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The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

STAR100 Index Rebalance Preview: High Risk/Return Trade Setup

The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
There are 10 stocks in inclusion zone and 11 in deletion zone. There should be 10 changes since that is the cap for the maximum changes at a single rebalance.
The potential adds and deletes are down between 37-47% over the last 6 months and a long/short trade could provide superior risk-adjusted returns.

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete

The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.

Hang Seng Index (HSI) Rebalance: Idling at 82 Members; 100 Members in 2025 at the Earliest

In a surprise, the Hang Seng index committee has decided not to make any constituent changes to the Hang Seng Index (HSI INDEX) at the March rebalance.
We now see the index reaching its 100-member target in 2025 at the earliest, though we would not be surprised to see it spill into 2026 as well.
Free float and capping changes will result in one-way turnover of 1.2% resulting in a round trip trade of HK$4.54bn. HSBC Holdings (5 HK) is the biggest sell.

Snow Peak (7816) – Nikkei Says Bain to Launch ¥50bn MBO

Apparently, MergerMarket had an article out Friday saying once-higher-flying outdoor/sporting goods retailer Snow Peak Inc (7816 JP) was considering going private. The company said(J) late they were considering multiple options.
A Nikkei article (J) Saturday said it was Bain would launch an MBO/Tender Offer as early as this week paying ¥50bn.
This will probably go limit up Monday. I’d expect an announcement post-close Monday. Long-suffering long-only investors who have already sold will be disappointed. Those who were late to sell? Happy.

EQD | HSI Rally: Possible Brief Stop This Week

By Nico Rosti

The Hang Seng Index is rallying as anticipated in a previous insight, but it could stop this week and pullback a bit.
3 possible trades available: go SHORT and hold to profit from a re-start of the downtrend, go SHORT and close after 1 week, wait the pullback and go LONG.
It’s unclear at the moment if the index will go lower or rebound after the upcoming pullback.

[Japan Governance] FSA Urges Japan Non-Life Insurers to Eliminate Cross-Holdings – Sales Coming

There has been a recent non-life insurer price-fixing scandal. The JFTC and FSA investigated. Last December, the FSA issued Business Improvement Orders to the four majors.
There was a Bigmotor scandal last summer and Sompo Japan got a Business Improvement Order last month. All four insurers have
9 Feb post-close, Jiji/Nikkei had articles saying the FSA had urged four major non-lifes subject to the first BIO to accelerate sales of ¥6.5trln+ of 5,900 Cross-Holdings. That’s big.

Japan Weekly | Rakuten, Asics, Ebara, Tokyo Electron Chalk up Big Gains

By Mark Chadwick

The Nikkei hasn’t been this high since the Berlin Wall came toppling down. The Nikkei was up over 4% on the week and stands 15% higher YTD.
There were plenty of reasons not to be higher. US stocks closed marginally lower; AI stocks like SMCI crashed on Friday;
Japanese stocks were higher but that hides significant divergence between the winners and losers after a heavy week of earnings releases. Perhaps a pause for breath next week.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Altium, Ansarada, Roland DG, Welbe, Orecorp, Vinda

I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals discussed this week on Smartkarma: Altium Ltd (ALU AU), Ansarada Group Ltd (AND AU), Roland DG Corp (6789 JP), and Welbe Inc (6556 JP).
Key updates took place on JSR Corp (4185 JP) and Outsourcing Inc (2427 JP)

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Feb 17

Most Read: Samsonite, Outsourcing Inc, Newmont , Tosoh Corp, Hyundai Motor India , Itoki Corp, ISC Co Ltd, Industrial & Infrastructure Fund Investment, Trend Micro Inc, Korea Stock Exchange Kospi Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
Outsourcing (2427) MBO Situation – Checking, and Thinking, and Noodling, and Speculating
S&P/ASX Index Rebalance Preview: Newmont Still Has Nearly A$1bn to Sell
Japan – Shorts & Positioning on Passive Sells
Initial Thoughts on Hyundai Motor India IPO
Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump
Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out
Industrial & Infrastructure Investment Corp Placement – Back to the Markets for the 12th Time
Trend Micro (4704) – In-Line Announcement Causes Selloff – Hopium Meets Reason
Emerging Korean Investment Theme: Potential Corporate Defense Mechanisms for Share Cancellations

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

Outsourcing (2427) MBO Situation – Checking, and Thinking, and Noodling, and Speculating

I got a bunch of questions about my Outsourcing comments yesterday in Outsourcing (2427) – Earnings Delay Causes Consternation.
This piece is intended to clarify what I know (still limited), put parameters around what it might be, and draw lines in the sand which I might later erase.
This may be nothing. But it may not be. I will try to answer the questions I received in a kind of Q&A format, and I hope that helps.

S&P/ASX Index Rebalance Preview: Newmont Still Has Nearly A$1bn to Sell

With two days left in the review period, there could be 28 adds/deletes across the S&P/ASX family of indices in March.
There is nearly A$1bn to sell in Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There could be 2-41 days of ADV to buy in the index inclusions while the impact on the deletions will range between 0.7-24 days of ADV.

Japan – Shorts & Positioning on Passive Sells

BayCurrent Consulting, Open House, Sumitomo Chemical, Koei Tecmo Holdings, Kose Corp, Oji Holdings, Daiwa House Reit Investment and Tosoh Corp will have passive selling at the close on 29 February.
Short interest has increased on all these stocks over the last few weeks and there has been big underperformance versus the Nikkei 225 Index and TOPIX Index.
Cumulative excess volume has increased on the stocks and there will be short covering in the last week of the month.

