Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a>, <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a> and <a href="https://www.smartkarma.com/entities/zhongan-online-p-c-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:23681:1" rel="noopener">ZhongAn Online P&amp;C Insurance (6060 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> and <a href="https://www.smartkarma.com/entities/china-overseas-land-invest" target="_blank" data-smartkarma-citation="entities:419:1" rel="noopener">China Overseas Land &amp; Investment Ltd (688 HK)</a>. Shorts increased in the Consumer Discretionary, Health Care, Information Technology and Financials sectors while decreasing in the Communication Services, Real Estate and Consumer Staples sectors.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP)</a>, <a href="https://www.smartkarma.com/entities/odakyu-electric-railway-co-ltd" target="_blank" data-smartkarma-citation="entities:5405:1" rel="noopener">Odakyu Electric Railway (9007 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-osk-lines-ltd" target="_blank" data-smartkarma-citation="entities:20717:1" rel="noopener">Mitsui Osk Lines (9104 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a>, <a href="https://www.smartkarma.com/entities/kawasaki-kisen-kaisha-ltd" target="_blank" data-smartkarma-citation="entities:3548:1" rel="noopener">Kawasaki Kisen Kaisha (9107 JP)</a>, <a href="https://www.smartkarma.com/entities/nabtesco-corp" target="_blank" data-smartkarma-citation="entities:13176:1" rel="noopener">Nabtesco Corp (6268 JP)</a> and <a href="https://www.smartkarma.com/entities/tokyo-electric-power-co-inc" target="_blank" data-smartkarma-citation="entities:15457:1" rel="noopener">Tokyo Electric Power Co (9501 JP)</a>. Shorts increased in the Industrials, Financials and Information Technology sectors.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>, <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/db-hitek-co-ltd" target="_blank" data-smartkarma-citation="entities:18926:1" rel="noopener">DB Hitek Co., Ltd. (000990 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">SK Innovation (096770 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS)</a> and <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a> and <a href="https://www.smartkarma.com/entities/nuvoton-technology-corp" target="_blank" data-smartkarma-citation="entities:15913:1" rel="noopener">Nuvoton Technology (4919 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/ctbc-financial-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:436:1" rel="noopener">Ctbc Financial Holding (2891 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a> and <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Meituan (3690 HK), Geely Auto (175 HK), Postal Savings Bank of China (1658 HK), CanSino Biologics Inc (6185 HK) and ZhongAn Online P&amp;C Insurance (6060 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Kuaishou Technology (1024 HK), NetEase (9999 HK), Country Garden Services Holdings (6098 HK) and China Overseas Land &amp; Investment Ltd (688 HK). Shorts increased in the Consumer Discretionary, Health Care, Information Technology and Financials sectors while decreasing in the Communication Services, Real Estate and Consumer Staples sectors.In Japan, stocks increased on Japan Post Bank (7182 JP), Toshiba Corp (6502 JP), Yaskawa Electric (6506 JP), Odakyu Electric Railway (9007 JP) and Mitsui Osk Lines (9104 JP) while there was short covering on freee (4478 JP), Sharp Corp (6753 JP), Kawasaki Kisen Kaisha (9107 JP), Nabtesco Corp (6268 JP) and Tokyo Electric Power Co (9501 JP). Shorts increased in the Industrials, Financials and Information Technology sectors.In Korea, shorts increased on NCSOFT Corp (036570 KS), Netmarble Corporation (251270 KS), DB Hitek Co., Ltd. (000990 KS), SK Telecom (017670 KS) and Samsung Electronics (005930 KS) while shorts were covered on Amorepacific Corp (090430 KS), Kakao Corp (035720 KS), SK Innovation (096770 KS), LG Household &amp; Health Care (051900 KS) and KT Corp (030200 KS).In Taiwan, shorts increased on Yageo Corporation (2327 TT), Mediatek Inc (2454 TT), Evergreen Marine Corp (2603 TT), Innolux Corp (3481 TT) and Nuvoton Technology (4919 TT) while shorts covered on Taiwan Cement (1101 TT), Ctbc Financial Holding (2891 TT), Yang Ming Marine Transport (2609 TT), Nanya Technology (2408 TT) and Wan Hai Lines (2615 TT).

