In today’s briefing:
- CSI500 Index Rebalance Preview: Positioned for Outperformance
- SPX Met 3,700 Sell Zone to Reduce Long Basket/Roll into Shorts
- Plenus (9945) To Go Private in MBO – Looks Like a Done Deal
- Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?
- MSCI Korea November SAIR: Three Adds & Four Deletes
- Index Rebalance & ETF Flow Recap: CSI500, SSE180, KOSPI2, Sensex, MSCI IN/KR, TW Div+, Socionext
- Japan Weekly | Fast Retailing, Disco, Nidec
- Last Week In Event SPACE: Renault/Nissan, Toshiba, Golden Energy, Bilibili, Shinsei, Macau Casinos
- Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage
- FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
CSI500 Index Rebalance Preview: Positioned for Outperformance
- Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
- The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.
SPX Met 3,700 Sell Zone to Reduce Long Basket/Roll into Shorts
- Call was to buy our long group for a mid-October short covering rally. Lofty CPI means we retest lows (late October). Top today for dip, better sell territory next week.
- NKY was our top long bet in our long basket (NKY, ASX, Euro Stoxx 50 and SPX) with a call to reduce with ideal sell levels due next week.
- At SPX 3,700+ we are rolling back into our short group. Ideal low due in late October.
Plenus (9945) To Go Private in MBO – Looks Like a Done Deal
- Kyushu-Based food services business and restaurant operator Plenus Co Ltd (9945 JP) announced Friday that its main holder had announced a Tender Offer. The Board voted to support the effort.
- The Tender Offer is at ¥2,640/share, a 37.5% premium to last, and which is just higher than the highest closing price since listing.
- This looks like a deal easy to get done. Decent premium, well above book, lifetime high on a low vol stock, not an awful multiple, and founder+cross-holders have 50%.
Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?
- Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows.
- It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
- As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.
MSCI Korea November SAIR: Three Adds & Four Deletes
- As the recent share price volatility has grown, there have been significant changes in those on the borderline at the MSCI November SAIR.
- Additions: Hyundai Mipo Dockyard (010620), LOTTE Corp (004990), and Ecopro (086520) & Deletions: Meritz Financial Group (138040), Amorepacific Group (002790), SK Chemicals (285130), and Green Cross (006280).
- We must wait on many names until the end, making the price impact more dramatic than usual, as the flow can be concentrated after the announcement.
Index Rebalance & ETF Flow Recap: CSI500, SSE180, KOSPI2, Sensex, MSCI IN/KR, TW Div+, Socionext
- The review period for the MSCI November SAIR starts this week and will run till 31 October. We also near the end of the review period for many local indices.
- AIPL has announced a S&P BSE SENSEX Index market consultation while FTSE has announced the result of the FTSE TWSE Taiwan Dividend+ Index market consultation.
- There were big weekly inflows to ETFs that track China, Taiwan, Korea and Hong Kong equities.
Japan Weekly | Fast Retailing, Disco, Nidec
- The Nikkei 225 closed the week +0.2% higher after sharp gains on Friday
- The Japanese yen dropped to a 32-year low on Thursday, trading at around 147.65 against the dollar, hitting its weakest point since August 1990
- Higher rates and weakening economic growth are proving a stern headwind for tech stocks; Yaskawa cut full year OP guidance
Last Week In Event SPACE: Renault/Nissan, Toshiba, Golden Energy, Bilibili, Shinsei, Macau Casinos
- In April, reportedly Renault (RNO FP) might sell Nissan (7201 JP) shares to support EV investments. We have news talks are coming to a head. The results won’t be pretty.
- The Nikkei says the JIP consortium is the “Preferred Bidder” for Toshiba Corp (6502 JP). That is a stalking horse. The proposed price of ¥2.5trn is also a stalking horse
- Reportedly the Widjaja Family may be looking to take Indonesian/Australian energy/met coal play Golden Energy & Resources (GER SP) private.
Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage
- In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.
- In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.
- We highlight 26 pair trades that involve Korean holdcos and opcos.
FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
- On 20th September 2022, FTSE Russell commenced a market consultation with a goal of increasing the constituent count of the FTSE TWSE Taiwan Dividend+ Index from 30 to 50.
- On 13th October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50.
- In this insight, we take a look at the updated Ground Rules and Quiddity’s expectations for index flows during the December 2022 Rebalance.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