Initial Thoughts on Hyundai Motor India IPO

Hyundai Motor India has been taking initial steps for an IPO. We believe this IPO could be completed sometime in 4Q 2024.
Hyundai Motor India Limited (HMIL) IPO offering size is estimated to be at least US$3 billion, which would be one of the largest in India and the world this year.
If HMIL is valued at US$25 billion and HMC sells a 15% stake, its remaining 85% stake would be worth US$21 billion, representing 55% of HMC’s market cap.

Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump

Two days ago, Japanese manufacturer of ubiquitous office furniture Itoki Corp (7972 JP) announced salutary earnings/presentation(J) results, new MTMP(E) outlines, new shareholder return policy(J), yutai program(J), div hike(J), and buyback(J).
It was a big day. The stock went limit up on 14 Feb and is +12% today. +25% in two days.
No single holder holds that much BUT the parameters tell you how this gets done. It’s interesting, but it is important to read the fine print below!

Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out

Will there be changes in April’s rebalancing? With two weeks left, two names are likely. Wonik IPS may be replaced by ISC Co Ltd, given a ₩150B market cap difference.
In the previous rebalancing, constituent changes had a notable price impact. Despite a passive flow impact of +1.0x ADTV, HPSP and EO Technics saw about a 15% 3-day return.
Wonik IPS is estimated to receive -4.0x ADTV, while ISC is expected to receive +1.0x ADTV. This is also quite similar to the previous rebalancing.

Industrial & Infrastructure Investment Corp Placement – Back to the Markets for the 12th Time

By Ethan Aw

Industrial & Infrastructure Fund Investment (3249 JP) is looking to raise around US$341m in its primary follow-on offering to acquire 28 properties and an equity interest in a silent partnership.
The deal is a somewhat large one to digest, at 83 days of three month ADV and 16.2% dilution.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Trend Micro (4704) – In-Line Announcement Causes Selloff – Hopium Meets Reason

Last November, Trend Micro Inc (4704 JP) announced a second change to Shareholder Return Policy in 9 months. Activist ValueAct had been pushing. This was their big win.
I discussed, bullishly, in Trend Micro BIG Bonanza But Shareholder AND Balance Sheet Structure Matter. N225 Divs Get a Fillip.
Yesterday, with 2024 earnings, we got the promised special dividend and 2024 buyback, and in-line forecasts. No surprises. But the stock is down hard as yesterday’s hopium met today’s reason.

Emerging Korean Investment Theme: Potential Corporate Defense Mechanisms for Share Cancellations

Local sources confirm government’s focus on strengthening stock market for April election. Market expects aggressive policies for share cancellations, including corporate defense mechanisms.
Chosun Ilbo, a government-friendly and influential media outlet, advocates for corporate defense mechanisms to boost share cancellations, shaping a political atmosphere.
This theme is likely to emerge in Korea’s market. We must consider political dynamics and screen companies with high treasury shares for potential stock boosts.

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Feb 16

Most Read: Thai Beverage, Toei Animation, Altium Ltd, Newmont , Outsourcing Inc, Itoki Corp, Hyundai Motor India , ISC Co Ltd, Tosoh Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come
Renesas (6723 JP) To Acquire Altium (ALU AU) In a A$9.1bn Deal
Renesas’ Transformative Offer For Altium
S&P/ASX Index Rebalance Preview: Newmont Still Has Nearly A$1bn to Sell
Outsourcing (2427) MBO Situation – Checking, and Thinking, and Noodling, and Speculating
Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump
Initial Thoughts on Hyundai Motor India IPO
Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out
Japan – Shorts & Positioning on Passive Sells

Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst

Thai Beverage (THBEV SP) has trended lower over the last couple of years and the stock is trading very close to its lows.
There has been a contraction in multiples and Thai Beverage (THBEV SP) trades cheaper than a lot of its Asia listed peers.
A potential index inclusion could bring in significant passive inflows and result in a rerating of the stock.

Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come

In December 2021, when companies were required to file statements with the TSE as to plans to meet continuing listing requirements, Toei Animation (4816 JP) had a Plan.
That plan? Get from a then-current 15.5% Tradable Shares level to 25.0% by 31 March 2025. That was “OK” though later, the TSE asked companies to speed it up.
Today, shareholders Sony and Bandai Namco announced an equity offering to sell down up to 4.48mm shares in a domestic+overseas offering. It’s big, heavy, and there is more to come.

Renesas (6723 JP) To Acquire Altium (ALU AU) In a A$9.1bn Deal

Renesas Electronics (6723 JP) has entered a Scheme Implementation Agreement to acquire Altium Ltd (ALU AU) at A$68.5/share implying an equity value of A$9.1bn and an Enterprise Value of A$8.8bn.
The offer price is a 33.6% premium to the last close and a larger premium to VWAPs ranging from 30 days to 180 days.
There will be ad hoc inclusions to the S&P/ASX 100 Index and the S&P/ASX 200 (AS51 INDEX) on Altium Ltd (ALU AU)‘s last trading day (expected second half of 2024).

Renesas’ Transformative Offer For Altium

Renesas Electronics (6723 JP), a supplier of advanced semiconductors, is offering Altium Ltd (ALU AU) shareholders A$68.50/share, in cash, a lifetime high, by way of a Scheme.
Back in June 2021, Altium rejected a A$38.50/share NBIO, then a A$40/share verbal Offer, from US engineering software giant Autodesk. This was discussed in Altium Ltd (ALU) Rebuffs Autodesk Offer
This is compelling Offer for Altium. For Renesas, this transaction is a paradigm shift away from its core semiconductors manufacturing ops.

S&P/ASX Index Rebalance Preview: Newmont Still Has Nearly A$1bn to Sell

With two days left in the review period, there could be 28 adds/deletes across the S&P/ASX family of indices in March.
There is nearly A$1bn to sell in Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There could be 2-41 days of ADV to buy in the index inclusions while the impact on the deletions will range between 0.7-24 days of ADV.

