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

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

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

A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.

Kioxia IPO Trading – Decent Demand for Decent Upside

By Sumeet Singh

Kioxia Holdings (285A JP) raised around US$800m (including over-allocation) in its Japan IPO, after pricing its IPO in the middle of its range.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

Shin-Etsu Chemical (4063) – Small/Large Below-Market Tender Offer Buyback, Followed by Overhang

Today, Shin Etsu Chemical (4063 JP) announced a second buyback this year (first ¥100bn was announced in May, buying back 16.695mm shs (0.83%). This time, ~¥94bn via Own-Share Tender Offer.
Three non-life insurers and two banks who together hold 6+% will sell a total of ~1.01% at ~10% below last. They will then sell the rest of their shares later.
Cute, but not enough. Shin-Etsu is cash-rich, securities-rich, receivables and inventory-rich. And nearly ¥1trln of EBITDA. They are a key part of the tech infrastructure. They can borrow.

Heiwa (6412) Announces Game-Changing Acquisition, Gets Very Heavily Levered (Termed Debt)

Heiwa Corp (6412 JP) got 99% of its revenue as a pachinko/pachislot machinery maker. In 2011, it bought one of Japan’s largest golf course operators, PGM Holdings, from Lone Star.
Golf course revenue is up 30% in 10yrs. Pachinko/Pachislot revenue is down by 60+% in the same period. Golf is the bulk of revenue and OP now.
Today, the company announced a stunning, even monumental acquisition to become the largest golf course operator in the world.

China & HK Strategy: Names to Watch for Market Value Management

By Osbert Tang, CFA

CSRC’s Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.
Chinese banks dominated the list with below-book A-shares. China Everbright Bank (6818 HK), China Citic Bank H (998 HK), and ICBC (H) (1398 HK) are the prime beneficiaries.
Infrastructure construction companies China Railway Cons Corp (1186 HK), China Railway Group H (390 HK), and China Comm Cons (1800 HK) are also well-positioned to gain.

Ohayo Japan | Nissan and Honda in Merger Talks

By Mark Chadwick

The Dow Jones Industrial Average extended its historic losing streak to nine sessions on Tuesday, falling 267 points (-0.61%) to 43,449, marking its longest skid since 1978
Nissan Motor (7201 JP) and Honda Motor (7267 JP) are reportedly in talks for a merger. NIssan ADR up 11% overnight.
Oasis has emerged as a significant shareholder of Macromill, Inc (3978 JP) . The company is currently subject to a TOB from CVC Capital Partners.

How Has the Index Rebalance Strategy Performed in 2024?

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

Lotte Shopping and Potentially Others Are Shaping up as Fresh Picks for Dividend Arbitrage Plays

At today’s close, Lotte Shopping (023530 KS) shows solid contango for a basis trade, with LS Corp (006260 KS) next; the rest are too tight or dry.
Lotte Shopping surprised the market today, changing its dividend record date to a board-set day, wiping out the backwardation that matched its dividend yield until yesterday.
Lotte Shopping’s move could signal other stocks changing dividend dates, causing similar dislocations. With a 7% yield and solid SSF volume, it’s prime for aggressive dividend arbitrage.

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Dec 18

Most Read: Korea Zinc, Horizon Robotics, Fuji Soft Inc, Kioxia Holdings , China Banking, Macromill, Inc, Posco DX, Phison Electronics, Shin Etsu Chemical and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
Kioxia IPO Trading – Decent Demand for Decent Upside
PCOMP Index Rebalance Preview: Two Changes Likely in February
Activist Buys 7+% of Takeover Target Macromill (3978 JP)
A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again
TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact
Shin-Etsu Chemical (4063) – Small/Large Below-Market Tender Offer Buyback, Followed by Overhang

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

A Comparison of Korea Zinc’s M&A in 2024 Vs SM Entertainment’s M&A in 2023 in the 9th Inning

By Douglas Kim

The EGM for Korea Zinc (010130 KS) is expected to be held on 23 January 2025. Accordingly, the shareholder registry is expected to be closed around 19 – 23 December.
By better analyzing the timeline of the M&A of SM Entertainment, we may be able to get better clues to Korea Zinc’s price movement in the next several weeks.
Notice the double top share price formation of SM Entertainment in 2023 versus the potential double top formation of Korea Zinc in 2024. These trading formations look eerily similar.

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

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

Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds

~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.

