Event-Driven

• Toshiba Corp (6502 JP)‘s bidder list is out. It is Bain, Brookfield, JIP-JIC, and CVC. Overall, the impression of this pool of candidates is negative
• Swire Pacific (A) (19 HK) is trading cheap at a look-through forward P/B of 0.26x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x. 
• Soho China (410 HK)‘s name was toxic after SAMR dinged Blackstone’s deal. It is no less toxic now. Arguably the upside is greater than the downside. But on what timeframe?

• We have gone through days 1-5 of the review period for the MSCI September rebalance. There are multiple review cutoffs in the coming week.
• The announcement of the changes to the LQ45/IDX30/IDX80 indices should be made early in the coming week and implemented at the close on 29 July.
• China had the largest ETF inflows over the last week, while there were outflows from Korea focused ETFs.

• A critical issue arose lately. The Nexon heirs do not have collateral for installment payment. The Korea NTS doesn’t accept shares of an unlisted company as collateral for tax payment.
• So, the contingency plan is a direct equity sale. The more feasible would be for NXC to sell its stake in Nexon for the convenience of valuation and finding buyers.
• The deal size is so large that it can come out in multiple block deals rather than a single buyer deal by the end of October.

• There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• I see no new transactions were discussed this week on Smartkarma.
• Key updates took place for: Pendal Group (PDL AU),Link Administration (LNK AU), Toshiba Corp (6502 JP), Excelpoint Technology (EXLP SP), and Cocoaland Holdings (COLA MK).

• Back on 1 March, 51 Job Inc Adr (JOBS US) entered into a revised merger agreement at US$61.00/share, down 22.8% from the initial terms.
• This merger was approved at an EGM on the 27 April and became effective on the 6 May.
• Court proceedings have commenced for dissenters, accounting for a staggering 30.9% of shares out. It’s not just “fair value” under the microscope; but the legality of the downward revision.

• On the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share. 
• This two-step voluntary cash offer incorporated a Scheme-like vote and a 90% tendering condition. 
• Shareholders voted for the transaction on the 29 June. The tendering condition has now been satisfied. The last day of trading is on the 1 August.  

• Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) shares declined as reports suggest that NBTC’s subcommittees voted 3:1 AGAINST the merger. True said the reports are false.
• An earlier press conference by CP Group and Telenor ASA (TEL NO) reiterated that the NBTC could only prescribe remedial measures. A court ruling on 16 June supports this view.
• NBTC will allegedly review the subcommittees’ findings on 26-27 July. We think this development results in the NBTC prescribing harsher remedial conditions to the merger rather than blocking it. 

• Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net outflow over the past week was ~US$1.83bn, split between Shanghai (-US$1.3bn) and Shenzhen (-US$0.5bn).
• The largest inflows were into Yunnan Chuangxin New (002812 CH) and Shanghai Baosight (600845 CH). The largest outflows were in Sungrow Power (300274 CH) and Ping An Bank (000001 CH).

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net inflow over the past week was ~US$0.46bn, split (+US$0.36bn) for Shanghai and (+US$0.1bn) for Shenzhen.
• The largest inflows were into Tencent (700 HK) and BYD (1211 HK). The largest outflow was in Pop Mart International Group Limited (9992 HK) and Great Wall Motor (2333 HK).

• We continue to believe that Banorte is one of the main potential acquirers of Banamex; CitiBanamex’s opex and credit quality metrics worsened to May, making the acquisition more challenging
• Banorte’s 2Q22 results include a reduced core capital ratio post dividend payments which, in the event of a Banamex acquisition, increases the risk of an approximately USD1bn capital raise
• Furthermore, AMLO’s latest pronouncements on the Banamex sale – which include that there should be no mass lay-offs – threaten to limit the acquiring bank’s scope to extract merger synergies 

• ANZ got about half its equity raise done, with the shortfall bookbuild only being 5% of the institutional total and clearing above TERP. Now the retail rights.
• Risk management mechanisms suggest rights trade expensive to stock near-term, then cheapen, as ANZ shares experience some selling pressure from arbs.
• But ANZ is cheap. Relative weakness on FY2-FY3 EPS forecasts has contributed to 25% underperformance vs Peers since January but Relative Multiple Deterioration has contributed more.

