Event-Driven

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 – Doosan Robotics (454910 KS), ARM Holdings (1822695D US), VNG (VinaGame) (VNG US), Integral Corporation (5842 JP) IPOs and Aquila Acquisition Corporation (7836 HK) de-SPAC.
Event-Driven developments – JMDC (4483 JP), Intage Holdings (4326 JP), Mason Group Holdings (273 HK), Liontown Resources (LTR AU), Newcrest Mining (NCM AU), Orecorp Ltd (ORR AU).

United Malt: Shareholder Vote On 12th Oct

Back on the 3 July, United Malt Group Ltd (UMG AU) and Malteries Soufflet entered into a binding agreement of A$5.00/share, by way of a Scheme.
The Scheme Booklet has now been lodged with ASIC. UMG shareholders vote on the transaction on the 12 October, with implementation on the 15 November.
The Offer remains subject to FIRB and other regulatory approvals. Malteries Soufflet and UMG are the second and fourth-largest maltsters in the world.

Merger Arb Mondays (11 Sep) – Eoflow, Mason, Liontown, Newcrest, United Malt, OreCorp, MPI

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 – 111 Inc (YI US), Costa Group Holdings (CGC AU), Eoflow (294090 KS), Symbio Holdings (SYM AU), Mason Group Holdings (273 HK), Origin Energy (ORG AU).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Yaizu Suisankagaku Industry (2812 JP), Liontown Resources (LTR AU), T&K Toka Co Ltd (4636 JP), Itochu Techno Solutions (4739 JP).

KRX Sector Index Series Rebalancing: Heavy Shorting on SK Square Is Anticipated

The most noteworthy developments include Samsung Electronics being newly added to the Semicon sector, while SK Square has been removed.
We must be mindful of the potential concentration of shorting flow on SK Square as most names expected to experience negative flows do not fall under the KS200/KQ150 membership.
Our strategic approach can take three directions: 1. aim at only those receiving positive flows, 2. heavy shorting SK Square, and 3. long-short the four with the most flow size.

KOSPI Size Indices – Changes in September & Implications

There are 8 migrations from MidCap to LargeCap, 7 LargeCap to MidCap, 8 new additions to MidCap, 17 SmallCap to MidCap, 23 MidCap to SmallCap, 5 new additions to SmallCap.
The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.

CSI500 Index Rebalance Preview: ETF Inflows Lead to Performance Skew

Over 85% of the way through the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.4% at the December rebalance resulting in a one-way trade of CNY 7.22bn.
With the market being stabilised through the ETF route, the index constituents have outperformed the non-index constituents over the last 6-7 weeks. That could reverse over the near term.

Quiddity Mainland Connect NORTHBOUND Flows (Week to 8Sep23) : BYD, ZTE, Zhongji Innolight, Amperex

This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
We like the nifty interactive tables and charts. We welcome feedback on how to make it more useful going forward.

EQD | Nikkei 225 (NKY) MONTHLY Trajectories Analysis

By Nico Rosti

The Nikkei 225 INDEX fell -5.77% during July and August (CC=-2). Currently the index is down for September: this month’s negative Close would be = CC=-3, a strong LONG signal.
The index reached a low = 31275.25 in August, right in the middle of the 32391-30600 support price band indicated in our previous MONTHLY Trajectories Analysis, 50%-75% reversal probability.
LONG Support levels are confirmed, in this insight we will analyze the new, re-calculated Resistance levels, to evaluate how far/how long the index could rise, if it rallies.