Asia Shorts: Meituan, Geely, Kuaishou, COLI, Toshiba, Freee, NCSOFT, SK Tel, Yang Ming, Wan Hai, EMC

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Obic Business Consultants / Equity Capital Markets

<p>A group of OBIC Business Consultant’s (4733 JP, OBC) shareholders plan to raise around US$447m (JPY48bn) by selling 12.87% of the company. </p><p>The stated purpose of the selldown is to ensure that OBC qualifies for prime market on the TSE.</p><p>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</p>

A group of OBIC Business Consultant’s (4733 JP, OBC) shareholders plan to raise around US$447m (JPY48bn) by selling 12.87% of the company. The stated purpose of the selldown is to ensure that OBC qualifies for prime market on the TSE.In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

OBIC Business Consultants Placement - Large Deal Needs a Large Correction - Remains in Transition

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>Toshiba posted a reasonable 1Q with revenue slightly above consensus but margins disappointing due to weak profitability in the Building Solutions segment and top line beats in less profitable segments vs. weakness in higher profit segments.</p>

Toshiba posted a reasonable 1Q with revenue slightly above consensus but margins disappointing due to weak profitability in the Building Solutions segment and top line beats in less profitable segments vs. weakness in higher profit segments.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven


For the month of July, 13 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$34bn.



Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.







New Deals


Industry


Size (US$bn)


Type


Premium




Australia




5G Networks Ltd/Australia (5GN AU) /  Webcentral (WCG AU) 
Telco
0.1
Scheme
n.a.


Webcentral - 5GN Merger: A Small-Cap Merger Aimed at ASX300 Status



Australian Pharmaceutical Industries (API AU) 
Healthcare
0.5
Scheme
20.5%


API AU: The Hunter Turns The Hunted As Wesfarmers Makes A Move



Empired Ltd (EPD AU) 
Systems
0.2
Scheme
64.6%


Empired (EPD AU): Capgemini's Full Offer



iCar Asia Ltd (ICQ AU) 
Auto portal
0.2
Scheme
83%


ICar (ICQ AU): Carsome &amp; Catcha Carpool



Iress Ltd (IRE AU) 
Software
2.3
Scheme
23%


Iress (ASX AU) Bats Away EQT - For Now



Oil Search Ltd (OSH AU) 
O&amp;G
7.1
Scheme
12.3%


Santos/Oil Search: Getting Facts Straight



Rhipe Ltd (RHP AU) 
Software
0.1
Scheme
20%


Rhipe (RHP AU): Crayon Sees Silver in Them Thar Clouds



Spark Infrastructure (SKI AU) 
Utility
3.9
Scheme
26%



Spark Infra (SKI AU): KKR &amp; OTPPB's Tilts Falls Short
Spark Infrastructure (SKI AU): KKR &amp; OTPPB Pay Up




Sydney Airport (SYD AU) 
Airports
17.0
Scheme
42%


Sydney Airports (SYD AU): Opportunistic Tilt Amid Cloudy Future



Youfoodz Holdings (YFZ AU) 
Home delivery
0.1
Scheme
82.4%


Youfoodz (YFZ AU): HelloFresh's Lowball Takeover Offer Difficult to Block But Not UnBumbable



Hong Kong




Beijing Capital Land Ltd H (2868 HK) 
Real Estate
0.4
Merger by Absorption
62.8%


Beijing Capital Land (2868 HK): Delisting Offer From Parent



Nature Home Holding Company (2083 HK) 
Floorboarding
0.1
Scheme
17.2%


Nature Home (2083 HK): Possible Takeover Target Nature Home (2083 HK)'s Full Offer



South Korea




Green Cross Cell (031390 KS) / Green Cross LabCell (144510 KS) 
Biopharmaceutical
1.5
Merger
n.a.


GC Cell - GC LabCell: Korean Biopharma Merger Trading Tight


Source: Smartkarma Insights







The average premium for the new deals announced (or first discussed) in July was ~41%, with a year-to-date average of ~34% (102 deals &amp; total deal size of US$195bn). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively. 
Offer Premium Summary

     




2019


2020


2021 YTD



Australia
33.0%
32.4%
35.2%


Hong Kong
25.2%
34.7%
34.5%


Japan
44.0%
35.2%
28.5%


ROW
29.1%
24.2%
35.3%


Average
31.5%
31.1%
33.5%


Source: Smartkarma Insights 







Summary of News in July of Arb Situations On Smartkarma's Radar



(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)





Australia


Comments (with links to announcements &amp; insights)




Altium Ltd (ALU AU) 

20-Jul: Autodesk Inc (ADSK US)'s early June Offer for Altium Ltd (ALU AU) was terminated.