• Link Administration (LNK AU) announced it has agreed to Dye & Durham’s latest $4.81/share offer, which is 13% below its initial $5.50/share approach last December.
• Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
• This transaction is still subject to Australian Competition and Consumer Commission clearance, which should happen once D&D undertakes to offload its GlobalX ops.

• Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
• What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
• Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”

• Emperador (EMI SP) started trading on the SGX (SGX SP) on 14 July and so far meets all criteria to be included to the FTSE Straits Times Index (STI INDEX).
• However, it is still a borderline inclusion on free float, market cap and liquidity and will need to pass all three criteria to be added to the index in September.
• If added to the STI, the inclusion will take place on the same day as the potential inclusion of Emperador (EMP PM) in the FTSE All-World Index.

• Life Insurance Corp of India (LIC) (LICI IN) and Tata Power (TPWR IN) will replace Nmdc Ltd (NMDC IN) and Piramal Enterprises (PIEL IN) at the close on 5 August.
• In September, Adani Wilmar (AWLTD IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN), Hindustan Aeronautics Ltd (HNAL IN) and Mphasis Ltd (MPHL IN) are potential inclusions.
• At over 4 days of deliverable volume to trade, the impact is especially large on  Bharat Electronics (BHE IN), Zydus Lifesciences Ltd (ZYDUSLIF IN) and Lupin Ltd (LPC IN). 

• Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
• Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
• Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.

• Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
• The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
• However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

• On 30 June 2022, Sanrio reached a five year licensing deal with Alifish, which will cover Sanrio’s cast of popular characters including Hello Kitty and Kuromi in China.
• In July 2020, Shintaro Tsuji (founder of the company) handed over control of Sanrio to his 31 year old (as of 2020) grandson Tomokuni Tsuji.
• Despite the longevity of Hello Kitty as well as the recent partnership with Alifish (Alibaba’s subsidiary) to expand its business in China, we remain concerned with Sanrio’s lofty valuation multiples.

For our next Webinar, we are delighted to welcome back Analyst Jesus Rodriguez Aguilar who will take us through his top ideas in Europe’s M&A landscape.

• On 3rd June, Fraser & Neave (FNH MK) announced it sought to take Cocoaland (COLA MK) private by way of a Scheme at RM1.50/share, a 26.1% premium to last close.
• Board support was received on the 15 June. The Explanatory Statement is now out with a Court Meeting to vote on the Scheme to be held on the 18th August. 
• Management-Backed Leverage Success, the largest shareholder with 40.65%, has given an irrevocable to vote for the Scheme. This is done with payment late-October. The IFA says fair and reasonable. 

• Overnight, Toshiba Corp (6502 JP) has released an update “Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.  
• Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
• Now parties will start due diligence, and Toshiba will examine bids for “measures to enhance corporate value” and certainty of execution (given national security-sensitive issues, and funding). 

• The Nikkei reported yesterday that Toshiba had winnowed the pool of potential partners down to four candidates. 
• All four names (Bain, CVC, Brookfield and Japan Industrial Partners/Japan Investment Corp) have been connected to Toshiba previously. 
• We wonder whether this pool of candidates points to a higher likelihood of a strategic partnership rather than a full buyout.

• Back on the 4 April, asset manager Pendal Group (PDL AU) announced a non-binding proposal from investment firm Perpetual Ltd (PPT AU).
• As widely expected, Pendal’s board unanimously determined that the indicative cash/scrip Offer significantly undervalued the current and future value of the company.
• Pendal said yesterday that it is still in discussions with Perpetual regarding a potential transition.  Using yesterday’s close, and applying the same terms, backs out an indicative price of A$5.67/share. 

• DB was notified of the conversion to a holding company by the Korea FTC. DB must complete the conversion to a holding company by January 1, 2024.
• DB has no option but to ECO DB HiTek, the same trick employed for LG Energy Solution, to meet the 30% stake obligation for DB HiTek.
• There are still opportunities for outright shorting on DB HiTek as DB will likely announce DB HiTek split before August 12.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices for the September 2022 Rebalance.
• In addition to the Indices specified above, I have also discussed the upcoming index change expectations for the FTSE TWSE Taiwan Dividend+ Index.
• I also discussed some interesting LONG-SHORT trades involving some potential ADDs and DELs.

