In today’s briefing:
- Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
- HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying
- A/H Premium Tracker (To 13 Dec 2024): Pairwise Intracorrelation and Vol Way Up, Premia Down
- CPMC (906 HK): Not A Shadow Of Doubt (!) As Pre-Cons Fulfilled
- MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
- China Healthcare Weekly (Dec.15) – 10th VBP Results, WuXi Shares Surge, Newjf Will Be Successful
- Quiddity Leaderboard Hang Seng Internet & IT March 25: 4 Changes Likely, Some Names Have High Impact
- A Review of Major Equity Indices in Korea in 2024
- Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy
- Quiddity Leaderboard HSCEI Mar 25: One Change Likely but More Names Lurking Close to the Border
Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
- The impeachment motion against President Yoon passed in the South Korean National Assembly, clearing the two-thirds supermajority, and is now official.
- For the impeachment to fail, four justices must oppose it—highly unlikely given the current setup. The odds are heavily in favor of the impeachment being upheld.
- Corporate law reforms, driven by a likely Democratic Party takeover, could fuel value-up momentum and drive the local market, potentially sparking an unexpected rally through the May election.
HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying
- SOUTHBOUND gross trading activity rebounded about 33% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK rebounded.
- Alibaba Group Holding (9988 HK) was again the top buy and Tencent (700 HK) and Meituan (3690 HK) the top two sells. Tech is having a mixed outing now.
- Gross SOUTHBOUND volumes back up this week to levels seen just off the autumn peak. An interesting week as stocks popped Monday, opened high Tuesday, then fell all week.
A/H Premium Tracker (To 13 Dec 2024): Pairwise Intracorrelation and Vol Way Up, Premia Down
- Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB volumes rebounded, tech saw limited net buying, BABA was bought but other major tech sold.
- The first leg of China’s retaliatory acts against US trade measures appeared with export bans on gallium, germanium, antimony, graphite products, etc. These will not be lifted soon.
- China is also retaliating against the Phils, Vietnam, Taiwan and changing tack in Europe. The next couple of years threatens to be “interesting times.
CPMC (906 HK): Not A Shadow Of Doubt (!) As Pre-Cons Fulfilled
- My conversation with the FA earlier this week largely put to rest a number of concerns, specifically on regulatory approvals, surrounding the Offer for CPMC Holdings (906 HK).
- As announced on the 13th December, the last pre-condition, SAFE, has been satisfied. All pre-cons have been fulfilled. The Offer Doc will be dispatched on or before the 20th December
- This could turn unconditional before year-end, depending on whether Zhang Wei promptly tenders. Expect the share price to trade tight (er) to terms Monday morning.
MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
- Vulcan Energy Resources (VUL AU) will be added to the VanEck Rare Earth/Strategic Me (REMX US) while Tianqi Lithium (9696 HK) will be deleted from the index.
- Constituent changes, float changes and capping changes result in an estimated one-way turnover of 2.5% and in a round-trip trade of US$37m.
- The largest inflows will be in Vulcan Energy Resources (VUL AU), Lynas Corp Ltd (LYC AU), Ganfeng Lithium (1772 HK) and Tronox Holdings (TROX US).
China Healthcare Weekly (Dec.15) – 10th VBP Results, WuXi Shares Surge, Newjf Will Be Successful
- The 10th national VBP released results. The average price reduction was about 70%. CSPC, Kelun, Fosun Pharma, Sino Biopharmaceutical are the “main force” and their performance would be affected.
- WuXi Shares surge due to the absence of BIOSECURE Act from the proposed amendments to US NDAA. However, the rally could be short-term as the Bill may return next year.
- Pre-Conditions of Newjf have been smooth so far. We think investors can directly consider Newjf’s Offer. Based on the current situation, we are optimistic that Newjf will finally be successful.
Quiddity Leaderboard Hang Seng Internet & IT March 25: 4 Changes Likely, Some Names Have High Impact
- The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
- In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
- Based on the latest available data, we see four ADDs and four DELs for HSIII in March 2025.
A Review of Major Equity Indices in Korea in 2024
- In this insight, we review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index.
- Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and reducing stocks that could be excluded.
- Korea Value Up Index has been heavily promoted by the Korean Exchange this year. Korea Exchange plans to make special changes to the Korea Value-Up Index constituents on 20 December.
Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy
- Nec Networks (1973 JP)‘s own FA didn’t include any measure of transaction synergies to be created about which NEC and NESIC were so sure. This is not being done right.
- Singapore Post (SPOST SP)‘s muted price action after announcing the ~S$900mn FMH sale is illustrative. But expect more value to be unlocked from divesting non-core ops going forward.
- The FTC’ blocking the giant grocery merger of Kroger Co (KR US) and Albertsons Cos (ACI US) spells trouble for ACT and Seven & I Holdings (3382 JP).
Quiddity Leaderboard HSCEI Mar 25: One Change Likely but More Names Lurking Close to the Border
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
- At present, we see one change based on the 13th December 2024 data but the rankings can change until 31st December 2024.
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