APN Property Group (APD AU) 

27-Jul: All resolutions passed at the Scheme Meeting




Bingo Industries (BIN AU) 

13-Jul: All resolutions passed at the Scheme Meeting




Boral Ltd (BLD AU) 

14-Jul:  Boral's Bump Earned, Likely to Extend, but THEN WHAT? 19-Jul: Boral (BLD AU): Index Impact from Seven's Offer 22-Jul: Boral Ltd: Seven's Done Deal. What Happens Next?
29-Jul: The Seven Group Holdings (SVW AU) Offer for Boral Ltd (BLD AU) was not extended (as announced on 28 Sep). The deal closed yesterday. The resulting ownership is now 69.6%. 




Crown Resorts (CWN AU) 

22-Jul: Star Entertainment Group (SGR AU) walks away from its proposal for Crown Resorts (CWN AU). That's not a good look. 




Galaxy Resources (GXY AU) 

7-Jul: Scheme Booklet dispatched. The Scheme Meeting will be held on the 6 August.




Hansen Technologies (HSN AU) 

16-Jul: Co-operation agreement entered into




Japara Healthcare (JHC AU) 

27-Jul: Japara Healthcare (JHC): Calvary Takes Charge




Mainstream Group Holdings Ltd (MAI AU) 
No July update



Milton Corp Ltd (MLT AU) 

21-Jul: Milton's Marvelous Arb Meanders Along... Marvelously




Think Childcare (TNK AU) 

No July update












Hong Kong


Comments (with links to announcements &amp; insights)




Bestway Global Holding (3358 HK) 

16-Jul: Scheme Doc pushed out to the 31 August. 




China Machinery Engineering (1829 HK) 

6-Jul: CMEC (1829 HK): Circ Out. H-Class Meeting Firmed. Looks Done




China Traditional Chinese Medicine (570 HK) 

9-Jul: In its monthly update regarding a potential Offer, China Traditional Chinese Medicine (570 HK) says there is no update.




China Youzan Limited (8083 HK) 

15-Jul: In its monthly update, China Youzan (8083 HK) said in its monthly update, that there is no update.




Chong Hing Bank (1111 HK) 

30-Jul: Chong Hing Bank (1111 HK): Scheme Doc Out. IFA Says Fair



Kerry Logistics Network (636 HK)
20-Jul: Kerry Logistics Network (636 HK) announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.



Rivera Holdings (281 HK) 

23-Jul: Scheme approved. 




Sichuan Languang Justbon Service (2606 HK) 

15-Jul: Desliting conditions met. Last day of trading is the 9 August. 




Soho China Ltd (410 HK) 

2-Jul: SOHO China (410 HK): Known Knowns As Spread Widens 30-Jul: SOHO China (410 HK): In For a Penny .... 




WH Group (288 HK) 

5-Jul: WH Group - Trading Opportunities Abound 10-Jul: WH Group - Long-Only Fundamental Investors Can Take Advantage Too 30-Jul: WH Group Offer Doc Out - This Little Piggy Went To Market.










India


Comments (with links to insights)




Adani Power (ADANI IN) 

23- Jul: After going limit up today, to INR 101.80/share, Adani Power (ADANI IN) is now back above INR 100/share after having fallen from INR 160. The 1-year deadline to file the Delisting Offer to the Exchange is 23 July. The Exchange would respond within 5 business days if they file. 




Mphasis Ltd (MPHL IN) 

No July update




Vedanta Ltd (VEDL IN) 

No July update









Japan


Comments (with links to announcements &amp; insights)




Aomori Bank (8342 JP) / Michinoku Bank (8350 JP) 
No July update


EPS Holdings (4282 JP)
9-Jul: The bidder for EPS Holdings (4282 JP) now has 86.97%. This will lead us to an EGM and a squeezeout. 



Hitachi Metals (5486 JP) 

No July update




Invesco Office J Reit (3298 JP) 

28-Jul: Invesco Real Estate Deal for Invesco Office (3298) Successful - Now For the Aftermath



Japan Asia (3751 JP)
14-Jul: City Index Eleventh has raised its bid from ¥960/share to ¥970/share. That forces an extension from expected end date tomorrow to the 30th of July. That's why it was raised. He doesn't have enough shares to do what he wants yet. But in raising it, he has gotten the board to agree to recommend his offer, which is something pretty special. 



