Most Read

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now

On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.

Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%

Sparx on Friday announced a Tender Offer at 0.55x book and an EV of less than inventory (<20% of revenue) for Snt Corp (6319 JP) – another metal monozukuri company.
Last year they did it on IJTT Co., Ltd. (7315 JP). That one got bumped. This one could too, but cross-holders own nearly 60%.
This kind of company has skill-sets which may be portable but the product line is tied to old Japan. The takeover

7&I (3382) Update – Couche-Tard Responds

On 10 March, Alimentation Couche-Tard (ATD CN) issued a release “UPDATE ON PROPOSAL FOR A COMBINATION WITH SEVEN & i“.
They felt obliged to be transparent in the wake of the 7&i Letter To Shareholders released yesterday. The content/nuance of the two letters differ significantly.
Two parties competing to get a truth which cannot be both could be problematic. We are still many months away from any kind of ACT/7-11 deal.

CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range

There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.

JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry

JX Advanced Metals (5016 JP) has priced its IPO at ¥820/share, at the top end of the IPO range but lower than the initial indication of ¥862/share.
With the bulk of the domestic offering going to retail investors, there is no chance of Fast Entry for the stock in global indices.
TOPIX INDEX inclusion will take place at the close on 28 April, while inclusion in major global indices is likely to take place in August and September.

Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.

SET50 Index: Market Moves Adjust for Consultation Proposal; DELTA in the Crosshairs (Again)

On 4 February, the SET floated a consultation paper on capping stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at 10%.
The move was aimed at Delta Electronics Thailand (DELTA TB) since it was the only stock with an index weight higher than 10%.
Delta Electronics Thailand (DELTA TB) has slid since then and at the current weight of 9.27% will not need to be capped. The market has adjusted for it.

ESR (1821 HK) Chips Away At Pre-Cons

When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions.
We’re half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead.
Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It’s just a question of timing.

Properly Interpreting Korea’s Stock Borrow Data for Short Selling

Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.

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Mar 11

Most Read: Nikkei 225, Japan Post Bank, Sigma Healthcare, Seven & I Holdings, DoorDash , SK Innovation, TKO Group Holdings , BYD, Makino Milling Machine Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility
Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
Select Sector Indices and S&P Equal Weight Rebalance: US$16.3bn Trade; Big Impact for EXE, TKO
Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
ECM Weekly (10th Mar 2025) – BYD, Japan Post, Mixue, Sanhua, Chifeng, Nanshan, Goertek, Travel Food
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now

On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

Select Sector Indices and S&P Equal Weight Rebalance: US$16.3bn Trade; Big Impact for EXE, TKO

Constituent changes to the S&P500 INDEX and capping changes will result in a round-trip trade of US$16.3bn across the Select Sector indices and the S&P500 Equal Weight Index.
The Select Sector index trackers and S&P500 Equal Weight trackers will need to buy the adds to the S&P500 INDEX and sell the deletes, further increasing flow for the stocks.
The flows will change over the next week as stock prices move around, and final capping is done after the close on 14 March.

Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter

The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement.
The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals.
However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal.

ECM Weekly (10th Mar 2025) – BYD, Japan Post, Mixue, Sanhua, Chifeng, Nanshan, Goertek, Travel Food

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, Mixue Group (2097 HK) provided some much needed relief to the HK tea chains, Seoul Guarantee Insurance (031210 KS) might not do the same this week.
On the placements front, BYD (1211 HK)‘s jumbo offering has been doing well, while Japan Post Bank (7182 JP) hasn’t been correcting much.

Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.

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Mar 10

Most Read: Japan Post Bank, Nikkei 225, A2 Milk Co Ltd, Sigma Healthcare, SK Innovation, Mitsui O.S.K. Lines, Daihatsu Diesel Mfg, DoorDash , China Vanke (H) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)
S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices
Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade
Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors
Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity
S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility
A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ).
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade

By Janaghan Jeyakumar, CFA

The ADDs/DELs for the ASX index family for the March 2025 index rebal event were announced after market close on Friday 7th March 2025.
There are 22 ADDs and 18 DELs collectively for ASX 50, ASX 100, ASX 200, and ASX 300.
In this insight, we take a final look at the flow expectations for each of these index changes.

