Most Read

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Grab Holdings (GRAB US) – Harvest Time

By Angus Mackintosh

Grab Holdings has expressed excitement for 2025, as it harvests the investments it has made in its laddered approach to new product offerings from Saver to Grab Unlimited in 2024.
Having grown transacting users in 2024 through its Saver offering, Grab will focus on growing its premium offers in 2025. Groceries should outperform along with its offline dining initiatives.
Grab will focus on lending growth at its DigiBanks in Malaysia, and Singapore in 2025 and will double down on its advertising offerings. Grab will book a 2025 net profit.

Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law

By Douglas Kim

Amid chaos in Korean politics (including impeachment of the Acting President Han Duck Soo), the FSC announced that the change in the procedure for quarterly dividends was passed into law.
The main change that has been made is that the the investors will know in advance how much they will receive in quarterly dividends.
Amid market turmoil, numerous high dividend paying stocks such as Hankook & Company, HD Hyundai, and KT Corp have been outperforming the market this year.

How Much Higher Can TSLA Go? A Pullback Could Hit in Two Weeks

By Nico Rosti

Tesla (TSLA US) has been completelly defying gravity law in the weeks past the US Elections. If you are a long-term TSLA holder you may want to cover soon.
The rally may encounter strong resistance in the next 2 weeks, a pullback could happen in that time frame.
The analysis of our QUANTCHARTS can help pinpoint the support levels where to add positions again to existing TSLA holdings.

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Dec 28

Most Read: Sanrio, Kokusai Electric , LG CNS, Samsung Engineering, Makino Milling Machine Co, Shin Kong Financial Holding, Hyundai Motor , Samsung Electronics Pref Shares and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
Japan: Potential Passive Selling in February
LG CNS IPO: Limited Float Pushes Back Passive Buying
Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Shin Kong/Taishin Merger – Proceeding Apace
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
Our Best Calls in 2024: Review and Outlook for 2025
What We’ve Got on Samsung Electronics’ Value-Up Disclosure
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

Our Best Calls in 2024: Review and Outlook for 2025

By Osbert Tang, CFA

With a range of 34.5-68.1%, our five best calls in 2024 generated an average return of 54.1% YTD, outperforming the Hang Seng Index by 26.2pp.
China Communications Construction (1800 HK) and Dongfang Electric (1072 HK) are expected to sustain strengths into 2025 on market value management and pick-up in new orders.
Xinhua Winshare (811 HK), China Everbright Environment (257 HK), and SITC International (1308 HK) may hold their share price, but gains are unlikely to be as much as 2024.

What We’ve Got on Samsung Electronics’ Value-Up Disclosure

Yesterday, the FSC pushed for value-up policies, but the real buzz was about Samsung Electronics hinting at rolling out its own value-up plan soon.
Samsung may raise its dividend payout from 50% to 60% and could issue a special dividend if semiconductor results improve or FCF exceeds expectations.
Samsung’s value-up disclosure may not cause short-term price action but could strengthen downside support. It may focus on dividends over buybacks, potentially boosting preferred stock.

Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share, an 18.9% premium to the last close.
The offer is preconditioned on several regulatory approvals. It is scheduled to start on 4 April, even if the Board does not recommend it.
The Board has three options: engage to facilitate a friendly offer, find a white knight bidder and launch an ambitious MTM plan to thwart the offer.

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✓ Company Analytics and News
✓ Events & Webinars

Dec 27

Most Read: Seven & I Holdings, Sanrio, Kokusai Electric , LG CNS, Samsung Engineering, Shin Kong Financial Holding, Macromill, Inc, CPMC Holdings, Malaysia Airports Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
Japan: Potential Passive Selling in February
LG CNS IPO: Limited Float Pushes Back Passive Buying
CPMC (906 HK): Tendering Now Open
Korea: Potential Relegations from K League 1
Shin Kong/Taishin Merger – Proceeding Apace
Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk
CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional
Malaysia Airports (MAHB MK): Awaiting the Consortium’s Next Move

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

CPMC (906 HK): Tendering Now Open

At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk

Three pre-existing Large Shareholders have not sold down. Two new 5+% shareholders have appeared since Tender Launch. Together, their reports give them 51.7% of shares out.
That provides them with a significantly strong implied negotiating hand. Given the midpoint of the Target Company’s Advisor’s DCF Range, I expect a bump.
Today the Bidder extended for 10 more days. They didn’t have the shares to close. I expect they won’t unless they bump a lot.

CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional

CPMC Holdings (906 HK)’s offer from ORG Technology Co., Ltd. A (002701 CH) is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.
CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.
The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.

Malaysia Airports (MAHB MK): Awaiting the Consortium’s Next Move

Malaysia Airports Holdings (MAHB MK)‘s voluntary conditional RM11.00 offer from the consortium has a first closing date of 8 January.
Unusually, the independent directors and adviser have differing opinions – the directors and adviser agree that the offer is NOT fair. However, the directors opine that it is NOT reasonable.
The consortium has three options – keep terms unchanged (hope for the best), bump or lower the acceptance threshold. The most likely option is to lower the acceptance threshold.

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✓ Company Analytics and News
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Dec 26

Most Read: Seven & I Holdings, Honda Motor, Posco DX, LG CNS, Kioxia Holdings , Hyundai Motor , Micron Technology, Matsuya Co Ltd, Samsung Engineering, SGX Rubber Future TSR20 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
LG CNS IPO: Limited Float Pushes Back Passive Buying
ECM Weekly (22nd Dec 2024) – LG CNS, Kioxia, Vishal Mega, IGI, Sai Life, Ventive, Paras
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
Micron. So Long Legacy & Hello There HBM, Data Center & Leading Edge
Matsuya Targets ¥20 Billion Online
Korea: Potential Relegations from K League 1
Vietnam Rubber Group (VRG) Showcases Its EUDR Preparedness At Annual Rubber Conference

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback

Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.

KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

ECM Weekly (22nd Dec 2024) – LG CNS, Kioxia, Vishal Mega, IGI, Sai Life, Ventive, Paras

By Sumeet Singh

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, all of the India listings managed to do well, while Kioxia Holdings (285A JP) managed to provide steady returns as well.
On the placements front, there were only a few deals in India, led by Mankind Pharma.

Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

Micron. So Long Legacy & Hello There HBM, Data Center & Leading Edge

By William Keating

Micron’s Q1F25 met expectations on key metrics but the ~9% downward guidance for the current quarter sent the share price into a tailspin
Consumer-Related inventory issues and China competition were highlighted as the root causes for the surprise downward guide
Micron is ok to cede legacy products to China competition and focus instead on the much more lucrative leading edge products, especially HBM. The transition could be rocky however

Matsuya Targets ¥20 Billion Online

By Michael Causton

Department store sales to locals plummeted in October, resulting in the first decline in 32 months.
While sluggish clothing sales was one factor, another was crowded luxury concessions putting off locals from visiting.
Matsuya thinks it has the answer: keeping locals and tourists separate using a new online store.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Vietnam Rubber Group (VRG) Showcases Its EUDR Preparedness At Annual Rubber Conference

By Vinod Nedumudy

40-45% of production forest areas in Vietnam certified for sustainable management
VRG sold over 800 tons EUDR rubber netting an additional US$250/ton
Member firms abroad readying to sign contracts on EUDR rubber

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✓ Company Analytics and News
✓ Events & Webinars

Dec 25

Most Read: China National Building Material, Hang Seng TECH Index, Seven & I Holdings, Honda Motor, Kokusai Electric , AppLovin , Malaysia Airports Holdings, LG CNS, Greatview Aseptic Packaging, Hyundai Motor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
How Has the Index Rebalance Strategy Performed in 2024?
7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
Japan: Potential Passive Selling in February
S&P500 December 2024 Forecast (Final): Flipping the COIN
Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms
LG CNS IPO: Limited Float Pushes Back Passive Buying
GAPack (468 HK): XJF’s Offer Now Open
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%

China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
CNBM’s parent – the CNBM Parent Concert Group – will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently.
That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer.

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback

Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

S&P500 December 2024 Forecast (Final): Flipping the COIN

By Dimitris Ioannidis

Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.

Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms

Back on the 15th May, a consortium (Khazanah Nasional, EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners) collectively holding 41.22%, launched an Offer for Malaysia Airports (MAHB MK).
After some political gymnastics, MAHB squared away the necessary regulatory approvals, and a firm Offer was made on the 15th November. The Offer Doc dispatched on the 6th December.
In the Circular on Friday, the IFA said NOT fair – with reference to a SOTP; but reasonable referencing historical market pricing and that no competing Offer will emerge.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

GAPack (468 HK): XJF’s Offer Now Open

On Friday, the 20th December, GAPack (468 HK) announced that Shandong Xinjufeng Technology (301296 CH) (XJF) had satisfied all pre-conditions.
The Offer Document has now been dispatched, and the Offer is now open for tendering. The First Close is the 21st January.
This Doc is largely a nothing burger. The Response Document, which will include the IFA, is required to be dispatched on or before the 7 January 2025.

Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Dec 24

Most Read: Shanghai Henlius Biotech , Kokusai Electric , Honda Motor, Posco DX, Exedy Corp, Nikkei 225, Tencent, Korea Stock Exchange KOSPI 200, Goldlion Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shanghai Henlius Biotech (2696.HK) Privatization Update- Looks Like “An Agreement” Has Been Reached?
Japan: Potential Passive Selling in February
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
Henlius (2696 HK): Circ Out. 22nd Jan H-Class Meeting
KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
[Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
EQD | Nikkei Index Options Weekly – December 16 – 20
EQD | Hong Kong Single Stock Options Weekly December 16 – 20
EQD | Kospi Index Options Weekly – December 16 – 20
Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal

Shanghai Henlius Biotech (2696.HK) Privatization Update- Looks Like “An Agreement” Has Been Reached?

By Xinyao (Criss) Wang

Fosun has a clear plan for Henlius’ future development. This seems to hint at “an internal consensus” – Fosun seems to have persuaded major shareholders to vote for the privatization.
The privatization of Henlius will make positive contributions to Fosun Pharma’s revenue/profit, but this impact is limited. What Fosun really wants is to obtain huge investment income from another spin-off/re-listed.
For investors who are interested in the Share Alternative, they’re advised to figure out whether the Rollover Entities/Securities is relevant to the new entity.If not, the Share Alternative is worthless.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback

Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.

Henlius (2696 HK): Circ Out. 22nd Jan H-Class Meeting

After Shanghai Henlius Biotech (2696 HK) secured NDRC approval on the 22nd Nov; fulfilled pre-cons on the 16th December, the Circular was dispatched last night, the 22nd December.
The EGM/H-share class meeting will take place on the 22nd January, one day past my estimate. Settlement should be on ore around the 18th Feb, a week beyond my estimate.
Trading at a gross/annualised spread off 2.9%/20.3%. Still attractive here.

KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

[Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback

Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December.
I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected.

EQD | Nikkei Index Options Weekly – December 16 – 20

By John Ley

All 5 trading days of the past week saw non-volatile price declines but with implied vols still ticking higher leaving historic vol and implied vol moving in opposite directions.
Trading activity focused on Puts, 59.5% of all options trades were Puts last week
Postions being covered into market weakness as seen from large decrease in open interest (60% of the decline was Puts).

EQD | Hong Kong Single Stock Options Weekly December 16 – 20

By John Ley

Communication Services had 39% of single stock option volumes vs only 22% of the open interest highlighting short expiry / speculative nature of trading.
Tencent and Baidu heading in opposite directions – Baidu vol on the inexpensive side vs Tencent vol.
Xiaomi one of only 2 optionable names trading at 52-week high (Sunny optical being the other).

EQD | Kospi Index Options Weekly – December 16 – 20

By John Ley

Kospi is now off 20% from its 52-week highs. Historic vols are picking up and implieds looking like good value given market dynamics.
Hedging increased with broad based positioning in Puts across out-of-the-money strikes.
Heavier volume in Puts with 53.2% of added open interest being Puts.

Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal

On 17 December, Goldlion Holdings (533 HK) announced a scheme offer from Mr Tsang (Chairman/CEO) at HK$1.5232 per share, a 71.1% premium to the undisturbed price of HK$0.89 (20 November).
The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake is a seller.
The offer is reasonable compared to peer multiples and historical trading ranges. At the last close and for a late April payment, the gross/annualised spread is 7.3%/22.7%.

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Dec 23

Most Read: Seven & I Holdings, Nec Networks & System Integr, Shanghai Henlius Biotech , Pentamaster International, Kioxia Holdings , Malaysia Airports Holdings, ROHM Co Ltd, Fuji Soft Inc, Ping An Healthcare and Technology and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
NEC Networks (1973 JP) Next To Last Showdown – NEC Lowers Minimum, Bumps Tiny, Ignores Synergies
Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January
Pentmaster (1665 HK): Malaysian Parent’s Offer For Pseudo Dual-Listing
ECM Weekly (22nd Dec 2024) – LG CNS, Kioxia, Vishal Mega, IGI, Sai Life, Ventive, Paras
Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms
Unloved Japan Roundup-Rohm, Taiyo Yuden, Kose
(Mostly) Asia-Pac M&A: Beenos, Insignia, Henlius, GAPack, Fuji Soft, Goldlion, Malaysia Airports
Ping An Healthcare and Technology (1833 HK) – Cash Dividend Or Scrip Dividend?