Locoguide (4497 JP) / Kufu (4399 JP)

9-Jul: Kufu (4399 JP) confirmed on 7th July 2021 that shareholders have voted in favour of the Deal. Locoguide (4497 JP) shareholder vote (which was quite straightforward as the top shareholder held more than two-thirds) was also confirmed on 25th June 2021. Both stocks are expected to be delisted on 29th September 2021. The combined NewCo will be listed on 1st October 2021. 



Maruka Machinery (7594 JP) / Furusato Industries (8087 JP) 
No July update



Oliver Corp (7959 JP) 
No July update



Sakai Ovex (3408 JP) 
27-Jul: Sakai Ovex MBO Reloaded - Up 27% from Last Weak Bump But Still Cheap




Sanshin Electronics (8150 JP) 
No July update



Sawada Holdings (8699 JP) 

3-Jul: Sawada (8699) - Upsilon To End Its Tender, and Khan Bank Applies to List




Secom Co Ltd (9735 JP) 

No July update




Takeei Corp (2151 JP) 

8-Jul: Takeei (2151 JP) - Rever (5690 JP): Shareholder Approvals Complete - Road to TOPIX Upweight Clear




Toshiba Corp (6502 JP) 

20-Jul: Toshiba Corp (6502 JP) Chapter 5: Assessing the Next Move 21-Jul: Toshiba Support Cracked




Yamada Denki (9831 JP) 

No July update












Malaysia


Comments 




IHH Healthcare (IHH MK) 
No July update



Ijm Plantations (IJMP MK) 
No July update



MMC Corp Bhd (MMC MK) 
14-Jul: the Offeror has granted the Company an extension of time to no later than 5.00pm on 30 August 2021 for the Company to respond to the Offeror with its decision as to whether or not to implement and to recommend the Proposed SCR to the Entitled Shareholders for their consideration, based on the terms set out in the SCR Offer Letter.









New Zealand


Comments (&amp; link to insight)




Tilt Renewables Ltd (TLT NZ) 

15-Jul: At the Scheme Meeting,  shareholders representing 91.84% of all Tilt Renewables' shares on issue, voted by proxy or at the meeting. Over 75% of the votes of shareholders in each interest class who were entitled to vote and who voted, were cast in favour of the Scheme. Further, of all the votes cast, 99.94% of votes were in favour of the Scheme.








Singapore


Comments (&amp; link to insight)




Dutech Holdings (DTECH SP) 

15-Jul: Offer price revised to $0.435/share. Offer closes on the 2 August.






Travis Lundy

<p>A few years ago I started this series, and I updated it last year. Since last year, it has been a top 10 insight in terms of views. </p><p>I personally think it is important for investors of all types to understand WHO OWNS WHAT. </p><p>Many fundamental investors are reticent to spend any time on this but there are many reasons why active investors in Japan should be interested in understanding the ownership and shareholder dynamics of passive investors in Japan.</p><div><p>Some of the places active investors will see their influence are:</p></div><div>
<ul style="list-style-type: disc;">
<li>Stories intermittently published about the BOJ's presence in Japanese ETFs (especially the fact that it owns 85+% of the outstanding ETF market),</li>
<li>Relatively constant interest in Nikkei 225 rebalances like the one we saw in July 2020, which helped push up <a href="https://www.smartkarma.com/entities/japan-exchange-group-inc" target="_blank" data-smartkarma-citation="entities:11266:1" rel="noopener">Japan Exchange Group (8697 JP)</a> by 30+% from May to July, then helped it slide 13% in a week, or the changes in the Nikkei 225 review rules published earlier this year which may change what happens this September to a few large caps, and the announcement of the BOJ that it would no longer buy Nikkei 225 ETFs which started a long slide in <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> shares against comps and the Nikkei itself. Long "held up" by 'market inventory' and Nikkei 225 ETF buying, when the BOJ stopped, it removed the cushion and existing inventory holders had to sell out. </li>
<li>Then if you look at the shareholder structure of Fast Retailing today, you will see that it is STILL fundamentally a serious problem for large foreign active investors who would actually wish to take an <em>active</em> (but not activist) position. <em>Real World Float</em> on the stock is, by my calculation, less than 15% of shares outstanding. </li>
<li>The relatively recent policy of increased stewardship regarding the passive management portion of the GPIF (the Government Pension Investment Fund) - an investing heavyweight in Japan.</li>
<li>The timing and quantum of after-event support or overhang on corporate actions such as buybacks, secondary offerings, primary offerings, mergers, etc. </li>
<li>Index inclusions mean big flows. If you follow the insights on <strong><a href="https://www.smartkarma.com/collections/topix-inclusion/insights?item=54585" target="_blank" rel="noopener">TOPIX Inclusions</a></strong> by <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> and myself, you will often see big moves. Sometimes these stocks move 50% between when we write about them and when they go into the index. If you own them and are considering an exit, you need to know when to take profits, and the dynamic of the liquidity. If you are thinking about getting in for fundamental reasons, it pays to know early so you can get ahead of the major flow.</li>
<li>The return of <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> to the TSE First Section in Q1 this year changed the foreign shareholder percentage ownership, lowering it by 10%. Smartkarma readers knew this last year and in January, which prepared them for the June AGM when the shareholder category ownership was released.</li>
<li>The changes to the TSE's market structure, which will affect TOPIX membership, which will affect many companies' issuance, buyback, share cancellation, etc decisions over the next several months. They are doing this because of the TSE Prime listing rules which will effectively also determine whether or not they will be included in TOPIX in future, or whether they will fall out of TSE Prime and will see constant selling over late 2022 to early 2025. </li>
</ul>
<p>Of course, TOPIX is just over half of the passive tracking AUM in Japan. There's more. </p>
<p>Find out WHO OWNS WHAT in Japan Passive below the fold. </p>
</div>

