In today’s briefing:
- Trading Opportunities from Korea’s Sudden Short Selling Ban & Resulting Futures Backwardation
- Last Week in Event SPACE: Hokuhoku, Origin Energy, KDDI, BoJ
- Daito Trust Construction (1878) – Big Buyback, Dense Register, 120% Payout This Year
- EQD | Nikkei 225 (NKY)’s November Rally: How Far Can It GO?
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Tietto Teraoka Seisakusho, Symbio, Celltrion Health, EOFlow
- Index Rebalance & ETF Flow Recap: NEXT50, SET50, L&F, Onewo, Celltrion, AMFI
Trading Opportunities from Korea’s Sudden Short Selling Ban & Resulting Futures Backwardation
- We should consider the complete prohibition of short selling for the next six months as practically finalized.
- Following the individual stock short selling ban, both position hedging and short demand will inevitably shift to the futures market, consequently inducing unavoidable immediate backwardation.
- We should design a setup that not only actively seizes sell arbitrage opportunities but also effectively capitalizes on the downward price pressure stemming from spot selling.
Last Week in Event SPACE: Hokuhoku, Origin Energy, KDDI, BoJ
- If you are still long the Financial Group (8377 JP) from before, stay long.If you sold Hokuhoku from before, be long again, and buy on weakness
- Disaster for arb players as AusSuper rewrites the record books as an investor class and shoots down Brookfield’s sweetened Offer for Origin Energy (ORG AU).
- Kyocera (6971 JP) announced Q2 results and lowered its full-year forecast. Then the CEO said it was “reconsidering” what to do with KDDI (9433 JP) shares (after an AGM disaster).
Daito Trust Construction (1878) – Big Buyback, Dense Register, 120% Payout This Year
- Daito Trust last week announced H1 earnings, its 50% dividend payout ratio, and a ¥50bn stock buyback which results in a shareholder payout ratio of ~120% over the next year.
- This should help to keep ROE high, and as it is a clear distribution of surplus, it should help keep the multiple up.
- It is worth looking at shareholder structure to see how this buyback will be taken.
EQD | Nikkei 225 (NKY)’s November Rally: How Far Can It GO?
- The Nikkei closed the month of October down, 4 months down in a row (CC=-4), very OVERSOLD MONTHLY. The 30600 support indicated in our last MONTHLY insight did hold somehow.
- We think the Nikkei could continue to rally in November, but this explosive, fast rally, at one point will have to retrace back, before it can continue up.
- The index could rally for 2 months, into December. The target prices for the end of the rally are near 34000.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Tietto Teraoka Seisakusho, Symbio, Celltrion Health, EOFlow
- I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Two new deal was discussed on Smartkarma this week: Zhaojin Mining Industry H (1818 HK)‘s tilt for Tietto Minerals Ltd (TIE AU); and Teraoka Seisakusho (4987 JP)‘s MBO.
- Key updates took place for: Symbio Holdings (SYM AU), Lansen Pharmaceutical Holdings Co, Ltd. (503 HK), Celltrion Healthcare (091990 KS), and EOFlow (294090 KS).
Index Rebalance & ETF Flow Recap: NEXT50, SET50, L&F, Onewo, Celltrion, AMFI
- There were a bunch of indices where the review period ended last week. The changes will be announced this month and implemented in December.
- Emerald Resources Nl (EMR AU) replaced Invocare Ltd (IVC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on Friday.
- There were large outflows from mainland China listed ETFs during the week. Outflows from iShares Emerging Markets (EEM US) continued for another week.
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