In today’s briefing:
- Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
- KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade
- Index Rebalance & ETF Flow Recap: KS200, KQ150, Yuanta Div+, LIT, HSCI, IDX, Japan Positioning
- Lansen Pharma (503 HK): 27th November Scheme Vote
- Weekly Deals Digest (29 Oct) – Eoflow, Haitong Intl, Hollysys, Azure, Symbio, EcoPro, Cainiao
- ECM Weekly (29th Oct 2023) – Kokusai, J&T, Midea, Wuxi XDC, Cirrus, Cello World, Honasa, SIA
- Ohayo Japan | Tech Rebounds but Markets in Correction; The New Lexus Concept Car
- L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer
- Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- A-H Premium Weekly (Oct 27th): Beigene, CMS, Guangzhou Auto, China Longyuan
Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
- Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn.
- Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
- The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.
KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade
- The merger between Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) is done. Newco starts trading this week as KDX.
- The trade was fine until I wrote 9 days ago there was still room to run. It fell the next day, bounced 3%, then got CRUSHED into the index upweight.
- NEWREIT is now as cheap relative to its Pro-Forma Peer Group as it was at announcement.
Index Rebalance & ETF Flow Recap: KS200, KQ150, Yuanta Div+, LIT, HSCI, IDX, Japan Positioning
- The coming week has a lot of review periods ending – KOSPI 200, KOSDAQ 150, CSI 300, CSI 500, SSE50, STAR50, ChiNext and SENSEX, among others.
- The TOPIX rebalance will be implemented on Monday while the Global X Lithium & Battery Tech ETF (LIT US) and IDX indices will rebalance at the close on Tuesday.
- There were outflows from Emerging Market ETFs including iShares Emerging Markets (EEM), iShares Core Emerging Mar (IEMG), Schwab Emerging Markets Equi (SCHE) and IShares Edge Min Vol Emerging Markets ETF (EEMV).
Lansen Pharma (503 HK): 27th November Scheme Vote
- On the 17 September, specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK), a perennial takeover target, finally announced an Offer.
- Wu Zhen Tao, NED and Chairman of Lansen, made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.
- Composite Doc is now out. Court Meeting is the 27th November. Expected last day of trading is the 28 Nov. 28 December payment. IFA says fair and reasonable. Looks done.
Weekly Deals Digest (29 Oct) – Eoflow, Haitong Intl, Hollysys, Azure, Symbio, EcoPro, Cainiao
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – EcoPro Materials (ECO123 KS), Cainiao Smart Logistics (1437124D HK), VNG (VinaGame) (VNG US) IPOs
- Event-Driven developments – Eoflow (294090 KS), Azure Minerals (AZS AU), Pact Group Holdings (PGH AU), Symbio Holdings (SYM AU), Haitong International Securities Group (665 HK), Hollysys Automation Technologies (HOLI US).
ECM Weekly (29th Oct 2023) – Kokusai, J&T, Midea, Wuxi XDC, Cirrus, Cello World, Honasa, SIA
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- In the IPO space, Kokusai Electric (6525 JP) provided some relief in the ECM space, even as J&T Global Express (1519 HK) didn’t do much.
- Given the earnings seasons, there weren’t any placement during the week. We did look at Singapore Airlines (SIA SP)‘s upcoming placement lockup expiry.
Ohayo Japan | Tech Rebounds but Markets in Correction; The New Lexus Concept Car
- Overseas: SPX -0.5%, Nasdaq; +0.5%; Energy stocks weaker on poor results; US inflation still too high
- Today: NKY Futs -1.3% v cash. JPY149.7; Weak results from Omron, Seiko, Sumi Chem
- JapanX: Lexus’s LF-ZC concept car offers a 1,000 km range with advanced batteries, AI integration, and a commitment to luxury, signaling Toyota’s EV ambitions
L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer
- L&F Co Ltd (066970 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
- Based on history, the approval for the transfer and the listing change could take place some time in December.
- L&F (066970 KS) will not be short-sell eligible for 6 months or longer. That means short covering prior to index deletion and a possible overshoot in the stock price.
Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- Onewo (2602 HK) has announced the full conversion of 1.05bn Domestic Shares and Unlisted Foreign Shares to H-shares. The increased market cap will help in HSCI inclusion.
- Onewo (2602 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect soon after index inclusion.
- Onewo (2602 HK) has drastically underperformed its peers since listing and the HSCI inclusion could mark a turning point for the stock.
A-H Premium Weekly (Oct 27th): Beigene, CMS, Guangzhou Auto, China Longyuan
- We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 119.1% as of Oct 27th.
- The average A-H premium changed by -1.7ppt week on week, led by utilities, consumer discretionary, industrials and offset by consumer staples.
- We highlight weekly changes in A-H premium for Beigene, China Merchants Securities, Guangzhou Auto, China Longyuan.
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