In today’s briefing:
- HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- Kioxia (285A JP) IPO: Valuation Insights
- CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade
- Quiddity ChiNext/ChiNext 50 Dec 24 Results: ~80% Hit Rate; US$1bn+ One-Way Flows
HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
- The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.
- An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray.
Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- A Bloomberg article mid-day suggested Japan’s Ministry of Health, Labour and Welfare proposed a new “wage growth +1.9%” (vs 1.7% now) return bogey for the US$1.7trln Government Pension Investment Fund.
- The GPIF is conducting its quinquennial review to assess markets, long-term prospects, correlations, etc, to set a CAPM asset allocation mix to meet the bogey.
- The combination of higher USDJPY, Japan inflation, wider valuation spreads, and the prospect of higher yen rates suggests the review might result in lower yen bond allocs, higher equity allocs.
ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
- We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).
Kioxia (285A JP) IPO: Valuation Insights
- Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
- We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
- Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.
CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
- Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH).
- The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.
Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
- At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
- TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.
TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.
NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade
- There could be 19 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December. There are some stocks from the new F&O inclusions.
- If all changes are on expected lines, one-way turnover is estimated at 65.2% and that will result in a one-way trade of INR 71bn (US$837m).
- The potential inclusions have outperformed the potential deletions since the start of July. The pace picked up over the last month as we neared the end of the review period.
Quiddity ChiNext/ChiNext 50 Dec 24 Results: ~80% Hit Rate; US$1bn+ One-Way Flows
- The December 2024 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
- There will be seven changes for the ChiNext index and five changes for the ChiNext 50 index. Some of these names surprised us.
- In this insight, we take a look at our final flow expectations for the confirmed index changes.
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