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump

By Michael Causton

Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

NEC Networks (1973 JP) Next To Last Showdown – NEC Lowers Minimum, Bumps Tiny, Ignores Synergies

On Friday, NEC Corp (6701 JP) raised the price for its Tender Offer on Nec Networks & System Integr (1973 JP) from ¥3,250 to ¥3,300.
It also lowered the minimum to 10.153mm shares (6.82%). It had proposed to do so earlier but NESIC demanded a bump, and NEC didn’t want to.
Now it’s bumped. That’s the “final price.” But it still does not include “a fair allocation of a portion of the value that cannot be realised without an acquisition.”

Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January

Shanghai Henlius Biotech (2696 HK)’s IFA opines that Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer is fair and reasonable. The vote is on 22 January.
The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There are recent movements in H Share substantial shareholders.
Key shareholders should be supportive of the cash/scrip offer. At the last close and for a 15 February payment, the gross/annualised spread is 2.9%/16.9%.

Pentmaster (1665 HK): Malaysian Parent’s Offer For Pseudo Dual-Listing

In Pentamaster Corp: In The (EV) Driver’s Seat in February last year, I discussed Pentamaster Corp (PENT MK)‘s supply of semiconductors testers to the electric vehicle business.
A quirk of PENT was that its pseudo dual-listed twin – Pentamaster International (1665 HK) – trades at a significant discount.
In a not altogether surprising move, PENT is now seeking to take PI private by way of a Scheme at HK$1.00/share, including a HK$0.07/share dividend.

ECM Weekly (22nd Dec 2024) – LG CNS, Kioxia, Vishal Mega, IGI, Sai Life, Ventive, Paras

By Sumeet Singh

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, all of the India listings managed to do well, while Kioxia Holdings (285A JP) managed to provide steady returns as well.
On the placements front, there were only a few deals in India, led by Mankind Pharma.

Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms

Back on the 15th May, a consortium (Khazanah Nasional, EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners) collectively holding 41.22%, launched an Offer for Malaysia Airports (MAHB MK).
After some political gymnastics, MAHB squared away the necessary regulatory approvals, and a firm Offer was made on the 15th November. The Offer Doc dispatched on the 6th December.
In the Circular on Friday, the IFA said NOT fair – with reference to a SOTP; but reasonable referencing historical market pricing and that no competing Offer will emerge.

Unloved Japan Roundup-Rohm, Taiyo Yuden, Kose

By Michael Allen

Solar power will be cheaper than fossil fuels and EVs will be cheaper than ICE vehicles, but you can’t make either without the parts that Rohme excels in.
Tesla is up 201% on speculation about its FSD, but Taiyo Yuden, which makes critical parts in FSD systems is down systems, is down 43%.
Kose is down 49%, largely on China woes, but China is no longer big enough to be a problem, and Japan and other regions growth should start to take over.

(Mostly) Asia-Pac M&A: Beenos, Insignia, Henlius, GAPack, Fuji Soft, Goldlion, Malaysia Airports

I tally 51 – 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: Goldlion Holdings (533 HK)‘s Scheme, and Beenos Inc (3328 JP)‘s Tender Offer.
Key updates/news took place on: Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), GAPack (468 HK), Fuji Soft (9749 JP), Macromill (3978 JP) and Malaysia Airports Holdings (MAHB MK).

Ping An Healthcare and Technology (1833 HK) – Cash Dividend Or Scrip Dividend?

By Xinyao (Criss) Wang

Hopson Development (754 HK) is cash-strapped and it will most likely choose cash dividend, which would increase the likelihood that Glorious Peace’s shareholding ratio will increase to more than 50%.
If PAGD’s share price is higher than HK$6.12, there is arbitrage opportunity. Since Ping An may hope other shareholders to choose cash dividends, future stock price may fall below HK$6.12
A risk point is Ping An can actually wait for other shareholders to make their choices before making the final decisions based on the stock price situation at that time.

