Event-Driven

• The Doosan Group are planning to restructure Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS) and Doosan Robotics (454910 KS) by reorganizing the business structure to find synergies.
• Doosan Enerbility will spin-off its stake in Doosan Bobcat and merge it with Doosan Robotics. Doosan Robotics will then look to acquire full control of Doosan Bobcat via a share swap.
• There could be an adhoc inclusion to the KOSPI200 INDEX at the end of October and global passives will buy Doosan Robotics (454910 KS) at the time of merger completion.

• Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively. 
• The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
• The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.

• Back on the 18th June, personal computer parts and accessories play PC Partner (1263 HK)  announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
• This development was discussed in PC Partner (1263 HK) Muses SGX Listing & HKEx Withdrawal.  PC Partner subsequently announced a privatisation would not accompany any proposed withdrawal (should it happens).
• My recent discussions with SFC confirms this is possible. And there was a recent precedent. But there may be caveats.

• Medi Assist Healthcare Services (0886371D IN) was listed on 23rd Jan 2024 after raising US$140m. The IPO had been 100% secondary, with the promoters and pre-IPO investors trimming their stakes.
• Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
• Coming up for six-month lockup expiry are the firm’s pre-IPO shareholders and a portion of the promoters’ stakes.

• With 70% of the review period complete, 4 non-constituents are in inclusion zone and 5 constituents are in deletion zone.
• We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 8.8bn (US$1.2bn). Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes. With multiple days ADV to trade on the changes and the recent short selling clampdown, there could be further outperformance.

• With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
• There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX). 
• The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.

• 15 shareholders are looking to sell between 73.9-85m shares (US$1.2bn-US$1.38bn) of ASICS Corp (7936 JP) in a secondary offering that will likely be priced on 23 July.
• ASICS Corp (7936 JP) has also announced a huge upward revision to its sales and profit forecasts with EPS expected to increase 61% from earlier estimates.
• Passive buying will be extremely limited in the short-term with the downward pressure offset to a large extent by the sales and earnings revisions.

• China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
• The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
• The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.

• There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
• The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
• Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

• Nine companies disclosed value-up plans, with four official and five pending disclosures. Initially, these announcements boosted stock prices, but long-term correlations were inconclusive. Yet, shareholder returns notably rose in H1.
• NPS increased stakes in three of the nine recently announced value-up companies. They share traits in value-up trading (large caps & low PBR), potentially guiding our strategy as NPS enters.
• BlackRock’s Hong Kong branch has recently engaged with six Korean asset management firms for potential entrustment of its Asian fund’s Korean investment portion, focusing on the value-up policy.

• Legend Biotech Corp (LEGN US) shares increased 12% on Friday as a Street Insider report claimed it received takeover interest and hired Centerview Partners to help review the offer.
• Genscript Biotech (1548 HK), the largest shareholder, shares rose 25%. Genscript responsded that it is not aware of any reasons for these share price movements and any inside information.
• The chances for an offer are low as the offeror would face several hurdles. Nevertheless, without an offer, the upcoming CARVYKTI commercial production in 2H24 will support the share price.   

• SK Innovation (096770 KS) and SK E&S plan to hold a board meeting on 17 July to discuss the potential merger between the two companies.
• If this merger is successful, it would create the eighth largest company in Korea with a combined assets of 106 trillion won (US$77 billion). 
• Although the merger ratio is not yet available, we believe that this potential merger could potentially benefit SK E&S and SK Inc but could be negative on SK Innovation.

• The UK government has more than halved its stake in NatWest Group (NWG LN) over the last two years reflecting an improving financial health for the lender.
• The UK government is a strategic shareholder and the selling is forecasted to cause a passive fund demand in the next two months across four indices.
• At close of 20 September 2024, the aggregate passive fund demand for NatWest Group (NWG LN) is currently estimated at 22.8m shares, $95.7m and 0.73 days of volume.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
• There have been some changes to the SSE 180 expected ADDs/DELs lists since our last insight.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight include: Zhongsheng Group (881 HK), Jardine Matheson Holdings (JM SP), FIT Hon Teng (6088 HK), and Hon Hai Precision Industry (2317 TT).

• With 70% of the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index at the close on 13 December.
• We estimate a one-way turnover of 11.3% at the rebalance resulting in a one-way trade of CNY12.08bn (US$1.7bn). The Information Technology and HealthCare sectors gain at the expense of Industrials.
• The potential adds have outperformed the potential deletes and the CSI Smallcap 500 Index (SH000905 INDEX) since the start of the year with the outperformance gradually picking up.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), A8 New Media (800 HK), Asia Cement China (743 HK).
• Lowest spreads: Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP). 

• Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
• The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
• The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

• POSCO Holdings (005490 KS) announced a major shareholder return policy to buyback and cancel nearly 2 trillion won worth of treasury shares from 2024 to 2026. 
• The company will cancel 5.25 million treasury shares representing 6.2% of outstanding shares (about 1.9 trillion won). It will also repurchase and cancel additional 100 billion won of shares.
• POSCO Holdings has taken a major initiative to provide greater returns to its shareholders and this should have a positive impact on its share price. 

• There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
• We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
• The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.

• CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
• A UK-listing makes perfect sense. In excess of 90% of CKI’s FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
• The wording in the announcement is unclear – a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND inflow continues, albeit smaller. SOE Banks/Energy/Telecoms remain a big net buy. Percentage of volume is large. NORTHBOUND saw finance buying. Possible short-covering ahead of new short-selling restrictions/access.
• AH Premia were up small on average, down small on the liquid pairs. But HSI/HSCEI vs CSI300/500 performance spreads were higher. Third Plenum this week may drive “sentiment.”

• Legend Biotech received takeover interest and hired Centerview Partners to review the offer. Due to the satisfactory clinical results/promising commercialization outlook of Carvykti, Legend Bio is an attractive M&A candidate.
• Peak sales of Carvykti could exceed US$5 billion. After Carvykti is approved by the FDA/EC for 2L treatment of MM, future valuation leap of legend Bio is becoming more certain.
• Legend Bio is clearly undervalued. We think reasonable market value range for Legend Bio is about US$12.5 – 15 billion, which means there is decent upward potential for share price.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net BUY RMB +15.9bn of A-shares. NORTHBOUND bought Financials, Industry, Infotech, etc. They sold Communications (which was a HUGE SOUTHBOUND buy) and Pharma/Healthcare.
• It is notable that net flows as a percentage of value traded are clearly “short gamma”, which is to say, sector underperformers are being sold, sector outperformers being bought.

• SOUTHBOUND was again a net buyer, for HK$7.3bn this week, on smallish two-way volumes. Major buying was mostly SOEs.
• The more I watch, the more I think the last few months have had serious national team buying of banks and energy, perhaps ahead of shareholder return policy changes.
• But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

• IVs for Monthly & Quarterly contracts rose as options market baked in additional risk premia for the Budget Announcement. 
• Vega bid & Gamma offered  – Monthly IVs higher by +2.3 vols & Weekly IVs lower by -0.5 vols.  Short-Dated IVs closed lower in spite of upcoming earnings events 
• Term structure is trading with a kinked shape, with Monthly IVs trading at a markup to rest of the curve

• The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by Aisin (7259 JP) but moves have come fast and furious.
• Apparently minorities are grumbling to the SFC about the low-balled Offer for Asia Cement China (743 HK). And for good reason. The best course of action? Vote against the Scheme.
• Hanwha Corporation (000880 KS) is trading at a steep NAV discount. And the controlling family is making  a partial Offer to gain majority control. 

• I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Four new deals discussed this week on Smartkarma: Second Chance Properties (SCE SP)‘s VGO,Shinsung Tongsang (005390 KS)‘s Tender, Rex Minerals (RXM AU)‘s Scheme, and Canvest (1381 HK)‘s possible Offer.
• Key updates took place on Altium Ltd (ALU AU), Pacific Smiles (PSQ AU), Asia Cement China (743 HK), Shanghai Henlius Biotech (2696 HK), and Kfc Holdings Japan (9873 JP).

• Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
• ¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
• Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too. 

• On 11 July, the Doosan Group announced a major business structure reorganization, including the delisting of Doosan Bobcat Inc (241560 KS).
• In our view (over the next 3-6 months), these transactions appear to be value-destroying for Doosan Bobcat and Doosan Enerbility minority shareholders but positive for Doosan Robotics shareholders.
• Doosan Robotics plans to acquire the remaining 54% stake in Doosan Bobcat through a tender offer. Once Doosan Robotics fully owns Doosan Bobcat, its shares will be delisted.

• Interest in this merger is emerging from an unexpected angle, especially regarding the merger ratio’s fairness. There’s a risk it could unfavorably affect SK Innovation’s stock price.
• SK Innovation at ₩108,000/share; SK E&S at ₩290,000/share based on strong profits. SK plans ratios around 1.3x total value and 2.7x per share. SK Inc may reach mid-70% stake post-merger.
• SK Innovation’s stock may face short-term decline. Securing shareholder approval, with SK Inc at 36%, overseas investors 22%, local institutions 15%, local retail 20%, and NPS 7%, poses challenges.