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Sep 10

Daily Brief Event-Driven: MVIS US Listed Semiconductor 25 Index Rebalance: Upweight for TSMC and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MVIS US Listed Semiconductor 25 Index Rebalance: Upweight for TSMC
MVIS Australia A-REITs Index Rebalance: Abacus Group Deletion Means More Outflow
Progress of Merger Between Celltrion Inc and Celltrion Healthcare & Appraisal Rights Issue
Omron Partial Offer for JMDC (4483) – The Engagement Is On! This Is the Script, This Is the Timing
MVIS Global Junior Gold Miners Index Rebalance: One Add, One Delete, Float, Capping = Big Impact
MVIS Australia Equal Weight Index Rebalance: Float & Capping Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover
MarketVector Vietnam Local Index Rebalance: Some Big Impact Changes
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, KOSDAQ150, Yuanta ETFs, MVA, MVW, SMH
Newcrest Mining (NCM AU): Scheme Meeting on 13 October

MVIS US Listed Semiconductor 25 Index Rebalance: Upweight for TSMC

The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 15 September. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$9.7bn.
Estimated one-way turnover is 5.9% resulting in a one-way trade of US$595m. The stocks are extremely liquid, the impact on the stock in terms of ADV to trade is small.

MVIS Australia A-REITs Index Rebalance: Abacus Group Deletion Means More Outflow

As expected, Abacus Group (ABG AU) will be deleted from the MVIS Australia A-REIT Index at the close on 15 September.
Abacus Group (ABG AU) will also be deleted from the S&P/ASX 200 (AS51 INDEX) on the same day, so this increases the sell flow on the stock.
Estimated one-way turnover at the rebalance is 3.8% resulting in a one-way trade of A$23.8m. There are a few stocks with over 1x ADV to trade from passive trackers.

Progress of Merger Between Celltrion Inc and Celltrion Healthcare & Appraisal Rights Issue

By Douglas Kim

The appraisal right prices of Celltrion Inc (068270 KS) is 150,813 won (2.2% higher than current price) and Celltrion Healthcare (091990 KS) is 67,251 won (1.9% higher than current price).
Celltrion Inc has mentioned that the merger could be cancelled if the total amount of appraisal share purchase amount exceeds 1 trillion won.
Although some investors are likely to exercise their appraisal rights in this merger, we would attach a higher probability of this merger getting completed (80-90%+).

Omron Partial Offer for JMDC (4483) – The Engagement Is On! This Is the Script, This Is the Timing

In February 2022, Noritsu Koki (7744 JP) sold a chunk of JMDC (4483 JP) to Omron Corp (6645 JP) for nearly US$1bn. 7mos later, Omron supported a primary offering.
Now Omron is going to 50+%, as Noritsu Koki is getting out. Other investors have to participate for this to succeed.
The question of pro-ration may be a question of Elmer vs Mr Partridge. But Elmer has a point here.

MVIS Global Junior Gold Miners Index Rebalance: One Add, One Delete, Float, Capping = Big Impact

There is one add, one delete, one listing change, plus float and capping changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September.
Estimated one-way turnover is 6.1% and that results in a one-way trade of US$240m. There are 31 stocks with over 1 day of ADV to trade from passive trackers.
There will be some same way and some opposite flows between the VanEck Vectors Junior Gold Miners ETF (GDXJ) and S&P/ASX 200 (AS51) trackers at the close on 15 September.

MVIS Australia Equal Weight Index Rebalance: Float & Capping Changes

There are no constituent changes for the MVIS Australia Equal Weight Index at the September rebalance. JB Hi-Fi Ltd (JBH AU) and Charter Hall (CHC AU) have avoided deletion.
Float and capping changes will result in a one-way turnover of 3.5% and in a one-way trade of A$69m.
There is a lot of short interest on stocks that will have passive buy/sell flows, but there will not be enough volume traded for shorts to use to reduce positions.

MVIS Global Rare Earth/Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover

There is one add and two deletes for the MVIS Global Rare Earth/Strategic Metals Index at the September rebalance. Plus there are free float and capping changes.
One way turnover is estimated at 11.1% and will result in a one-way trade of US$58m. There are a few stocks with over 0.5 days of ADV to trade.
The inclusion of Sociedad Quimica y Minera de Chile (SQM US) and deletion of Zhejiang Huayou Cobalt (603799 CH) are surprises.