• On 19 July, Cooke, the spurned suitor, increased its stake in Tassal (TGR AU) to 10.49%. The average price to build the 10.49% stake is A$4.14 per share. 
• Cooke also hired Phil Wiese, the former CEO of Huon Aquaculture (HUO AU), as a MD in Canada. Mr Wiese is well qualified to run Tassal should Cooke acquire it. 
• With shareholders happy to sell to Cooke despite the Board’s assertions that the previous bid undervalued Tassal, a new offer will force the Board to engage.

• The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
• Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
• Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.

• The independent advisor considers Fraser & Neave Holdings (FNH MK)‘s RM1.50 offer for Cocoaland Holdings (COLA MK) fair as it falls within its valuation range of RM1.21-1.66 per share.
• The key conditions are the headcount test and <10% rejection from all disinterested shareholders. The shareholder with a blocking stake has provided an irrevocable. 
• We continue to think that offer is attractive. At the last close and for the end of October payment date, the gross and annualised spread is 1.4% and 4.8%, respectively.

• Uni President Enterprises and President Chain Store Corp (an affiliate of Uni-President Group) have agreed to acquire a controlling 60% stake ownership of Carrefour Taiwan from Carrefour SA (CA FP).
• We believe the acquisition of the additional 49.5% stake in Carrefour Taiwan is likely to have a positive impact on Uni President Enterprises (1216 TT).
• Uni President Enterprises is trading at P/S multiple of 0.77x so the acquisition multiple of 0.6x would be slightly lower than Uni President Enterprises’ current valuation multiple. 

• Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is growing around the deal.
• The squeeze-out threshold is 90%, and reaching it seems increasingly difficult, in spite of a generous premium. Philip Morris could lower the acceptance threshold and/or extend the offer period.
• My DCF valuation is SEK 113.17, potentially a 13% upside, although it would be difficult to twist Philip Morris’s arm. I’d still be long just under the offer price.

• The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
• I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
• The impact on Real World Float is non-negligible. One name in particular is deserving of attention. 

• With over 90% of the review period complete, Adani Enterprises (ADE IN) is a high probability inclusion to the NIFTY Index (NIFTY INDEX) and will replace Shree Cement (SRCM IN). 
• We estimate passive NIFTY Index (NIFTY INDEX) trackers will need to buy nearly 7% of the real float on Adani Enterprises (ADE IN) and the stock should continue to outperform. 
• Adani Green Energy (ADANIGR), Adani Transmission (ADANIT) and Avenue Supermarts Ltd (DMART) have higher average free float market caps and could be included if added to the F&O segment.

• Swire Pacific (A) (19 HK) expands its beverages ops, its best-performing unlisted segment, via the acquisition of Coke bottling operations in Vietnam and Cambodia. 
• Preceding my comments on Swire – and Swire Properties (1972 HK) and Cathay Pacific Airways (293 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%.

• Yesterday I published Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out. Assuming correct, and we move the last 6mos of data 6mos forward, March23 Rebal is below.
• This too is 3 in, 3 out. But it is complicated. “Required” changes would move the sector balance further out of whack. 
• And while some of the trades are “interesting”, the rebal is smaller and the bigger question is “What comes after that?”

• Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
• We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.
• The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.

• Perpetual Ltd (PPT AU) confirmed today that it is currently in “high-level, preliminary, confidential discussions with Pendal in relation to a potential acquisition.”
• Since rejecting Perpetual’s offer, Pendal Group (PDL AU)’s shares have underperformed most of its peers largely due to poor FUM performance. 
• Despite today’s pop, Pendal trades at a discount to historical and peer multiples. Perpetual’s renewed interest points to its underlying value. 

• As of July 19, SKT was in the top 50 short-selling KOSPI stocks. SK Telecom ranked 8th and 18th in terms of short-selling amount and short-selling ratio to trading volume.
• Deletion is practically a foregone conclusion if MSCI does not calculate SKT’s foreign room that reflects the DR situation. Reversing requires calculating a flexible foreign room considering the DR situation.
• However, the critical point here is that in any of the above cases, SKT’s stock price is highly likely to rise on the date the results are announced.

• In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the September 2022 Rebalance.
• I expect there to be 7 ADDs and 7 DELs for the ASX 200 Index and 23 ADDs and 18 DELs for the ASX 300 Index.
• Based on recent price performance, I believe the Potential ADDs could outperform the Potential DELs over the next few weeks.