• The KOSPI 200 INDEX started a modest pullback and is entering a BUY area, but it could fall further this coming week, caution is advised.
• The support levels to buy are between 383-371, this coming week.
• Alternatively buy the Close, if the WEEKLY Close is negative, next Friday.

• The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
• The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
• Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

• Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
• Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact. 
• New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

• Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%. 
• There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
• But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

• A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
• But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
• I expect the ask needs to change, and the agenda item needs to be difficult to be against. 

• This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
• In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
• As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.

• Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion. 
• Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
• The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC. 

• After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share. 
• The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
• The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

• Following the regulatory approval from the Government of Canada, Glencore’s cash acquisition of 77% stake in Teck’s Elk Valley Resources (EVR) is expected to close on 11 July 2024.
• The cash acquisition is forecasted not to cause any passive fund flows based on the deal structure.
• The potential demerger introduces the risk for Glencore approaching the exit threshold of STOXX Europe 50. This is yet undetermined due to the long time horizon.

• Jollibee Foods (JFC PM) recently acquired Compose Coffee, the second-largest take-out chain in South Korea’s competitive value coffee retail segment.
• While the acquisition presents growth opportunities for Jollibee, the intense competition and inherent challenges of the value coffee retail segment warrant caution.
• With Jollibee’s Coffee & Tea business vertical now growing into a meaningful size, we recommend listing it separately to enhance visibility, accountability and unlock shareholder value.

• Shanghai Fosun Pharmaceutical (Group) (2196 HK)‘s (SFP) “Merger by Absorption” HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
• The first hurdle for the share option – valid letters of interest from those shareholders wishing to rollover – was secured yesterday. SCP still has the discretion on providing scrip.
• But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.

• KKR and KSP Kokusai will offer 52.51m-60.38m shares (US$1.76bn-2bn) of Kokusai Electric (6525 JP) in a secondary offering that will likely be priced on 22 July.
• Kokusai Electric (6525 JP) will also buy back up to JPY 18bn of its shares. At the last close, that is 3.33m shares (1.2x ADV).
• Trackers of one global index will buy stock at the time of settlement of the shares. The (much) bigger buying will come at the end of August.

• Founder/CEO Mohamed Salleh Maricar (MSM) and his family have made a voluntary unconditional general Offer for the 14.94% in gold/jewellery retailer Second Chance Properties (SCE SP) (“SCP”) not held.
• The S$0.30/share cash Offer is a 39.5% premium to last close. The Offer price is final.
• The Offer is unconditional in all respects. This will trade tight. A delisting Offer is next on the cards.

• The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.
• There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
• Capping will result in passives buying Kuaishou Technology (1024 HK) and JD.com (9618 HK) while selling Meituan (3690 HK) and Tencent (700 HK).

• The Hong Kong Television Network (1137 HK) vote on the share buyback for a maximum of 100.0m or 11.25% of outstanding shares at HK$2.15 was comfortably passed at the EGM.
• The partial offer is designed to help the co-founders bypass the creeper rule and increase their grip on the shares. There is no minimum acceptance condition. 
• While the IFA opines the offer is fair and reasonable, it is unattractive. A 100% minority participation rate implies a minimum proration of 20.74%. The offer closes on 23 July.  

• Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
• Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. 
• Shinsung’s share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?

• Second Chance Properties (SCE SP) has disclosed a voluntary unconditional offer from Mohamed Salleh’s family at S$0.30 per share, a 39.5% premium to the undisturbed price (10 July).
• The offer document will be despatched by 31 July. The offeree circular will be despatched by 7 August at the earliest, implying the earliest close of 28 August.
• The offer price has been declared final and is attractive as it represents an all-time high. The offeror will likely achieve the 90% compulsory acquisition threshold.

• The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
• Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
• Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.

• Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
• It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
• Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

• The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
• Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
• Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.

• Rex Minerals being acquired by major shareholder, Selim Group, for $393 million
• Acquisition comes after extensive partnering process and recent investment by Mac with 16% shareholding
• Rex’s Hillside project in South Australia has historical challenges but now looks set for development with new ownership and funding capabilities

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Today’s press release unveils details on new flow trading events in Korea’s local market from the second half of this year, highlighting two key points.
• Firstly, the disclosure rule starts with block deals from August 23rd. Secondly, a 30% or greater stock price correction on disclosure day may cancel the transaction plan.
• This highlights the need to consider cancellation risks in pre-disclosure positions and design setups with consideration for the potential for reverse flows as stock prices approach 30% corrections.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• In the last few days, SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) have announced their moves to TSE prime which would eventually trigger a TOPIX Inclusion event.
• Macbee Planet was in our highest conviction list but SUNWELS Co was not. In this insight, we have made some modifications to our methodology to improve future hit rates.