MarketVector Vietnam Local Index Rebalance: Some Big Impact Changes

There are no constituent changes for the index but there are float and capping changes that will be implemented at the close on 15 September.
Estimated one-way turnover is 3.3% and the one-way trade is US$21.5m. There are eight stocks where passive trackers need to trade over 1 day of ADV.
After large creations for Market Vectors Vietnam ETF (VNM US) at the start of the year, there has not been a lot of follow-on activity as the market moves higher.

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, KOSDAQ150, Yuanta ETFs, MVA, MVW, SMH

The changes at the Nikkei 225 September rebalance were announced on 4 September. The rebalance of the HSI, HSCEI, HSTECH and HSCI was implemented on the same day.
The changes to the MVIS indices were announced on 8 September and will be implemented at the close on 15 September. The S&P/ASX family will also rebalance on 15 September.
After a month and a half of big inflows to onshore China ETFs, there were small outflows from a lot of ETFs during the week.

Newcrest Mining (NCM AU): Scheme Meeting on 13 October

Newcrest Mining (NCM AU)‘s IE considers Newmont Mining (NEM US)’s offer of 0.400 Newmont shares per Newcrest share + special dividend + FY2023 dividend to be reasonable but not fair.
The IE valued Newcrest at US$18.64-21.13 per share vs. the transaction value of US$17.10-18.70 per share. The sharp sector de-rating, including Newmont’s shares, has impacted the scrip-heavy offer.
The offer remains attractive compared to peer multiples, historical prices and VWAP exchange ratios. At the last close prices and for the 6 November payment, the gross/annualised spread is 1.2%/7.8%.

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Sep 09

Daily Brief Event-Driven: KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts
JMDC (4483 JP): Omron’s Partial Tender Offer
Newcrest: Shareholder Vote On 13th Oct
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Slowing Growth

KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts

After results were transitioned to non-public information, it has been observed that results are reflected in prices significantly later, with substantial price impact occurring close to the rebalancing trading day.
Even though the AUMs have recently decreased, the passive impact size is quite substantial, considering a recent pattern of price impact concentrating within a maximum of about two trading days.
A heavy Long-Short setup on these pairs, DearU / Douzone Bizon and SK Biopharmaceuticals / SK Bioscience (302440 KS), is something we should very actively consider.

JMDC (4483 JP): Omron’s Partial Tender Offer

JMDC (4483 JP) announced a partial tender offer for Omron Corp (6645 JP), the largest shareholder. Omron aims to make JMDC a consolidated subsidiary.
The offer is for a minimum of 12.0m shares (18.52% ownership ratio) and a maximum of 15.0m shares (23.08%) at JPY5,700 per share, a 22.4% premium to the undisturbed price.
Irrevocables (Noritsu Koki (7744 JP)) represent a 13.63% ownership ratio. While the offer is light, it will likely succeed as the minimum acceptance condition requires a 7.1% minority acceptance rate.

Newcrest: Shareholder Vote On 13th Oct

After being granted due diligence, Newmont (NEM US) firmed an all-scrip Offer on the 15 May for Newcrest (NCM AU) at 0.400 new Newmont shares for each Newcrest share held.
The Offer, by way of a Scheme, permits Newcrest to pay a special franked dividend of up to $US1.10/share on top of the Offer terms.
The Scheme Booklet has now been lodged with ASIC. Newcrest shareholders vote on the transaction on the 13 October. The record date for the special dividend is the 19 October.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Slowing Growth

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

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Sep 08

Daily Brief Event-Driven: Aquila Acquisition: The De-SPACed Arb and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Aquila Acquisition: The De-SPACed Arb
Hana Micron’s Boost From Samsung/Nvidia Agreement
Mason Group (273 HK): A Wide Spread with the Scheme Vote on 3 October
Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way
Quiddity HSCEI Dec 23 Flow Expectations: At Least One Change Likely; There Could Be More
3rd Oct Scheme Vote For Mason (273 HK)