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors

The USTR issued a Section 301 report in January 2025. The report suggests China has tried to achieve dominance in global shipping, to the detriment of US commerce.
The report is flawed, in data (it somehow manages to make up data which is otherwise available from MARAD), analytics, and conclusions, but the Trump administration has run with it.
In February, the USTR announced “Proposed Actions” – fees for Chinese liners and international liners with Chinese ships, and restrictions on future exports. US users lose. And there are loopholes.

Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity

In late January, Daihatsu Diesel Mfg (6023 JP) announced its once/former parent would sell all its shares; in part to a private company in the industry and a 20% buyback.
The buyback – a below-market own-share tender offer – was priced low enough to be a big win. Accretion added to that.
Buyback Tender Results and External Changes signal overhang and opportunity. Either way, it’s cheap, but good governance could make it even cheaper.

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.

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Mar 09

Most Read: Xiamen Amoytop Biotech Co Ltd, BYD, Alibaba Group Holding , SUNeVision Holdings, Amazon.com Inc, A2 Milk Co Ltd, Japan Post Bank, Korea Zinc, Seven & I Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
BYD (1211 HK) Placement: Continuing to Power Up
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)
Sunevision (1686 HK): Data Center Rally Brings Passive Flows
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)
Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
M&A For Korea Zinc: Seoul Central District Court Makes Important Rulings
Seven & I Holdings: Mega Share Buyback Plan and IPO of North American CVS Unit to Boost Share Price

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises

There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.

BYD (1211 HK) Placement: Continuing to Power Up

Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).
Meituan , JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.

Sunevision (1686 HK): Data Center Rally Brings Passive Flows

The huge rally in SUNeVision Holdings (1686 HK) will bring passive inflows to the stock after being added to a global sector index.
Estimated passive buying is 19.4m shares (US$22m; 0.55x ADV) with implementation scheduled for the close of trading on 21 March.
Shorts have risen sharply in the last couple of weeks and cumulative excess volume has jumped too. But we see a similar pattern in a close peer.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ).
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

M&A For Korea Zinc: Seoul Central District Court Makes Important Rulings

On 7 March, the Seoul Central District Court ruled that it is reasonable for Korea Zinc to maintain the concentrated voting system, which should favor Chairman Choi and his allies.
On the other hand, the court also ruled that Korea Zinc was wrong to restrict Young Poong’s voting rights which should be favorable to MBK/Young Poong alliance.
The fact that the court has allowed concentrated voting system would mean the M&A of Korea Zinc will continue.

Seven & I Holdings: Mega Share Buyback Plan and IPO of North American CVS Unit to Boost Share Price

If indeed the company proceeds with 2 trillion yen buyback over five years, this would represent buyback of about 7.3% of its shares per year (37% of market cap).
Seven & I Holdings’ plans to massively buyback shares and IPO its North American CVS business are major catalysts that should have positive impact both near and long term.
Certainly, the company’s action plan to sell its non-core assets (including supermarket, restaurant, and specialty stores) to Bain Capital for $5.5 billion is a step in the right direction.

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Mar 08

Most Read: Seven & I Holdings, Korea Zinc, Amazon.com Inc, Japan Post Bank, Korea Stock Exchange KOSPI 200, Coforge, Naigai Trans Line and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
Korea Zinc: Cross Shareholding Limitation System Loophole
Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
Japan Post Bank (7182 JP): The Current Playbook
DN Solutions IPO Might Skip OC—A Unique Trading Opportunity
ECB: Meaningfully Less Restrictive
Coforge’s $1.56 Billion Bet: A Game-Changer or a Risky Move?
Naigai Trans Line (9384 JP): IA Partners’ JPY4,065 Tender Offer
HEW: Political Blunderbuss

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

Korea Zinc: Cross Shareholding Limitation System Loophole

The proxy battle at the EGM for the control of Korea Zinc (010130 KS) is scheduled for 23 January.
One day prior to the EGM, Korea Zinc’s Chairman Choi is trying to capitalize on the “cross-shareholding limitation system” in order to retain control of the company.
In our view, it appears that the legal case regarding the cross shareholding limitation system is in favor of MBK/Young Poong alliance.

Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
We have looked at the deal dynamics in our previous notes. In this note, we talk about updates and look at discounts vs performance for past secondary deals.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

Japan Post Bank (7182 JP): The Current Playbook

Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have declined by 2.5%. On 3 March, JPB completed the ToSTNeT-3 buyback by acquiring 13.3 million shares for JPY20 billion.
To understand JPB’s trading pattern, it is instructive to examine its 2023 offering, Japan Post Insurance (7181 JP)/JPI’s 2019 offering, and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
JPB’s shares follow the trading pattern playbook of its 2023 and JPH’s 2021 offerings, in which investors buying the offer were rewarded with positive returns at the payment date.

DN Solutions IPO Might Skip OC—A Unique Trading Opportunity

With cautious foreign interest, DN Solutions’ big IPO deal might skip the OC and go full local for bookbuilding, setting a new trend in Korean IPOs.
If foreign anchor orders drop, local players gain more negotiating power, leading to aggressive bidding and potentially a way more conservative IPO price.
Offshore funds passing investment review without an OC could grab more volume, benefiting from local-led down-pricing without lock-up restrictions.

ECB: Meaningfully Less Restrictive

By Phil Rush

The ECB’s sixth 25bp deposit rate cut to 2.5% was unsurprising, and its characterisation of policy as meaningfully less restrictive leaned towards our relatively hawkish view.
Policy rates may already be close to neutral. Looser fiscal policy plans also pressure monetary policy to follow a tighter path than would otherwise have been necessary.
We still expect the ECB to hold rates in April, which is no longer a controversial call. A final 25bp ECB cut in June remains in our outlook (BoE cuts in May and Fed on hold).

Coforge’s $1.56 Billion Bet: A Game-Changer or a Risky Move?

By Nimish Maheshwari

Coforge (COFORGE IN)‘s $1.56 billion deal with Sabre positions it as a major player in travel technology, but concerns over Sabre’s financial stability create potential risks for long-term execution.
Acquisitions of Rythmos and TMLabs align with Coforge’s strategy to enhance cloud, data, and enterprise IT capabilities, strengthening its market position in airline and ServiceNow implementation services.
While analysts recognize strong revenue visibility, Sabre’s $5.1 billion debt and negative net worth raise cash flow concerns, leading to a divided outlook on Coforge’s future profitability and risk exposure.

Naigai Trans Line (9384 JP): IA Partners’ JPY4,065 Tender Offer

Naigai Trans Line (9384 JP) has recommended a tender offer from IA Partners at JPY4,065 per share, a 62.3% premium to the last close.
Despite being below the midpoint of the target IFA’s DCF valuation range, the offer is attractive compared to historical trading ranges and represents an all-time high.
Given that the offer is reasonable, the required minority acceptance rate is attainable. The offer is from 10 March to 21 April, with payment on 28 April.

HEW: Political Blunderbuss

By Phil Rush

Shot from Trump’s blunderbuss is hitting sentiment and risk appetite yet the hard data remain resilient. Europe waking up on defence punched markets more in hope than reality, but hawkish inflation and ECB news helped create room to close our bullish call.
Next week’s US inflation data are the scheduled global highlight, along with the Bank of Canada likely pausing its cutting cycle. We also await UK GDP data confirming resilience inconsistent with the dovish panic at February’s BoE meeting.
Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to transition@smartkarma.com).

