In today’s briefing:
- ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Auckland Airport (AIA NZ) Placement: Index Impact
- STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
- Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500
- K Bank IPO (279570 KS): Index Inclusion Timeline
- Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play
- (Mostly) Asia-Pac M&A: Dyna Mac, Platinum Asset, Fuji Soft, JTower, Arvida, Korea Zinc, Sun Art
- NWD 17 HK: Kitchen Sink Results, Overhang Removed, the BEST Stock to BUY in New Rate Cut Cycle
- EQD | The Nikkei At The Top
- Last Week in Event SPACE: DFI/JD.com/Yonghui, Alibaba/Sun Art, New World Development, Austal
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
- Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
- There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.
Auckland Airport (AIA NZ) Placement: Index Impact
- Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
- The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
- We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
- 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
- We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
- The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.
Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500
- Free float is forecasted to increase from ~94% to 100% in S&P 500 and other US and Global indices after Berkshire halved its stake in Apple (AAPL US) .
- Forecasted demand from S&P 500 and S&P TMI is 164.2m shares, $37.1bn and 3.0 ADV at the close of 20 September 2024.
- Materialization of the free float increase is uncertain due to debatable strategic shareholder classification. ETF ratios and current free float improve the confidence of the forecast.
K Bank IPO (279570 KS): Index Inclusion Timeline
- K Bank (279570 KS) is looking to raise up to KRW 984bn (US$738m), valuing the company at KRW 5tn (US$3.75bn) at the top end of the IPO price range.
- Close peer KakaoBank (323410 KS) and regional peer SBI Sumishin Net Bank (7163 JP) have been trading lower recently and the IPO could price lower than the top end.
- The change in KOSPI2 INDEX Fast Entry rules will leave the stock out of the index till June 2025. Inclusion in global indices will have to wait a while too.
Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play
- Kumyang’s major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
- Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
- Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang’s stock futures have solid liquidity, making it a prime arb trading setup.
(Mostly) Asia-Pac M&A: Dyna Mac, Platinum Asset, Fuji Soft, JTower, Arvida, Korea Zinc, Sun Art
- I tally 39 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Two new deals discussed on Smartkarma this week: Xingda International (1899 HK) and NSL Ltd (NSL SP). Sun Art Retail (6808 HK) also susppended due to the Takeovers Code.
- Key updates took place on: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Fuji Soft (9749 JP), JTower (4485 JP), Arvida (ARV NZ), and Korea Zinc (010130 KS).
NWD 17 HK: Kitchen Sink Results, Overhang Removed, the BEST Stock to BUY in New Rate Cut Cycle
- NWD reported HKD20bn loss attributable to shareholders. There is no dividend declared. However, we view this as kitchen sink. The stock rallied 22% on Friday
- CEO Adrian Cheng stepped down and COO Eric Ma, former Secretary for Development for HK, is the new CEO. This represents a shift from family business to professional management
- As Fed initiated new rate cut cycle, NWD will benefit most given high gearing. With macro backdrop in U.S. and China, NWD is the Best stock to buy now
EQD | The Nikkei At The Top
- The last 2 weeks’ upswing in the Nikkei 225 INDEX does not change our view: it is WEEKLY overbought and October is a coin flip according to our seasonal models.
- The index could rise further at this point, herd behavior may force investors to pile up into the rally, but our models say rising well past 40k will be hard.
- A pullback is not necessarily a great occasion to buy, as already explained in our previous insight, the N225’s trend does not look good, at the moment.
Last Week in Event SPACE: DFI/JD.com/Yonghui, Alibaba/Sun Art, New World Development, Austal
- Hypermarket reshuffles as JD.com (9618 HK) and DFI Retail (DFI SP) exit Yonghui Superstores (601933 CH); and Alibaba Group (9988 HK) potentially exits Sun Art Retail (6808 HK).
- Evidently the influence of a younger hip third-generation tycoon-scion wasn’t the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
- MBK bumps the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000. What with the Choi’s do?
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