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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.</li>
<li>There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.</li>
<li>Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.


Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

<ul>
<li>A trade idea involving <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a> from a Holdco perspective, which we suggested last year outperformed Topix by more than 30% in the first 9 months of 2022.</li>
<li>Since November 2022, Kirin has underperformed Topix by 18% (driven by input cost inflation) to push the Holdco discount yet again to an attractive level.</li>
<li>The price hike announcement yesterday could change the cost inflation narrative and help Kirin to keep on unwinding the Holdco discount.</li>
</ul>


A trade idea involving Kirin Holdings (2503 JP) from a Holdco perspective, which we suggested last year outperformed Topix by more than 30% in the first 9 months of 2022.
Since November 2022, Kirin has underperformed Topix by 18% (driven by input cost inflation) to push the Holdco discount yet again to an attractive level.
The price hike announcement yesterday could change the cost inflation narrative and help Kirin to keep on unwinding the Holdco discount.


Kirin’s Holdco Discount Could Keep Unwinding After The Price Hikes Announcement

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sula-vineyards-ltd" target="_blank" data-smartkarma-citation="entities:36206:1" rel="noopener">Sula Vineyards</a> is looking to raise around US$117m in its upcoming India IPO.</li>
<li>Sula Vineyards (SV) distributes wines under a bouquet of brands. In addition to its flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” &amp; “Dia”. </li>
<li>We have looked at various aspects of the deal in our previous notes. In this note, we will talk about recent updates and valuations.</li>
</ul>



Sula Vineyards is looking to raise around US$117m in its upcoming India IPO.
Sula Vineyards (SV) distributes wines under a bouquet of brands. In addition to its flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” &amp; “Dia”. 
We have looked at various aspects of the deal in our previous notes. In this note, we will talk about recent updates and valuations.


Sula Vineyards IPO - Does Offer a Unique Exposure with Lots of Ifs and Buts

<ul>
<li>Following a couple of investor-activism campaigns against <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> and <a href="https://www.smartkarma.com/entities/fuji-soft-inc" target="_blank" data-smartkarma-citation="entities:17504:1" rel="noopener">Fuji Soft Inc (9749 JP)</a>, Singapore-based Japan-focused activist investor, 3D-Investment-Partners seems to be turning its attention towards Sapporo.</li>
<li>Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until they hear out opinions and new ideas from shareholders.</li>
<li>We believe that there’s a chance that 3D Investment Partners could turn hostile as <a href="https://www.smartkarma.com/entities/sapporo-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14085:1" rel="noopener">Sapporo Holdings (2501 JP)</a> seems to be completely ignoring the activist investor’s requests and proposals.</li>
</ul>


Following a couple of investor-activism campaigns against Toshiba Corp (6502 JP) and Fuji Soft Inc (9749 JP), Singapore-based Japan-focused activist investor, 3D-Investment-Partners seems to be turning its attention towards Sapporo.
Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until they hear out opinions and new ideas from shareholders.
We believe that there’s a chance that 3D Investment Partners could turn hostile as Sapporo Holdings (2501 JP) seems to be completely ignoring the activist investor’s requests and proposals.


Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>It is doubtful that independent outside directors are actually able to actively bridge the gap between shareholders and the board of directors, as the Corporate Governance Code states in Japan.</li>
<li>Behind the lack of willingness on the executive team to make major changes in the way things have been done is high % of specified shareholders (40%), including cross-held shares.</li>
<li>No major change in business strategy is expected unless foreign shareholder ratio exceeds 30%. In order for the current large shareholders' equity to decline, Sapporo should sell its cross-held shares.</li>
</ul>


It is doubtful that independent outside directors are actually able to actively bridge the gap between shareholders and the board of directors, as the Corporate Governance Code states in Japan.
Behind the lack of willingness on the executive team to make major changes in the way things have been done is high % of specified shareholders (40%), including cross-held shares.
No major change in business strategy is expected unless foreign shareholder ratio exceeds 30%. In order for the current large shareholders' equity to decline, Sapporo should sell its cross-held shares.


The First Step in Major Shift in Management Strategy Is for Sapporo to Sell Its Cross-Shareholdings

Japan

Sapporo Holdings Ltd produces and sells alcoholic and non-alcoholic beverages.  The Company's products include beer, wine, brandy, whiskey, imported beer, soft drinks, juice, coffee, and tea.  SAPPORO HOLDINGS also operates real estate businesses.

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Sapporo Holdings (2501 JP)

Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses

There could be 3 changes to the NKY in Sep. Lasertec, ZOZO, Nitori could replace MatsuiSec, MitsuiE&S, NipponSheetGlass. There are other stocks...

Brian Freitas

Kirin’s Holdco Discount Could Keep Unwinding After The Price Hikes Announcement

With price hikes possibly turning around the recent negative sentiment, we think the Kirin Holdco trade could yet again get going in the short-term...

Oshadhi Kumarasiri

Sula Vineyards IPO - Does Offer a Unique Exposure with Lots of Ifs and Buts

Sula Vineyards is looking to raise around US$117m in its upcoming India IPO. In this note, we talk about the recent updates and valuations.

Sumeet Singh

Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile

Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until...

Oshadhi Kumarasiri

The First Step in Major Shift in Management Strategy Is for Sapporo to Sell Its Cross-Shareholdings

I would like to discuss the issues on the Nikkei article of November 7, "Overseas Funds Demand Management Reform from Outside Directors of Sapporo...

Metrical Inc

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