• The listing of EDF’s shares is resumed with the announcement of a minorities buyout offer at €12/share, a 53% premium to the undisturbed share price.
• It is a generous offer that also aims to avoid the outcry of EDF’s employees (c. 1% stake). Interloper risk is nil. Delisting is expected by the end of October.
• Gross spread is 2.13% which could lead to an interesting c. 8% estimated annual return if settlement takes place by the end of October. Long and tender.

• Zomato (Zomato IN) raised US$1.3bn in its India IPO in Jul 2021. At that time, it was the largest technology sector listing in India.
• Zomato is one of two leading food delivery app operators in India. It recently acquired Blinkit marking its foray into the instant grocery segment.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• The KRX will list 20 new single stock futures (SSF) and 5 single stock options (SSO) next Monday, July 25, including LG Energy Solution (373220 KS).
• It seems very probable that the replacement demand for futures (short) will increase substantially due to a possible saturation of the loan market.
• This situation, coupled with local pensions’ basis trading, can lead to a significantly distorted basis. We should do basis trading or play pair trading (with LG Chem) on this.

• Ten months after China’s SAMR torpedoed Blackstone’s Offer, SOHO China (410 HK) has fallen 61%. Its portfolio of high-quality properties are currently trading at 0.2x P/B. 
• Recent woes concern electricity price violations, tax evasion, and now an investigation into CFO Ni Kuiyang’s alleged insider trading. 
• SOHO is trading cheap on a standalone basis; and to peers. This is still not a good reason to get involved.

• Tianqi Lithium (002466 CH) trades at an 84% premium to Tianqi Lithium (9696 HK) and the AH premium has been volatile since listing.
• Tianqi Lithium (002466 CH)‘s potential inclusion in the MSCI China and FTSE All-World Index could keep the AH premium at a higher level as compared to its peers.
• Tianqi Lithium (9696 HK)‘s inclusion to Southbound Stock Connect in August and potential inclusion to the MSCI and FTSE indices will help keep a lid on the AH premium.

• LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO. The stock was listed on 27th Jan 22. Its six-month lockup is set to expire soon.
• LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• 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. However, such disclosures are by no means an absolute. 
• These insights also flags those companies where shares have been pledged, both recently and ongoing.

• Suncorp (SUN AU) agreed to sell its banking business (Suncorp Bank) to Australia and New Zealand Banking Group (ANZ) (ANZ AU) for A$4.9 billion in cash. Completion targeted for 2HCY2023.
• Suncorp Bank’s sale price is attractive. We estimate that New Suncorp (ex-banking) is currently valued at a 24% discount to Insurance Australia (IAG AU) on an FY2023 P/E basis.
• Post-Completion, New Suncorp will be a leaner and more efficient business which will be better positioned to close (or even exceed) the valuation gap to Insurance Australia Group.

• Unsurprisingly, the independent financial advisor (IFA) considers WT Microelectronics (3036 TT)‘s S$1.93 offer for Excelpoint Technology (EXLP SP) to be fair and reasonable. We think that IFA’s valuation approach is sound. 
• The key condition is approval from shareholders and regulatory authorities (Taiwan pending). The scheme meeting is scheduled for 3:00 pm on 10 August. 
• We continue to think that offer is attractive. At the current price and for the 15 September payment date, the gross and annualised spread is 0.5% and 3.1%, respectively.

• On the 13 April, WT Microelectronics (3036 TT) entered into an agreement to acquire electronic component distributor Excelpoint Technology (EXLP SP) by way of a Scheme. 
• The cash consideration of S$1.93/share was a 7.8% premium to last close, but a 21.4% premium to the undisturbed price.
• The Scheme Doc is out. The Scheme Meeting will be held on the 10th August. The IFA considers the terms to be fair. Settlement is expected by the 15th September.

• This insight is a follow-up to FTSE UK Quiddity Leaderboard Sep 2022: Sanne Group Deletion Seems Likely in 3Q 2022.  
• GSK’s spin-off of Haleon (HLN LN) and the completion of Vivo Energy (VVO LN) and Ultra Electronics Holdings (ULE LN) Deals could cause intra-review changes in the next two weeks.
• There could be more in the subsequent weeks too. Below is a closer look at the timeline and the potential replacement names for these index events.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• The highest spreads are 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Australian Unity Office Fund (AOF AU), Link Administration (LNK AU). 
• The lowest gross spreads are Hwa Hong Corp (HWAH SP), Uniti Group Ltd (UWL AU), Excelpoint Technology (EXLP SP), Giordano International (709 HK), Dongzheng Automotive Finance (2718 HK). 

