In today’s briefing:
- HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?
- New CSRC “Provisions” Take a Step Towards Meeting PCAOB Requirements
- Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)
- Merger Arb Mondays – Yashili, Razer, Sezzle, Link Admin, Uniti, AKM, Virtus
- Jin Jiang Capital (2006 HK): Composite Doc Out. 26 April H-Class Meeting
HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?
- Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
- If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
- Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)‘s real float. Short interest is over 17 days of ADV.
New CSRC “Provisions” Take a Step Towards Meeting PCAOB Requirements
- The PCAOB has not, despite a cooperation agreement with the CSRC signed in 2013, been able to conduct on-site investigations of a HK or mainland-based company since 2010.
- On Friday, the CSRC published a new Strengthening Confidentiality and File Management Related to Overseas Issuance to replace 2009 rules.
- Importantly, the revised Provisions deletes the stipulation that “on-site inspections shall be dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators.” Will it be enough?
Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)
- NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
- Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO.
- Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies.
Merger Arb Mondays – Yashili, Razer, Sezzle, Link Admin, Uniti, AKM, Virtus
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
- This week, the highest gross spreads are Yashili International Holdings (1230 HK), Razer Inc (1337 HK), Sezzle Inc (SZL AU), Link Administration Holdings (LNK AU), Uniti Group Ltd (UWL AU)
- The lowest gross spreads CIMIC Group Ltd (CIM AU), China Logistics Property Holdings (1589 HK), Dragon Crown Group (935 HK), 51 Job Inc Adr (JOBS US), Jin Jiang Capital.
Jin Jiang Capital (2006 HK): Composite Doc Out. 26 April H-Class Meeting
- Hotel operator Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s Composite Doc is out. The H-Class meeting on the 26 April, with expected payment on the 17 May.
- The IFA considers the Offer to be fair and reasonable.
- This is done and trading tight at a gross/annualised spread of 1.6%/14%.
Before it’s here, it’s on Smartkarma
