Event-Driven

In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.

Jeisys Medical (287410 KS): Archimed’s Delisting Offer

Aesthetic laser maker Jeisys Medical (287410 KS) has announced French PE outfit Archimed SAS is seeking to delist the company.
Archimed intends to acquire 72% of Jeisys at ₩13,000, a 20.82% premium to undisturbed. Archimed has also inked agreements with founders/directors for 26.44%, taking its possible % acquisition to 98.44%.
A Korean medical device maker – not another Eoflow (294090 KS)?! Jeisys did face a patent infringement case from Syneron Medical (ELOS US) in 2018; but since resolved.

Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions

The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.
Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.
Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.

Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market

Today after the close, SBI Holdings (8473 JP) – which currently owns 32.4% of Medical Data Vision (3902 JP) – announced it would buy another 1.91mm shares over 7mos.
This market purchase would lift them to ~37.4% by year-end. Interestingly, they plan to go through the one-third level without a Tender Offer. But their buying history hasn’t been great.
SBI bought 20% in 2020. It fell by half. They bought another 5%. Then it dropped 50%, so they bought another 5%. Now -25% so they are buying another 5%.

CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up

Activist Argyle Street’s approach to closed-end investment company China Merchants China Direct Investments (133 HK) (CMCDI) has a certain David Webb-like quality.
Apart from the deep value angle, the analysis of director Elizabeth Kan’s potential conflict of interest is particularly insightful. Argle will vote against Kan’s re-election at the 20th June AGM
Given this upcoming vote, as I’ve done with Giordano (709 HK) and L’Occitane (973 HK) previously, it’s useful to investigate the lesser-known shareholder register, a byproduct of investigative disclosure reports.

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer

In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May.
The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors.

KOSDAQ Global Rebalancing This Week: Trading Considerations

KRX announced KOSDAQ Global rebalancing. Annually in June, effective date follows June options expiry. Passive flow trading on Thursday, the 13th. 49 companies designated, with nine excluded and eleven added.
Predicting passive capital movement is challenging, but attention must be given to price impacts because reshuffle predictability is low, lacking preemptive trading setups.
We must anticipate the SSF reshuffle in August, likely including new KOSDAQ Global constituents. KRX plans to list SSFs for all remaining constituents, potentially advancing setup timing for price increases.

Rakuten Bank (5838 JP) – The Bank in Current Form and the Promise of FinTech Reorganization

By Victor Galliano

Rakuten Bank, in its present form, is positioned to benefit from rising interest rates in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
The proposed FinTech reorganization of the group around the bank should drive further potential shareholder benefits; higher ROE, lower customer acquisition costs, increased active account penetration and lower operating costs
We believe that there will be effective governance checks and balances in place to ensure fair valuations of the FinTech segments pre-reorganization; we include our base valuations in this report

Alumina (AWC AU): Scheme Vote on 18 July

The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range.
The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.

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Jun 11

Daily Brief Event-Driven: Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn
Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer
Tender Offer of Jeisys Medical by Archimed Group
S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning
Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank
Jun24 S&P 500/400/600 Index Rebal – Both More and Less Interesting Than You Think, But 3 Big Buys
CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead
Interglobe Aviation : Block Deal Trade Special Situations and Tactical Trade Strategy

Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor

Sun Corp (6736 JP) for years has been a play on its investment holding in Cellebrite DI (CLBT US), brought to market in a $2.4bn SPAC deal announced 30Aug2021.
The SPAC entity was an entity called TWC Tech Holdings II Corp (TWC = “True Wind Capital”). The next day, Cellebrite DI (CLBT US) was born, trading up to US$11.00+.
Sun Corp (6736 JP)‘s value realisation path had begun. Today, a True Winds entity announced a Partial Tender Offer – unsolicited, unannounced previously – on Sun Corp, for 19.0%.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn

There are 5 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June with implementation taking place from 21-27 June.
The constituent changes and capping changes result in an estimated one-way turnover of 12.8% and in a one-way trade of TWD 37.2bn (US$1.15bn).
The changes are in line with our forecasts with one exception. Uni President Enterprises (1216 TT) was not added and Yulon Finance (9941 TT) was added instead.

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.

Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer

True Wind has launched a hostile partial tender offer for Sun Corp (6736 JP) for a minimum (3.8m) and maximum (4.2m) shares at JPY4,400, 19.2% premium to the undisturbed price.
The offer was prompted by frustration with the Board’s lack of urgency in closing the disparity between Sun Corp’s market cap and the value of its Cellebrite DI (CLBT US) stake.
The Board has three options: do nothing (low probability), find a white knight bidder (high probability), or commit to selling/distributing its Cellebrite stake (medium probability).

Tender Offer of Jeisys Medical by Archimed Group

On 10 June, it was announced that France’s Archimed Group is conducting a tender offer of 55.72 million shares of Jeisys Medical (287410 KS) (72% of outstanding shares).
The tender offer period will run from 10 June to 22 July. The tender offer price is 13,000 won.
Archimed also signed a contract to purchase the entire stake (23.2%) held by Kang Don-Hwan (Chairman of Jeisys Medical) and (3.2%) held by a Director Myung-Hoon Lee.

S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, and no regular changes for the S&P/ASX200 INDEX in June.
The surprise inclusion of Wisetech Global (WTC AU) means that positioning is likely to be lower than the passive buying and there could be a move higher in the stock.
There will be one adhoc inclusion to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June following Cie De Saint-Gobain (SGO FP)’s acquisition of CSR Ltd (CSR AU).

Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank

Asia Vital Components (3017 TT) will replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 21 June.
Asia Vital Components (3017 TT) was added to a global index at the end of May and the stock has dropped nearly 25% from its highs.
Asia Vital Components (3017) trades at a much higher forward PE compared to its peers while Chang Hwa Commercial Bank (2801) trades at a lower PB compared to its peers.

Jun24 S&P 500/400/600 Index Rebal – Both More and Less Interesting Than You Think, But 3 Big Buys

On Friday, the S&P index committee announced the June 2024 changes to the three major indices in the S&P1500 universe.
KKR, Crowdstrike (CRWD), and GoDaddy (GDDY) replace Robert Half (RHI), Comerica (CMA), and Illumina (ILMN) in the S&P500. There are 6 ADDs to S&PMidCap400, 13 DELETEs from Sm600.
There are some BIG and impactful flows here. Some are very big. Netted 2-way flow on 21 June is ~US$66-80bn. But as always, details matter.

CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead

By Xinyao (Criss) Wang

Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand.
ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.
For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader.

Interglobe Aviation : Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
These block deals generally include selling promoters and big funds at a price discount to its current market price.
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

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Jun 10

Daily Brief Event-Driven: S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks
Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders
Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent
Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas
A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement
Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff
HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly

S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks

There are 3 changes for the S&P 500 INDEX, 7 changes for the S&P Midcap400 Index and 13 changes for the S&P SmallCap600 Index at the June rebalance.
There is huge size to trade in KKR & Co (KKR US) and Crowdstrike Holdings (CRWD US) and both stocks were up big in the after-hours market.
There has been positioning in some stocks recently but stocks including KKR & Co, RB Global and Texas Pacific Land could see further positioning in the next week.

Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys

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), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK).
Lowest spreads: Alumina Ltd (AWC AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), QV Equities Ltd (QVE AU).

Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders

Archimed aims to acquire 72% of Jeisys Medical’s shares, totaling 55,724,838 shares. The tender offer runs from the 10th of this month to the 22nd of the following month.
If tendered shares fall short of the 18,013,879 minimum, Archimed refrains from purchases. If exceeded, Archimed buys all, eliminating allocation risk.
With over 70% substantial volume and a large portion held by local retail investors, surpassing the 26% threshold seems feasible.

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable.
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power’s offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.

Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas

The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.

A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win

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’s renewed buy streak continued this past week; every day net positive. Strong net buying. NORTHBOUND saw small net buying on renewables, utilities, and semiconductors.
AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng/other HK indices fell and A-shares did not do much. Liquid Hs underperformed As by 2%.

Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement

The ASX 20/50/100 index changes for the June 2024 index rebal event was announced after market close on Friday 7th June 2024.
In this insight, we take a look at our flow expectations for the ADDs/DELs and the trends in short interest buildup for these names.
Separately, the completion of the CSR Ltd (CSR AU) M&A deal could trigger an intra-review deletion in June 2024 and the potential replacement name could have very high-impact.

Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price

By Xinyao (Criss) Wang

Since the China/Taiwan situation looks increasingly tense, Xu Xudong/Far Eastern Group may be eager to privatize ACC considering geopolitical conflicts and political risks. Its business is subject to strict regulation.
HK$3.22 Offer Price is disappointing, but the privatization isn’t completely impossible (The headcount does not apply now). A certain number of investors are still willing to accept the Offer Price.
For arbitrageurs, the return looks not bad. However, considering the high uncertainties/failure risks, we still advise investors to be cautious. HK$2.5/share is a price point worth participating in.

NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff

There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly

SOUTHBOUND was again a net buyer, for HK$27.2bn this week, on small two-way volumes. China Mobile (941 HK) dominated as it reached dividend ex-date. Other high-div SOEs also saw buying.
It is not clear how much of this is H/A discounts, expected dividend tax removal, and the KPIs for SOE CEOs to raise prices and payout ratios, but it continues.
Valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

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Jun 09

Daily Brief Event-Driven: Potential Merger Dynamics Involving SK Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix
CPMC Holdings (906 HK): ORG’s Competing Offer Kicks off an Auction
(Mostly) Asia-Pac M&A: CPMC, Nagatanien, APM Services, Altium, Austal, Shinko Elect, Hollysys
Weekly Deals Digest (09 Jun) – Teijin, Nagatanien, CF Logistics, Asia Cement, CPMC, MMG, Shift Up
Game On As ORG Lobs Competing Offer For CPMC (906 HK)
Last Week in Event SPACE: Jardine Cycle & Carriage, “Name & Shame”, Asia Cement, Northern Minerals

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix

Regardless of the divorce proceedings, SK still urgently needs SK Inc’s stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
SK Inc’s involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.

CPMC Holdings (906 HK): ORG’s Competing Offer Kicks off an Auction

CPMC Holdings (906 HK) disclosed a competing pre-conditional voluntary offer from ORG Technology Co., Ltd. A (002701 CH) at HK$7.21, a 4.9% premium to Changping Industrial’s HK$6.87 offer.
Like the Changping Industrial offer, ORG’s offer is pre-conditional on regulatory approvals and has a 50% minimum acceptance condition. Changping Industrial has secured all regulatory approvals except SAMR.
ORG’s skinny premium and precarious irrevocable from Mr Zhang Wei suggests Changping Industrial’s next move is to secure Mr Wei’s irrevocable with a revised higher offer.

(Mostly) Asia-Pac M&A: CPMC, Nagatanien, APM Services, Altium, Austal, Shinko Elect, Hollysys

I tally 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed on Smartkarma this week: Asia Cement China (743 HK)‘s rubbish Scheme; and the low-balled MBO for Nagatanien Holdings (2899 JP).
Key updates took place on: CPMC Holdings (906 HK), APM Human Services (APM AU), Altium (ALU AU), Austal (ASB AU),Shinko Electric Industries (6967 JP), and Hollysys Automation Technologies (HOLI US).

Weekly Deals Digest (09 Jun) – Teijin, Nagatanien, CF Logistics, Asia Cement, CPMC, MMG, Shift Up

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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) seeks to raise up to US$320 million.
Event-Driven developments: Asia Cement China (743 HK), CPMC Holdings (906 HK), Chilled & Frozen Logistics Holdings (9099 JP), Nagatanien Holdings (2899 JP), Teijin Ltd (3401 JP), Altium Ltd (ALU AU).

Game On As ORG Lobs Competing Offer For CPMC (906 HK)

After six months had elapsed, and CPMC Holdings (906 HK)‘s Offeror just needing SAMR/SAFE clearance before launching a firm bid, a competing Offer from ORG Technology (002701 CH) appeared unlikely.
Yet in a surprise move, ORG has made a pre-conditional (NDRC, SAFE, MoC, SAMR, and shareholder approval) Offer at HK$7.21/share, a 4.9% premium to the ongoing SASAC/NCSSF Offer.
ORG’s pre-con Offer also has a 50% acceptance condition. ORG and concert parties have 24.43%. And Zhang Wei (22.01%) has given has an irrevocable. Directors have 0.87%. Intriguing situation.

