In today’s briefing:
- Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….
- [PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears
- HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
- (Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR
- Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin
- Japan Weekly | Real Estate Inflates; Nidec Benefits from AI
- HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
- The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
- Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
- There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
- Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….
- The Nikkei 225 INDEX has been rallying for >3 months, rising more than 28%. Is it too much, too fast?
- Short-Term, if we look at the Market Reversal Matrix’s SHORT WEEKLY model for the index, it looks like it could either reverse within a couple of weeks, or stall.
- Look for the ~41000 resistance area to place SHORT or hedge your LONG positions.
[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears
- PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
- We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
- We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;
HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
- On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won.
- The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won) and there are 11 million shares in this rights offering (10% of outstanding shares).
- HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.
(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR
- I tally 52 – 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 were discussed this week on Smartkarma: IntelliCentrics Global Holding (6819 HK) disposal/winding-up/special dividend arb; and Chilled & Frozen Logistics Holdings (9099 JP)‘s hostile Offer.
- Key updates took place on: Boral Ltd (BLD AU), Orecorp Ltd (ORR AU), Link Administration (LNK AU), and JSR Corp (4185 JP).
Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Lianlian DigiTech (2104619D CH) launches a US$78 million IPO.
- Event-Driven developments: Chilled & Frozen Logistics Holdings (9099 JP), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), IntelliCentrics Global Holding (6819 HK), Sciclone Pharmaceuticals (6600 HK).
Japan Weekly | Real Estate Inflates; Nidec Benefits from AI
- The Nikkei and Topix indexes surged by 5.63% and 5.33% reaching all-time highs
- Real Estate majors were the biggest movers in Japan. Beneficiaries of higher inflation and continuation of easy monetary policy
- Nidec is reinventing itself again. EV traction motors will remain a core driver, but investors can now get excited by the AI thematic
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
- On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
- The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
- The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.
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