In today’s briefing:
- Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
- ASX200 Index Rebalance: PEXA to Replace Pendal
- Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa
- Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.
- ECM Weekly (8th Jan 2022) – Sinohytec, Beauty Farm, Sula, Kfin, Bionote, Meidong, CIFI, Jinxin Fert
- PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix
- Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%
- Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event
- Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston
- Ant Group: Shareholder Restructuring Announced and the Lack of IPO Plan Are Negatives Surprise
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
- End December was the end of the review cutoff for a lot of indices that will rebalance within the next couple of months.
- PEXA Group (PXA AU) replaces Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 12 January.
- There were big outflows from Hong Kong and China focused ETFs led by Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).
ASX200 Index Rebalance: PEXA to Replace Pendal
- PEXA Group (PXA AU) will replace Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 12 January.
- Passive S&P/ASX 200 (AS51 INDEX) trackers will receive PEXA Group (PXA AU) shares from their Link Administration (LNK AU) holdings and will have to buy the rest from the market.
- There will be selling in Pendal Group (PDL AU) from S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index trackers as well as from global trackers.
Last Week In SPACE: Shinsei Bank, Warrego Energy, Korean Bank Activism, Japfa
- SBI Holdings (8473 JP) is still expected to buy out SBI Shinsei Bank (8303 JP) minorities sooner rather than later
- Not one to rest on its laurels, Hancock immediately bumped its Offer for Warrego Energy (WGO AU) to A$0.36/share, up from A$0.28/share, provided it gets to 40%. We need more popcorn.
- APCM reckons Korean banks can pay out more than 50% of net income to their shareholders annually.
Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.
- Yamada Denki (9831 JP) has bought back nearly 16% of shares out ex-Treasury in the 7.5 months since last fiscal year earnings were announced. It went limit up on Day1.
- Then it stopped – despite the buyback being 15% of expected volume every day for a year and a HUGE piece of Real World Float.
- There is 8% left to buy at current prices – 16-18% of volume the next 4.5mos. And it is still a dirt cheap capital structure and somewhat sticky shareholder structure.
ECM Weekly (8th Jan 2022) – Sinohytec, Beauty Farm, Sula, Kfin, Bionote, Meidong, CIFI, Jinxin Fert
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs
- On the IPO front, only the smaller issuers were active with most following through on year end listing plans.
- On placements front, HK market got going in a jiffy, riding on the coattails of China reopening.
PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix
- On Friday after the close, S&P DJI Indices announced that PEXA Group (PXA AU) would replace Pendal Group (PDL AU) in the S&P ASX 200 on 12 January at close.
- This is unsurprising. Pendal was scheduled to exit in January due to takeover. PEXA was already an interim S&P ASX 200 member after the distribution by Link Administration (LNK AU).
- The timing is conveniently in the timeframe for the LNK distribution of PXA shares to its shareholders implemented on the 10th.
Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%
- TSMC’s ADR premium is entering the higher end of its range since early 2022. Earnings coming this week.
- UMC’s ADR has flipped from a discount to a moderate premium. Earnings are ahead as well.
- ASE Technology’s ADR premium has reached 6.1%, high even for this usually higher-premium trading pair.
Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event
- In mid-December, digital UX creation agency (90% of revenues) and “talent agency” (10%) announced it would move from TSE Growth to TSE Prime mid-December 2022.
- This was in Janaghan’s “Not Ready” list in TOPIX Inclusions: Who Is Ready (Dec 2022) because it did not meet two of the requirements. But it turns out it did.
- This is therefore a TOPIX inclusion event at end-January 2023.
Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Tyro Payments (TYR AU), Origin Energy (ORG AU).
- Lowest spreads – Norwest Energy NL (NWE AU), Nitro Software Ltd (NTO AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Nippon Steel Trading Corporation (9810 JP).
Ant Group: Shareholder Restructuring Announced and the Lack of IPO Plan Are Negatives Surprise
- The announced restructuring of Ant Group holding companies will block founder Jack Ma from achieving majority voting on the board following the implementation of the holdcos adjustment
- The majority of board directors will be “independent” post the holdco restructuring and they are likely to drive a more social policy focused agenda, as the 2021 sustainability report suggests
- We see these developments, and especially the lack of IPO plan, to be negative for non-government aligned Ant Group shareholders, such as the international private equity groups and especially Alibaba
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