In today’s briefing:
- Major Global Liquidity Warning – Don’t Fight the Feds
- Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
- Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank
- Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
- Arclands (9842) Overpays for Arclands Service Holdings (3085)
- Merger Arb Mondays (17 Apr) – Newcrest, Essential, Healius, Lian Beng, Golden Energy, Arcland
- Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
- Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
- ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon
- Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest
Major Global Liquidity Warning – Don’t Fight the Feds
- A major bull market in Global Liquidity has started. Be prepared the cycle is rising and looks set to expand towards a new top sometime around 2026.
- A sharp uptick in the pace of liquidity injections into World financial markets occurred around October of last year in the wake of the British gilt crisis
- China’s PBoC also began a major easing policy coinciding with the end of COVID-lockdowns. China matters hugely to the World economy because of her whopping size.
Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
- SBI Sumishin Net Bank (7163 JP) lowered its listing price vs what were already lowered expectations from a year prior. Then Rakuten Bank (5838 JP) lowered its IPO range.
- SBI Sumishin dilly-dallied around IPO price for three days then went nuts, rising 40% as of Friday morning. Rakuten Bank’s IPO looks dirt cheap now.
- But it is worthwhile comparing it on a spectrum of OTHER Japanese banks and neobanks.
Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank
- The review period for the MSCI May QCIR starts on Monday. The most
changesinclusions by far are expected to be in China. - There will be an ad hoc change for the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 18 April.
- After a period of sustained outflows, there were some inflows to the IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.
Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
- Prosus (PRX NA) moved 96mn shares of Tencent (700 HK) into CCASS. Tencent shares fell hard. If the share price fell because of a block offering, that would be unwarranted.
- Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials.
- Japan’s Finance Minister said that companies need to improve their PBRs, and that “increasing corporate value of listed companies would allow for Japan to realise sustainable growth.”
Arclands (9842) Overpays for Arclands Service Holdings (3085)
- On Friday Arcland Sakamoto (9842 JP) and restaurant franchise subsidiary Arcland Service (3085 JP), which it launched in 1993 and IPOed in 2007, announced they had agreed to merge.
- Arcland SHD runs 18 restaurant brands, of which Katsuya is most well-known, with a total of 750 or so restaurants managed globally. It has grown consistently.
- The merger ratio is at an all-time high for Arcland SHD. This should be a done deal but I might expect some complaints. I think Arclands is probably overpaying.
Merger Arb Mondays (17 Apr) – Newcrest, Essential, Healius, Lian Beng, Golden Energy, Arcland
- 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 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Origin Energy (ORG AU).
- Lowest spreads – Healius (HLS AU), Essential Metals (ESS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), Golden Energy & Resources (GER SP), Mincor Resources NL (MCR AU).
Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
- Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
- The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
- We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.
Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
- We should aim for price movement patterns with relatively low market exposure. One of them is the post-effective upward price movement of deletions.
- The relative price performance for one week after the implementation compared to KOSPI 200 was consistently positive, ranging from 2.41% to 6.82%.
- Given the recent price movement of four deletion candidates, there is again a high possibility that the price distortion caused by MSCI flow will revert after the effective date.
ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- Momentum appears to be picking up on the IPO front with a few successful listing helping sentiment
- On the placement front, GDR flow appears to have resumed.
Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest
- OVERSEAS. SPX up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data; Musk jump’s into Generative AI; Boeing Production Woes
- JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed; Panasonic to build 3rd US batt plant; JT ramps up heated stick products
- NUGGET. Elon Musk’s aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan’s Advantest(6857)
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