In today’s briefing:
- Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- MarketVector Vietnam Local Index Rebalance: One Add, Capping & Float Changes
- MV Global Rare Earth/Strategic Metals Index Rebalance: One Delete & Other Changes
- MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$1.2bn
- CK Hutchison (1 HK): Political Turbulence
- Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- MV Global Junior Gold Miners Index Rebalance: 7 Adds & Other Changes Lead to US$610m Trade
- HKBN (1310 HK): MBK Ups Stake Via VLN Conversion
- MV Australia Equal Weight Index Rebalance: SIG, TNE Added; US$288m Trade
- Ramelius/Spartan Merger: MergeCo Close to ASX100 Index Inclusion
Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- Nikkei Business reported Friday 14 March that Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) (“DHFG”) were in talks to integrate to create a Super-Regional Bank
- Gunma and Daishi-Hokuetsu are part of the same multiple-regional bank alliances, including the Gunma-Daishi Hokuetsu Alliance since 2021, in order to collaborate regionally, build scale, and lower service provision cost.
- As Gunma and Daishi Hokuetsu serve adjacent jurisdictions, and they are already exploring sharing branches, this makes sense. The World with Interest (rates above zero) may cause more integration talk.
MarketVector Vietnam Local Index Rebalance: One Add, Capping & Float Changes
- Nam A Commercial Joint Stock Bank (NAB VN) will be added to the MarketVector Vietnam Local Index at the close on 21 March.
- Estimated one-way turnover is 3.1% and that results in a round-trip trade of US$26m. There are 3 stocks with more than 1x ADV to trade from passives.
- Vietnam is on the watchlist of a global index provider for possible reclassification from Frontier to Secondary Emerging Market and that could lead to inflows to the stocks.
MV Global Rare Earth/Strategic Metals Index Rebalance: One Delete & Other Changes
- Standard Lithium (SLI US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close of trading on 21 March.
- The constituent change, float changes and capping changes result in an estimated one-way turnover of 8.9% and in a round-trip trade of US$61m.
- The largest inflows will be in Pilbara Minerals (PLS AU) and Albemarle (ALB US) while there will be outflows from MP Materials (MP US) and Lynas Corp (LYC AU).
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$1.2bn
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
- Estimated one-way turnover is 3% resulting in a round-trip trade of US$1.2bn. Impact on the stocks is small given they are highly liquid.
- There is expected to be US$600m to sell in Broadcom from the Technology Select Sector and Invesco S&P500 Equal Weight ETFs at the same time as the selling from VanEck Vectors Semiconductor.
CK Hutchison (1 HK): Political Turbulence
- On 13 March, Ta Kung Pao, a Hong Kong newspaper owned by the Chinese government and Communist Party, denounced CK Hutchison Holdings (1 HK)’s planned port transaction.
- The opinion piece is mainly political rhetoric, as even if China managed to block the deal, it would still not address the underlying concerns expressed in the article.
- In the near term, the shares will likely be under pressure from a nationalistic backlash. Nevertheless, deal or no deal, the valuation remains undemanding.
Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning “more than 50% but less than 51%” of Tsuruha.
- The Price Ratio is now 4.24x. Trailing EPS ratios is >5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.
- Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.
MV Global Junior Gold Miners Index Rebalance: 7 Adds & Other Changes Lead to US$610m Trade
- There are 7 adds for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March. There are plenty of float and capping changes too.
- Estimated one-way turnover is 5.3% resulting in a round-trip trade of US$610m. There are 11 stocks with over 1x ADV to trade from passive trackers.
- Spartan Resources /Australi (SPR AU) and Ora Banda Mining (OBM AU) will be added to some of the S&P/ASX indices at the same time, increasing flow and impact.
HKBN (1310 HK): MBK Ups Stake Via VLN Conversion
- China Mobile (941 HK) has made a pre-conditional HK$5.23/share voluntary Offer for HKBN Ltd (1310 HK). However, a possible separate Offer from I Squared continues to make the news.
- In an unusual move, MBK, via Twin Holding, has converted HK$970.5mn of VLNs, at a whopping HK$11.60/share conversion price, lifting MBK’s stake to 16.39% on a fully diluted basis.
- Speculation is rife that MBK provides an irrevocable to I Squared for its enlarged shareholding. Maybe. I still don’t see China supporting a U.S.-based infrastructure firm over an SOE .
MV Australia Equal Weight Index Rebalance: SIG, TNE Added; US$288m Trade
- Sigma Healthcare (SIG AU) and Technology One (TNE AU) will be added to the VanEck Vectors Australian Equal Weight ETF (MVW AU) at the close on 21 March.
- Surprisingly, there are no deletions from the index. The two inclusions, float changes and capping changes result in a one-way turnover of 5.6% leading to a round-trip trade of A$288m.
- There will be huge buying of A$1.2bn in Sigma Healthcare (SIG AU) at the same time from S&P/ASX 200 (AS51 INDEX) and related index trackers.
Ramelius/Spartan Merger: MergeCo Close to ASX100 Index Inclusion
- Ramelius Resources (RMS AU) and Spartan Resources /Australi (SPR AU) have signed a binding Transaction Implementation Deed to enter into a ‘Transformational Combination’.
- For each share of Spartan Resources (SPR AU) held, shareholders will receive A$0.25 in cash and 0.6957 Ramelius Resources (RMS AU) shares, implying a value of A$1.78/share for Spartan Resources.
- The merger is expected to complete late July/ early August, and the merged entity could be added to the S&P/ASX 100 Index in September.
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