In today’s briefing:
- China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- TSMC (TSM.US; 2303.TT): ASP Lifting Hasn’t Decided Yet; QCOM Moves Back High-End Smartphone 8 Gen 1
- KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- Merger Arb Mondays – Razer, 51Job, Irongate, Link, Crown Resorts, Guodian
- Charts to Watch
China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- China ADRs were sharply lower last week as the SEC started to name companies that were identified under the Holding Foreign Companies Accountable Act (HFCAA).
- Then DiDi Global dropped 44% on Friday following reports that the their proposals to prevent data/security leaks did not meet CAC’s requirements and work on the HK listing was halted.
- With 2024 not too far away, a lot of the U.S. listed companies will look at listing in Hong Kong in the near future. That will have its own implications.
TSMC (TSM.US; 2303.TT): ASP Lifting Hasn’t Decided Yet; QCOM Moves Back High-End Smartphone 8 Gen 1
- We think TSMC is still considering 1) at what time and 2) what technologies to further raise wafer price now.
- TSMC’s largest client is Apple. Qualcomm should be the 2nd client because they will ship Snapdragon 8 Gen 1 from TSMC in 4Q22. Nvidia/MediaTek are the 3rd/4th clients.
- TSMC is giving nearly 49% stock ownership to Sony for CMOS Image Sensor (CIS) Fab in Japan. It is mainly to obtain the CIS technology, to our thoughts.
KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- KODEX battery ETF does rebalancing four times a year from this March. The rebalancing trading is done for 3-trading days from March 14 to 16, presumably equal daily weight.
- Due to the low float rate, LG Energy will fall to third place. Samsung SDI should become the top constituent with a 20% cap, followed by SK Innovation at 15%.
- The passive impact sizes of the top four stocks are significant, considering they are in the same sector. So, they should make themselves a suitable target for long/short basket trading.
Merger Arb Mondays – Razer, 51Job, Irongate, Link, Crown Resorts, Guodian
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
- This week, the highest gross spreads are Razer Inc (1337 HK), 51 Job Inc Adr (JOBS US), Irongate Group (IAP AU), Link Administration Holdings (LNK AU), Crown Resorts (CWN AU)
- The lowest gross spreads are CIMIC Group Ltd (CIM AU), Singapore Press Holdings (SPH SP), Australian Pharmaceutical Industries (API AU), Virtus Health (VRT AU), Ausnutria Dairy Corp (1717 HK)
Charts to Watch
- The Chinese Government has not been very friendly with the Chinese tech companies in the last year: it imposed several fines and introduced new anti-monopoly laws, that hurt company business and profitability
- Now the SEC is trying to look better into the balance sheet of these companies, threatening a possible delisting from U.S. exchanges. This is another big risk for chinese tech stocks.
- An almost 70% drawdown already happened. Will there ever be a reversal?
Before it’s here, it’s on Smartkarma
