In today’s briefing:
- SBI Applies for Bank Holdco License for Shinsei Stake. Aims to Go Above 50%. It’s Coming.
- HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)
- BREAKING! Dog Loses To Mangalore – Idemitsu Kosan Does Its Deal for Toa Oil (5008)
- Toyo Construction (1890 JP) – There’s Nuance in Them Thar Press Releases
- A Coming Crash: The Law of Conservation of Financial Volatility?
- EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable
- Last Week in Event SPACE: Swire Pacific, SATS/WFS, Hitachi Metal, Jinke Smart, Porsche
- Hong Kong CEO & Director Dealings: 30th Sept – Swire Pac’s Bs, Joinn Laboratories, Techtronic
- ECM Weekly (2nd Oct 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Oyo, Ixigo, Tencent, Taiwan Cemt
- Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB
SBI Applies for Bank Holdco License for Shinsei Stake. Aims to Go Above 50%. It’s Coming.
- Last Friday most of the way through the afternoon session, media reports ran a story saying SBI Holdings (8473 JP) had applied for a Bank Holding Company authorisation.
- That is a filing with the FSA one makes when one wants to acquire >50% of voting rights in an entity with a Banking license. Shares popped, and fell back.
- They probably didn’t pop enough. There is a BIG sell flow coming, but the timing is giri-giri on eventiness, and confident traders could take the whole trade.
HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)
- We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
- Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
- Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.
BREAKING! Dog Loses To Mangalore – Idemitsu Kosan Does Its Deal for Toa Oil (5008)
- Friday post-close, Idemitsu Kosan (5019 JP) announced a deal to buy out subsidiary Toa Oil Co Ltd (5008 JP). Cornwall has agreed to tender, so it’s a done deal.
- This is at ¥3,150/share, which is nearly 30% higher than the bid 21 months ago, where Cornwall bought enough to block, but it is a disappointing outcome for governance.
- A clearly problematic tolling agreement with the parent, and what could be ¥100bn of excess land value are ignored. Minority investors get hosed. One of the problems of minority investments.
Toyo Construction (1890 JP) – There’s Nuance in Them Thar Press Releases
- On Friday, post-close, there was a flurry of excitement as YFO put out a press release amending the start date of the planned Tender Offer to early November.
- Not long after, there was another release by Toyo Construction (1890 JP) itself.
- You have to read both for what they are. And as they say…. Get your programs here!
A Coming Crash: The Law of Conservation of Financial Volatility?
- Volatility is sequential and the turbulence and illiquidity in forex and bond markets will inevitably spread to equities? A CRASH could be coming!
- VIX has already moved up, but this barely acknowledges volatility elsewhere. The VIX always sees greater volatility because it includes the effects of economic volatility as the business cycle breaks
- Upcoming World recession seems set to force the VIX above 50 index points. Stay ‘risk-off’ and choose ‘carry’ at the front-end of yield curves
EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable
- The Composite Document for electronics play and property developer EVOC Intelligent Technology Company (2308 HK), has been dispatched. The EM and H-Class meeting will be held on the 19 October.
- The Offer Price is HK$1.75/share. It will not be increased. No further dividends will be added.
- This is done. Trading at a gross/annualised spread of 2.9%/34%.
Last Week in Event SPACE: Swire Pacific, SATS/WFS, Hitachi Metal, Jinke Smart, Porsche
- Historically, when Swire (B) (87 HK) / Swire (A) (19 HK) gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%.
- The SATS (SATS SP) / WFS transaction appears all stitched up with major shareholder Temasek backing the deal. The acquisition is expected to close in 1Q23, subject to regulatory clearance.
- We had the heads up days (or a week plus) ago, and now it is official. Bain has now launched its Tender Offer for Hitachi Metals (5486 JP) at ¥2,181/share.
Hong Kong CEO & Director Dealings: 30th Sept – Swire Pac’s Bs, Joinn Laboratories, Techtronic
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights may also flag those companies where shares have been pledged. Stocks mentioned include Swire Pacific (B) (87 HK), Joinn Laboratories (H) (6127 HK), and Techtronic Industries (669 HK).
ECM Weekly (2nd Oct 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Oyo, Ixigo, Tencent, Taiwan Cemt
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, all listing this week failed to impress which means that the HK and Korean markets are probably in for a slow end of the year.
- Taiwan Cement (1101 TT) and Embassy Office Parks REIT (EMBASSY IN) were the two large placements this week. We also looked at possible Tencent (700 HK) linked blocks.
Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB
- Last week we had the implementation of the first two tranches of the Nikkei 225 (NKY INDEX) rebalance with the third tranche to be implemented at the close on Monday.
- Thursday saw the NIFTY indices implementation while Friday marked the end of the review period for the December rebalance of the Hang Seng family of indices.
- There were large inflows to China, Taiwan, Korea and Hong Kong ETFs during the week while there were some outflows from Japan.
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