Kioxia IPO Trading – Decent Demand for Decent Upside

By Sumeet Singh

Kioxia Holdings (285A JP) raised around US$800m (including over-allocation) in its Japan IPO, after pricing its IPO in the middle of its range.
It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

PCOMP Index Rebalance Preview: Two Changes Likely in February

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

Activist Buys 7+% of Takeover Target Macromill (3978 JP)

Today post-close, activist/engagement investor Oasis Management filed a new LSR on Macromill, Inc (3978 JP) owning 7.12% of shares as of 13-Dec-2024. Reason: Defend shareholder value, propose measures to management.
That is 7.56-7.65% of effective voting/tender rights. It’s big enough to matter. Of course, the stock has not traded below terms once since full trading started post-announcement.
And this was warned in CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid. Shareholder structure REALLY matters.

A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.

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

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

Shin-Etsu Chemical (4063) – Small/Large Below-Market Tender Offer Buyback, Followed by Overhang

Today, Shin Etsu Chemical (4063 JP) announced a second buyback this year (first ¥100bn was announced in May, buying back 16.695mm shs (0.83%). This time, ~¥94bn via Own-Share Tender Offer.
Three non-life insurers and two banks who together hold 6+% will sell a total of ~1.01% at ~10% below last. They will then sell the rest of their shares later.
Cute, but not enough. Shin-Etsu is cash-rich, securities-rich, receivables and inventory-rich. And nearly ¥1trln of EBITDA. They are a key part of the tech infrastructure. They can borrow.

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Dec 17

Most Read: Shinko Electric Industries, Macromill, Inc, Phison Electronics, Shanghai Henlius Biotech , Hyundai Mobis, Fosun Tourism, Westgold Resources, Broadcom , Horizon Robotics, China Banking and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
Henlius (2696 HK): NDRC Approval Should Calm Nerves
KRX Value-Up Index Rebalance Results and Estimated Passive Impact
Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough
MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
Select Sector Indices and S&P Equal Weight Rebalance: US$17.7bn Round-Trip Trade Post Capping Cutoff
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025
PCOMP Index Rebalance Preview: Two Changes Likely in February

Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy

Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range.
I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.

CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid

Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board.
The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%.
Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

Henlius (2696 HK): NDRC Approval Should Calm Nerves

Due to several factors, the gross spread of Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) has widened to 21.5%.
The wide gross spread reflects the China TCM deal break hangover, slow progress in satisfying the precondition, Fosun Pharma’s potential funding challenges, and the shareholder vote.
NDRC approval should calm nerves about precondition satisfaction. Even with lingering deal-break concerns, a 21.5% gross spread is excessive.

KRX Value-Up Index Rebalance Results and Estimated Passive Impact

KRX updated the Value-Up Index with five new names: KB Financial, Hana Financial, KT Corp, SK Telecom, and Hyundai Mobis, with Mobis replacing JB Financial, surprising the market.
This is the first rebalancing, packed into one day, so expect notable price action. Reverse moves could also follow Thursday as pre-positioned trades unwind, so monitor price action closely.
Even after Thursday’s rebalancing, half of the funds, especially from the National Pension Service, will flow into high-yield stocks, likely driving significant price moves through early next year.

Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough

By Xinyao (Criss) Wang

Fosun Tourism has emerged from its difficulties and started an upward trend.If it remains listed, it’s only a matter of time before its share price returns to the IPO price.
Temasek was once in talks to buy a minority stake in Club Med from Fosun International for €500 million, based on which reasonable valuation for Fosun Tourism is RMB12.6 billion.
Fosun has continued its style- When performance recovery hasn’t been reflected in stock price, it’s the right time to privatize valuable assets at cheap price. A share alternative is expected.

MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks

No constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December. But there are a lot of float and capping changes.
Estimated one-way turnover is 2.6% resulting in a round-trip trade of US$269m. There are 8 stocks with over 1x ADV to trade from passive trackers.
Stocks with the largest flows are Evolution Mining, Pan American Silver, Westgold Resources, B2Gold, Alamos Gold, Harmony Gold Mining, Eldorado Gold, K92 Mining, IAMGOLD, Endeavour Silver and Emerald Resources.

Select Sector Indices and S&P Equal Weight Rebalance: US$17.7bn Round-Trip Trade Post Capping Cutoff

Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$17.7bn across the Select Sector indices and the S&P500 Equal Weight Index.
There is over US$500m to trade in Broadcom (AVGO US), Tesla (TSLA US), Apollo Global Management (APO US), Amazon.com Inc (AMZN US) and Workday Inc Class A (WDAY US).
Broadcom (AVGO US) swings from a small net buy to a large net sell following the rally in the stock last week.

