In today’s briefing:
- Rakuten (4755 JP) – A Big Deal With Very Interesting Characteristics – Index Matters
- Rakuten (4755 JP) Offering: Could Drop Some More Before Passive Buying Kicks In
- Yuexiu Rights – The Trading Pattern Fits
- Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan
- Five Star IPO Lock-Up – Over US$1.3bn Lockup Release with Less than US$1m ADV
- Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+
- MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- Canon Buyback – 18th in a Row at the Same Size, But This Time With a Running Head Start
- S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- StubWorld: China Everbright (165 HK) Trading Wide
Rakuten (4755 JP) – A Big Deal With Very Interesting Characteristics – Index Matters
- Yesterday (15 May 2023) just before EOD, an article ran suggesting a ¥300bn capital raise by Rakuten (4755 JP). The stock fell 10% in 10mins. Rakuten hemmed/hawed but didn’t deny.
- One day later, we have a deal. It is up to 546mm shares including greenshoe, which at the close was ¥333bn. 468mm shares to the public, 79mm to 3rd parties.
- This increases Real World Float by 95%. In that respect this is vaguely IPO-ish. Investors have to re-underwrite. Then Passive re-shrinks the float. Details matter.
Rakuten (4755 JP) Offering: Could Drop Some More Before Passive Buying Kicks In
- Rakuten (4755 JP) is looking to raise around US$2.4bn by selling shares via a Japanese Public Offering and an International Offering as well as through a third-party allotment.
- The stock has already dropped 13.7% in the last couple of days on large volumes as the rumours of the offering started to swirl.
- The offering prices late next week and passive trackers will be buying stock once the stock settles and this will provide support in the near-term.
Yuexiu Rights – The Trading Pattern Fits
- The Yuexiu Property (123 HK) Rights start trading today. Last day is next Monday. There is a general pattern to the flows and it behooves investors to be aware.
- There is a pattern to these trades which is worth understanding.
- In this case, I expect it is worth going long Yuexiu Rights vs Short peer basket equity earlier in the cycle.
Checking on Dongwon Industries’ KS200 Deletion Situation After Last Friday’s Share Cancellation Plan
- It is highly likely that Dongwon Industries will be removed from the KOSPI 200 index in this June review.
- Additionally, based on the confirmed cancellation timeline, the possibility of reinstatement during the December review seems unlikely.
- As a result, it would be wise to maintain shorting position strategies that factor in this information.
Five Star IPO Lock-Up – Over US$1.3bn Lockup Release with Less than US$1m ADV
- Five Star Business Finance (FIVESTAR IN) raised around US$190m in its India IPO in Nov 2022.
- Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+
- On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In our previous note, we highlighted which division could list. In this note, we will look at Cainiao.
MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- We do not expect any constituent changes in June (that could change though!). The only flows are likely to be from capping the constituents at 10% of the index weight.
- Capping changes will lead to a one-way turnover of 2.15% resulting in a one-way trade of A$14m. There are two stocks with over A$5m to trade.
- Stockland (SGP AU) will be the most affected stock with passive trackers needing to sell over 1 day of ADV. The stock has run up and shorts are increasing.
Canon Buyback – 18th in a Row at the Same Size, But This Time With a Running Head Start
- Canon has conducted 18 buybacks in the last 15 years. Every single one has been the same size. And the parameter-setting and how they are executed is… particular.
- For those with Canon to execute, using the information about patterns may be helpful.
- For those interested in a trade, there may be one here.
S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- The review period for the June rebalance of the S&P/ASX family of indices ends tomorrow and we expect two changes for the S&P/ASX 200 (AS51 INDEX).
- Impact of passive trading on the stocks varies between 4.3-11 days of ADV. Short interest on the potential adds is small while there are significant shorts on the potential deletes.
- We expect there is pre-positioning on at least three of the four stocks. In some cases that is small, while it could be a lot larger in other stocks.
StubWorld: China Everbright (165 HK) Trading Wide
- Fund manager China Everbright (165 HK)‘s implied stub and simple ratio (CEL / Everbright Securities Co (A) (601788 CH))) are at multi-year lows.
- Preceding my comments on China Everbright are the weekly setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
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