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Mar 07

Most Read: Seven & I Holdings, Alibaba Group Holding , SUNeVision Holdings, Amazon.com Inc, Japan Post Bank, BayCurrent Consulting and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) Possibility of YUUUUUGE Buyback?
7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)
Sunevision (1686 HK): Data Center Rally Brings Passive Flows
Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure
Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis
Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before

7&I (3382) Possibility of YUUUUUGE Buyback?

Last Thurs the MBO died. Tuesday an article said the ACT deal had died. Then 7&i denied that. Yesterday an article said Bain’s York Holdings deal would be approved today.
That meant a Board meeting which would approve receipt of ~¥700bn of cash. What to do with it?
Just now, Bloomberg says Seven & I Holdings (3382 JP)‘s board will consider a massive buyback. THAT is the capital allocation news my last piece suggested necessary. It’s HUGE.

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec

In a big surprise, there is only one change for the Nikkei 225 (NKY INDEX) in March with BayCurrent Consulting (6532 JP) replacing Mitsubishi Logistics (9301 JP).
The non-inclusion of Kokusai Electric (6525 JP) is a big surprise given that the stock was ranked among the top 75 stocks by liquidity. There could be selling near-term.
BayCurrent Consulting (6532 JP) has been added at a 0.5 PAF and that will increase to 1 in September. Fast Retailing (9983 JP) could be capped yet again in September.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).
Meituan , JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.

Sunevision (1686 HK): Data Center Rally Brings Passive Flows

The huge rally in SUNeVision Holdings (1686 HK) will bring passive inflows to the stock after being added to a global sector index.
Estimated passive buying is 19.4m shares (US$22m; 0.55x ADV) with implementation scheduled for the close of trading on 21 March.
Shorts have risen sharply in the last couple of weeks and cumulative excess volume has jumped too. But we see a similar pattern in a close peer.

Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure

The Seven & I Holdings (3382 JP) Board announced a plan to unlock and distribute significant value to shareholders.
The initial excitement focused on the positives of leadership changes, US Assets IPO, a higher-than-expected valuation for the Superstore Business and a considerable buyback.
The negatives of a long-dated buyback, inevitable rejection of the Couche-Tard offer, an uncertain US Assets IPO and ongoing HoldCo discount suggest the initial excitement will fizzle out.

Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA

The March 2025 Nikkei 225 Average Review was announced last night. Something of a disaster for Team Quiddity. I had expected 2-3 ADDs and 2-3 DELETEs.
We got only one change, and that was my second choice ADD and second choice DELETE. Top 75 name Kokusai Electric (6525 JP) was missing in action. BIG Disappointment.
BayCurrent Consulting (6532 JP) is in at a PAF of 0.5, with an upweight end-Sep. Mitsubishi Logistics (9301 JP) is OUT. Fast Retailing (9983 JP) will see US$2.3bn of sells.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
We have looked at the deal dynamics in our previous notes. In this note, we talk about updates and look at discounts vs performance for past secondary deals.

Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before

The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
I see one ADD and one DELETE. Fast Retailing capping is right on the border. BayCurrent will see an upweight.
The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.

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Mar 06

Most Read: Shift Inc, CK Hutchison Holdings, Korea Stock Exchange KOSPI 200, BayCurrent Consulting , Japan Post Bank, Kum Yang , SUNeVision Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
Li Ka-Ching! Cheung Kong (1 HK) Offloads Panama Ports To Blackrock
Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders
Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec
Japan Post Bank US$4bn Placement Updates-Performing Similar to Its Last. Past Large Deals Comparison
KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot
StubWorld: Cheung Kong’s Geopolitics
Sunevision (1686 HK): Data Center Rally Brings Passive Flows
Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA
HEM: Pausing Policy Easing

Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning

The changes to the Nikkei 225 (NKY INDEX) as part of the March rebalance should be announced in just over 2 weeks. We expect 2-3 changes at the review.
The forecast adds have massively outperformed the forecast deletes and the Nikkei225 Index over every time period going back 3 months with the largest outperformance in the last month.
Positioning appears to be stretched in one forecast add while there appears to be under positioning in a couple of the forecast deletes.

