In today’s briefing:
- TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade
- SKC Co: Announces a Share Buyback of 5% of Outstanding Shares
- TOPIX October 2022 Rebal – BIG Names with BIG Flows
- Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea
- Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport
- Hong Kong CEO & Director Dealings: 7th Oct – Luk Fook, Zhongsheng Group, Kowloon Development
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax
- Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA
TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade
- At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
- Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
- Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.
SKC Co: Announces a Share Buyback of 5% of Outstanding Shares
- On 7 October, SKC Co Ltd (011790 KS) announced that it will conduct a share buyback of 1.89 million shares, representing 5% of outstanding shares.
- We continue to maintain a Negative view of SKC Co.
- We remain concerned about lack of clear measures to protect existing minority shareholders if its major subsidiaries (such as Nexilis) complete IPOs in the next several years.
TOPIX October 2022 Rebal – BIG Names with BIG Flows
- The TSE announced its first large FFW rebalance under new rules and Market Segmentation. ~1,000 names see FFW drop 5% or more. 100+ rise 5+%. Reverse funding trades are significant.
- Top BUY flow: Toyota, Olympus, Daiichi Sankyo, Tokio Marine, JP Holdings with an average of 4.0 days’ ADV to buy. Softbank/9984, MitCorp, Hitachi, Suzuki, Marubeni average 4.8 days to SELL.
- 493 names start their phased weight reduction out of TOPIX because they do not meet the hurdle for minimum trading value. And… Shinsei is the most impressive SELL name.
Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea
- Chairman Kim of the FSC mentioned potential rule changes in disclosing the names of short sellers at the state audit last Thursday.
- The first is to reveal the identity of short sellers who traded through a swap contract with a broker, which is currently exempt from the short-selling disclosure obligation.
- The second is to disclose the identity of investors caught in illegal short-selling activities, mostly naked short-selling and wall-crossing.
Last Week in Event SPACE: Shinsei Bank, Jardine Cycle, Keppel Corp, Eagle Cement, Hitachi Transport
- SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
- Jardine Cycle & Carriage (JCNC SP) is expensive here – relative to historical values – and from an implied stub perspective, has only briefly been exceeded twice in the last decade.
- Expect Keppel (KEP SP) to re-rate after the spinoff. The Sembcorp Marine (SMM SP) distribution supported by both better profitability and much larger order books can be managed reasonably cleanly.
Hong Kong CEO & Director Dealings: 7th Oct – Luk Fook, Zhongsheng Group, Kowloon Development
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights may also flag those companies where shares have been pledged. Stocks mentioned include Luk Fook Holdings Intl (590 HK), Zhongsheng Group (881 HK), and Kowloon Development (34 HK).
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Eagle Cement,Toa Oil, O2Micro, Hitachi Transport, Shidax
- There are 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Three new deals discussed this week: San Miguel (SMC PM)‘s MTO for Eagle Cement (EAGLE PM), Idemitsu (5019 JP)‘s Offer for Toa Oil (5008 JP), and O2Micro (OIIM US)‘s MBO.
- Key updates took place for Tassal (TGR AU), Hitachi Transport System (9086 JP), Shidax Corp (4837 JP), Toyo Construction (1890 JP), and Singapore Medical (SMG SP).
Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA
- We expect a few adds to the HSCI in December followed by a lot more change in March. We could finally reach 80 HSI INDEX constituents in December.
- There will be a handful of adds to the FTSE All-World/All-Cap indices in December. But there will be many changes to the FTSE TWSE Taiwan Dividend+ Index in December.
- There were large inflows to the Yuanta/PShares Taiwan Dividend Plus ETF (0056 TT), Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).
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