In today’s briefing:
- RMB Dual Counter Trading Is Coming – This Changes AH Relationships
- KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
- KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
- Local Observations on Carlyle’s Possible Buyout of Hanon Systems
- Updated Tool (30Apr24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
- Key Insights from Qualcomm’s Latest Data; Mediatek Taking Market Share?
- ASX200 Index Adhoc Rebalance: Sigma Healthcare (SIG) Replaces Boral (BLD)
- Jusung Engineering: Announces Equity Spin Off + Physical Division Split
- StubWorld: Stay Long PICC (1339 HK)
- Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill
RMB Dual Counter Trading Is Coming – This Changes AH Relationships
- A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
- They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
- RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.
KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
- With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
- Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
- Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
- With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
- Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
- The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.
Local Observations on Carlyle’s Possible Buyout of Hanon Systems
- Carlyle’s renewed interest in acquiring Hanon Systems is evident from recent local market news, indicating outreach to bankers for a potential buyout, as confirmed by a local brokerage.
- Carlyle eyes majority control of Hanon Systems, targeting 50.5% from Hahn & Co and 19.5% from Hankook Tire. Carlyle may extend a tender offer for the remaining 30%.
- Still early stages; no solid info on deal certainty or specifics. Limited immediate trading opportunities, but worth monitoring as it progresses.
Updated Tool (30Apr24) & “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 are weeks ahead of the TSE and we have all the links.
- We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.
Key Insights from Qualcomm’s Latest Data; Mediatek Taking Market Share?
- Qualcomm’s latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results’ key implications for Mediatek.
- Qualcomm’s 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
- Qualcomm confirmed Mediatek’s view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.
ASX200 Index Adhoc Rebalance: Sigma Healthcare (SIG) Replaces Boral (BLD)
- Seven Group Holdings (SVW AU) now holds 85.8% of Boral Ltd (BLD AU) and that will lead to deletion of Boral from the S&P/ASX 200 (AS51 INDEX).
- As expected, Sigma Healthcare (SIG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 9 May.
- Sigma Healthcare (SIG AU) price movements will be largely influenced by its pending merger with Chemist Warehouse Group (CWG).
Jusung Engineering: Announces Equity Spin Off + Physical Division Split
- On 2 May, Jusung Engineering (036930 KS) announced an equity spin-off as well as a physical division split.
- We are negative on this combination of equity spin-off and physical division split of Jusung Engineering.
- After the two units are listed on 6 December 2024, it is likely that the semiconductor unit (Jusung Engineering Co) will rise while Jusung Holdings Co is likely to decline.
StubWorld: Stay Long PICC (1339 HK)
- People’s Insurance (PICC) (1339 HK) has bounced off its lifetime low implied stub and simple ratio (PICC/PICC Property & Casualty (2328 HK)); but still trades below its historical trailing/forward metrics.
- Preceding my comments on PICC 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%.
Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill
- MMAS prioritizes dividends over low-PBR, key to government’s Value-up momentum. Despite initial market disappointment, dividend stocks rebounded, underscoring continued investor interest.
- Government officials are collecting historic dividend data to simulate separate taxation impact of dividend income, likely to be included in July’s tax reform bill for National Assembly approval.
- Local institutions focus on dividend-centric Value-up trading, targeting stocks with high cash reserves and dividends. Strategy needed to manage market impact pre-tax reform bill in July.
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