In today’s briefing:
- Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes
- S&P/ASX Index Rebalance Preview: Potential Changes in September
- Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023
- Last Week in Event SPACE: Celltrion, Fast Retailing, Canon, Costa, Chindata
- Merger Arb Mondays (17 Jul) – Chindata, Eoflow, JSR, IMAX, Mason, Estia, Musgrave, Origin, InvoCare
- Lutronic Tender Offer by Hahn & Company: 2nd Round
- Taiwan Dual-Listings Monitor: TSMC Premium Staying High Ahead of Earnings This Week; UMC at Par
- Quiddity Leaderboard ASX Sep 23: Intra-Review Replacement for BKL and Many Other Expected Changes
Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes
- Based on prices and turnover from 10 July, there could be one deletion from the index in July. Plus there will be capping and float changes.
- There are four stocks that meet the inclusion criteria but all are non-pure play companies and the index is already at the limit of 15 non-pure play companies.
- There will be a large impact on a lot of stocks but the flows are not very large due to the limited assets tracking the index.
S&P/ASX Index Rebalance Preview: Potential Changes in September
- We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
- Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
- Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.
Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- Busy week in India with the adhoc changes to the NIFTY, NSE Nifty Next 50, S&P BSE SENSEX and Nifty Bank due to the HDFC Limited and HDFC Bank merger.
- The IDX could announce the changes to the IDX30, LQ45 and IDX80 indices in the coming week, though there is no firm schedule for announcements.
- Yet another week of inflows to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF and outflows from the Hang Seng H Share Index ETF (2828 HK).
SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
- That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
- SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.
Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023
- In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
- Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
- We highlight 38 pair trades that involve Korean holdcos and opcos.
Last Week in Event SPACE: Celltrion, Fast Retailing, Canon, Costa, Chindata
- According to Invest Chosun, Celltrion Inc (068270 KS) plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
- Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
- Canon (7751 JP)‘s most recent buyback should be done now-ish. They have been ~15-20% of volume over the past month. The Trade would be short Canon vs Ricoh (7752 JP).
Merger Arb Mondays (17 Jul) – Chindata, Eoflow, JSR, IMAX, Mason, Estia, Musgrave, Origin, InvoCare
- 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 111 Inc (YI US), Chindata Group (CD US), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP).
Lutronic Tender Offer by Hahn & Company: 2nd Round
- According to local media (Seoul Economic Daily), Hahn & Company plans to make a second round of tender offer for Lutronic Corp, in order to meet the delisting requirements.
- The tender offer price is 36,700 won, the same as the first tender offer price.
- We believe that Hahn & Co is likely to successfully complete this second round of tender offer of Lutronic and it is likely to be delisted in the coming months.
Taiwan Dual-Listings Monitor: TSMC Premium Staying High Ahead of Earnings This Week; UMC at Par
- TSMC: 9.9% premium, continues to stay above one standard deviation from historical median… Earnings coming this week.
- UMC: 0.0% ADR premium… Trading on par with local shares… Earnings next week.
- Chunghwa Telecom: -0.8% discount represents relatively deep discount vs. history.
Quiddity Leaderboard ASX Sep 23: Intra-Review Replacement for BKL and Many Other Expected Changes
- In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run up to the September 2023 Rebalance.
- Blackmores Ltd (BKL AU) could get deleted from the index family, triggering intra-review changes in the next few days.
- Including the intra-review changes, ASX 300 could see 12 ADDs and 10 DELs, ASX 200 could see 4 changes, and ASX 100 could see one change between now and September.
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