In today’s briefing:
- Fast Retailing (9983) – Now At Double Downweight Levels
- Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
- HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- A/H Premium Tracker (To 15 Mar 2024): Liquid AH Premia Starting to Narrow
- Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation
- Taiwan Tech Weekly: Nvidia Conference; Samsung to Hike NAND Prices; TSMC Adding Capex Due to Demand
- Merger Arb Mondays (18 Mar) – Roland DG, JSR, YSK, CIMC Vehicles, Alumina, QV Equities, Qantm
- Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.
- Taiwan Dual-Listings Monitor: TSMC Premium Slumped But Remains Extreme; UMC at a Discount
- Pair Trade Idea: Short Evergreen Against Long Maersk / ZIM
Fast Retailing (9983) – Now At Double Downweight Levels
- Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
- If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 2.8mm shares (US$2.5bn) to sell.
- At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.
Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
- In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
- The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
- We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.
HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
- Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
- The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row.
A/H Premium Tracker (To 15 Mar 2024): Liquid AH Premia Starting to Narrow
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND a net buyer every day since the end of Chinese New Year. NORTHBOUND a huge net buyer this week, now net buyers in size (RMB +93bn) over 7 weeks.
- For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).
Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation
- Estimating FINANCIAL INVESTMENT’s dividend arbitrage positions’ exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January’s volume (≥₩2T).
- Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April’s end, likely impacting index negatively, akin to January.
- Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.
Taiwan Tech Weekly: Nvidia Conference; Samsung to Hike NAND Prices; TSMC Adding Capex Due to Demand
- Nvidia GTC Conference This Week Likely to Create Newsflow for Many Tech Names
- Samsung Could Hike NAND Flash Prices by 20%; Silicon Motion for Exposure
- TSMC Reportedly Placing Orders for Additional Advanced Packaging Capacity, Likely In Response to Demand Strength
Merger Arb Mondays (18 Mar) – Roland DG, JSR, YSK, CIMC Vehicles, Alumina, QV Equities, Qantm
- 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: APM Human Services Internation (APM AU), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU), Alumina Ltd (AWC AU), Silver Lake.
- Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).
Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.
- Late last week, machine tool and press maker Aida Engineering (6118 JP) made an announcement of a share buyback. Up to 2.3mm shs (3.59%) spending up to ¥2bn.
- The company has filed a policy for “Action to Implement Management That is Conscious of Cost of Capital and Stock Price” in its most recent CorpGov report available (J/E) here.
- It will be a little smaller than that, but it is worth taking a closer look at the details, etc.
Taiwan Dual-Listings Monitor: TSMC Premium Slumped But Remains Extreme; UMC at a Discount
- TSMC: +15% ADR Premium; Likely to Trend Further Lower Over Time
- UMC: -2.3% Discount; Decent Level to Long the ADR vs. Short Local
- ASE: +11.6% Premium; Continue to Advocate Shorting the Spread Here
Pair Trade Idea: Short Evergreen Against Long Maersk / ZIM
- Since October, Evergreen shares have performed well on rising spot rates
- Over the same period, Maersk and ZIM shares fell on longer-term concerns
- Pair trade idea: SHORT Evergreen vs LONG Maersk / ZIM position
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