Last Week in Event SPACE: Jardine Cycle & Carriage, “Name & Shame”, Asia Cement, Northern Minerals

A new tool highlights which TSE companies have disclosed a policy/consideration; sometimes referred to as the “name and shame” list. In practice, more “name” than “shame”.
Jardine Cycle & Carriage (JCNC SP) is trading rich to its NAV. And the simple ratio (JCNC/Astra International (ASII IJ)) is the highest level outside the 2008 GFC.
This is a rubbish Offer for Asia Cement China (743 HK). Given how shareholders voted at last year’s AGM, expect this Scheme to be voted down. Avoid.

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Jun 08

Daily Brief Event-Driven: EQD | The NIFTY Swung Big But the Rally Could Continue For +2 Weeks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EQD | The NIFTY Swung Big But the Rally Could Continue For +2 Weeks
Unipol Gruppo/UnipolSai: Squeeze-Out and Spread

EQD | The NIFTY Swung Big But the Rally Could Continue For +2 Weeks

By Nico Rosti

The NIFTY Index has been swinging wildly as of lately, but the odds look good for a continuation of the rally at the moment.
The index is in a pattern where it can rally for 1-2 more weeks.
Wait for prices in the 23500/23700 resistance area before considering a SHORT trade.

Unipol Gruppo/UnipolSai: Squeeze-Out and Spread

By Jesus Rodriguez Aguilar

Unipol Gruppo S.p.A (UNI IM) has reached 95% of the share capital of UnipolSai SpA (US IM), therefore the conditions for the squeeze-out are met.
The dividend-adjusted offer price is €2.535. Unipol has three months from 26 April to implement the squeeze-out. The holding discount, as expected, has closed.
Spread to cash offer is 0.51%/3.85% (gross, annualized assuming settlement of squeeze-out by 26 July). The share alternative is now trading at a premium.

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Jun 07

Daily Brief Event-Driven: Softbank (9984 JP): This Time and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Softbank (9984 JP): This Time, It’s Different
TOPIX Inclusions: Who Is Ready (June 2024)
Affinity Equity Partners Seeking Delisting of Lock & Lock Through Comprehensive Stock Exchange
Altium (ALU AU): Scheme Vote on 12 July
MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June
Sidara/John Wood: 4th Proposal at 230p
Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal

Softbank (9984 JP): This Time, It’s Different

By Victor Galliano

Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount

TOPIX Inclusions: Who Is Ready (June 2024)

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.
There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.

Affinity Equity Partners Seeking Delisting of Lock & Lock Through Comprehensive Stock Exchange

On 5 June, Affinity Equity Partners (AEP) announced that it is seeking a delisting of Lock&Lock (115390 KS) shares through a comprehensive stock exchange.
It has been reported that the second tender offer failed. Only 1.5% of the outstanding shares participated in the second tender offer, falling short of the 9.5% participation required.
Affinity plans to transfer the shares of Lock&Lock held by an overseas corporation to a domestic corporation (investment-in-kind) and then go through a comprehensive stock exchange procedure.

Altium (ALU AU): Scheme Vote on 12 July

The Altium Ltd (ALU AU) IE considers Renesas Electronics (6723 JP)’ A$68.50 scheme offer fair and reasonable as it is above the midpoint of the A$62.37 to A$70.27 valuation range.
The offer is conditional on remaining regulatory approvals (FIRB, CFIUS) and shareholder approval.
The offer price is attractive and 31% above the all-time high. At the last close and for the 1 August payment, the gross/annualised spread was 1.7%/11.6%.

MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June

With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.

Sidara/John Wood: 4th Proposal at 230p

By Jesus Rodriguez Aguilar

Sidara has submitted a fourth and final 230p/share cash proposal. Wood’s Board has changed tack and will grant due diligence. PUSU has been extended to 3 July.
This proposal represents 39.4% premium, implied equity value of £1,591 million ($2,033 million) and implied EV of £2,983 million ($3,122 million), and (still good value) 6.4x EV/NTM Fwd EBITDA.
The market is cautious (gross spread 12.5%). There’s potential for a “best & final” firm offer. However, if Sidara withdraws a significant sell-off in Wood’s shares is expected.

Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal

Back on the 15th Feb, Renesas Electronics (6723 JP), a supplier of advanced semiconductors, entered into a Scheme with Altium Ltd (ALU AU).
Altium shareholders are being offered A$68.50/share, in cash, a lifetime high.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th July. Expected implementation on the 1 August. The IE says fair & reasonable.

