In today’s briefing:
- EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
- Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- Hitachi Transport (9086) – Delay Doesn’t Mean Ditched
- TOPIX Inclusions: Who Is Ready (Oct 2022)
- HSI Index Rebalance Preview: Small Step or Giant Leap?
- KOSPI Size Index Migration: 10-Year Backtesting
- Link Admin’s In-Specie Distribution of PEXA: Potential ASX200 Inclusion
- KOSPI 200 Rebalance in December Highlighted by Locals
- MBK Partners Joins JIC Consortium to Acquire Toshiba
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Driven Changes
EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
- Stock has fallen 17% since Sep 15th, and implied vols have picked up
- The fundamentals remain strong and tech momentum may be shifting
- We suggest two directional trades using options to play earnings
Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay (Alibaba (ADR) (BABA US)).
- Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
- In this note, we will talk about the previous deal and the upcoming lockup expiry.
Hitachi Transport (9086) – Delay Doesn’t Mean Ditched
- The KKR consortium which was to buy Hitachi Transport System (9086 JP) has encountered a delay. What was to start in September is now scheduled for November.
- On the 29th, HTS released a document saying KKR still had a couple of approvals or lapses of waiting periods needed.
- The HTS announcement suggested the start of the Tender Offer would be early November rather than end-September.
TOPIX Inclusions: Who Is Ready (Oct 2022)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Aug 2022)
- At present, there are 53 names that satisfy all of these conditions and there are more names that are close to being in that group.
HSI Index Rebalance Preview: Small Step or Giant Leap?
- Currently at 69 index members, we just could reach 80 constituents at the December rebalance. That would leave the index committee to plan the move to 100 constituents in 2023.
- We list 10 potential inclusions to the index in December. One-way turnover is just under 4% and inclusions of all stocks will increase index market cap coverage significantly.
- Shorts are more than 3% of free float on five of the potential inclusions and these stocks could see some short covering ahead of the announcement of the changes.
KOSPI Size Index Migration: 10-Year Backtesting
- Price adjustment by passive flow started one month before the effective date. The LONG/SHORT basket set a month towards the effective dates provided a higher yield than seven days ahead.
- The yield tended to be relatively low when the overall market was in a bearish phase. We see a positive correlation between the yields and the market direction.
- Overall, the LONG/SHORT basket trading on this event over the past decade has shown a fairly high persistence and winning rate, substantial enough for us to have a careful look.
Link Admin’s In-Specie Distribution of PEXA: Potential ASX200 Inclusion
- Following the termination of the proposed scheme with Dye & Durham, Link Administration (LNK AU) is working towards a potential in-specie distribution of PEXA Group (PXA AU) shares.
- Link Administration (LNK AU) owns 42.8% of PEXA Group (PXA AU) and intends to distribute at least 80% of its holding following ATO tax roll-over relief.
- The increased float will put PEXA Group (PXA AU) firmly in the running for S&P/ASX 200 (AS51 INDEX) membership where passive trackers will need to buy a lot of stock.
KOSPI 200 Rebalance in December Highlighted by Locals
- This article discusses the potential inclusions and exclusions of KOSPI 200 rebalance in December 2022 (especially those that are highlighted by the locals).
- Stocks that are expected to be included in the KOSPI 200 index include Samyang Foods (003230 KS) and Lotte Confectionery (280360 KS).
- Stocks that are expected to be excluded in the KOSPI 200 index include Samyang Holdings (000070 KS) and Boryung Pharmaceutical (003850 KS).
MBK Partners Joins JIC Consortium to Acquire Toshiba
- It was announced today that MBK Partners will join a consortium led by Japan Investment Corporation (JIC) to acquire Toshiba Corp (6502 JP).
- The sharp appreciation of the USD vs JPY could make a stronger case for JIC consortium (now backed by both Bain Capital and MBK Partners) to become the main bidder.
- Including the premium for management rights, the acquisition price of Toshiba is expected to reach about 3 trillion JPY (US$21 billion).
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Driven Changes
- A market consultation could result in an increase in the number of index constituents for the FTSE TWSE Taiwan Dividend+ Index from 30 to 50.
- As of the close on 4 October, we see 23 potential inclusions and 2 potential deletions in December. That could change to +24/-3 depending on the rank cutoff thresholds.
- FTSE plans to implement the changes in a single step at the December rebalance. That could lead to one-way turnover of TWD 62bn (US$1.97bn).
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