In today’s briefing:
- MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes
- Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
- MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade
- MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
- Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
- MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
- Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade
- MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn
- MV Australia A-REITs Index Rebalance: Only Float & Capping Changes
- Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough
MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes
- De Grey Mining (DEG AU), Perseus Mining (PRU AU) and Sandfire Resources Limited (SFR AU) will be added to the Vaneck Vectors Australian Resources ETF (MVR AU) in December.
- Constituent changes, float changes and capping changes result in an estimated one-way turnover of 7.4% and in a round-trip trade of A$63m.
- De Grey Mining will be acquired by Northern Star Resources in the first half of 2025. The passive buying could push De Grey Mining higher in the short-term.
Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
- The impeachment motion against President Yoon passed in the South Korean National Assembly, clearing the two-thirds supermajority, and is now official.
- For the impeachment to fail, four justices must oppose it—highly unlikely given the current setup. The odds are heavily in favor of the impeachment being upheld.
- Corporate law reforms, driven by a likely Democratic Party takeover, could fuel value-up momentum and drive the local market, potentially sparking an unexpected rally through the May election.
MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade
- Telix Pharmaceuticals (TLX AU) is the sole (and somewhat surprising) inclusion for the VanEck Vectors Australian Equal Weight ETF (MVW AU) in December.
- The one inclusion, float changes and capping changes result in a one-way turnover of 5.5% leading to a round-trip trade of A$290m.
- Shorts have increased in Telix Pharmaceuticals (TLX AU) this year but there has been some covering in the stock recently.
MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
- No constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December. But there are a lot of float and capping changes.
- Estimated one-way turnover is 2.6% resulting in a round-trip trade of US$269m. There are 8 stocks with over 1x ADV to trade from passive trackers.
- Stocks with the largest flows are Evolution Mining, Pan American Silver, Westgold Resources, B2Gold, Alamos Gold, Harmony Gold Mining, Eldorado Gold, K92 Mining, IAMGOLD, Endeavour Silver and Emerald Resources.
Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Nishimoto (9260 JP).
MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
- Vulcan Energy Resources (VUL AU) will be added to the VanEck Rare Earth/Strategic Me (REMX US) while Tianqi Lithium (9696 HK) will be deleted from the index.
- Constituent changes, float changes and capping changes result in an estimated one-way turnover of 2.5% and in a round-trip trade of US$37m.
- The largest inflows will be in Vulcan Energy Resources (VUL AU), Lynas Corp Ltd (LYC AU), Ganfeng Lithium (1772 HK) and Tronox Holdings (TROX US).
Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade
- The Dems are serious about the Commercial Act amendment, with Lee Jae-myung personally attending the policy forum to pitch the change directly to key business players.
- Key takeaways: expanding directors’ fiduciary duties to all shareholders and mandatory cumulative voting, which could empower minority shareholders and reignite value-up policies in Korean companies.
- The Dems plan to fast-track the Commercial Act amendment by year-end, with implementation likely by Q2 next year, boosting market moves and reigniting the value-up trade ahead of May’s election.
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in December but there are a lot of float and capping changes.
- Estimated one-way turnover is 4.5% resulting in a one-way trade of US$1.1bn. Impact on the stocks is not big given they trade like water.
- The selling in Broadcom and NVIDIA will be amplified by selling from the Technology Select Sector SPDR (XLK US) and Invesco S&P 500 Equal Weight E (RSP US) ETFs.
MV Australia A-REITs Index Rebalance: Only Float & Capping Changes
- The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 20 December. There are no constituent changes, but there are float and capping changes.
- Estimated one-way turnover at the rebalance is 2.9% resulting in a one-way trade of A$17m. There is limited impact on the index constituents.
- The largest inflows are in Charter Hall, Gpt Group, Dexus Property and Region RE while the largest outflows will be from Goodman Group, Scentre Group and Vicinity Centres.
Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough
- Fosun Tourism has emerged from its difficulties and started an upward trend.If it remains listed, it’s only a matter of time before its share price returns to the IPO price.
- Temasek was once in talks to buy a minority stake in Club Med from Fosun International for €500 million, based on which reasonable valuation for Fosun Tourism is RMB12.6 billion.
- Fosun has continued its style- When performance recovery hasn’t been reflected in stock price, it’s the right time to privatize valuable assets at cheap price. A share alternative is expected.
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