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

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

PCOMP Index Rebalance Preview: Two Changes Likely in February

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

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Dec 16

Most Read: Perseus Mining, Korea Stock Exchange Kospi Index, Telix Pharmaceuticals, Westgold Resources, ESR Group , Vulcan Energy Resources, Samsung C&T, Taiwan Semiconductor (TSMC) – ADR, Mirvac Group, Fosun Tourism and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes
Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade
MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn
MV Australia A-REITs Index Rebalance: Only Float & Capping Changes
Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough

MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes

De Grey Mining (DEG AU), Perseus Mining (PRU AU) and Sandfire Resources Limited (SFR AU) will be added to the Vaneck Vectors Australian Resources ETF (MVR AU) in December.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 7.4% and in a round-trip trade of A$63m.
De Grey Mining will be acquired by Northern Star Resources in the first half of 2025. The passive buying could push De Grey Mining higher in the short-term.

Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact

The impeachment motion against President Yoon passed in the South Korean National Assembly, clearing the two-thirds supermajority, and is now official.
For the impeachment to fail, four justices must oppose it—highly unlikely given the current setup. The odds are heavily in favor of the impeachment being upheld.
Corporate law reforms, driven by a likely Democratic Party takeover, could fuel value-up momentum and drive the local market, potentially sparking an unexpected rally through the May election.

MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade

Telix Pharmaceuticals (TLX AU) is the sole (and somewhat surprising) inclusion for the VanEck Vectors Australian Equal Weight ETF (MVW AU) in December.
The one inclusion, float changes and capping changes result in a one-way turnover of 5.5% leading to a round-trip trade of A$290m.
Shorts have increased in Telix Pharmaceuticals (TLX AU) this year but there has been some covering in the stock recently.

MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks

No constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December. But there are a lot of float and capping changes.
Estimated one-way turnover is 2.6% resulting in a round-trip trade of US$269m. There are 8 stocks with over 1x ADV to trade from passive trackers.
Stocks with the largest flows are Evolution Mining, Pan American Silver, Westgold Resources, B2Gold, Alamos Gold, Harmony Gold Mining, Eldorado Gold, K92 Mining, IAMGOLD, Endeavour Silver and Emerald Resources.

Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Nishimoto (9260 JP).

MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes

Vulcan Energy Resources (VUL AU) will be added to the VanEck Rare Earth/Strategic Me (REMX US) while Tianqi Lithium (9696 HK) will be deleted from the index.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 2.5% and in a round-trip trade of US$37m.
The largest inflows will be in Vulcan Energy Resources (VUL AU), Lynas Corp Ltd (LYC AU), Ganfeng Lithium (1772 HK) and Tronox Holdings (TROX US).

Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade

The Dems are serious about the Commercial Act amendment, with Lee Jae-myung personally attending the policy forum to pitch the change directly to key business players.
Key takeaways: expanding directors’ fiduciary duties to all shareholders and mandatory cumulative voting, which could empower minority shareholders and reignite value-up policies in Korean companies.
The Dems plan to fast-track the Commercial Act amendment by year-end, with implementation likely by Q2 next year, boosting market moves and reigniting the value-up trade ahead of May’s election.

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

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

MV Australia A-REITs Index Rebalance: Only Float & Capping Changes

The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 20 December. There are no constituent changes, but there are float and capping changes.
Estimated one-way turnover at the rebalance is 2.9% resulting in a one-way trade of A$17m. There is limited impact on the index constituents.
The largest inflows are in Charter Hall, Gpt Group, Dexus Property and Region RE while the largest outflows will be from Goodman Group, Scentre Group and Vicinity Centres.

Fosun Tourism (1992.HK) Privatization – The Cancellation Price Is Not Good Enough

By Xinyao (Criss) Wang

Fosun Tourism has emerged from its difficulties and started an upward trend.If it remains listed, it’s only a matter of time before its share price returns to the IPO price.
Temasek was once in talks to buy a minority stake in Club Med from Fosun International for €500 million, based on which reasonable valuation for Fosun Tourism is RMB12.6 billion.
Fosun has continued its style- When performance recovery hasn’t been reflected in stock price, it’s the right time to privatize valuable assets at cheap price. A share alternative is expected.

