In today’s briefing:
- LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9
- Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
- Softbank – Masayoshi Son’s Got Nothin’
- Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem
- StubWorld: Unicom’s “Hs” Are Cheap
LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9
- There is recently a growing view that the ETF operators (KODEX and TIGER) will conduct most of the rebalancing trading on February 9 to avoid excessive tracking errors.
- LG Chem will face an outflow of ₩0.38T (0.8% of SO and 1.37x ADTV). LG Energy would be 0.36x ADTV and 0.31% of SO, assuming a DTV of 2M shares.
- This is definitely a clear long/short setup opportunity: LG Energy LONG/LG Chem SHORT position. Alternatively, we can also consider approaching this event with Battery ETFs LONG/LG Chem Short setup.
Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
- Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
- There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
- If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.
Softbank – Masayoshi Son’s Got Nothin’
- It’s hard to believe but Softbank’s earnings briefing had even less of substance this time than usual, essentially amounting to an “innovative” unofficial roadshow for an Arm IPO.
- The termination of the Arm-Nvidia deal was made official and there was the usual TED talk for retail investors on LTV, NAV and the brand-new concept of computer chips.
- With portfolio performance since the start of this year as grim as expected there was little to cheer.
Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem
- As for LG Energy’s inclusion timing, Solactive made a rule change, presumably designed for LG Energy’s earlier entry on April 29.
- Since LG Chem also has a battery-related business, LG Chem may remain in this index. However, the possibility should be low because its battery business is small in total sales.
- LG Chem will experience an outflow of ₩250B (1.0x ADTV). And assuming that LG Energy receives 4.75%, a passive impact of 0.31x at a DTV of 1.5M shares is expected.
StubWorld: Unicom’s “Hs” Are Cheap
- Despite the recent share price gain, China Unicom (762 HK) is inexpensive with respect to parent China United Network (600050 CH) – its pseudo domestic A-share twin – and to peers.
- Preceding my comments on Unicom, are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
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