Outsourcing (2427) MBO Situation – Checking, and Thinking, and Noodling, and Speculating

I got a bunch of questions about my Outsourcing comments yesterday in Outsourcing (2427) – Earnings Delay Causes Consternation.
This piece is intended to clarify what I know (still limited), put parameters around what it might be, and draw lines in the sand which I might later erase.
This may be nothing. But it may not be. I will try to answer the questions I received in a kind of Q&A format, and I hope that helps.

Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump

Two days ago, Japanese manufacturer of ubiquitous office furniture Itoki Corp (7972 JP) announced salutary earnings/presentation(J) results, new MTMP(E) outlines, new shareholder return policy(J), yutai program(J), div hike(J), and buyback(J).
It was a big day. The stock went limit up on 14 Feb and is +12% today. +25% in two days.
No single holder holds that much BUT the parameters tell you how this gets done. It’s interesting, but it is important to read the fine print below!

Initial Thoughts on Hyundai Motor India IPO

Hyundai Motor India has been taking initial steps for an IPO. We believe this IPO could be completed sometime in 4Q 2024.
Hyundai Motor India Limited (HMIL) IPO offering size is estimated to be at least US$3 billion, which would be one of the largest in India and the world this year.
If HMIL is valued at US$25 billion and HMC sells a 15% stake, its remaining 85% stake would be worth US$21 billion, representing 55% of HMC’s market cap.

Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out

Will there be changes in April’s rebalancing? With two weeks left, two names are likely. Wonik IPS may be replaced by ISC Co Ltd, given a ₩150B market cap difference.
In the previous rebalancing, constituent changes had a notable price impact. Despite a passive flow impact of +1.0x ADTV, HPSP and EO Technics saw about a 15% 3-day return.
Wonik IPS is estimated to receive -4.0x ADTV, while ISC is expected to receive +1.0x ADTV. This is also quite similar to the previous rebalancing.

Japan – Shorts & Positioning on Passive Sells

BayCurrent Consulting, Open House, Sumitomo Chemical, Koei Tecmo Holdings, Kose Corp, Oji Holdings, Daiwa House Reit Investment and Tosoh Corp will have passive selling at the close on 29 February.
Short interest has increased on all these stocks over the last few weeks and there has been big underperformance versus the Nikkei 225 Index and TOPIX Index.
Cumulative excess volume has increased on the stocks and there will be short covering in the last week of the month.

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Feb 15

Most Read: Outsourcing Inc, Toei Animation, JSR Corp, IGO Ltd, I-TAIL , KB Financial and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Outsourcing (2427) – Earnings Delay Causes Consternation
Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come
JSR (4185) – Updated Information in SUNY Lawsuit, and Other Developments
MVIS Australia Equal Weight Index Rebalance Preview: Should I Stay or Should IGO?
Toei Animation Placement – Looks Ripe for a Correction
SET50 Index Rebalance Preview: Three Potential Changes in June
Musings On US-Listed China Plays
KB Financial Placement – Momentum Has Been Strong and the Last Clean-Up Sale Has Done Well
Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?
Toei Animation (4816 JP): A US$550 Million Secondary Offering

Outsourcing (2427) – Earnings Delay Causes Consternation

Originally, the MBO for Outsourcing Inc (2427 JP) was expected to get launched end-January 2024. A late-ish filing with regard to the EU’s Foreign Subsidies Regulation regime prompted a delay.
Yesterday Outsourcing announced a delay its earnings release by 3 business days, the delay “procedures related to impairment losses are continuing.”
Outsourcing shares are down hard on this. -1.5% as I write. I examine.

Toei Animation (4816) – Shareholder Selldown To Meet Listing Hurdles – Bigly, Heavy, More to Come

In December 2021, when companies were required to file statements with the TSE as to plans to meet continuing listing requirements, Toei Animation (4816 JP) had a Plan.
That plan? Get from a then-current 15.5% Tradable Shares level to 25.0% by 31 March 2025. That was “OK” though later, the TSE asked companies to speed it up.
Today, shareholders Sony and Bandai Namco announced an equity offering to sell down up to 4.48mm shares in a domestic+overseas offering. It’s big, heavy, and there is more to come.

JSR (4185) – Updated Information in SUNY Lawsuit, and Other Developments

12 days ago, JSR Corp (4185 JP) announced that former research collaboration partner Research Foundation of the State University of New York had sued in an intellectual property ownership dispute.
I wrote about it here to the extent I could. Since then, more information has become available, or available to me. Some details on the case. Some on lawyers.
Since then JSR has reported earnings with unchanged forecast, and major pure play comp Tokyo Ohka Kogyo (4186 JP) today reported earnings; the stock popped 10+% to an all-time high.

MVIS Australia Equal Weight Index Rebalance Preview: Should I Stay or Should IGO?

The review period for the March rebalance of the MVIS Australia Equal Weight Index ends on 29 February with results announced on 8 March and implemented on 15 March.
Lendlease Group (LLC AU), IDP Education (IEL AU) and IGO Ltd (IGO AU) are very close to deletion zone and price moves over the next couple of weeks are important.
IGO Ltd (IGO AU) is also a deletion from a global index in February and a lower stock price could lead to deletion from this index too.

Toei Animation Placement – Looks Ripe for a Correction

By Sumeet Singh

Bandai Namco (7832 JP) and Sony Pictures are looking to raise up to US$525m via selling around 10.66% of Toei Animation (4816 JP) (TA).
The purpose of the placement is to unwind some of the cross-shareholding, as well as help TA to maintain its listing in the Standard Segment.
In this note, we will talk about the placement and run the deal through our ECM framework.

