In today’s briefing:
- JAPAN FLOW: Foreign Investor Inflows Increased; Next Is Foreigners Vs Buybacks Vs GPIF
- Great Wall Motor (2333 HK) – RMB Dual Counter Trading Starts Today, Watch that A-Share Discount
- Two Trading Opportunities from LG Chem’s Stake Sale in LG Energy Solution
- Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Stock Moves
- LG Chem: Considering a Block Deal Sale of About 2 Trillion Won of LG Energy Solution: A Big Overhang
- Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters
- Syngenta IPO – Index Entry Possibilities
- MOG Digitech (1942 HK): What the Flow Is Going On?
- Takeda: Clinical Development of HUTCHMED’s Fruquintinib Progressing Well
- Amara Holdings Gains On Possible Offer
JAPAN FLOW: Foreign Investor Inflows Increased; Next Is Foreigners Vs Buybacks Vs GPIF
- On 8 May I wrote JAPAN FLOW: Foreign Investor Inflows May Increase. Since the data used in that insight, TSE data shows net foreign buying of ¥3.5trln+.
- Investor flows appear to work in patterns which are correlated to TOPIX gains and outperformance vs S&P500.
- The history of autocorrelation of net buying suggests while the current streak may end, a four week average of net buys could remain positive for a while.
Great Wall Motor (2333 HK) – RMB Dual Counter Trading Starts Today, Watch that A-Share Discount
- 24 different HK-listed stocks will be tradable in RMB on the HKEX starting 19 June. They make up 35% of HKEX market cap, 40% of total turnover. They are fungible.
- The ultimate goal is to allow mainland investors to trade HK stocks in RMB, but we’re not there yet. Southbound has yet to be approved for the 21 SB-eligible names.
- Only five of the 24 have A-shares, and of those, three (China Mobile, CNOOC, and Great Wall Motor) have wide H-share discounts. Those should be the ones to look at.
Two Trading Opportunities from LG Chem’s Stake Sale in LG Energy Solution
- This issue offers two trading opportunities. The first is the passive inflow resulting from an increase in the float rate. The second is the possibility of additional stake sales.
- It will provide LG Energy with a passive inflow of 760K shares (₩426.4 billion), which is a significant passive impact at approximately 3.2x ADTV.
- There would be further stake sales of LG Chem’s shares in LG Energy. LG Chem plans to pursue additional stake sales targeting local institutional investors.
Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Stock Moves
- The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
- Stocks with buy flows dropped 0.8% on average on Friday while the stocks with sell flows rose 0.27%. On a flow weighted basis, the numbers were -0.63% vs +1.99%.
- The stocks with outflows have outperformed stocks with inflows by a huge margin in the recent past and short interest has jumped on most stocks recently.
LG Chem: Considering a Block Deal Sale of About 2 Trillion Won of LG Energy Solution: A Big Overhang
- After the market close on 16 June, it was reported in the local media that LG Chem is close to selling about 2 trillion won worth of LG Energy Solution.
- This block deal sale is likely to pose overhang on more stake sales of LG Energy Solution (about 10% stake) in the next 3-5 years.
- Our NAV valuation analysis of LG Chem suggests an implied price of 1,057,770 won per share, which is 41% higher than current share price.
Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters
- Canon Inc (7751 JP) has, as discussed in these pages, conducted 18 buybacks since the GFC. Every single one is ¥50bn. They are short and sharp. The longest? 23 days.
- The most recent took 18 days, and was only 15% of ADV, significantly lower than the average of the last dozen at 23-24%.
- This time, 3 days after the finished they launched another. The stock popped 5% the first day. There’s a reason for that. Shareholder structure STILL matters a lot.
Syngenta IPO – Index Entry Possibilities
- Syngenta AG (SYNN SW) has passed the listing committee meeting to raise CNY 65bn (US$9.1bn) in a Main Board listing on the Shanghai Stock Exchange.
- We forecast Syngenta AG (SYNN SW) will be added to the SSE180 Index, SSE50 Index and the CSI 300 Index (SHSZ300 INDEX) indices at the December rebalance.
- Inclusion in the SSE A Share Index could take a year and that will hold up inclusion in Northbound Stock Connect and consequently in global indices.
MOG Digitech (1942 HK): What the Flow Is Going On?
- MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
- MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
- Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.
Takeda: Clinical Development of HUTCHMED’s Fruquintinib Progressing Well
- HUTCHMED developed Fruquintinib has demonstrated positive results in a Phase III FRESCO-2 study which reduced the risk of death by 34% in patients with previously treated metastatic colorectal cancer.
- In addition, Fruquintinib also has been validated and accepted for regulatory review (for marketing authorization) by the European Medicines Agency (EMA) last week.
- In January 2023, Takeda Pharmaceutical (4502 JP) entered into an exclusive licensing agreement with HUTCHMED to further develop and commercialise Fruquintinib outside of Mainland China, Macau and Hong Kong.
Amara Holdings Gains On Possible Offer
- Hotel and investment property play Amara Holdings (AMA SP) announced that its controlling shareholders are in discussions with a third party in relation to a possible transaction.
- Shares up for grabs controlled by the Teo family are estimated to exceed 65% of shares out.
- No price was mentioned. And there is no guarantee a firm Offer will unfold. Shares have gained 38% in the past three trading sessions.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
