In today’s briefing:
- MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- Taiwan Tech Weekly: TSMC Surge Leads Taiwan Stocks Higher; Advanced Chip Packaging in Focus
- Merger Arb Mondays (11 Mar) – Shinko, JSR, Azure, Genex, OreCorp, Hollysys, CPMC, Vinda
- ECM Weekly (11th Mar 2024) – Oriental Land, ARM, Tuhu, Wiwynn, Macrotech, Zomato, Trial Holding
- HK Connect SOUTHBOUND Flows (To 8 Mar 2024); Big Net Buys of SOEs, Finally Tencent a Net Buy
- Tencent (700 HK) 4Q23 Earnings Preview: Stable Growth and Margin Improvement Will Continue
- Mainland Connect NORTHBOUND Flows (To 8 Mar 2024): Utilities and Semis a Buy
- EQD | S&P500 WEEKLY Pull Back: BUY the Dip
- KS (1024 HK) 4Q23 Earnings Preview: Will See Historical Profit
MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) is the largest buy while capping results in NVIDIA Corp (NVDA US) being the largest sell by far.
- Estimated one-way turnover is 8.3% resulting in a round-trip trade of nearly US$3bn. There are a few stocks with more than 0.2x ADV to trade.
WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
- That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
- The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest buy.
Taiwan Tech Weekly: TSMC Surge Leads Taiwan Stocks Higher; Advanced Chip Packaging in Focus
- Massive TSMC Rises 13.8% in Just a Week; Mediatek a Top 10 Gainer for Second Week in a Row
- TSMC (2330.TT; TSM.US): Sales Should Be Gradually Increasing QoQ in 2024F; IPhone 16 Is on Schedule.
- PC Monitor: Long Dell Vs. Short Acer Update; Dell & HPQ Results Indicate Opportunity in Asus
Merger Arb Mondays (11 Mar) – Shinko, JSR, Azure, Genex, OreCorp, Hollysys, CPMC, Vinda
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: APM Human Services Internation (APM AU), Probiotec Ltd (PBP AU), Genex Power Ltd (GNX AU), China Traditional Chinese Medicine (570 HK), Genetron Holdings Ltd (GTH US).
- Lowest spreads: Tietto Minerals Ltd (TIE AU), CIMC Vehicle Group Co Ltd (1839 HK), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), Payroll (4489 JP), Welbe Inc (6556 JP).
ECM Weekly (11th Mar 2024) – Oriental Land, ARM, Tuhu, Wiwynn, Macrotech, Zomato, Trial Holding
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, Trial Holdings (5882 JP) was hoping for better luck with its listing this time around.
- For placements, it was a very busy week for a change with most regions, apart from Hong Kong, chipping in.
HK Connect SOUTHBOUND Flows (To 8 Mar 2024); Big Net Buys of SOEs, Finally Tencent a Net Buy
- A shares were up small on the week. HK stock indices were down.
- Net SOUTHBOUND buying was HK$17.1bn in the third post-holiday week. SOUTHBOUND has net bought every day since the end of Chinese New Year.
- SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.
Tencent (700 HK) 4Q23 Earnings Preview: Stable Growth and Margin Improvement Will Continue
- We believe total revenue will grow by 11% in 4Q23 and 2024.
- We also believe the operating margin will improve slightly in 4Q23 and the following two years.
- Tencent sold weak business to China Literature in December 2024.
Mainland Connect NORTHBOUND Flows (To 8 Mar 2024): Utilities and Semis a Buy
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net SELL RMB 3.1bn of A-shares on slightly slower average activity after net buying RMB +63bn the previous five trading weeks.
- Lower activity into the end of the Two Sessions Week. First net selling by NORTHBOUND in many weeks.
EQD | S&P500 WEEKLY Pull Back: BUY the Dip
- The SPX has been rallying for 4 months, rising >+24%, is is OVERBOUGHT but we see the current pullback as a BUY opportunity.
- The index could pullback another 1-2 weeks before it restarts the rally.
- Price areas to buy are between 5069 and 5000, lower prices may indicate a deeper correction is unfolding (lasting up to 3 weeks down in total).
KS (1024 HK) 4Q23 Earnings Preview: Will See Historical Profit
- We believe total revenue will increase by 17% YoY in 4Q23 and 15% in 2024.
- We also believe KS will see historical high operating profit in 4Q23 and the year 2023.
- We conclude that KS has an upside of 92% and a price target of HK$90. Buy.
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