SET50 Index Rebalance Preview: Three Potential Changes in June

Early days, but there could be three changes for the Stock Exchange of Thailand SET 50 Index at the June rebalance. Two names are reversals of the December changes.
Passive trackers will need to buy between 1.5-3.6 days of ADV on the inclusions and sell 1.1-1.4 days of ADV on the deletions.
There are a couple of stocks that are close to passing/failing the liquidity tests and a couple close to cutoff ranks. That could result in further changes to the index.

Musings On US-Listed China Plays

Seeing as though it is Chinese New Year week, I thought it might be appropriate to conduct a brief analysis of US-listed China plays.
According to a recent US-China Economic and Security Review Commission report, 265 Chinese companies were listed on the NYSE, Nasdaq and NYSE American exchanges in January 2024 worth US$848bn.
That’s down from 252 companies worth US$1.03tn a year ago, a 17.5% decline. 91% of the total market capitalization of Chinese firms listed on U.S. exchanges use VIEs.

KB Financial Placement – Momentum Has Been Strong and the Last Clean-Up Sale Has Done Well

By Clarence Chu

The Carlyle Group / (CG US) via Kingsman Investment, is looking to raise US$244m from selling its entire stake in KB Financial (105560 KS).
Carlyle has been invested in the firm since mid-2020, where it then expressed that it would hold on to its stake for at least three and a half years.
The deal would be a small one to digest at just 3.8 days of KB Financial’s three month ADV, representing 1.2% of its current mcap.

Outsourcing (2427 JP): Keep Calm or Worry About the Earnings Delay?

Outsourcing Inc (2427 JP) has delayed the announcement of its 4QFY2023 results from 14 to 19 February as the impairment loss accounting is yet to be completed.
Outsourcing has a history of impairments, resulting in missed forecasts, which suggests a weak 4Q. The concern is that a weak 4Q could force Bain to trim its JPY1,755 offer.
Persol Holdings (2181 JP) guidance cut today suggests a weak 4Q reflects near-term industry weakness rather than company-specific issues. The weak 4Q is a valuable cover to justify the less-than-stellar offer.

Toei Animation (4816 JP): A US$550 Million Secondary Offering

Toei Animation (4816 JP) has announced a secondary offering of up to 4.5 million shares (including overallotment). Bandai Namco Holdings (7832 JP) and Sony Corp (6758 JP) are the sellers.
The offering will allow Toei Animation to maintain its listing in the TSE Standard Market and enable Bandai Namco and Sony to reduce and liquidate cross-shareholdings.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 27 February and 4 March (likely 27 February).

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Feb 14

Most Read: Fast Retailing, Socionext, Softbank Group, GMR Airports Infrastructure, Abacus Storage King, GDS Holdings , Top40 Index, IGO Ltd, Ansarada Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Fast Retailing
FINAL PREDICTIONS: March 2024 Nikkei 225 Rebal (Socionext, Disco, and 1 Consumer Goods Stock to ADD)
Softbank (9984 JP): Relying on Arm Strength and JPY Weakness
GMR Airports Infra (GMRI IN): Flying High
MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete
Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place
FEB 2024 REBALANCE Index Changes Announced, SA Constituents to Remain the Same
MVIS Australia Equal Weight Index Rebalance Preview: Should I Stay or Should IGO?
IKang Healthcare (KANG US): Another Setback For Dissenters
Ansarada Enters Scheme With Datasite

Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Fast Retailing

The review period for the Nikkei 225 (NKY INDEX) March rebalance ends yesterday. There could be three changes at the rebalance with sector balance in focus.
Depending on the changes, passive trackers will need to buy between 1.3-19x ADV (7.1-24% of real float) on the inclusions and sell between 3.5-47x ADV on the deletions.
Fast Retailing (9983 JP) avoids capping in March, passives will buy Nitori Holdings (9843 JP), and 25 stocks have over 0.5x ADV to sell as part of the funding trade.

FINAL PREDICTIONS: March 2024 Nikkei 225 Rebal (Socionext, Disco, and 1 Consumer Goods Stock to ADD)

The Nikkei 225 data for the March 2024 rebalance is a wrap. The names are the same as before but there is likely less DISCO Corp (6146 JP) to buy.
It’s still big, but smaller than before because of the difference between performance and the change in PAF required to be below 1%. A 4:1 share split would be optimal.
I recommend a few positioning changes from before, and the Fast Retailing trade loses one short-term option but the longer-term one stays in place.

Softbank (9984 JP): Relying on Arm Strength and JPY Weakness

By Victor Galliano

We believe that Arm is now valued as a “growth at any price” stock; with nearly half of SoftBank group’s equity value reliant on Arm, NAV downside risk is rising
The risk of JPY appreciation is real, whilst SVF2 remains very exposed to financing costs, with 85% of its equity value in private companies
Softbank shares trade at a 55%+ discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with the potential JPY appreciation, should keep the discount wide

GMR Airports Infra (GMRI IN): Flying High

At the last close, GMR Airports Infrastructure (GMRI IN) has a market cap of US$6.23bn and a free float market cap of US$2.48bn.
Passive global trackers are estimated to need to buy 223.33m shares (US$230m; 4.4x ADV) of GMR Airports Infrastructure (GMRI IN) at the close on 29 February.
GQG Partners (GQG AU) has been a big buyer since December and holds 4.98% of the company. The stock could run up for a few more weeks.

MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete

The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.

Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The index changes for HSTECH index for the March 2024 index rebal event will be announced on 16th February 2024.
In this insight, we take a final look at the expected index changes and our latest flow expectations.

