In today’s briefing:
- Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively
- KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
- CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- JD Industrials Pre-IPO – The Positives – Growing Fast and a Leader in Its Space
- AAG (2686 HK): Pros & Cons Ahead Of Scheme Vote
- Mankind Pharma: IPO Details & Index Inclusion
- KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)
- CPF Global Food Solution Pre-IPO – The Positives – One of the Largest Players in the Industry
- CSI500 Index Rebalance Preview: Potential Changes as Review Period Nears Completion
Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively
- The local ghost hedge fund began to excessively invest in credit, which leveraged 2.5 to 3 times when the eight manipulated stocks started to increase rapidly in price.
- Then, the Financial Supervisory Service deemed this excessively-leveraged trading behavior as unusual, and news of an investigation into their activities broke out and triggered them to dump the shares.
- The key now is identifying in advance the stocks that will experience similar selling patterns. To do so, we need to prioritize selecting stocks with high-margin balances in recent times.
KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
- With 4 trading days left in the review period, we see three potential changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in June.
- Kum Yang (001570 KS), Cosmochemical (005420 KS) and Youlchon Chemical (008730 KS) could replace Dongwon Industries (006040 KS), Hwaseung Enterprise (241590 KS) and Hyundai Home Shopping Network (057050 KS).
- If approved by shareholders, the Dongkuk Steel Mill (001230 KS) split increases the probability of Youlchon Chemical (008730 KS) inclusion and Hyundai Home Shopping Network (057050 KS) could avoid deletion.
CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
- With 4 trading days to go the review period, we see 13 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 1.94% at the June rebalance leading to a one-way trade of CNY 5.05bn.
- With the review period nearly complete, the gap between the potential adds and deletes could narrow ahead of the announcement of the changes as pre-positions are built.
AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
- Ahead of Aag Energy Holdings (2686 HK)’s vote on 27 April, the gross spread to Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer sits uncomfortably high at 13.5%.
- The key risk remains that minorities vote down the scheme. Retail forums are active with mixed views on the offer. Peers have also modestly re-rated, which helps the NO camp.
- At the last close, the risk-reward profile is unfavourable as the downside to a scheme fail (-16.0%) is greater than the upside to a scheme pass (+13.5%).
JD Industrials Pre-IPO – The Positives – Growing Fast and a Leader in Its Space
- JD Industrials is looking to raise about US$1bn in its upcoming HK IPO.
- JD Industrials (JDI) is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
- In this note, we talk about the positive aspects of the deal.
AAG (2686 HK): Pros & Cons Ahead Of Scheme Vote
- We’re down to the pointy end of AAG Energy Holdings (2686 HK)‘s Scheme. And at a gross/annualised spread of 15.6%/318%, all is not well.
- The uncertainty is not without substance. A derisory Offer, one that is rejected by a proxy advisor; together with a silent, large shareholder no one seems to know.
- Shareholders go to the vote this Thursday, the 27th April. Currently trading 5% below the undisturbed price.
Mankind Pharma: IPO Details & Index Inclusion
- Mankind Pharma (6596876Z IN) is looking to raise up to US$526m in its IPO by selling 40.06m shares at a price range of INR 1026 to INR 1080 per share.
- The company has allocated 12.02m shares to anchor investors at INR 1080/share. That list includes marquee names and the lock-up reduces near-term float.
- The IPO opens on 25 April and will close on 27 April. Shares are expected to start trading on 9 May and there are no near-term index inclusions expected.
KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)
- With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX).
- There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
- Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.
CPF Global Food Solution Pre-IPO – The Positives – One of the Largest Players in the Industry
- CPF Global Food Solution (2247162D TB) is looking to raise around US$1bn in its upcoming Thailand IPO.
- CPF Global Food Solution (CPFGS) is a subsidiary of CP Foods Group, offering food products and services to food operators and consumers locally and internationally.
- In this note, we talk about the positive aspects of the deal.
CSI500 Index Rebalance Preview: Potential Changes as Review Period Nears Completion
- With three trading days left in the review period for the CSI 500 Index (SH000905 INDEX) June rebalance, we forecast 50 changes at the close on 9 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 10.77% at the June rebalance resulting in a one-way trade of CNY 6.28bn.
- The potential adds have outperformed the potential deletes but there has been a big selloff in the last couple of weeks as the market has headed lower.
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