Aquila Acquisition: The De-SPACed Arb

SPACs – remember them? US offerings in 2021 topped ~US$150bn, falling to US$13bn in 2022. Singapore joined the bandwagon in January 2022 and Hong Kong two months later.
That Hong Kong stock is Aquila Acquisition Corporation (7836 HK), and it recently announced a merger with ZG Group, a Chinese steel trading website.
That’s positive. Less positive is how de-SPACed shares tend to trade in the US.

Hana Micron’s Boost From Samsung/Nvidia Agreement

US graphics chip designer NVIDIA Corp (NVDA US) has, to date, sourced HBM3 chips exclusively from SK Hynix (000660 KS).
Shares in Samsung Electronics (005930 KS) promptly popped ~6% last Friday on news it had been added as a supplier to NVIDIA.
Hana Micron Inc (067310 KS), which boasts Samsung as its largest customer, similarly jumped, and is up 45% in the past week. Too much too quickly?

Mason Group (273 HK): A Wide Spread with the Scheme Vote on 3 October

Mason Group Holdings (273 HK)‘s scheme document is out, with the vote scheduled for 3 October. The IFA considers Red Emerald Capital’s HK$0.0338 per share offer fair and reasonable.
The key conditions are SFC approval and the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). Peer de-rating has helped the attractiveness of the offer.
Shareholders with blocking stakes have provided irrevocables or will accept due to the attractive ROI. At the last close and for the 21 November payment, the gross/annualised spread is 9.0%/52.1%.

Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way

In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.
At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.

Quiddity HSCEI Dec 23 Flow Expectations: At Least One Change Likely; There Could Be More

In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.
Based on the latest available data, I expect one ADD and one DEL for HSCEI in December 2023.
There is more than one potential ADD in the top 40 according to my estimates but recent history tells us some of these names are not “index-provider-friendly.“

3rd Oct Scheme Vote For Mason (273 HK)

On the 11 June, broker Mason Group (273 HK) announced a Scheme at HK$0.0338/share, a 20.7% premium to last close. Terms had not been declared final.
The Offeror is Red Emerald. which holds no shares in Mason. Shareholders with 47.55% of shares out have given irrevocables in support of the Scheme.
The Scheme Doc is now out. The EGM/Court Meeting will be held on the 3 Oct with expected payment around the 21 November. Trading wide to terms.

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Sep 07

Daily Brief Event-Driven: NTT’s Partial Offer for Marketing Consultant Intage (4326) – and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NTT’s Partial Offer for Marketing Consultant Intage (4326) –
Intage Holdings (4326 JP): NTT’s Partial Tender Offer
StubWorld: Axiata Is Coming Up Cheap
CSI300 Index Rebalance Preview: 14 Potential Changes in December
Single-Day ETF Flow Event Not to Be Missed in Korea in December
JF Wealth Lock-Up – At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity

NTT’s Partial Offer for Marketing Consultant Intage (4326) –

Today, NTT (Nippon Telegraph & Telephone) (9432 JP) announced a partial offer to buy a minimum of 40.0% and a maximum of 51.0% of Intage Holdings (4326 JP).
Six crossholders holding 20.98% between them have separately agreed to tender a total of 19.9%. That means a minimum 25.4% minority participation. With success, minimum pro-ration is 51.5%.
The dynamics of this deal and where synergies lie suggests people need to think really hard about where they underwrite future illiquid ownership.

Intage Holdings (4326 JP): NTT’s Partial Tender Offer

NTT (Nippon Telegraph & Telephone) (9432 JP) has announced a partial tender offer for Intage Holdings (4326 JP) to make it a consolidated subsidiary.
The offer is for a minimum of 15.4m shares (40.00% ownership ratio) and a maximum of 19.6m shares (51.00%) at JPY2,400 per share, a 26.4% premium to the undisturbed price.
Irrevocables represent a 19.90% ownership ratio. The minimum acceptance condition requires a 20% minority acceptance rate. The offer is attractive and represents an all-time high.

