In today’s briefing:
- Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
- EQD / NSE NIFTY50 Vol Update / Vol Term-Structure Inverts as Front-End IVs Jump to 15.0%
- Ares Management’s $3.7 Billion Acquisition: Shift for the U.S. And Global Index
- Strategic Bitcoin Reserve?
- Aviva/Direct Line: Preliminary Offer Agreement
Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?
- Gordan Tang (& his wife Celine) acquired 2.14% in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
- The Offer Price is $1.16/share against a recent close of $1.17. The Offer will be conditional on a 50% acceptance hurdle. That’s it. This is purely a technical Offer.
- Share popped 7% on the news, and closed up ~5%. This appears unwarranted. Tang is not going to take Suntec private. But ESR Group (1821 HK) may be exiting.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
- There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
- Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
- There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.
EQD / NSE NIFTY50 Vol Update / Vol Term-Structure Inverts as Front-End IVs Jump to 15.0%
- Short-Date IVs reprice higher as active contract rolls over to 12.12.2024 expiry. Elevated risk-premia justified as contracts capture RBI rate decision & U.S. NFP event risks.
- Re-Pricing of front-end IVs has kicked Vol term-structure into Backwardation. Monthly & Quarterly IVs remain unchanged. Current Vol curve shape is at odds with improving sentiment in underlying Index.
- Strategic Implications: (1) Avoid Short Gamma exposure. (2) Continue allocation to Short Vega + Short Smile structures. (3) Look for Nifty50 trading range to stabilize as trigger for Skew harvesting.
Ares Management’s $3.7 Billion Acquisition: Shift for the U.S. And Global Index
- Ares Management (ARES US) entered into a definitive agreement a $3.7 billion acquisition of GLP Capital Partners’ international operations.
- The acquisition is structured with a mix of cash and stock, including performance incentives.
- The deal, subject to regulatory approvals, will impact Ares’ presence in a global and a major US index, potentially creating significant passive demand.
Strategic Bitcoin Reserve?
Donald Trump’s election and the subsequent bull run to 100k has emboldened Bitcoiners. Many of them are now calling for the US government to build what they call a Strategic Bitcoin Reserve.
This idea has been floating around for a while. Robert Kennedy Jr. gave it a big boost in July when he promised to make the Treasury buy a quarter of all Bitcoin in circulation was he elected as president.
Since the election, various crypto celebrities have chimed in and politicians at the state and the federal level have come up with policy proposals to push this agenda.
Aviva/Direct Line: Preliminary Offer Agreement
- Aviva’s sweetened 275p proposal for Direct Line, with a 73.3% premium, aims to strengthen its UK insurance market leadership and achieve £100M+ cost synergies, enhancing profitability and competitiveness.
- The proposal values Direct Line at an 13.05x forward P/E multiple, higher than its five-year average of 9.95x. The acquisition is a transformative move for Aviva amidst ongoing sector consolidation.
- PUSU deadline is 25 December. Gross spread is 8.8%. I believe Aviva will make a firm offer and would be long the spread.
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