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Jun 06

Daily Brief Event-Driven: SMFG Cross-Shareholding – At Least US$17bn of Cross-Shareholding to Sell and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SMFG Cross-Shareholding – At Least US$17bn of Cross-Shareholding to Sell, Planning to Speed It Up
Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail
Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries
CK Asset Holdings (1113 HK): First Down, Then Up?
Maxell (6810) Launches New MTMP, A “TSE ‘ATIMAoCoC&SP'” Notice, And A Buyback
Asia Cement (743 HK): $3.22/Share Offer – Really?
Quiddity Leaderboard S&P 500 Jun 24: Ranks to Be Finalized Tomorrow; 2 Changes Possible

SMFG Cross-Shareholding – At Least US$17bn of Cross-Shareholding to Sell, Planning to Speed It Up

By Sumeet Singh

Following up on our earlier cross-shareholding notes, in this note we look at Sumitomo Mitsui Financial Group (8316 JP) cross-shareholding.
SMFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$17bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

Asia Cement China (743 HK) disclosed a Cayman scheme privatisation offer from Asia Cement (1102 TT) at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close.
The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break.

Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.

CK Asset Holdings (1113 HK): First Down, Then Up?

CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.

Maxell (6810) Launches New MTMP, A “TSE ‘ATIMAoCoC&SP'” Notice, And A Buyback

Today, Maxell Ltd (6810 JP) announced its new MTMP “MEX26 – Commit to Value (CorporateValue,ProfitGrowth)” with lots of consultant-speak and corporate homily.
But they present a capital investment plan, and a capital return plan. These may interest investors. The buyback is the same size as 2019 and 2022. They popped and faded.
Todays tidbits were all announced during the lunch break today, and the stock popped 6% in the PM session on the news.

Asia Cement (743 HK): $3.22/Share Offer – Really?

After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.

Quiddity Leaderboard S&P 500 Jun 24: Ranks to Be Finalized Tomorrow; 2 Changes Possible

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The rankings used for the June 2024 index rebal event will be decided based on the opening prices tomorrow (6th June 2024).
In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

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Jun 05

Daily Brief Event-Driven: Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks
StubWorld: What Now With Langham (1270 HK)?
HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows
Northern Minerals (NMI AU): Chinese Investors Forced To Exit
Quiddity ChiNext/ChiNext 50 Jun 24 Rebalance: ~US$700mn One-Way Flows; Thoughts on Surprises
China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait
GS Retail: Equity Spin Off of Parnas Hotel and Freshmeat Subsidiaries
MV Australia A-REITs Index Rebalance Preview: ASK May Be Deleted; HMC Close Add; Capping Changes

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
Nearly 5mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 12wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 2.6% wider than at narrowest. In May, gap risk narrowed as Shinko underperformed Ibiden.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)

The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.

MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks

By Charlotte van Tiddens, CFA

MSC indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R41.9bn, R25bn traded in the closing auction (60%).
Turnover at the February rebalance was R25.6bn. Most SA constituents were pushed lower in the closing auction and for the day, consistent with the downweighting of SA Inc.
China was downweighted in the ACWI and EM indices for a second straight quarter, reducing the country weight in ACWI by 6bps to 2.69%.

StubWorld: What Now With Langham (1270 HK)?

Unexpectantly, Great Eagle Holdings (41 HK) said it would not proceed with an Offer; and Hong Kong hotel-play Langham Hospitality (1270 HK) promptly cratered. But why the flip flop?
Preceding my comments on GE, Langham and Champion REIT (2778 HK), 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%.

HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows

The HSI added BYD Electronics (285 HK) and deleted Country Garden Services (6098 HK). HSCEI added Zijin Mining Group Co Ltd H (2899 HK) deleted Xinyi Solar Holdings (968 HK)
HSTECH had no changes, but lots of flow. The index team sets capping levels, then resets them a three days before the actual rebalancing. There were some capping/recapping changes.
Below we offer tables showing all the changes and flows across the indices for each stock, ranked by Flows, ADV, and Ticker. And a spreadsheet with all the relevant data.

Northern Minerals (NMI AU): Chinese Investors Forced To Exit

Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days.

Quiddity ChiNext/ChiNext 50 Jun 24 Rebalance: ~US$700mn One-Way Flows; Thoughts on Surprises

The June 2024 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
There will be seven changes for the ChiNext index and five changes for the ChiNext 50 index. Some of these names surprised us.
In this insight, we take a look at our final flow expectations for the confirmed index changes and our thoughts on the selection process.