FEB 2024 REBALANCE Index Changes Announced, SA Constituents to Remain the Same

By Charlotte van Tiddens, CFA

Indices will be rebalanced at the end of the month on Thursday the 29th of February.
The three largest additions to the World Index measured by full company market capitalization will be Samsara A (USA), Corebridge Financial (USA) and Applovin Corp A (USA)
The three largest additions to the Emerging Markets Index measured by full company market capitalization will be Midea Group Co A (HK-C) (China), Punjab National Bank (India) and Union Bank Of India (India)

MVIS Australia Equal Weight Index Rebalance Preview: Should I Stay or Should IGO?

The review period for the March rebalance of the MVIS Australia Equal Weight Index ends on 29 February with results announced on 8 March and implemented on 15 March.
Lendlease Group (LLC AU), IDP Education (IEL AU) and IGO Ltd (IGO AU) are very close to deletion zone and price moves over the next couple of weeks are important.
IGO Ltd (IGO AU) is also a deletion from a global index in February and a lower stock price could lead to deletion from this index too.

IKang Healthcare (KANG US): Another Setback For Dissenters

In officially decided cases concerning dissentient shareholders in privatised US-listed China plays, the uplift to the merger price versus time value of money and legal costs, is less than ideal.
The outcome for each case will turn on the underlying facts. But it would appear iKang Healthcare Group (ADR) (KANG US) is following a similar trend.
Reportedly the uplift to the iKang merger price is just 10%. Dissenters can still lodge an appeal.

Ansarada Enters Scheme With Datasite

Virtual room provider Ansarada Group Ltd (AND AU) has entered into a Scheme with Datasite, a leading global SaaS provider acquired by UK-based PE outfit CapVest Partners in 2020.
Datasite is offering A$2.50/share, in cash, a 19% premium to undisturbed and a lifetime high.
Apart from requiring Ansarada shareholder approval, the Scheme is conditional on FIRB and the carving out of certain assets to Ansarada’s CEO. This transaction should complete in early June.

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Feb 13

Most Read: SCREEN Holdings, Roland DG Corp, Infosys Ltd, YTL Corp, Samsung C&T, Hyundai Motor , Softbank Group, China Mobile, Recruit Holdings, GDS Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Screen Holdings (7735 JP): Positioning & Potential Passive Buying
Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
Southeast Asia EM: Potential Passive Flows in February
Korea: Surging Share Cancellations in 2024
Exploring Prioritized Buyback/Cancellation of Samsung Electronics & Hyundai Motor Prefs
Softbank (9984 JP): Relying on Arm Strength and JPY Weakness
A/H Premium Tracker (To 9 Feb 2024): Liquid AH Premia Near Multi-Yr Wides, Narrow AH Premia Wider
Recruit: HR Tech Top Line Further Declines; No Big Impact From Indeed Plus in the Near Term
Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place

Screen Holdings (7735 JP): Positioning & Potential Passive Buying

SCREEN Holdings (7735 JP) could be added to a global index at the end of the month and there will be a lot of buying in the stock.
There is a fair bit of positioning for the potential passive buying and there will be supply in the stock.
However, the stock trades cheaper than its peers and a correction could provide an opportunity for long-term investors to enter the stock.

Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap

Taiyo Pacific Partners took the original parent company (Roland Corp (7944 JP) of Roland DG Corp (6789 JP) private in 2014. It was re-listed in 2020.
Roland DG is one of the world’s leading large format digital printer manufacturers. They also make some interesting medical devices and systemic tools, and 3D milling/printing/engraving/photo impact machines.
This TOB is at a 30.1% premium. Almost a 10yr high. But it is not expensive. And even if TPP has 20%, there is a LOT of float left over.

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

Southeast Asia EM: Potential Passive Flows in February

There could be large passive flows for stocks in Malaysia and Thailand in the next few weeks. Impact is especially high where there could be passive outflows.
YTL Corp (YTL MK) and YTL Power International (YTLP MK) are likely to have passive inflows.
Dialog Group (DLG MK), Berli Jucker (BJC TB), Osotspa Public Company Limited (OSP TB) and Banpu Public (BANPU TB) could have outflows.

Korea: Surging Share Cancellations in 2024

We discuss the surging share cancellations in Korea in 2024. As of 8 February 2024, Korean companies have announced 3.3 trillion won worth of shares to be completed this year.
At current blistering pace, it is likely that the share cancellations in Korea could jump at least 100% YoY to jump more than 10 trillion won in 2024.
Some of the leading Korean companies including Samsung C&T and KT&G that have announced share cancellations this year continue to outperform the market on average.

Exploring Prioritized Buyback/Cancellation of Samsung Electronics & Hyundai Motor Prefs

Samsung Elec & Hyundai Motor’s high proportion of preferred stocks leads to their unusually high cost of capital, making themselves prime targets for the govt’s Corporate Value Up policy.
Policy likely focuses on aggressive share buybacks, especially preferred stock repurchase, to improve PBR. Pension funds may invest heavily in ETFs, offsetting dilution effects.
Hyundai Motor may pursue more aggressive shareholder returns due to the India listing, possibly prioritizing preferred share repurchases as it introduces risks of value transfer controversies within Korea.

Softbank (9984 JP): Relying on Arm Strength and JPY Weakness

By Victor Galliano

We believe that Arm is now valued as a “growth at any price” stock; with nearly half of SoftBank group’s equity value reliant on Arm, NAV downside risk is rising
The risk of JPY appreciation is real, whilst SVF2 remains very exposed to financing costs, with 85% of its equity value in private companies
Softbank shares trade at a 55%+ discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with the potential JPY appreciation, should keep the discount wide

A/H Premium Tracker (To 9 Feb 2024): Liquid AH Premia Near Multi-Yr Wides, Narrow AH Premia Wider

By Shifara Samsudeen, ACMA, CGMA

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND and NORTHBOUND flows net positive. AH premia on average rose so Hs underperformed As by 1.75%. Narrow premia pairs saw AH premia rise most.
Watch the SOE stock price KPI space. Wouldn’t be short SOEs vs Privates on H/A basis. Low-hanging fruit with some SOEs having large cash balances.

