In today’s briefing:
- Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk
- Sembcorp Marine & Keppel O&M: Revised Terms & Index Implications
- Hitachi Transport (9086) – KKR Deal Is Here And There Are Index Implications
- Keppel & Sembcorp Marine Revise Transaction, Improve Terms to SMM
- KOSPI 200 & KOSDAQ 150: Rule Clarifications & Rebalancing Predictions
- Hang Lung Group’s All-Time Low P/B As Hang Lung Props Rolls Over
- Detailing KRX’s Proposed New Rules (Pre-Registration/Monitoring) For High-Frequency Traders
- Hong Kong Buybacks Weekly (Oct 28th): Aia, Great Wall Motor, Wuxi Biologics
- Lygend Resources & Technology Pre-IPO – Resting Its Hopes and Dreams on a JV with a Singular Partner
- JPX-Nikkei 400 Rebal 2023: End-Oct 2022
Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk
- The FTSE Taiwan Dividend+ Index is a fabulously interesting index from an index prediction trading standpoint. Because it works off negative momentum, the bias risk is different from normal indices.
- And there is a turn. That turn is where what had been bad becomes good, becomes very good, then turns bad again.
- This insight proposes a basket to buy, and a basket to short, and if the basket to buy ends up not going in, it is a high quality problem.
Sembcorp Marine & Keppel O&M: Revised Terms & Index Implications
- Sembcorp Marine (SMM SP) will now acquire Keppel O&M from Keppel Corp (KEP SP) at an 8% lower consideration at a revised exchange ratio of 46:54 vs 44:56 earlier.
- The simplified transaction structure is expected to reduce consent and approval requirements and could reduce completion time by up to 2 months. Expected completion now is December or Jan.
- At a proforma market cap of S$7bn, there could be selling in Sembcorp Marine from MSCI Singapore and FTSE Straits Times Index (STI) (STI INDEX) trackers at the time of implementation.
Hitachi Transport (9086) – KKR Deal Is Here And There Are Index Implications
- The KKR deal for Hitachi Transport System (9086 JP) is here.
- Some were worried KKR would walk. That was never a worry. Some worried Russia wouldn’t approve. There was always a way.
- This deal should trade tight. New money might be better allocated elsewhere. Arbitrageurs and investors should be wary of the index effects of the TOPIX FFW adjustment tomorrow at close.
Keppel & Sembcorp Marine Revise Transaction, Improve Terms to SMM
- Today, Keppel Corp (KEP SP) and Sembcorp Marine (SMM SP) made an announcement of revised structure and revised terms.
- Under revised terms, Sembcorp will issue fewer shares to Keppel, and it will be a takeover rather than Scheme of Arrangement. Keppel will deliver more shares to shareholders, keeping less.
- Just like the first announcement, there is a little here for everyone. Keppel doesn’t do a great job of selling it but it is still win-win.
KOSPI 200 & KOSDAQ 150: Rule Clarifications & Rebalancing Predictions
- The 2nd screening only deals with those who have passed the 1st screening. The 2nd screening does NOT include the first company to cross the threshold.
- Lotte Confectionery will be the only addition to the KOSPI 200. Samyang Holdings or Hyundai Home Shopping Network will leave the index.
- There will be ten changes in the KOSDAQ 150: eight regular & two special entries. WCP’s special entry still seems uncertain due to the GICS classification issue.
Hang Lung Group’s All-Time Low P/B As Hang Lung Props Rolls Over
- Hang Lung Group (10 HK) is currently trading at a miserly 0.15x P/B, its lowest level since records began.
- It has also been somewhat of a forgetful week for 59.5%-held Hang Lung Properties (101 HK), down 12%, following Wednesday’s 7% decline.
- HLG’s discount to NAV has retraced back to levels last seen during the 2020 Covid lows.
Detailing KRX’s Proposed New Rules (Pre-Registration/Monitoring) For High-Frequency Traders
- KRX proposes three new rules: 1. trader pre-registration, 2. brokerages’ risk management measures, and 3. traders’ risk management tools
- KRX plans to implement it in January next year with a grace period of three months for the pre-registration after the effective date.
- The key is to what extent KRX will flexibly monitor and supervise this. If not, market liquidity will be significantly reduced, resulting in a distortion that widens the market spread.
Hong Kong Buybacks Weekly (Oct 28th): Aia, Great Wall Motor, Wuxi Biologics
- We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 28th based on HKEx daily reports.
- In the past 7 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Great Wall Motor (2333 HK), Wuxi Biologics (2269 HK).
- In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Wuxi Biologics (2269 HK).
Lygend Resources & Technology Pre-IPO – Resting Its Hopes and Dreams on a JV with a Singular Partner
- Lygend Resources & Technology (LR HK) is looking to raise about US$800m in its Hong Kong IPO.
- Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
- With the Obi Project expanding the firm’s capacity into the higher margin production segment, Lygend expects sales and profitability to pick up.
JPX-Nikkei 400 Rebal 2023: End-Oct 2022
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-October 2022.
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