Li Ka-Ching! Cheung Kong (1 HK) Offloads Panama Ports To Blackrock

As part of a US$22.8bn transaction, BlackRock, Global Infrastructure Partners and Terminal Investment, have agreed to buy two contentious Panama ports from Li Ka-shing’s CK Hutchison (1 HK) (CKH).
The transaction also includes an 80% stake in CKH’s ports subsidiaries, which operate 43 ports comprising 199 berths in 23 countries.
CKH expects cash proceeds in excess of US$19bn. CKH’s current market cap was – at the time of deal – also ~US$19bn.

Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders

This 40% rule will distort bookbuilding, force down-pricing, choke float post-listing, and amplify volatility.
Offshore investors like us benefit most—cheap IPO pricing with no lock-up. Local brokers see this as a giveaway to foreign funds and pushed back hard last Friday.
FSS won’t budge—40% lock-up is happening. If issues arise post-implementation, they might adjust later.

Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec

In a big surprise, there is only one change for the Nikkei 225 (NKY INDEX) in March with BayCurrent Consulting (6532 JP) replacing Mitsubishi Logistics (9301 JP).
The non-inclusion of Kokusai Electric (6525 JP) is a big surprise given that the stock was ranked among the top 75 stocks by liquidity. There could be selling near-term.
BayCurrent Consulting (6532 JP) has been added at a 0.5 PAF and that will increase to 1 in September. Fast Retailing (9983 JP) could be capped yet again in September.

Japan Post Bank US$4bn Placement Updates-Performing Similar to Its Last. Past Large Deals Comparison

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
We have looked at the deal dynamics in our previous note. In this note, we talk about the updates since then.

KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot

Kum Yang (001570 KS)‘s designation as an Administrative Issue should result in the deletion of the stock from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) later this week.
Taekwang Industrial (003240 KS) could be added to the index as an ad hoc replacement. The stock was in line to be added to the index at the June rebalance.
Miwon Specialty Chemical (268280 KS) ranked higher than Taekwang Industrial (003240 KS) at the December rebalance but appears to fail the liquidity screen.

StubWorld: Cheung Kong’s Geopolitics

CK Hutchison Holdings (1 HK) (CKH) is trading “cheap” as Panama’s Supreme Court agrees to consider a request to nullify CKH’s canal concessions.
Preceding my comments on CKH, CK Infrastructure Holdings (1038 HK) (coming up cheap on my monitor), and Power Assets Holdings (6 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%.

Sunevision (1686 HK): Data Center Rally Brings Passive Flows

The huge rally in SUNeVision Holdings (1686 HK) will bring passive inflows to the stock after being added to a global sector index.
Estimated passive buying is 19.4m shares (US$22m; 0.55x ADV) with implementation scheduled for the close of trading on 21 March.
Shorts have risen sharply in the last couple of weeks and cumulative excess volume has jumped too. But we see a similar pattern in a close peer.

Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA

The March 2025 Nikkei 225 Average Review was announced last night. Something of a disaster for Team Quiddity. I had expected 2-3 ADDs and 2-3 DELETEs.
We got only one change, and that was my second choice ADD and second choice DELETE. Top 75 name Kokusai Electric (6525 JP) was missing in action. BIG Disappointment.
BayCurrent Consulting (6532 JP) is in at a PAF of 0.5, with an upweight end-Sep. Mitsubishi Logistics (9301 JP) is OUT. Fast Retailing (9983 JP) will see US$2.3bn of sells.

HEM: Pausing Policy Easing

By Phil Rush

Central banks are advised to slow, pause, or stop reducing rates due to rising inflation and labour costs.
Inflation is unexpectedly increasing, and labour costs are exceeding target-consistent levels.
Monetary policy is almost neutral according to activity trends, but rate hikes in 2026 could counteract unnecessary easing.

