In today’s briefing:
- What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?
- Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment
- Aisin (7259 JP): The Current Playbook
- JAPAN ACTIVISM: Murakami Target Mitsui Matsushima Cleans Up
- Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy
- Outpacing Delivery Expectations Sends Shares Soaring. Is Tesla the Most Undervalued AI Name?
- EQD | Will the HSI Keep Falling In July?
- (Mostly) Asia-Pac M&A: Sermsuk, L’Occitane, Shinko Electric, MMA Offshore, Hollysys
- Quiddity Leaderboard HSTECH Sep 24: Reference Period Over; One Change Likely; US$733mn One-Way
- Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates
What Did NPS Buy and Sell in Korean Stock Market in 2Q 2024?
- On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ.
- In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.
- NPS reduced its capital allocation to the military & defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%).
Hanwha Corp Tender Offer Details & Arbitrage Trading Assessment
- Hanwha Energy, wholly owned by the Hanwha Group’s owning family, announced a tender offer for an 8% stake in Hanwha Corp at ₩30,000. The tender period is until July 24.
- Hanwha Energy will buy all shares if tendered less than planned, otherwise pro-rata. Payment in cash eliminates cancellation risk but poses allocation risk.
- Approximately 10-15% of shares are likely to be the potential ceiling for tendering, minimizing allocation risk for the 8% target. A widening spread of 2-3% could offer arbitrage opportunities.
Aisin (7259 JP): The Current Playbook
- Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
- The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
JAPAN ACTIVISM: Murakami Target Mitsui Matsushima Cleans Up
- On 20 May, I wrote that Japanese activist MURAKAMI Yoshiaki and relations/affiliates had gone from 5% to 20% of Mitsui Matsushima (1518 JP) in 5 trading days.
- I wondered if it was real, or a pump & dump, but they went to near 30% in following days. THEN they drifted off as Murakami-Fille sold while Murakami-Père bought.
- The reasoning was not clear, but the story had real potential. Still does. Today, shareholders got more good news.
Impact of Kim Byung-Hwan’s Appointment as Korea FSC Chairman on Value-Up Policy
- Kim Byung-hwan addressed criticism of weak incentives in tax support for the value-up policy, emphasizing boosting dividends. His background suggests effective advocacy for tax reforms in his new role.
- He prioritized abolishing the FIIT in the National Assembly, citing its hindrance to capital market liquidity and investment promotion, indicating a robust approach to the value-up policy.
- Kim’s appointment as FSC Chairman signals the government’s commitment to advancing the value-up policy. He emphasizes boosting dividends and aligning tax policies accordingly, shaping trading strategies toward dividend-expanding companies.
Outpacing Delivery Expectations Sends Shares Soaring. Is Tesla the Most Undervalued AI Name?
- Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
- Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
- Future remains uncertain for Tesla and its investors. Tesla shares are pricing in the launch of a lower priced model and Tesla’s Robotaxi on 8/8.
EQD | Will the HSI Keep Falling In July?
- After an explosive rally in April, the Hang Seng Index has been in a downtrend since mid-May, many are wondering where the index is headed next.
- July 2024, based on our seasonal pattern analysis, does not have a great chance to close higher (it could, but the odds are not good).
- If the index goes down in the next 2 weeks, buy the 17600-17300 price area.
(Mostly) Asia-Pac M&A: Sermsuk, L’Occitane, Shinko Electric, MMA Offshore, Hollysys
- I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Just one new deal was discussed this week on Smartkarma: Sermsuk PCL (SSC TB)‘s Delisting Offer. There are also rumours of an Offer for Raffles Medical Group (RFMD SP).
- Key updates took place on: L’Occitane (973 HK), Shinko Electric Industries (6967 JP), MMA Offshore (MRM AU), and Hollysys Automation Technologies (HOLI US).
Quiddity Leaderboard HSTECH Sep 24: Reference Period Over; One Change Likely; US$733mn One-Way
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- The reference period for the September 2024 index rebal event is now complete. In this insight, we take a look at our final expectations for index changes.
- Our current estimates suggest one-way flows due to index changes and capping could be around US$733mn but that could change by early September 2024.
Shift Up IPO: Final Allocation Results, Lockup Release Schedule, & Index Float Rates
- Notably, local hedge funds receive significant allocation, nearly 10%, unusual for KOSPI IPOs this size, differing from HD Hyundai Marine Solution.
- KOSPI 200’s initial float rate is 14%, rising to 58% in six months. MSCI starts at 8%, reaching 12% in six months and 25% in a year.
- Differences from HD Hyundai Marine Solution include high short-term strategies among institutions. Unlike before, local pension funds receive substantial allocation, potentially affecting stock price post-listing.
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