• Australia and New Zealand Banking Group (ANZ) (ANZ AU) has announced that it is acquiring Suncorp Bank from Suncorp (SUN AU) for an all cash consideration of A$4.9bn.
• ANZ will fund the Suncorp Bank acquisition by a fully underwritten 1:15 pro rata accelerated renounceable entitlement offer to raise A$3.5bn at A$18.9/share, a 12% discount to TERP.
• A small increase in the Herfindahl-Hirschman Index (HHI) for the mortgage lending market will make it difficult for ACCC to deny approval for the acquisition.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea and Chinese ADRs.
• On the ECM front, Tianqi Lithium (9696 HK) listed its H Shares, WCP (WCP KS) plans to launch a KRW900 billion (US$692 million) IPO in August. 
• Event-Driven developments at Link Administration (LNK AU), DTAC/True, BYD (1211 HK), Genting Singapore (GENS SP), Tassal (TGR AU), Resapp Health (RAP AU), Dongzheng Automotive Finance (2718 HK).      

• The Uniti Group Ltd (UWL AU) Scheme Meeting was held Friday, approving both General Scheme Resolution and Rollover Shares Scheme unanimously. The MBD Bidco deal is done. 
• Friday after the close, the S&P DJI Global Index team announced that Uniti would be deleted from the ASX200 21 July at the close.
• Gold miner West African Resources (WAF AU) was chosen as the replacement. It’s a decent-sized inclusion and should have been well-flagged last week but may have been ignored.

• GlaxoSmithKline PLC (GSK LN) shareholders on 6 July overwhelmingly approved the long-awaited demerger of its GSK Consumer Healthcare unit newly-named Haleon (HLN LN) earlier this month. 
• While not originally universally-desired (Elliott wanted a sale), it was overwhelmingly approved. Haleon lists Monday 18 July with a £40+bn valuation resulting in FTSE 100 and Stoxx Europe 600 changes.
• GSK investors get 1 share of Haleon for every share of GSK held. Post-demerger, the public owns 55%, Pfizer ~32%, GSK ~13%. Lockup ends 10 November. There will be overhang.

• WCP will enter the KOSDAQ 150 with a passive inflow of about 530K shares, 1.5% of SO, at the close on December 8.
• WCP will be added to the TIGER ETF on October 14 with a passive inflow of about 345K shares, 1.0% of SO, at the close on October 14.
• From a flow trading perspective, the flow volume is certainly substantial enough to design a passive flow trading setup in conjunction with the lockup release schedule.

• The FTSE TWSE Taiwan Dividend+ Index is interesting since there are multiple moving parts and is not widely tracked. We take an early look at potential changes in December.
• West African Resources (WAF AU) will replace Uniti Group Ltd (UWL AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 21 July.
• There have been some large inflows to the Vanguard FTSE Pacific ETF (VPL US) in the last few weeks.

• Berkshire appears set to exit BYD (1211 HK) partially or in full. But why signal to market well in advance?
• United Tractors (UNTR IJ)‘s buyback should be impactful. They could do another one afterwards as they have lots of cash. This is a raging buy. Buy now. With both hands.
• The BOJ was expected to change its ETF allocations. It stopped buying Nikkei 225 and JPX Nikkei 400 ETFs. As the world moves more to passive, expect float to decrease.

• There are 44 – 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 this week: Kanemi Co Ltd (2669 JP)‘s tender Offer, and Glory Star New Media Group Holdings (GSMG US)‘s underwhelming MBO.
• Key updates took place for: AGL Energy Ltd (AGL AU), Link Administration (LNK AU) & Genting Singapore (GENS SP) 

• Bloomberg is reporting Genting Singapore (GENS SP) has been attracting suitors, including MGM Resorts International (MGM US).
• With Macau all-but emulating a Shanghai-style lockdown, including the recent shuttering of all casinos, large global casino operators will be looking to diversify their revenue base. 
• But with Singapore potentially emerging as Asia’s go-to gaming destination going forward, it’s unlikely the Lim family will exit their Genting flagship.