• In this insight, we discuss recent, active insiders buying and selling their shares prior to the mandatory block deal pre-announcement requirement starting 24 July in Korea.
• The three companies that announced insiders selling (July) are down on average 3% YTD. However, the three companies that announced insiders buying (July) are up on average 74% YTD. 
• LS Cable has been consistently increasing its ownership of LS Marine Solution, up from 46% stake as of 27 May 2024 to 56.14% as of 8 July 2024.

• The review period for the September rebalance ends 31 July, the changes will be announced in the first week of September and implemented at the close of trading 12 September.
• There are changes expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices. The Shift Up (462870 KS) listing should result in more changes.
• The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Douzone Bizon, SKC Co and Kakao Corp.

• Back in May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a mediocre 20.8% premium to undisturbed.
• The thrust of the Offer was to lift co-founder Ricky Wong’s stake to 51.55% from 45.75%.  But that required independent shareholders approving a whitewash waiver not to make a MGO.
• I didn’t expect shareholder pushback. And there wasn’t. Tendering closes on the 23rd July. Keep an eye on CCASS movements. Shares gained 4.7% yesterday prior to the EGM outcome. Mmm.

• As of end of H1, NAV was SEK 156 billion (SEK 361/share). NAV increased by 4%, gains in portfolio compensated by leverage increase. 5-y total return of 78.6% (OMX30, 76.4%).
• Industrivärden C shares are trading at a 4.8% discount to NAV (vs. 8.3% average for last 5-years). It seems risky to bet on a further discount reduction, rather a reversal.
• My target NAV is SEK 176,893 million. My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 360.3 (4.6% upside).

• Kakao has begun talks with potential buyers for Kakao Games, with Krafton leading discussions directly using its own investment team.
• Despite official denials, it’s viewed as procedural. Local markets anticipate the deal due to no direct refutation beyond formal announcements.
• A three-month compliance period from disclosure makes this quarter challenging, but completion announcement potential exists by Q4 this year.

• Despite the significant offering size, passive fund demand is unlikely to materialize due to non-strategic selling shareholders.
• Company’s number of shares and free float in the main global indices are forecasted to remain the same before and after the offering.
• Upcoming buybacks can lead to a decrease in float shares which can even cause passive fund supply at a subsequent quarterly review.

• Rex Minerals (RXM AU) has entered a scheme implementation deed with MACH Metals Australia at A$0.47 per share, a 70.9% premium to the undisturbed price (5 July).
• The key conditions are shareholder and FIRB approvals. FIRB approval should be forthcoming as Salim is the largest shareholder and the cordial Indonesia-Australia relations.
• While the offer represents a 10-year high, it implies multiples, which are light compared to precedent transactions. Nevertheless, this is a done deal. At last close, the spread was 9.3%.

• In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2024.
• The index changes for the September 2024 index rebal will be announced on 16th August 2024.
• The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.

• The review period for the LQ45 Index July rebalance ended 30 June. The changes should be announced the last week of July, becoming effective after the close on 31 July.
• Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
• For a change, the impact on the potential inclusions will be higher since they will join the index with higher weights compared to the potential deletions.

• On 21 June 2024, Canaan Co. announced a tender offer and taking private of Shinsung Tongsang. Tender offered shares are 31.664 million shares, representing 22.02% of outstanding shares.
• It could be difficult to complete this tender offer at 2,300 won, because there could be many investors that simply refuse to sell their shares at such low valuations.
• On the business side, the company has successfully captured higher market share and enjoyed higher profit margins especially for the Top Ten apparel brand, taking away market share from Uniqlo.

• Around a third of the way though the review period, there could be 4 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
• The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on the potential deletions varies from 2.5-16 days of ADV.
• The potential adds have outperformed the potential deletions over the last few months and there could be more to go with short selling banned.

• Many minority shareholders have lodged complaints against ACC with the SFC, since unfair privatization price damages the ecology of the entire market.It depends on whether the SFC will take action.
• The failure of privatization does not necessarily mean better returns for investors. On the contrary, it may result in greater losses. ACC can have other ways “hollow out” the Company.
• Arbitrageurs can choose to bet on a second privatization (with higher Offer Price) and also on the potential dividends, but the prerequisite is that the management choose to “act honorably”.