Recruit: HR Tech Top Line Further Declines; No Big Impact From Indeed Plus in the Near Term

Recruit Holdings (6098 JP) reported 3QFY03/2024 results on Friday. Revenues decreased YoY due to decline in HR Tech revenues, while Adj. EBITDA for the quarter increased YoY. Both Beat consensus estimates.
Weakening of labour markets and new pricing model have impacted HR Tech revenues, while cut down on investments have helped improve HR Tech margins.
The company has launched Indeed Plus to help improve earnings, which we don’t expect to have a major impact on Recruit Holdings (6098 JP) ’s earnings in the near term.

Quiddity HSTECH Mar 24 Flow Expectations: US$415mn One-Way if the Low-Conviction Change Takes Place

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The index changes for HSTECH index for the March 2024 index rebal event will be announced on 16th February 2024.
In this insight, we take a final look at the expected index changes and our latest flow expectations.

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Feb 12

Most Read: DISCO Corp, Roland DG Corp, Infosys Ltd, Tesla Motors, SCREEN Holdings, Lawson Inc, ASICS Corp, Welbe Inc, SiteMinder and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
Tesla Sold A Whopping One Car in January in South Korea
Screen Holdings (7735 JP): Positioning & Potential Passive Buying
Weekly Deals Digest (11 Feb) – Lawson, Benefit One, Welbe, China TCM, L’Occitane, Hollysys
Last Week in Event SPACE: Mitsui Fudosan/Oriental Land, Giordano, JSR, Pasona, Lawson, L’Occitane
Asics (7936) | Slow Out of the Blocks
Welbe (6556 JP) – MBO by Polaris
Quiddity Leaderboard ASX Mar 24: Five ASX 200 Changes Possible Including One Surprise

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap

Taiyo Pacific Partners took the original parent company (Roland Corp (7944 JP) of Roland DG Corp (6789 JP) private in 2014. It was re-listed in 2020.
Roland DG is one of the world’s leading large format digital printer manufacturers. They also make some interesting medical devices and systemic tools, and 3D milling/printing/engraving/photo impact machines.
This TOB is at a 30.1% premium. Almost a 10yr high. But it is not expensive. And even if TPP has 20%, there is a LOT of float left over.

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

Tesla Sold A Whopping One Car in January in South Korea

Tesla Motors (TSLA US) sold one car in January 2024 in South Korea. In comparison, Tesla sold 1,022 vehicles in December 2023 and 13,885 units in 2023.
The key reason for the sharp plunge in vehicle sales in January has been due to the government’s slashing EV subsidies for vehicles with Chinese LFP based batteries.
Furthermore, many consumers avoided buying Tesla vehicles in January as they waited for the government’s announcements of new EV subsidies.

Screen Holdings (7735 JP): Positioning & Potential Passive Buying

SCREEN Holdings (7735 JP) could be added to a global index at the end of the month and there will be a lot of buying in the stock.
There is a fair bit of positioning for the potential passive buying and there will be supply in the stock.
However, the stock trades cheaper than its peers and a correction could provide an opportunity for long-term investors to enter the stock.

Weekly Deals Digest (11 Feb) – Lawson, Benefit One, Welbe, China TCM, L’Occitane, Hollysys

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Ola Electric (1700674D IN) and FirstCry (0172540D IN) IPOs.
Event-Driven developments: Benefit One Inc (2412 JP), Lawson Inc (2651 JP), Welbe Inc (6556 JP), China Traditional Chinese Medicine (570 HK), L’Occitane (973 HK), Hollysys Automation Technologies (HOLI US).

Last Week in Event SPACE: Mitsui Fudosan/Oriental Land, Giordano, JSR, Pasona, Lawson, L’Occitane

Apparently Elliott is requesting Mitsui Fudosan (8801 JP) conduct a very large buyback and to sell down its stake in Oriental Land (4661 JP).
Some 17 months after the Cheng Family failed to secure 50%+ of Giordano International (709 HK), the family are now calling an SGM to install friendly directors.
TheLawson (2651 JP) deal is not terribly surprising. It’s not terribly surprising that it is being done cheaply. It IS being done too cheaply. This is bumpable by force.

Asics (7936) | Slow Out of the Blocks

By Mark Chadwick

Asics absolutely smashed the last MTP; this year they have a more measured approach
Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers

Welbe (6556 JP) – MBO by Polaris

On Thursday after the close, an entity tied to Polaris Capital announced an MBO of Welbe Inc (6556 JP). (Note this is Welbe not Welby Inc (4438 JP)).
The MBO by Tender Offer is set at ¥1,089/share is at a 29.952% premium to Thursday’s last trade. Coincidentally. It is well below where it traded 3-5 years ago.
If large domestic financial investors want a bump, we might see some fun, but I expect there is enough ownership willing to tender to get this over the hump.

Quiddity Leaderboard ASX Mar 24: Five ASX 200 Changes Possible Including One Surprise

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the March 2024 index review.
I expect one change for ASX 20, one change for ASX 100, and five changes for ASX 200 including a surprise deletion due to long term suspension of a stock.
The official index changes will be announced after the close on Friday 1st March 2024.

