In today’s briefing:
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
- China VAST’s Underwhelming Privatisation Bid from China Jinmao
- Short-Covering Trend of KOSPI 200 Deletions by Month-End
- NPS Plans to Increase Its Stake in KEPCO from 6.4% to Up to 10.0%
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (9 June 2022)
- Shorting Trend Projections on KOSPI 200 Additions
Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, net inflow was ~US$0.6bn, split (roughly) <US$0.1bn for Shanghai and US$0.5bn for Shenzhen.
- The largest inflows were into Kuaishou Technology (1024 HK) and Wuxi Biologics (2269 HK). The largest outflows were in CNOOC Ltd (883 HK) and Tencent (700 HK).
China VAST’s Underwhelming Privatisation Bid from China Jinmao
- China Vast Industrial Urban Development (6166 HK) announced a pre-conditional privatisation offer from China Jinmao Holdings (817 HK) at HK$2.40 per share, a 30.4% premium to the undisturbed price.
- Key conditions include approval by at least 75% disinterested shareholders (<10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
- The headcount test (if still applicable) is a key challenge as minorities are likely to be unimpressed. We would be buyers up to HK$2.26 per share (implies 75% deal probability).
Short-Covering Trend of KOSPI 200 Deletions by Month-End
- As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.
- Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.
- So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.
NPS Plans to Increase Its Stake in KEPCO from 6.4% to Up to 10.0%
- After the market close today, KEPCO announced that NPS plans to increase its ownership of the company from 6.43% to as high as 10% by 2025.
- This announcement is likely to have a positive impact on KEPCO’s shares both in the near term as well as over the next three years.
- If NPS has a greater stake in KEPCO, this could encourage the government to raise electricity prices since the government wants the investments made by the NPS to perform well.
Shanghai/Shenzhen Northbound Connect: Weekly Moves (9 June 2022)
- Inside is a recap of movements in the last week relating to the Hong Kong Stock-Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
- Overall, net inflow was ~US$6.5bn, split between Shanghai (+US$5.5bn) and Shenzhen (+US$1.0bn).
- The largest inflows were into LONGi Green Energy Technology (601012 CH) and Kweichow Moutai (600519 CH). The largest outflows were in CATL (300750 CH) and Cosco Shipping Holdings (601919 CH).
Shorting Trend Projections on KOSPI 200 Additions
- All of these additions experienced significant levels of short trading yesterday. In particular, those newly listed stocks saw harsher shorting attacks, similar to what we witnessed at the last rebalancing.
- A certain level of short selling trend for newly listed stocks will likely work the same this time, and the applicable period is expected to be 3-4 trading days.
- That is, we need to target the newly listed stocks again for this rebalancing: Iljin Hysolus (271940 KS), K Car (381970 KS), and SD Biosensor (137310 KS).
Before it’s here, it’s on Smartkarma