A few years ago I started this series, and I updated it last year. Since last year, it has been a top 10 insight in terms of views. I personally think it is important for investors of all types to understand WHO OWNS WHAT. Many fundamental investors are reticent to spend any time on this but there are many reasons why active investors in Japan should be interested in understanding the ownership and shareholder dynamics of passive investors in Japan.Some of the places active investors will see their influence are:

Stories intermittently published about the BOJ's presence in Japanese ETFs (especially the fact that it owns 85+% of the outstanding ETF market),
Relatively constant interest in Nikkei 225 rebalances like the one we saw in July 2020, which helped push up Japan Exchange Group (8697 JP) by 30+% from May to July, then helped it slide 13% in a week, or the changes in the Nikkei 225 review rules published earlier this year which may change what happens this September to a few large caps, and the announcement of the BOJ that it would no longer buy Nikkei 225 ETFs which started a long slide in Fast Retailing (9983 JP) shares against comps and the Nikkei itself. Long "held up" by 'market inventory' and Nikkei 225 ETF buying, when the BOJ stopped, it removed the cushion and existing inventory holders had to sell out. 
Then if you look at the shareholder structure of Fast Retailing today, you will see that it is STILL fundamentally a serious problem for large foreign active investors who would actually wish to take an active (but not activist) position. Real World Float on the stock is, by my calculation, less than 15% of shares outstanding. 
The relatively recent policy of increased stewardship regarding the passive management portion of the GPIF (the Government Pension Investment Fund) - an investing heavyweight in Japan.
The timing and quantum of after-event support or overhang on corporate actions such as buybacks, secondary offerings, primary offerings, mergers, etc. 
Index inclusions mean big flows. If you follow the insights on TOPIX Inclusions by Janaghan Jeyakumar, CFA and myself, you will often see big moves. Sometimes these stocks move 50% between when we write about them and when they go into the index. If you own them and are considering an exit, you need to know when to take profits, and the dynamic of the liquidity. If you are thinking about getting in for fundamental reasons, it pays to know early so you can get ahead of the major flow.
The return of Toshiba Corp (6502 JP) to the TSE First Section in Q1 this year changed the foreign shareholder percentage ownership, lowering it by 10%. Smartkarma readers knew this last year and in January, which prepared them for the June AGM when the shareholder category ownership was released.
The changes to the TSE's market structure, which will affect TOPIX membership, which will affect many companies' issuance, buyback, share cancellation, etc decisions over the next several months. They are doing this because of the TSE Prime listing rules which will effectively also determine whether or not they will be included in TOPIX in future, or whether they will fall out of TSE Prime and will see constant selling over late 2022 to early 2025. 

Of course, TOPIX is just over half of the passive tracking AUM in Japan. There's more. 
Find out WHO OWNS WHAT in Japan Passive below the fold. 


Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

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Toshiba Corp (6502 JP)

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