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Dec 22

Most Read: Hang Seng TECH Index, Phison Electronics, China Banking, Seven & I Holdings, Cal Comp Electronics Thailand, Taiwan Semiconductor (TSMC) – ADR, Bloks Group, SGX Rubber Future TSR20, Chabiotech and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

How Has the Index Rebalance Strategy Performed in 2024?
TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
PCOMP Index Rebalance Preview: Two Changes Likely in February
7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
SET50 Index Rebalance: Four Changes; Cal Comp🚀
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn
Bloks Group IPO Valuation Analysis: Is The Offering Worth Buying?
Helixtap China Report: 2025 A Challenging Year For China
CHA Biotech Announces A Capital Raise of 41% of Outstanding Shares

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact

There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump

By Michael Causton

Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

PCOMP Index Rebalance Preview: Two Changes Likely in February

The review period for the February rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) ends in two weeks.
There could be two changes for the index with passive trackers needing to trade between 23-64x ADV in the stocks.
The passive buying is a lot larger than the passive selling, there will be funding outflows for the other index constituents; some stocks will have over 1x ADV to trade.

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

SET50 Index Rebalance: Four Changes; Cal Comp🚀

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
All changes are in line with our forecasts and there appears to be positioning in all the stocks.
Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.

MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in December but there are a lot of float and capping changes.
Estimated one-way turnover is 4.5% resulting in a one-way trade of US$1.1bn. Impact on the stocks is not big given they trade like water.
The selling in Broadcom and NVIDIA will be amplified by selling from the Technology Select Sector SPDR (XLK US) and Invesco S&P 500 Equal Weight E (RSP US) ETFs.

Bloks Group IPO Valuation Analysis: Is The Offering Worth Buying?

By Andrei Zakharov

Bloks Group, a fast-growing toy company in China, will disclose the proposed size and the initial price range for the share sale soon.
In my insight, I discuss IPO valuation, update relative valuation table and set a target valuation for Bloks Group ahead of an IPO.
Bloks Group enjoys higher relative growth profile and superior gross profit margins. The company has over RMB600M in cash and equivalents and no debt.

Helixtap China Report: 2025 A Challenging Year For China

By Arusha Das

Widespread caution around Chinese buying sentiment
Weakness in Yuan can pose significant challenge
Trade data not very optimistic

CHA Biotech Announces A Capital Raise of 41% of Outstanding Shares

By Douglas Kim

On 20 December, Chabiotech (085660 KS) announced that it plans to conduct a rights offering capital raise of 250 billion won.
The expected rights offering price is 10,800 won (27.3% lower than current price of 14,860 won). A total of 23.148 million new shares (41% of outstanding shares) will be issued.
This capital raise by CHA Biotech is likely to further negatively impact the company’s share price in the next several weeks as many investors are concerned about excessive shares dilution.

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Dec 21

Most Read: Hang Seng TECH Index, Phison Electronics, Kadokawa, Seven & I Holdings, Cal Comp Electronics Thailand, Shimano Inc, Greatview Aseptic Packaging, CPMC Holdings, UBTech Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

How Has the Index Rebalance Strategy Performed in 2024?
TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact
Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover
7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
SET50 Index Rebalance: Four Changes; Cal Comp🚀
Shimano: An Opportunity for Activist Investors
CPMC (906 HK): Tendering Now Open
GAPack (468 HK): XJF Satisfies Pre-Cons. Management Should Back Terms
CPMC Holdings (906.HK) Update – The Critical Moment Has Arrived
UBTech Robotics US$1.9bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact

There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.

Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover

Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason.
Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

SET50 Index Rebalance: Four Changes; Cal Comp🚀

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
All changes are in line with our forecasts and there appears to be positioning in all the stocks.
Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.

Shimano: An Opportunity for Activist Investors

By Mark Chadwick

Shimano, the Japanese maker of bicycle components and fishing equipment, is in need of a strategic gear change
A significant -25% decline in FY23 net sales highlights Shimano’s struggles. Revenues dropped a further -11% in the first nine months of 2024
For investors seeking opportunity at the bottom of the cycle, Shimano presents a compelling case. The stock is trading at 2.3x book value

CPMC (906 HK): Tendering Now Open

At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.

