as scheduled.
- X shares trade at ~5.2x on NTM IBES-consensus EBITDA given priced-in deal risk vs. implied 7x at the time of the winning NSC’s bid, and look attractive relative to comparables.
- There remains a possibility that Nippon could finalize the takeover after the U.S. presidential election, presenting potential upside.
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