Daily BriefsEvent-Driven

Daily Brief Event-Driven: Teijin (3401 JP): Alternative Play on the Potential Infocom Tender and more

In today’s briefing:

  • Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
  • CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
  • TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
  • STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
  • SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
  • Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
  • CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
  • Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern
  • Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
  • Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)


Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

By Arun George

  • Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion. 
  • If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
  • However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

By Brian Freitas

  • CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
  • There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
  • With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

By Brian Freitas

  • There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
  • One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
  • The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

By Brian Freitas


SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

By Brian Freitas

  • There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
  • The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
  • The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

By Janaghan Jeyakumar, CFA

  • The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
  • There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
  • Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%. 

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

By Brian Freitas

  • There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
  • Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
  • The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.


Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

By Sanghyun Park

  • The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
  • Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
  • The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)

By Travis Lundy

  • I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
  • The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
  • The portfolio worked well in April. Now we let April ride and add the May basket.

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