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Feb 11

Most Read: Chandra Asri Petrochemical, Jiangsu Hoperun Software, Suzhou Novosense Microelectron, Renesas Electronics, DISCO Corp, Semiconductor Manufacturing International Corp (SMIC), ASICS Corp, Infosys Ltd, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45 Index Rebalance: Four Changes for Each Index
ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow
STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact
Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45
Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
Where Are We In the Global Liquidity Cycle?
China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
Asics (7936) | Slow Out of the Blocks
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings

IDX30/LQ45 Index Rebalance: Four Changes for Each Index

There are 4 changes each for the IDX30 Index and the LQ45 Index at the upcoming rebalance to be implemented at the close on 31 January.
The largest passive inflows are expected in Indofood CBP Sukses (ICBP IJ), Merdeka Battery Materials (MBMA IJ), Indah Kiat Pulp & Paper (INKP IJ) and Pertamina Geothermal Energy (PGEO IJ).
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow

Nearly halfway through the review period, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
Some of the potential changes will also have passive flows from the CSI 500 Index trackers at the same time as the ChiNext Index rebalance.
The potential inclusions and deletions have slipped over the last couple of months along with the ChiNext Index, but the potential inclusions have outperformed as the deletions have dropped more.

STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact

The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.

Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45

The review period for the NIFTY family of indices, Nikkei 225, STAR50, the KRX New Deal Index and a global index ends on 31 January.
The January rebalance of the IDX30 and LQ45 indices will be implemented at the close of trading on 31 January.
There have been huge inflows into the CSI 300 Index ETFs for another week. This will increase the impact on the index changes at the next rebalance.

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

Where Are We In the Global Liquidity Cycle?

By Michael J. Howell

January 2024 another strong month for Global Liquidity which hits US$171.7 trillion
US Fed and China’s PBoC are in the forefront of adding liquidity
Global Liquidity Cycle trough in October 2022. Next peak late-2025

China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon

By William Keating

Both SMIC & Hua Hong reported Q423 earnings in line with expectations and both guided Q124 flat to slightly down. SMIC expects FY24 mid single digit growth YoY.
The downturn has exposed inherent weakness in China’s Semi Foundry segment relative to peers as exemplified by the significant GM disparity
China’s two leading semi foundries have ~80% domestic dependence. Right now, that’s a headwind

Asics (7936) | Slow Out of the Blocks

By Mark Chadwick

Asics absolutely smashed the last MTP; this year they have a more measured approach
Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings

By Aki Matsumoto

There are 167 companies of 1,784 companies in Metrical Universe (12/2023) with major shareholders holding over 50% stake, and 605 companies with major shareholders holding between 20% and 50% stake.
TSE has requests listed parent companies, listed subsidiaries, and affiliates to disclose the significance of parent-subsidiary (affiliates) listings. This will further increase pressure for the dissolution of parent-subsidiary (affiliates) listings.
Hitachi’s transformation into value-creating company, which once spawned numerous listed subsidiaries, has been a success story since it began full-fledged “selection and concentration” process through the dissolution of parent-subsidiary listings.

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Feb 10

Most Read: DISCO Corp, Shanghai Shenzhen CSI 300 Inde, Benefit One Inc, Pacific Metals, ITC Ltd, Woori Financial Group , Korea Stock Exchange KOSPI 200, Pasona Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again
ITC Ltd (ITC IN): Impact of BAT’s Potential Stake Sale
Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
Investigating Potential Block Deals Involving Korea’s Financial Holding Companies
Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
Get Your Pasona (2168 JP) Rump For Free

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up

Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.

Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small

Post-Close, the Nikkei carried a breathless headline that Dai Ichi Life Insurance (8750 JP) had agreed a deal for Pasona Group (2168 JP)‘s stake in Benefit One Inc (2412 JP).
Not long afterwards, TDNet Filings provided Benefit One results, a change to BeneOne’s Opinion on the M3 Offer, and Board Resolution to Support/Recommend DIL’s TOB, now at ¥2,173 and ¥1,526/share.
Looks like a done deal. And this will also likely delay the start of the DIL Bid to 26-28 February timeframe.

Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San

Today, Dai Ichi Life Insurance (8750 JP) announced a TOB for Benefit One Inc (2412 JP) having agreed a deal with Pasona Group (2168 JP) to sell into a buyback.
Pasona will get ¥1,526/share, and having agreed, it announced the expected special profit to be booked in the FY to 31 May 2024.
At ¥113.6bn on a consolidated basis (¥122.3bn on parent), less ¥1.165bn of associated costs, that’s ¥112.4bn at the lower end. That’s ¥2,870/share. Then there’s the rest of the business.

JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again

A couple of weeks ago I wrote here about noted activist Murakami-san and his new 5+% position in Pacific Metals (5541 JP). I warned it might be a rug pull.
It turns out, from subsequent filings, that it may have been a rug pull. This isn’t the first time. It isn’t even the first time on this stock.
That said, there are goings on here, and it pays to watch them.

ITC Ltd (ITC IN): Impact of BAT’s Potential Stake Sale

British American Tobacco (BATS LN) owns 29.03% of ITC Ltd (ITC IN) and could sell a portion of its stake. But BAT will hold at least 25% of the company.
British American Tobacco (BATS LN) paring its stake could also lead to SUUTI gradually reducing its own holding in the company.
Any stake sales would not result in buying from global passive trackers while there will be small buying from local index trackers. Increased float could pressure the stock.

Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer

Benefit One Inc (2412 JP) has recommended Dai Ichi Life Insurance (8750 JP)’s revised offer of JPY2,173, a 2.4% and 90.1% premium to the previous offer and undisturbed price, respectively.
The Board and Pasona Group (2168 JP) secured the highest price. M3 Inc (2413 JP) tabled an alternative proposal but Pasona had concerns about the plan’s tax treatment.
Based on the irrevocables, the minimum acceptance condition requires a 31.6% minority acceptance rate, achievable due to the high premium and the competitive bidding process.

