In today’s briefing:
- S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks
- Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
- Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders
- Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent
- Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas
- A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
- Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement
- Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
- NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff
- HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly
S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks
- There are 3 changes for the S&P 500 INDEX, 7 changes for the S&P Midcap400 Index and 13 changes for the S&P SmallCap600 Index at the June rebalance.
- There is huge size to trade in KKR & Co (KKR US) and Crowdstrike Holdings (CRWD US) and both stocks were up big in the after-hours market.
- There has been positioning in some stocks recently but stocks including KKR & Co, RB Global and Texas Pacific Land could see further positioning in the next week.
Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
- 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), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK).
- Lowest spreads: Alumina Ltd (AWC AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), QV Equities Ltd (QVE AU).
Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders
- Archimed aims to acquire 72% of Jeisys Medical’s shares, totaling 55,724,838 shares. The tender offer runs from the 10th of this month to the 22nd of the following month.
- If tendered shares fall short of the 18,013,879 minimum, Archimed refrains from purchases. If exceeded, Archimed buys all, eliminating allocation risk.
- With over 70% substantial volume and a large portion held by local retail investors, surpassing the 26% threshold seems feasible.
Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent
- The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable.
- The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power’s offer or launched a competing offer.
- Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.
Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas
- The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
- While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
- In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.
A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND’s renewed buy streak continued this past week; every day net positive. Strong net buying. NORTHBOUND saw small net buying on renewables, utilities, and semiconductors.
- AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng/other HK indices fell and A-shares did not do much. Liquid Hs underperformed As by 2%.
Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement
- The ASX 20/50/100 index changes for the June 2024 index rebal event was announced after market close on Friday 7th June 2024.
- In this insight, we take a look at our flow expectations for the ADDs/DELs and the trends in short interest buildup for these names.
- Separately, the completion of the CSR Ltd (CSR AU) M&A deal could trigger an intra-review deletion in June 2024 and the potential replacement name could have very high-impact.
Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
- Since the China/Taiwan situation looks increasingly tense, Xu Xudong/Far Eastern Group may be eager to privatize ACC considering geopolitical conflicts and political risks. Its business is subject to strict regulation.
- HK$3.22 Offer Price is disappointing, but the privatization isn’t completely impossible (The headcount does not apply now). A certain number of investors are still willing to accept the Offer Price.
- For arbitrageurs, the return looks not bad. However, considering the high uncertainties/failure risks, we still advise investors to be cautious. HK$2.5/share is a price point worth participating in.
NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff
- There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
- Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
- After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.
HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly
- SOUTHBOUND was again a net buyer, for HK$27.2bn this week, on small two-way volumes. China Mobile (941 HK) dominated as it reached dividend ex-date. Other high-div SOEs also saw buying.
- It is not clear how much of this is H/A discounts, expected dividend tax removal, and the KPIs for SOE CEOs to raise prices and payout ratios, but it continues.
- Valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.
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