StubWorld: Axiata Is Coming Up Cheap

Axiata Group (AXIATA MK)‘s NAV discount and implied stub are around their lows since the CelcomDigi (CDB MK) / Digi.com merger last November.
Preceding my comments on Axiata 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%.

CSI300 Index Rebalance Preview: 14 Potential Changes in December

Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.
The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.

Single-Day ETF Flow Event Not to Be Missed in Korea in December

Ecopro Co will replace Celltrion Inc. Their float market cap difference is nearly 5 trillion won, so it doesn’t seem likely that this will reverse by the end of November.
Ecopro may not have a very significant passive impact x ADTV, given its still high trading volume. On the other hand, Celltrion seems likely to be the target of traders.
From a trading perspective, it’s important to focus on the potential price impact of this flow event on Celltrion, which could be amplified depending on the possibility of merger cancellation.

JF Wealth Lock-Up – At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity

By Clarence Chu

JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.
The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.
JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.

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Sep 06

Daily Brief Event-Driven: JFE Holdings (5411) Stock+CB Offering and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JFE Holdings (5411) Stock+CB Offering
Mergers, Acquisitions and Potential S&P/ASX Index Ad Hoc Inclusions
Golden Eagle (3308 HK): CCASS Movements Are Standard Fare
EQD | NIFTY Index WEEKLY Resistance Analysis
Hong Kong CEO & Director Dealings (6 Sept): WuXi AppTec, Peking University, FriendTimes

JFE Holdings (5411) Stock+CB Offering

Today JFE Holdings (5411 JP) announced it would raise ~JPY 121bn in an equity offering of 55mm treasury shares and JPY 90bn in a Convertible Bond offering.
¥125bn will be spent on capex for expansion, ¥75bn for capex, investments, and R&D related to decarbonisation, as well as repayment of debt to 2028.
This is a heavier than a “normal” equity offering. And recent large-ish equity offerings seem to have more volatility in outcome (post-offer overhang, or squeeze) than previous years.

Mergers, Acquisitions and Potential S&P/ASX Index Ad Hoc Inclusions

There are a bunch of stocks that are constituents of the S&P/ASX family of indices and could go private or merge prior to the next scheduled rebalance in December.
That will lead to ad hoc inclusions for the S&P/ASX 200 (AS51 INDEX) and could also lead to ad hoc inclusions for the S&P/ASX 50 and S&P/ASX 100 indices.
There is a fair amount of short interest on some of the potential inclusions and short covering due to index inclusion could take the stocks higher.

Golden Eagle (3308 HK): CCASS Movements Are Standard Fare

Back on the 28th May, PRC department store play Golden Eagle (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
The Offeror is the Wang family, who together with concert parties, held 80.29%. 7.18% of the 19.71% held by the disinterested stakeholders have given irrevocables in favour of the Scheme.
Ahead of the Scheme Meeting on September 15th, a significant amount of shares have moved out of CCASS. This is not something to concern investors.

EQD | NIFTY Index WEEKLY Resistance Analysis

By Nico Rosti

After a -5 weeks correction in August, the NIFTY Index has restarted its Bull run, ongoing from mid-March 2020. Let’s have a look to where MRM WEEKLY resistance levels are.
The current pattern is BULLISH, the index could rise easily another 2-3 weeks from here.
Target prices for a reversal (or pullback within the uptrend) are between 19846 -20294

Hong Kong CEO & Director Dealings (6 Sept): WuXi AppTec, Peking University, FriendTimes

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 are WuXi AppTec (2359 HK), Peking University Resources (618 HK), and FriendTimes Inc (6820 HK).

