In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Results Announced; BIG Trade
- HDFC/HDFCB Merger in the Home Stretch: Potential Changes to NIFTY50, NIFTY100 & SENSEX Indices
- Index Rebalance & ETF Flow Recap: CSI500, SSE180, KOSPI2, Sensex, MSCI IN/KR, TW Div+, Socionext
- Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?
- United Tractors – Buyback Extended – Maybe 50% To Go
- FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
- Ming Yuan Cloud (909 HK): Potential Multiple Index Deletions
- Fengxiang’s Judical Auction Successful, MGO Upcoming
- Merger Arb Mondays (17 Oct) – EVOC, Fengxiang, Lifestyle, Genex, Pendal, DTAC/True, Eagle Cement
- Tracing Back TIGER (WISE) Battery ETF Rebalancing on October 13
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Results Announced; BIG Trade
- The number of FTSE TWSE Taiwan Dividend+ Index constituents will be increased from 30 to 50 in one step at the December rebalance.
- There are a few other changes to the index methodology, mainly around the cutoff ranks for inclusion/exclusion with a few additional constraints.
- We forecast 25 adds and 4 deletes to the index with one-way trade over US$2.2bn and big impact on many stocks due to inclusion, exclusion, capping and funding.
HDFC/HDFCB Merger in the Home Stretch: Potential Changes to NIFTY50, NIFTY100 & SENSEX Indices
- The National Company Law Tribunal (NCLT) has ordered a meeting of HDFC Limited and HDFC Bank shareholders on 25 November to consider and approve the proposed Scheme of Amalgamation.
- Pidilite Industries (PIDI IN) is a high probability ad hoc inclusion to the NIFTY Index (NIFTY INDEX) with Tata Power (TPWR IN) a lower probability inclusion candidate.
- Tata Motors Ltd (TTMT IN) and Adani Enterprises (ADE IN) could be added to the SENSEX INDEX in December replacing HDFC Limited (HDFC IN) and Dr. Reddy’s Laboratories (DRRD IN).
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.
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.
United Tractors – Buyback Extended – Maybe 50% To Go
- On 12 July, cash-rich mining mini-conglomerate (mining, contracting, equipment, etc) United Tractors (UNTR IJ) announced a buyback discussed in United Tractors (UNTR IJ) Buyback – Sure to Be Impactful.
- The buyback was to go for three months but three months later, it was extended or another three months.
- Performance has been good. How much has been bought back. Tough to know, but we can make some pretty educated guesses.
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.
Ming Yuan Cloud (909 HK): Potential Multiple Index Deletions
- Ming Yuan Cloud Group (909 HK) listed in September 2020 and was included in major indices (MSCI, FTSE, HSTECH) over the next few months.
- The stock price slide over the last few months could lead to the deletion of the stock from the MSCI China Index and Hang Seng Tech Index (HSTECH INDEX).
- Deletion and downward migration could result in an increase in the real float of the stock by 15% and add further downward pressure. Short interest has been increasing steadily.
Fengxiang’s Judical Auction Successful, MGO Upcoming
- A successful bidder (identity unknown at the time of writing) has emerged for Shandong Fengxiang (9977 HK) controlling shareholder’s 70.92% stake at the base bid price of RMB1,372.2 million.
- As the bidder will hold 30% or more of the voting rights, it will result in an MGO at RMB1.383 per share (HK$1.526 at the median BOC FX of 0.9056).
- The transfer of the sale shares is subject to completion procedures. Our best guess is the offer completes end-January 2023. At the last close, the gross spread is 15.6%.
Merger Arb Mondays (17 Oct) – EVOC, Fengxiang, Lifestyle, Genex, Pendal, DTAC/True, Eagle Cement
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), Shandong Fengxiang (9977 HK), O2Micro International (OIIM US).
- Lowest spreads – Tyro Payments (TYR AU),OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), True Corp Pcl (TRUE TB), Cocoaland Holdings (COLA MK), China VAST.
Tracing Back TIGER (WISE) Battery ETF Rebalancing on October 13
- Long/Short basket trading on an equal weight using only six stocks for a 10% ceiling reversion with SungEel and Sebitchem would have delivered a daily yield of close to 2%.
- An outright position on SungEel and Sebitchem and the biggest mover, Ecopro BM, alone would have delivered a pretty juicy yield of 4.2%.
- The rebalancing of this ETF is an event that allows you to bet on highly predictable share price movements by forming a basket with a relatively small number of stocks.
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