GAPack (468 HK): XJF Satisfies Pre-Cons. Management Should Back Terms

During the lunch break, Greatview Aseptic Packaging (468 HK) announced that Shandong Xinjufeng Technology Packaging (301296 CH) (XJF) had satisfied all pre-conditions – the final approvals concerned outbound direct investments.
The Offer Document, including the IFA opinion, is expected to be dispatched in seven days – or 27th December, at which time, the Offer will be open to acceptances.
Evidently the Jeff Bi/Gong Hong MGO isn’t materialising any time soon. Provided the IFA is supportive – and that should now be known – management should unanimously back XJF’s Offer.

CPMC Holdings (906.HK) Update – The Critical Moment Has Arrived

By Xinyao (Criss) Wang

The First Huarui Offer Closing Date is Jan.10 2025. The latest time/date by which the Huarui Offer can become or be declared unconditional as to acceptances is 18 February 2025.
China Foods once chose to side with Baosteel – They are both SOEs.Although regulatory agencies have given the green light, it’s still unclear if China Foods will accept Huarui Offer.
The “key variable” is Zhang Wei’s attitude. Investors can choose bet on it.It would be wise for arbitrageurs to wait until Zhang Wei makes his move before making a decision.

UBTech Robotics US$1.9bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity

By Clarence Chu

UBTech Robotics (9880 HK) was listed in Hong Kong on 29th Dec 2023 after it raised US$130m. Its one-year lockup will expire on 28th Dec 2024.
UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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Dec 20

Most Read: Hang Seng TECH Index, Phison Electronics, Kadokawa, Cal Comp Electronics Thailand, Shanghai Henlius Biotech , Shimano Inc, Mphb Capital, Beenos Inc, Shanghai Electric Group Company, SAMSUNG KODEX KOREA Value-Up ETF and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

How Has the Index Rebalance Strategy Performed in 2024?
TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact
Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover
SET50 Index Rebalance: Four Changes; Cal Comp🚀
Henlius (2696 HK): This Should Trade Tighter. Get Involved
Shimano: An Opportunity for Activist Investors
MPHB Capital (MPHB MK)’s Offer: Almost There As ISM Exhausts Options
LY Corp (4689) Announces Takeover of Beenos (3328) – Lightish at ¥4,000 But A Done Deal
Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows
Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact

There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.

Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover

Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason.
Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.

SET50 Index Rebalance: Four Changes; Cal Comp🚀

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
All changes are in line with our forecasts and there appears to be positioning in all the stocks.
Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.

Henlius (2696 HK): This Should Trade Tighter. Get Involved

After the China Traditional Chinese Medicine (570 HK) fiasco back in October, Hong Kong M&As have received some welcome Xmas cheer of late.
Small-Cap CM Hi-Tech (2115 HK) secured reg approvals in record time. Then CPMC (906 HK)‘s pre-cons were satisfied on 13th December. Now Shanghai Henlius (2696 HK)‘s pre-cons are also fulfilled.
Henlius’ spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.

Shimano: An Opportunity for Activist Investors

By Mark Chadwick

Shimano, the Japanese maker of bicycle components and fishing equipment, is in need of a strategic gear change
A significant -25% decline in FY23 net sales highlights Shimano’s struggles. Revenues dropped a further -11% in the first nine months of 2024
For investors seeking opportunity at the bottom of the cycle, Shimano presents a compelling case. The stock is trading at 2.3x book value

MPHB Capital (MPHB MK)’s Offer: Almost There As ISM Exhausts Options

MPHB Capital (MPHB MK)‘s delisting Offer via a selective capital reduction (SCR) from controlling shareholder and chairman Tan Sri Surin Upatkoon appears to be in the home straight.
The completion of the Offer has been delayed as ISM Sdn Bhd, MPHB’s minority partner in six JVs, invokes various legal options in an ongoing dispute.
The High Court has now fixed 6 January 2025 as the hearing date for the SCR petition. Assuming that is granted, payment is likely mid-Feb.

LY Corp (4689) Announces Takeover of Beenos (3328) – Lightish at ¥4,000 But A Done Deal

Early today, the Nikkei had an article saying LY (4689 JP) would launch a takeover of Beenos Inc (3328 JP). The stock went limit up. Shorts are many times ADV.
Post-Close, we get a deal much as implied by the Nikkei article. It seems light to me but the top three holders have agreed to the deal.
Regulatory will take a couple of months. This will likely fall tomorrow. If you are a long-only fund holder, think about the alternatives (read the conclusions here).

Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows

By Janaghan Jeyakumar, CFA

CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.

Korea FSC’s Stabilization Fund: Breaking Down the Buzz and Flow Impact