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Sep 05

Daily Brief Event-Driven: September Nikkei 225 Review – Lasertec and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

September Nikkei 225 Review – Lasertec, Mercari, Nitori IN, Expected DELETEs Out (Matsui the Biggie)
Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split
Liontown Resources (LTR AU): Albemarle’s Final A$3.00 Offer
Korea’s Latest IPO Rule Change: Daily Differential Allocation
EQD | SP/ASX200 Index: Will It Break Out of Its Range?

September Nikkei 225 Review – Lasertec, Mercari, Nitori IN, Expected DELETEs Out (Matsui the Biggie)

Today, somewhat earlier than expected), the Nikkei Index Team announced the changes to the Nikkei 225.
Lasertec Corp (6920 JP), Mercari (4385 JP), and Nitori Holdings (9843 JP) are added. Nippon Sheet Glass (5202 JP), Mitsui E&S Holdings (7003 JP), and Matsui Securities (8628 JP) removed.
That triggers flows of about ¥480bn a side, and some big, big changes. The announcement helps understand new process better.

Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT

Mercari (4385 JP), Lasertec (6920 JP) and Nitori (9843 JP) will replace Nippon Sheet Glass (5202 JP), Mitsui E&S (7003 JP) and Matsui Securities (8628 JP) in the Nikkei 225.
As expected, Nitori Holdings (9843 JP) will be added at half the planned PAF since the trading value is low compared to the expected index weight.
Passive trackers need to buy between 1-17 days of ADV on the adds while selling between 1.2-16.5 days of ADV on the deletes. There is a big funding trade too.

March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split

Now that the September 2023 Nikkei 225 Rebal is announced, we look at the March 2024 rebal and its possibilities.
Socionext (6526 JP) is the only automatic ADD, but it might not be. ZOZO Inc (3092 JP) and Ryohin Keikaku (7453 JP) would be sector balance ADDs.
Fast Retailing (9983 JP) could get capped if it outperforms Nikkei 225 by ~10%+ to 31Jan2024. And Nitori Holdings (9843 JP) will see an add of ~14 days of ADV.

Liontown Resources (LTR AU): Albemarle’s Final A$3.00 Offer

Liontown Resources (LTR AU) has received a revised non-binding privatisation proposal from Albemarle Corp (ALB US) at A$3.00 per share, a 20.0% premium to the previously rejected offer of A$2.50.
The revised offer is attractive compared to the Kathleen Valley Lithium Project’s NPV range, peer multiples and historical share prices. The offer price is final, barring a superior proposal.
Liontown has granted Albemarle a limited period of exclusive due diligence. The Board intends to recommend a binding proposal at A$3.00 per share. The retail vote could be a risk.

Korea’s Latest IPO Rule Change: Daily Differential Allocation

Korea FSS has provided guidelines to assign different weights to IPO orders from Day 1 to Day 5. Bookrunners should give higher weights to institutions that place their orders early.
The question of whether this will deter the rush to place bulk orders close to the deadline and lead to a higher weighting of essential pricing is generating significant interest.
The volume of orders and allocation by price range could serve as practical clues for assessing post-IPO pricing, making it a crucial factor in formulating post-IPO trading strategies.

EQD | SP/ASX200 Index: Will It Break Out of Its Range?

By Nico Rosti

The S&P/ASX 200 INDEX has been stuck in the 7000-7600 range for the past 2 years, with a brief dive to 6500 during the summer of 2022.
If we consider the bottom at 6411 in October 2022, the index may have started to build an uptrend since then, but failed repeatedly to breach past the 7600 barrier.
After a brief correction in August 2023, the index is currently rising, but soon it will encounter WEEKLY resistance that could hamper its chances of breaking out of its range.