• Grifols’ founding families and Brookfield ask the Board for the necessary information to evaluate an offer for 100% of Grifols SA (GRF SM). The CNMV has halted trading in the shares.
• Grifols is worth €5.5 billion, after plummeting 39% in 2024. The deal smacks of desperation from the founding families, worried not to lose control of the company to debt holders. 
• There should be a minimum premium to guarantee offer success, at least 15% to current share price (maybe even 30%). B shares are protected in case of takeover.

• With Hanwha Corporation (000880 KS) trading around a one-year low NAV discount, the Hanwha Group has made a Tender Offer for 8% of shares outstanding at ₩30,000/share.
• Preceding my comments on Hanwha are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Last year, the GPIF as a whole returned 22.67% in yen terms. As a whole, GPIF outperformed its benchmarks by 0.04% after paying 0.02% in fees and costs.
• GPIF traded ¥30trln of assets – relatively high turnover for a fund which espouses very low turnover – but there’s a reason for that. There were also sharp active/passive moves.
• This year is the last year in the “cycle” of the “old” Policy Allocation Framework. A new one is likely to be introduced this year.

• Grandblue Environment Co A (600323 CH) disclosed a potential pre-conditional privatisation of Canvest Environmental Protection Group (1381 HK) at HK$4.90 per share, a 20.7% premium to the last close price. 
• Completing the capital injection from SOE entities into the offeror is a precondition. Grandblue also proposes that the controlling shareholder roll over 7.23% of its effective 44.75% stake. 
• While not a knockout bid, the offer is reasonable. Shareholders with blocking stakes should support a binding proposal. Timing is the key risk. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), A8 New Media (800 HK), Greatview Aseptic Packaging (468 HK), Asia Cement China (743 HK). 
• Lowest spreads: Fancl Corp (4921 JP), Great Eastern Holdings (GE SP), Chilled & Frozen Logistics Holdings (9099 JP), Tatsuta Electric Wire & Cable (5809 JP), Kfc Holdings Japan (9873 JP). 

• With all regulatory approvals received, the Scheme Meeting for Renesas Electronics (6723 JP)‘ acquisition of Altium Ltd (ALU AU) will take place on 12 July.
• If approved at the Scheme Meeting and at the Second Court Hearing, Altium Ltd (ALU AU) will stop trading from the close on 19 July.
• The replacements for Altium Ltd (ALU AU) in the ASX100/200 indices could be announced late this week with implementation at the close on 19 July.

• SOUTHBOUND was again a net buyer, for HK$10.9bn this week, on smallish two-way volumes. Banks were a big buy.
• The more I watch, the more I think the last few months have had serious national team buying of banks and energy, perhaps ahead of shareholder return policy changes.
• But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

• Fosun’s preferred arrangement for Henlius is to list the Company in A-shares.Since IPO in A-shares failed and Henlius has begun to generate profits, Fosun finally feels the need for privatization.
• Due to its “flaws”, undervaluation of Henlius in the Hong Kong stock market is difficult to fundamentally change. So, for conservative/cautious investors, Fosun’s one-time acquisition at a 30% premium is attractive.
• The Potential Share Alternative Offer seems a good option, but it is uncertain whether investors are still willing to believe in Fosun’s “good story” – the future re-listing is uncertain.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 13.9bn of A-shares. NORTHBOUND bought utilities and raw materials and sold everything else, especially consumer names. Appliances remain on the sell side.
• It is notable that net flows as a percentage of value traded are clearly “short gamma”, which is to say, sector underperformers are being sold, not bought.

• The review period for the September rebalance ends 30 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
• We forecast 6 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX).
• Excluding the migrations, the potential adds have outperformed the potential deletes since the start of the calendar year and there could be further outperformance over the next few weeks.

• Copper-Gold play Rex Minerals (RXM AU) has entered into a Scheme with MACH Australia.
• MACH, wholly-owned by Indonesia’s Salim Group, is offering A$0.47/share in cash, a 71% premium to last close and a decade-high.
• Rex shareholder approval and FIRB are the key conditions. Rex’s board is unanimously supportive. This Offer will tentatively complete late October.

• With just over a third of the review period complete, there could be 12 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• Even with 12 potential changes, there is sector balance with over half the changes in the Information Technology sector. Passive trading impact varies from 0.04-4.1x ADV.
• The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the year with a big move higher since mid-May.