Daily Brief Utilities: Genex Power Ltd, China Three Gorges Renewables, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Merger Arb Mondays (01 Aug) – Genex, Yashili, Link Admin, VNET, Ramsay, Alliance Aviation
China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)
It Is Very Important to Review ESG Investing Before the Risks Become Evident

Merger Arb Mondays (01 Aug) – Genex, Yashili, Link Admin, VNET, Ramsay, Alliance Aviation

A “Long China Three Gorges Renewables (600905 CH), short Huaneng Power Intl Inc-A (600011 CH)” pair trade should generate good return in China’s utilities sector given the current industry dynamics.
The key supporting factors are: CTGR has pure exposure to renewable, faster capacity growth and a stronger balance sheet. They should underpin better earnings quality and outlook relative to HPI.
CTGR trades on higher PER and P/B multiples, but these should not be hurdles as they are just reflection of more promising prospects. We expect CTGR’s YTD outperformance to continue.

The reason for the limited increase in GPIF’s ESG investments must be thought of separately in terms of GPIF-specific factors and the overall trend in ESG investing.
Because investors consider which combination of managers in their asset allocation will work best for the overall portfolio, there are factors that cannot be determined by individual ESG investing alone.
ESG investing has been expanding, but with so many ESG indices and vendors in disarray, some problems are pointed out. It’s important to review the effectiveness of the ESG indices.

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