In today’s briefing:
- Japan Post Bank (7182) – The Flow Calendar
- Meituan (3690 HK) – US$16bn of Shares To Be Delivered This Week
- Index Rebalance & ETF Flow Recap: STAR50, HSCEI, CSI300, KOSDAQ150, Japan Post Bank
- Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT
- Macro Watch: The Banking Crisis Is Likely to Accelerate in Coming Weeks
- Harita Nickel IPO Peer Comparison – Seems to Be More Reliant on Lygend, than Vice Versa
- Shorting Kakao Pay on K200 Sector Index Passive Outflow Due to GICS Change on June 8
- Meritz Financial Group: A Large Share Buyback Amid Global Financials Uncertainties
- Korean Government Reviews Rules to Ease Foreign Ownership Limits
- Good Morning Japan |UBScs – Wedding Vows Sealed; NUGGET: MOL-Diversification Can’t Come Fast Enough
Japan Post Bank (7182) – The Flow Calendar
- The near-term Supply/Demand Balance is helped or hurt – depending on how well the deal has been placed to retail, by overseas bank turmoil.
- Quality of placement to retail is tough to know from outside. We have near-term offsets with both index demand and dividend looming.
- The biggest near-term differentiator in possible supply/demand outcomes is, of course, in the hands of the TSE Index team. And we just don’t know.
Meituan (3690 HK) – US$16bn of Shares To Be Delivered This Week
- In early 2022, Tencent (700 HK) made clear it was on a divestment path – disposing of investments able to support themselves – possibly “obliged” after 2021’s China internet mess.
- In August, Reuters suggested Meituan (3690 HK) was next. Tencent denied it, but in November with Q3 earnings, announced a January 2023 distribution with March 2023 settlement.
- US$16bn of Meituan shares get delivered on 24 March 2023 – this Friday. That’s a lot. But this time is different than last time.
Index Rebalance & ETF Flow Recap: STAR50, HSCEI, CSI300, KOSDAQ150, Japan Post Bank
- There were a bunch of rebalances on Friday across Asia resulting in big flows across multiple stocks and countries.
- The coming week is quieter with no scheduled rebalances – though the KOSDAQ 150 Index rebalance could take place dependent on Kuk Il Paper Mfg (078130 KS)‘s trading resumption.
- Inflows to China and Taiwan ETFs while Korean ETFs had outflows. Market volatility resulted in redemptions from iShares MSCI Emerging Markets (EEM) and IShares MSCI Min Vol Emerging Markets (EEMV).
Last Week in Event SPACE: Japan Post Bank, S.M Entertainment, Toshiba, Link REIT
- Medium-Term, Japan Post Bank (7182 JP) is not in great shape fundamentally compared to others We still know nothing about TOPIX. And we may just not hear.
- Kakao Corp (035720 KS) to take control of S.M.Entertainment Co (041510 KS) after HYBE (352820 KS) throws in the towel.
- The world is quite volatile now, and funding is probably more precious today than yesterday. But a bid for Toshiba Corp (6502 JP) is too.
Macro Watch: The Banking Crisis Is Likely to Accelerate in Coming Weeks
- The banking crisis will continue to rage until the Fed and the ECB accept the underlying reason for the deposit flight
- Banks cannot cope with an über-inverted yield curve, why cuts are needed asap to contain the situation
- It will likely get worse before it gets better consequently
Harita Nickel IPO Peer Comparison – Seems to Be More Reliant on Lygend, than Vice Versa
- PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) is looking to raise about US$650m in its Indonesian IPO.
- Harita Nickel is a vertically integrated pure-play nickel company operating on Obi Island, Indonesia.
- For our peer comparison exercise, we looked at international nickel mining companies and also included downstream players in the nickel value chain such as Huayou Cobalt and Lygend Group.
Shorting Kakao Pay on K200 Sector Index Passive Outflow Due to GICS Change on June 8
- Kakao Pay’s GICS sector movement from IT to FINANCIALS creates flow trading opportunities due to the subsequent transfer between KOSPI 200’s sector sub-indices.
- An outflow of ₩24.6B or 410K shares will occur. This is 0.6x ADTV. Given that the recent trading volume has further decreased, the actual impact will likely exceed 1.0x DTV.
- It will be a concentrated flow in a single trading day by a single ETF, which gives us plenty of reasons for preemptively designing a short position targeting this.
Meritz Financial Group: A Large Share Buyback Amid Global Financials Uncertainties
- On 17 March (after market close), Meritz Financial Group (138040 KS) announced a share buyback program worth 400 billion won, which represents 5.4% of its market cap.
- Given the relative large size of this deal, it should have a positive impact on its share price, especially on a relative basis against its competitors.
- The collapse of SVB Financial and uncertain investors’ reactions on the purchase of Credit Suisse by UBS will likely add to the global investors’ negative sentiment on the financial sector.
Korean Government Reviews Rules to Ease Foreign Ownership Limits
- In recent days, the Korean government announced that it is reviewing foreign ownership limit rules.
- The main reasons are to align South Korea’s financial policies in line with the global standards and improve the chances of South Korea becoming included in MSCI Developed country status.
- Key companies that could benefit from potential raise of foreign ownership limit include SK Telecom, KT Corp, and SBS.
Good Morning Japan |UBScs – Wedding Vows Sealed; NUGGET: MOL-Diversification Can’t Come Fast Enough
- OVERSEAS. Equities Sell-off on Pending Demise of Credit Suisse; Flight to Safety Trade resumes; SNB engineer Shotgun Wedding – deal closed with UBS $3.25 billion. The end of an era.
- JAPAN. On Friday, NKY Futs -2.3% vs Cash as Contagion Fears around Credit Suisse prompted Flight to Safety; With CS Rescue, expect strong open; JP Shippers Container Profits looks shaky
- NUGGET. As Mitsui OSK approaches ex-div, we think the share price will see headwinds given the expected earnings decline on ONE’s earning collapse = (MUCH) lower dividends next year.
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