• The ETF operator (TIGER)’s index tracking conformity was high enough to create trading opportunities aimed at the rebalancing flow.
• Flow/Price directions were mostly synched with only a few exceptions. Of particular importance is that the price impact was substantial compared to the passive flow size. 
• The yield of the tradable names suitable for a basket based on the projected passive impact size was 4.51%.

• Bloomberg reported MGM Resorts International (MGM US) recently approached Genting Singapore (GENS SP)’s controlling shareholder, Genting Bhd (GENT MK), to express an interest in a deal.  
• While the discussions with MGM Resorts have fizzled out, other potential suitors are reportedly interested. Shares are in a trading halt pending a response to an SGX query.
• Genting Singapore trades at a discount to peers. Precedent transactions suggest a potential privatisation price of at least S$1.00 per share, a 33% premium to the last close. 

• In the last six weeks, AGL Energy Ltd (AGL AU) has fallen and is now at the low end of its post-Brookfield bid trading range. Now below the A$8.25 bid.
• AGL has one generator down – the Loy Yang A Unit 2 – which will be back in late Sep. Guidance is left… unguided. There will be a related loss.
• In the meantime, the rest of the producing assets have probably been having a field day. But given shareholder structure, we’re still in limbo.

• Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net outflow over the past week was ~US$1.28bn, split between Shanghai (-US$0.85bn) and Shenzhen (-US$0.43bn)
• The largest inflows were into Aier Eye Hospital (300015 CH) and Shenzhen Mindray  (300760 CH). The largest outflows were in China Merchants Bank (600036 CH) and Sungrow Power (300274 CH).

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net outflow over the past week was ~US$0.56bn, split (-US$0.44bn) for Shanghai and (-US$0.12bn) for Shenzhen.
• The largest inflows were into Geely Auto (175 HK) and Hang Seng H Share Index ETF (2828 HK). The largest outflow was in Meituan (3690 HK) and CNOOC (883 HK).

• Capco agreed to acquire Shaftesbury in a stock swap reverse takeover transaction (1 SHB LN x 3.356 CAPC LN). Shaftesbury shareholders will own 53% while Capco shareholders will own 47%.
• The market is not reacting positively to the deal. As per the exchange ratio, the deal implies a transfer of value from Shaftesbury to Capco, in my view.
• The spread is trading at a 3.4% premium. Although the premium is tightening, I am still unsure many Shaftesbury shareholders would like to accept the offer in its current terms.

• West African Resources (WAF AU) will replace Uniti Group Ltd (UWL AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 21 July.
• We estimate passive trackers will need to sell 45.3m shares (A$226m; 10.2 days of ADV) on Uniti Group Ltd (UWL AU) at the close on 21 July.
• With over 10 days of ADV to buy from passive trackers and only 4 days to implementation, West African Resources (WAF AU) could outperform its peers till 21 July.

• Foreign selling has continued on HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) and foreign room on the proforma merged entity is 17.23%.
• Higher than 15% foreign room will require passive MSCI trackers to buy 209m shares (US$4.05bn) of HDFC Bank (HDFCB IN) at the time of merger implementation.
• If foreign selling continues and foreign room on the merged entity exceeds 20%, there will be buying from passive FTSE trackers as well.

• Astra International (ASII IJ) is coming up cheap after United Tractors (UNTR IJ) positively responded to its large share buyback announcement. Yet both companies are looking attractive here. 
• Preceding my comments on Astra and United Tractor 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%.

• The EURO STOXX 50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
• Historically, these Rebalance events have had significant volume impact and they generally involve large cap names. 
• In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2022.

• Bridgetown Holdings, a SPAC backed by Peter Thiel and Richard Li, is considering a potential merger with Singapore’s virtual telco Circles.Life (merger valuation could range US$1.5 billion to US$2.5 billion). 
• All in all, the valuation range of the proposed M&A merger of Bridgetown Holdings and Circles.Life needs to be reduced substantially, in order to generate more interest in this deal. 
• Otherwise, there is likely to be weak demand for this merger deal. In addition, the market environment for SPAC related M&A deals have deteriorated significantly in the past 6-12 months.

• The Healthcare Realty Trust (HR US) / Healthcare Trust Of America (HTA US) transaction is heading towards climax with the critical HR and HTA shareholder votes set for July 15 
• The odds are that activist investor and HR shareholder will not succeed in derailing the deal which it opposes from closing on July 20 
• Notwithstanding the significant spread compression seen in recent weeks, there remains an attractive short-term opportunity for the arbs