In today’s briefing:
- KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- The Biggish Sep 2024 “Thursday-Friday Trade”
- Tokyo Metro (9023 JP) IPO: The Bull Case
- Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
- What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?
- All the Scoop on the Korea Value-Up Index
- China’s [Maybe] Biggish [Quasi?] Bazooka
- Korea Exchange Announces The Korea Value Up Index
- Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason
- Korea Value Up Index – Surprising Inclusions and Exclusions
KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- KRX plans to launch the Value-Up Index as two separate indices: the “Excellent Value-Up Index” and the “Promising Value-Up Index.”
- The universe will include 150 constituents from KOSPI 200 and KOSDAQ 150. Allocation between indices is undecided, with sector limits on number and weight confirmed.
- The key indicators (ROE, PBR, shareholder return rate) remain unchanged. The Promising Index’s weights are undisclosed, but the Excellent Index favors financial and automotive stocks.
The Biggish Sep 2024 “Thursday-Friday Trade”
- Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
- There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
- This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.
Tokyo Metro (9023 JP) IPO: The Bull Case
- Tokyo Metro (TKYMETRO JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government.
- The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout.
Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
- The new 100% mandatory tender offer rule could push buyers to lower premiums for major shareholders, potentially increasing hostile takeover attempts as costs get shared with minority shareholders.
- It looks like MBK is eyeing this situation as a chance to redefine their strategy. This really shows how serious MBK is about the Korea Zinc deal.
- Watch for top-tier assets available via hostile takeovers, particularly companies like SK Inc and Lotte Corp, where low shareholder stakes may lead to management conflicts.
What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?
- In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
- The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
- Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.
All the Scoop on the Korea Value-Up Index
- The index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.
- Some companies not fitting the ‘value-up’ narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index’s original goal.
- Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.
China’s [Maybe] Biggish [Quasi?] Bazooka
- Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
- The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
- Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.
Korea Exchange Announces The Korea Value Up Index
- Korea Exchange announced the long awaited Korea Value Up Index (“K Value Up Index”) (composed of 100 stocks) today.
- Korea Exchange used a 5-step screening process to select the 100 companies in this index including market cap, profitability, shareholder returns, market evaluation, and capital efficiency.
- This Value Up index is part of the bigger “Corporate Value Up ” program in Korea. These efforts to improve Korea’s corporate governance policies is a marathon, not a sprint.
Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason
- Significant peer price performance declines leaves IPO valuation stretched, the desired discount multiple to attract interest has suddenly become a premium
- Investor interest in memory semiconductors, AI derivative stocks has cooled
- Peer price sell-offs are extreme but could quickly change, reflecting the highly cyclical nature of the sector
Korea Value Up Index – Surprising Inclusions and Exclusions
- There are some major surprises (both inclusions and exclusions) in the Korea Value Up index.
- In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&T and LG Corp) are surprising exclusions in the index.
- There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).
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