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Mar 05

Most Read: BYD, Korea Stock Exchange KOSPI 200, Seven & I Holdings, Keisei Electric Railway Co, Gemvax & Kael, Alibaba Group Holding , Oneconnect Financial Technology, CK Hutchison Holdings, Kum Yang and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
BYD (1211 HK) Placement: Continuing to Power Up
Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders
Seven & I Holdings (3382 JP): Shares Under Pressure as Rumours Swirl
Keisei Railway (9009) Gets Bad Advice from Activists, Which Is Good for The Rest of US
FnGuide Semiconductor Top10 Index Rebalance Preview: Big Moves Lead to Changes in Forecast
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)
OneConnect Financial (6638 HK/OCFT US): Ping An’s Fair NBIO
StubWorld: Cheung Kong’s Geopolitics
KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

BYD (1211 HK) Placement: Continuing to Power Up

Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.

Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders

This 40% rule will distort bookbuilding, force down-pricing, choke float post-listing, and amplify volatility.
Offshore investors like us benefit most—cheap IPO pricing with no lock-up. Local brokers see this as a giveaway to foreign funds and pushed back hard last Friday.
FSS won’t budge—40% lock-up is happening. If issues arise post-implementation, they might adjust later.

Seven & I Holdings (3382 JP): Shares Under Pressure as Rumours Swirl

Seven & I Holdings (3382 JP) denied a Yomiuri article that the Board has decided not to accept an Alimentation Couche-Tard (ATD CN) bid in favour of the restructuring plan.
Despite the Board’s assertions that it is still having constructive discussions with Couche-Tard, its actions suggest otherwise.
Couche-Tard remains interested but faces increasing roadblocks. The valuation is undemanding but the news flow is unlikely to support a rerating in the near-term.

Keisei Railway (9009) Gets Bad Advice from Activists, Which Is Good for The Rest of US

By Michael Allen

Activist investors, confusing market price with intrinsic value, have shot themselves in the foot by offering terrible advice to Keisei Railway’s management.
When Keisei followed advice from the activist, selling just 1% of the shares of Oriental Land, Keisei’s share price collapsed, proving market price has nothing to do with intrinsic value.
Keisei’s revenue growth and return on investment are stronger than most of its peers, and the crash in its stock price caused by activists might create an opportunity for others.

FnGuide Semiconductor Top10 Index Rebalance Preview: Big Moves Lead to Changes in Forecast

With the averaging period for the April rebalance commencing today, we forecast 2 changes for the FnGuide Semiconductor Top10 Index at the upcoming rebalance.
Based on the passive assets tracking the index, there will be between 0.65-1x ADV to buy in the adds and between 0.5-1.7x ADV to sell in the deletes.
The big rally has taken Gemvax & Kael into inclusion zone while underperformance leads to ISC Co and Techwing dropping out of inclusion zone.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).
Meituan , JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.

OneConnect Financial (6638 HK/OCFT US): Ping An’s Fair NBIO

Dual-Listed OneConnect Financial Technology (6638 HK/OCFT US), a digital retail banking/commercial banking/ digital insurance play, has announced a non-binding proposal from Ping An, OneConnect’s controlling shareholder with 32.12%.
Ping An is offering, by way of a Scheme, HK$2.068/share, or US$7.98/ADS, a 72.33% premium to last close, and a 131.66% premium to the 30-day average. The price is final.
What now? Back in OneConnect’s boards’ court whether to engage or not. Which they should. No competing Offer will emerge.

StubWorld: Cheung Kong’s Geopolitics

CK Hutchison Holdings (1 HK) (CKH) is trading “cheap” as Panama’s Supreme Court agrees to consider a request to nullify CKH’s canal concessions.
Preceding my comments on CKH, CK Infrastructure Holdings (1038 HK) (coming up cheap on my monitor), and Power Assets Holdings (6 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%.

KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot

Kum Yang (001570 KS)‘s designation as an Administrative Issue should result in the deletion of the stock from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) later this week.
Taekwang Industrial (003240 KS) could be added to the index as an ad hoc replacement. The stock was in line to be added to the index at the June rebalance.
Miwon Specialty Chemical (268280 KS) ranked higher than Taekwang Industrial (003240 KS) at the December rebalance but appears to fail the liquidity screen.

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Mar 04

Most Read: Seven & I Holdings, Xiamen Amoytop Biotech Co Ltd, BYD, Toyota Motor, Chifeng Jilong Gold Mining, Korea Stock Exchange Kospi Index, JX Advanced Metals, MS&AD Insurance, Tokyo Metro and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
BYD (1211 HK) Placement: Continuing to Power Up
Toyota’s New Shareholder Benefit Program – Either a Bribe for Retail or Odd Advertising
Chifeng Jilong Gold Mining (6693 HK) IPO: H-Share Offering Details & Index Inclusion
Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?
JX Advance Metals IPO – Digestable, but Not Really Attractive
Japan CorpGovReports: TSE “Mgmt Conscious Blah Blah” (Mar25), Read TSE Update Doc 3
TOPIX Index Upweights: Final Expectations For “The Big April Basket” 2025

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises

There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.

BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well

BYD (1211 HK) is looking to raise around US$5.2bn via selling 4% additional shares.
The company has undertaken a few deals before and they have ended up performing well.
In this note, we will talk about the placement and run the deal through our ECM framework.

BYD (1211 HK) Placement: Continuing to Power Up

Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.

Toyota’s New Shareholder Benefit Program – Either a Bribe for Retail or Odd Advertising

Today, Toyota Motor (7203 JP) announced a new Shareholder Benefit Program (株主優待 or kabunushiyutai). Often these programs are designed to give small unknown companies a way to build shareholder awareness/loyalty.
Toyota, needless to say, is not a small, unknown company building awareness. So this is a bribe or inducement to own shares or get people to use higher value product.
This is not a great look, and not great for shareholders. It smells of Toyota trying to buy votes as crossholders sell. But below we look at the math.

Chifeng Jilong Gold Mining (6693 HK) IPO: H-Share Offering Details & Index Inclusion

Chifeng Jilong Gold Mining (600988 CH) has launched an H-share offering that could raise up to US$554m if the offer size adjustment option and overallocation option are both exercised.
The price range of HK$13.72-HK$15.83/share is a discount of 18.7-29.5% to the A-shares and between 17-26% of the offering will be allocated to cornerstone investors.
The small issue size will result in the stock staying out the global indices for the foreseeable future. Inclusion in Southbound Stock Connect will take place in April.

Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?

If brokers let shorts exceed borrow, TRS end investors risk getting caught in the legal crossfire.
Some TRS players are setting up short-book systems and reg numbers proactively, ensuring brokers share borrow data to stay ahead of any compliance risks.
With most illegal shorts tied to TRS, and TRS dominating the market, the FSS will likely introduce TRS-specific rules rather than granting exemptions.

JX Advance Metals IPO – Digestable, but Not Really Attractive

JX Advanced Metals (5016 JP)’s parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.5bn via selling more than half of its stake in JXAM in its Japan IPO.
JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
We have covered various aspects of the deal in our previous notes. In this note, we will talk about the IPO pricing.

Japan CorpGovReports: TSE “Mgmt Conscious Blah Blah” (Mar25), Read TSE Update Doc 3

TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
161 new CGRs were filed in February 2025. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
THE BIG NEWS: The “Document 3” (linked below) of the TSE’s 20th Council Meeting 18 Feb is worth reading carefully. This will set the stage for more takeover fun.

TOPIX Index Upweights: Final Expectations For “The Big April Basket” 2025

By Janaghan Jeyakumar, CFA

In the TOPIX Index, some “low liquidity” names carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will see index inflows from passive trackers of TOPIX.
In this insight, we take a look at Quiddity’s final predictions for the names that are likely to see their Liquidity Factors removed in April 2025 and their flow implications.