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Sep 04

Daily Brief Event-Driven: Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium
S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises
Yuanta ETFs Rebalance: AI-Frenzy Means Tech Replaces Industrials; Shorts Surge; Big Positioning
China ETFs: Inflows Continue to Support the Market
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete
Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!
Quiddity TDIV/50/100 Sep 23 Rebal: ALL 15 Changes Expected; US$420mn One-Way
Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin
Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move
Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer

Carlyle Group Tender Offer for Seiko PMC (4963) At 89% Premium

Carlyle Group is buying Seiko Pmc Corp (4963 JP) from 54+% owner Dic Corp (4631 JP) and minorities in a Tender Offer with optical premium of 89%.
It looks good, takes advantage of tax code particularities, and the nature of the company disguises some value. Shareholder structure means this is basically a done deal before it starts.
With minimal foreign active investor ownership, and significant crossholder, ESOP, and director ownership, only a bit of retail actually needs to tender to make this successful.

S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises

There is 1 change for the S&P/ASX100 Index, 5 adds/ 6 deletes for the S&P/ASX 200 INDEX, and 10 adds/ 8 deletes for the S&P/ASX300 Index at the September rebalance.
There will be 4-14 days of ADV to trade on the S&P/ASX100 Index and S&P/ASX 200 INDEX adds while the impact on the deletions is between 3-12 days of ADV.
On average, the adds to the S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index have outperformed the deletes over the last few months.

Yuanta ETFs Rebalance: AI-Frenzy Means Tech Replaces Industrials; Shorts Surge; Big Positioning

There are 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
The impact on the inclusions is larger in terms of flow but smaller in terms of days to ADV to buy. Shorts are higher on the deletions.
There appears to be big positioning on a lot of the stocks. But the ETF adds could move higher in the short-term on short covering.

China ETFs: Inflows Continue to Support the Market

Money continues to flow into mainland China ETFs taking the total inflows since 18 July to over US$25bn. This has likely helped stabilise the market and prevent a bigger fall.
The inflows continue to be largest on ETFs tracking headline indices – CSI 300, STAR50, CSI1000, CSI 500, SSE50, ChiNext. Plus there are inflows on some sectoral and thematic ETFs.
The skew between stocks gaining 20%+ over the period vs those dropping -20% or more has improved significantly over the last week.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete

The review period for the MVIS Global Rare Earth/Strategic Metals Index ended 31 August. The changes will be announced on 8 September and implemented at the close on 15 September.
Coming in around the 85% cutoff, Rising Nonferrous Metals Share (600259 CH) is a potential inclusion. There are two stocks that are very close to the 98% deletion threshold.
Lake Resources Nl (LKE AU) is a deletion from the S&P/ASX 200 (AS51 INDEX) at the September rebalance and there could be more to sell if deleted from this index.

Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!

The September 2023 index changes for the ES50 index was confirmed after the close on Friday 1st September 2023.
There will be two ADDs and two DELETEs. One set of changes was well anticipated by us. The other set comes as a major surprise to us.
Collectively, the two ADDs could see ~US$2.4bn index flows and the two DELs could see ~US$2.9bn index flows, with US$500mm of reverse funding flows.

Quiddity TDIV/50/100 Sep 23 Rebal: ALL 15 Changes Expected; US$420mn One-Way

The September 2023 index changes for the TDIV, T50, and T100 Indices were confirmed after the close on Friday 1st September 2023.
In this insight, we take a look at our final flow expectations for these index changes and the capping flow expectations for the TDIV index.
There could US$420mn one-way flows across these three indices during this rebalance event.

Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin

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 – Seiko Pmc Corp (4963 JP), 111 Inc (YI US), Costa Group Holdings (CGC AU), Symbio Holdings (SYM AU), Eoflow (294090 KS), Orecorp Ltd (ORR AU).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Pacific Current (PAC AU), T&K Toka Co Ltd (4636 JP), Allkem Ltd (AKE AU), Celltrion Healthcare (091990 KS).

Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move

The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
Last week was slightly disappointing but the Recommendations Outperformed the universe.
New stimulus measures are partly supply side, and a little bit demand side, but they’re not big enough yet to move the needle. Mainland ETF buying smells like National Team.

Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer

Seiko Pmc Corp (4963 JP) has recommended Carlyle Group / (CG US)’s tender offer of JPY1,070 per share, an 88.7% premium to the undisturbed price.
Dic Corp (4631 JP) will not tender but vote for the share consolidation at the EGM. Post consolidation, DIC will sell its 54.51% stake to Carlyle at JPY799 per share.
Achieving the minimum ownership ratio (12.16%) requires a 26.7% acceptance rate, which is doable as the offer is attractive. The tender offer runs from 4 September to 17 October.

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✓ Company Data and News
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Sep 03

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: STAR50 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF
Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin
JPX-Nikkei 400 Rebal 2024: End-Aug 2023
Quiddity ASX Sep 23 Rebal: 15 Inflow/Outflow Names; Beware of Short Buildup; US$450mn One-Way
SBI Shinsei Bank (8303) EGM Done. TOPIX Removal on Weds, Last Day Is 27 Sep, Money Comes Next Year.
26 Sept Scheme Vote For ENM (128 HK)

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF

The HSI, HSCEI, HSTECH and HSCI rebalances will take place at the close on 4 September since the market was closed on 1 September due to Typhoon Saola.
There will be a few announcements next week with Nikkei 225 early in the week and the MVIS series post close on Friday. Plus the STAR50 rebalances on Friday.
Another week of huge inflows into mainland China ETFs focused on the CSI 300 Index, STAR50 INDEX and CSI Smallcap 500 Index.

Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM

Marginal float helped fuel the VinFast (VFS US) bubble. Then it popped.
The Prosus (PRX NA)/Naspers (NPN SJ) Circularity Detour and subsequent unwind created the B-Share construct which means they can maintain the voting control in South Africa without maintaining economic control.
The backlash against Star CM Holdings (6698 HK) calls into question the broader Chinese entertainment industry, and how it strikes a balance between viewership/profitability and ethical boundaries.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quiet week – only one new deal: STG’s Offer for Energy One Ltd (EOL AU).
Key updates took place for Costa Group Holdings (CGC AU), DDH1 (DDH AU), ENM Holdings (128 HK), and Penguin International (PBS SP).

JPX-Nikkei 400 Rebal 2024: End-Aug 2023

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2024 based on trading data as of end-August 2023.

Quiddity ASX Sep 23 Rebal: 15 Inflow/Outflow Names; Beware of Short Buildup; US$450mn One-Way

The September 2023 review results for ASX indices were announced after the close on Friday 1st September 2023.
There will be 15 ADD names and 15 DELETE names across ASX 100, ASX 200, and ASX 300. Collectively, the ADDs could see one-way flow of roughly US$450mn.
Many names have a significant number of days to trade. Some of these names have seen a spike in short interest recently. This should be an interesting flow event.

SBI Shinsei Bank (8303) EGM Done. TOPIX Removal on Weds, Last Day Is 27 Sep, Money Comes Next Year.

Today, the EGM to approve the share consolidation (resulting in minority squeezeout and delisting) took place.
It was a done deal. So now it is done.
All that remains is for the technically adept to do what they expect they need to do.

26 Sept Scheme Vote For ENM (128 HK)

Back on the 2 June, small-cap fashion wear retailer ENM Holdings (128 HK) received a delisting Offer from major shareholder, Chinachem, at HK$0.58/share, in cash.
The Scheme Doc is now out after thrice being delayed. The EGM/Court Meeting will be held on the 26 September with expected payment around the 14 November.
There’s a whiff of opportunism embedded in the Offer. But being loss-making and illiquid, I’d expect the vote to still get up.

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✓ Unlimited Research Summaries
✓ Personalised Alerts
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Sep 02

Daily Brief Event-Driven: ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September