Investigating Potential Block Deals Involving Korea’s Financial Holding Companies

Stake sales by Affinity and Bearing PE are attractive due to the absence of special partnerships with Shinhan Financial Group, indicating favorable exit potential at current stock prices.
KB Financial draws attention due to Carlyle’s ₩240B EB investment in 2020. Carlyle can now convert to shares at ₩48,000/share, yielding 37.08%.
Woori Financial is intriguing. IMM PE and Eugene PE hold stakes, investing ₩450B and ₩386B respectively. Their yields are 32.55% and 10.45% respectively. No constraints on divestment.

Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to four changes in the KOSPI 200 index in the run up to the June 2024 index rebal event including an intra-review fast entry change.

Get Your Pasona (2168 JP) Rump For Free

Dai Ichi (8750 JP) agreed with Pasona (2168 JP) for Pasona to sell its shares back to Benefit One (2412 JP) in a buyback after Dai-Ichi’s Tender Offer for Benefit.
This process gives Pasona a tax advantage versus selling into a Tender Offer at the same price.
What does Pasona take home? ~¥2,822/share versus its last price of ¥2,733/share. Then you have stubs ops (conservatively worth up to ~¥1,960/share) and Pasona’s stake in Bewith (9216 JP) (~¥360/share).

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Feb 09

Most Read: L’Occitane, Shanghai Shenzhen CSI 300 Inde, Benefit One Inc, Pasona Group, China Traditional Chinese Medicine, Woori Financial Group , Korea Stock Exchange KOSPI 200, Thai Credit Bank PCL, Welbe Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

L’Occitane (973 HK): Here We Go Again
China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
TCM (570 HK): We’ve Been Here Before
Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
Investigating Potential Block Deals Involving Korea’s Financial Holding Companies
Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
Thai Credit Bank IPO Trading – Half the Deal Already Spoken For, the Other Half Should Be Liquid
Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089

L’Occitane (973 HK): Here We Go Again

From 2018 onward, French beauty retailer L’Occitane (973 HK) has apparently drawn interest from the likes of Advent International and its controlling shareholder Chairman Reinold Geiger – amongst others.
There is substance to these “Offers” – Geiger confirmed in August 2023 he was contemplating a conditional voluntary general Offer. He holds 72.65% of shares out according to the HKEx.
The latest news, with no definitive source, is that Blackstone is mulling the possibility of teaming up with Geiger on a buyout.

China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up

Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.

Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small

Post-Close, the Nikkei carried a breathless headline that Dai Ichi Life Insurance (8750 JP) had agreed a deal for Pasona Group (2168 JP)‘s stake in Benefit One Inc (2412 JP).
Not long afterwards, TDNet Filings provided Benefit One results, a change to BeneOne’s Opinion on the M3 Offer, and Board Resolution to Support/Recommend DIL’s TOB, now at ¥2,173 and ¥1,526/share.
Looks like a done deal. And this will also likely delay the start of the DIL Bid to 26-28 February timeframe.

Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San

Today, Dai Ichi Life Insurance (8750 JP) announced a TOB for Benefit One Inc (2412 JP) having agreed a deal with Pasona Group (2168 JP) to sell into a buyback.
Pasona will get ¥1,526/share, and having agreed, it announced the expected special profit to be booked in the FY to 31 May 2024.
At ¥113.6bn on a consolidated basis (¥122.3bn on parent), less ¥1.165bn of associated costs, that’s ¥112.4bn at the lower end. That’s ¥2,870/share. Then there’s the rest of the business.

TCM (570 HK): We’ve Been Here Before

China Traditional Chinese Medicine (570 HK) (“TCM”) is the traditional Chinese medicine arm of SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), one of the largest healthcare groups in China.
By my reckoning, TCM has fielded three Offers in the past decade, all from Sinopharm Hongkong, an indirect wholly-owned subsidiary of CNPGC and TCM’s major shareholder.
TCM was suspended “pursuant to the Code on Takeovers and Mergers” earlier today. The Real McCoy? A no-deal again from CNPGC/Sinopharm? And why didn’t the last Offers complete?

Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer

Benefit One Inc (2412 JP) has recommended Dai Ichi Life Insurance (8750 JP)’s revised offer of JPY2,173, a 2.4% and 90.1% premium to the previous offer and undisturbed price, respectively.
The Board and Pasona Group (2168 JP) secured the highest price. M3 Inc (2413 JP) tabled an alternative proposal but Pasona had concerns about the plan’s tax treatment.
Based on the irrevocables, the minimum acceptance condition requires a 31.6% minority acceptance rate, achievable due to the high premium and the competitive bidding process.

Investigating Potential Block Deals Involving Korea’s Financial Holding Companies

Stake sales by Affinity and Bearing PE are attractive due to the absence of special partnerships with Shinhan Financial Group, indicating favorable exit potential at current stock prices.
KB Financial draws attention due to Carlyle’s ₩240B EB investment in 2020. Carlyle can now convert to shares at ₩48,000/share, yielding 37.08%.
Woori Financial is intriguing. IMM PE and Eugene PE hold stakes, investing ₩450B and ₩386B respectively. Their yields are 32.55% and 10.45% respectively. No constraints on divestment.

Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to four changes in the KOSPI 200 index in the run up to the June 2024 index rebal event including an intra-review fast entry change.

Thai Credit Bank IPO Trading – Half the Deal Already Spoken For, the Other Half Should Be Liquid

By Clarence Chu

Thai Credit Bank PCL (3674238Z TB) raised around US$281m in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
We had looked at the firm’s past performance and shared our thoughts on TCB’s valuation in earlier notes. In this note, we will look at the trading dynamics.

Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089