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Mar 03

Most Read: Xiamen Amoytop Biotech Co Ltd, AEON Mall, Shenzhen Bluetrum Technology, Weichai Power Co Ltd H, JX Advanced Metals, Aeon Delight, Alibaba Group Holding , Snt Corp, JD.com , Japan Post Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade
STAR Chip Index Rebalance: Shenzhen Bluetrum (688332) Replaces JoulWatt (688141)
A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening
JX Advanced Metals IPO Preview
Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
HK Connect SOUTHBOUND Flows (To 28 Feb 2025); Big Volumes, HUGE Net Buys on Blue Chips, Tech-Y Names
Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%
Box Trades Explained: How Traders Execute Near Risk-Free Arbitrage in Hong Kong’s Options Market
Weekly Deals Digest (02 Mar) – Japan Post Bank, 7&I, Aeon Delight, Tonami, Mixue, JXAM

STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises

There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.

Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.

STAR Chip Index Rebalance: Shenzhen Bluetrum (688332) Replaces JoulWatt (688141)

CSI announced the changes for the March rebalance after market close on 28 February and the changes will be effective after the close of trading on 14 March.
As expected, Shenzhen Bluetrum Technology (688332 CH) will be added to the index while JoulWatt Technology Co (688141 CH) will be deleted.
Shenzhen Bluetrum Technology (688332 CH) outperformed JoulWatt Technology Co (688141 CH) in the last quarter of 2024 and there has been a reversal of fortunes this calendar year.

A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening

AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best.
Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have ever had. By a long ways.
This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.

JX Advanced Metals IPO Preview

JX Advanced Metals (5016 JP) is seeking to raise about ¥460 billion in the upcoming IPO on the Tokyo Stock Exchange. The indicative IPO price is ¥862 per share.
The final IPO pricing will be on 10 March. JX Advanced Metals will be listed on 19 March. Eneos is selling as many as 534.9 million shares in the IPO.
The company has a strong customer base. It is a key supplier to TSMC, Samsung, Intel, SK Hynix, and Micron for sputtering targets and high-purity metals.

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share

Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.

HK Connect SOUTHBOUND Flows (To 28 Feb 2025); Big Volumes, HUGE Net Buys on Blue Chips, Tech-Y Names

Gross SOUTHBOUND volumes cleared HK$800bn for the second week in a row. NET buying by SOUTHBOUND was HK$75bn which was perhaps a new record.
Notable again is the HUGE back-and-forth. If HK$865bn traded and SOUTHBOUND “only” bought HK$75bn, HK$395bn was round-tripped for short-term purposes.
Last week I flipped to short Alibaba Group Holding (9988 HK). Sentiment may worsen and there’s lots to sell later this week. Staying short Alibaba for now.

Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%

Sparx on Friday announced a Tender Offer at 0.55x book and an EV of less than inventory (<20% of revenue) for Snt Corp (6319 JP) – another metal monozukuri company.
Last year they did it on IJTT Co., Ltd. (7315 JP). That one got bumped. This one could too, but cross-holders own nearly 60%.
This kind of company has skill-sets which may be portable but the product line is tied to old Japan. The takeover

Box Trades Explained: How Traders Execute Near Risk-Free Arbitrage in Hong Kong’s Options Market

By Gaudenz Schneider

Box trades are gaining popularity on the Hong Kong Stock Exchange. These arbitrage strategies exploit price discrepancies in options markets for near risk-free profits.
Long box trades involve simultaneously buying bull call spreads and bear put spreads with identical strikes and expiration dates, creating a fixed payoff regardless of the underlying asset’s price movement.
Box trades require careful execution consideration of spreads, commissions, margins, and fees, with risks primarily in execution and operations rather than market exposure.

Weekly Deals Digest (02 Mar) – Japan Post Bank, 7&I, Aeon Delight, Tonami, Mixue, JXAM