China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait

By Xinyao (Criss) Wang

The approval/filing process of China TCM’s privatization is complicated and would take some time, but there’re almost no cases of disapproval. It also depends on the adequacy of materials submitted.
Due to the extension of time for the despatch of Scheme Document, this process would be delayed for more months.But we should receive clear information by October at the latest.
For arbitrageurs, China TCM is an investment opportunity of high success rate, which becomes more attractive if HK stock market is depressed.It’s better suited to idle funds considering potential risks/returns.

GS Retail: Equity Spin Off of Parnas Hotel and Freshmeat Subsidiaries

On 3 June, GS Retail (007070 KS) announced that it will spin off Parnas Hotel and Freshmeat subsidiaries to simplify its business structure and enhance shareholder value.
The company plans to create a new entity tentatively called Parnas Holdings which will include Parnas hotel and Freshmeat (a meat processing company).
We have a positive view of GS Retail’s decision to conduct this equity spin off which simplifies the business structures and it could raise the valuation multiples of GS Retail.

MV Australia A-REITs Index Rebalance Preview: ASK May Be Deleted; HMC Close Add; Capping Changes

The review period for the June rebalance ended last week. There could be one deletion from the index and a bunch of capping changes.
There is one stock that is close to inclusion zone but may not make it in June.
The expected index changes will lead to a one-way turnover of 2.5% resulting in a one-way trade of A$14m. That will increase if there is an inclusion.

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Jun 04

Daily Brief Event-Driven: ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade
Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock
Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won
Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade
APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45
Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay

ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade

There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 5/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the one-way trade across both indices is estimated to be CNY 3.69bn (US$508m).

Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”

In mid-January 2024, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
The TSE list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links (and the shame list).
We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.

Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100

Nagatanien Holdings (2899 JP) recommended a Marunouchi Capital-sponsored MBO at JPY3,100, a 38.4% premium to the undisturbed price.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The offer period is from 4 June to 16 July.
While not a knockout bid, the offer represents a five-year high and requires a 58% minority acceptance rate. This is a done deal with payment commencing from 23 July.

CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock

We have already discussed our flow expectations for the mainstream indices in the CSI family such as CSI300/500, SSE50/100, and the STAR50/100 for the June 2024 index rebal event.
In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance of some of the lesser known indices in the CSI family.
The indices covered in this insight are All Share Brokerage, China Internet, Medical Devices, National Defense, and Livestock Breeding indices.

Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).

MitCorp – the largest shareholder – and the Nagatani family – today announced an MBO where they will buy a classic ubiquitous brand at an Adjusted EV of 5.4x EBITDA.
The equity check appears to buy at ~2.5x Mar27-29 average FCF but they probably have 50% of the shares in the bag. Retail, or who they sell to, matter.
There is room for a noisy activist to get involved here and disrupt the retail ownership. But there are very few of those around. And none in it now.

Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won

We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young.
Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending.
It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.

Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade

The June 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 31st May 2024.
There will be 3 changes for the STAR 50 index and 9 changes for the STAR 100 index.
We expect one-way flows of approximately US$750mn and US$314mn for the STAR 50 and STAR 100 index rebal events in June 2024.

APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45

APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.

Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month

The June 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 31st May 2024.
There will be 5 changes for the SSE 50 index and 18 changes for the SSE 180 index.
These changes could collectively cause one-way index flows of ~US$1.8bn during the June 2024 index rebal event. In this insight, we take a look at our final flow expectations.

Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay

By Sumeet Singh

Alipay will come out of its placement linked lockup for its remaining stake in Kakaopay (377300 KS) today.
Alipay (i.e. Alibaba Group (9988 HK)) had earlier sold some of its stake in Jun 2022 and Mar 2024. It still has over US$1bn worth of shares left to sell.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

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Jun 03

Daily Brief Event-Driven: Teijin (3401 JP): Alternative Play on the Potential Infocom Tender and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern
Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion.
If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.

SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%.

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern

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), Hollysys Automation Technologies (HOLI US), Chilled & Frozen Logistics Holdings (9099 JP), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK).
Lowest spreads: Great Eastern Holdings (GE SP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Mimasu Semiconductor Industry (8155 JP), Kfc Holdings Japan (9873 JP), Alumina Ltd (AWC AU).

Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)