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Dec 15

Most Read: Hua Nan Financial Holdings Co Ltd., Sanrio, Zomato, Crompton Greaves, Vishal Mega Mart, LG Electronics India, Insignia Financial, Exedy Corp, CPMC Holdings, COSCO Shipping Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift
Vishal Mega Mart IPO: IPO Details & Index Entry Timing
LG Electronics India: IPO Details & Index Entry Timing
Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
CPMC Holdings (906 HK): Festive Cheer as Precondition Satisfied🎄
HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact

There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

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

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

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift

We see 7 stocks moving from MidCap to LargeCap, 11 stocks moving from LargeCap to MidCap, 4 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 4 stocks are expected to be added to Large Cap, 3 stocks to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in March.

Vishal Mega Mart IPO: IPO Details & Index Entry Timing

Vishal Mega Mart (1620871D IN) is looking to list on the exchanges by selling INR 80bn (US$943m) of stock at a valuation of INR 352bn (US$4.15bn).
Anchor allocations were completed on 10 December, the IPO opens today, and the stock is expected to start trading on 18 December. Grey market premium is around 25%.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and June 2025.

LG Electronics India: IPO Details & Index Entry Timing

LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light

IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly

Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.

CPMC Holdings (906 HK): Festive Cheer as Precondition Satisfied🎄

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has received SAFE approval. Therefore, the precondition is satisfied.
The offer and response document will be despatched by 20 December and 3 January 2025, respectively. The Board will recommend the offer.
The offer should be declared unconditional by the first closing date. At the last close and late-January 2025 payment, the gross/annualized spread was 7.3%/88.0%.

HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying

SOUTHBOUND gross trading activity rebounded about 33% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK rebounded.
Alibaba Group Holding (9988 HK) was again the top buy and Tencent (700 HK) and Meituan (3690 HK) the top two sells. Tech is having a mixed outing now.
Gross SOUTHBOUND volumes back up this week to levels seen just off the autumn peak. An interesting week as stocks popped Monday, opened high Tuesday, then fell all week.

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Dec 14

Most Read: Cloud Village, Fosun Tourism, Zomato, LG Electronics India, Insignia Financial, Exedy Corp, Fuji Soft Inc, Vesync, Broadcom , Dexus Property and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KWEB Index Rebalance: 1 Add & 4 Deletes in December
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
LG Electronics India: IPO Details & Index Entry Timing
Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
Vesync (2148 HK): Expect The Yangs To Privatise
Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC
Blackstone Eyes Move On Dexus (DXS AU)

KWEB Index Rebalance: 1 Add & 4 Deletes in December

The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

LG Electronics India: IPO Details & Index Entry Timing

LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light

IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly

Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.

Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds

~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.

Vesync (2148 HK): Expect The Yangs To Privatise

Vesync (2148 HK), a manufacturer of small home appliance, is currently suspended pursuant to the Takeovers Code.
FY23 was Vesync’s best result since its December 2020 listing; and FY24E is on track to go one better. Yet the share price is 24% adrift of the IPO price.
The Yang family, led by chairman/CEO, control ~69.26% of Vesync. An Offer price around the IPO price may be enough to take Vesync private.

Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC

By Nicolas Baratte

FY24 AI revenue as guided US$12.2bn. 1Q25 AI revenue to increase 65% YoY. FY27 “serviceable market” or “opportunity” could reach US$60-90bn. Actual revenues could be ~70% of that.
Mngt announced another 2 hyperscale customers (one is Apple). At least 1 new new customer could add significant revenues before FY27 (adding to the 60-90bn above).
Stock up 14% aftermarket, trading at 32x FY25 EPS. We expect Consensus EPS to revise up 10-20%. Nvidia trades at 32x next FY (FY26). Positive to suppliers Hynix and TSMC.

Blackstone Eyes Move On Dexus (DXS AU)

Reportedly, Blackstone is running a ruler over Dexus Property (DXS AU), one of Australia’s leading fully integrated real estate groups.
The Australian article flips flops: “Blackstone is understood to have been back on the scene“; but “cooled on the opportunity for now“.
Almost exactly four year ago, Blackstone paid A$2.1bn for a 49% stake in the Dexus Australian Logistics Trust, a prime logistics portfolio managed and jointly owned by Dexus.

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Dec 13

Most Read: DigiCo REIT, Nec Networks & System Integr, Sieyuan Electric Co Ltd A, Seven & I Holdings, Zomato, Oji Holdings, VCredit Holdings Ltd, Insignia Financial, Lufax Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register
NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered
VCredit (2003 HK): Ma Makes His Move?
Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid
Lufax (6623 HK): On Ping An’s Stake Increases

DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications

DigiCo REIT (DIGICO AU) is looking to raise nearly A$2bn in its IPO by selling 399.1m shares at A$5/share. Stock is expected to list on the ASX on 12 December.
HMC Capital (HMC AU) will own 18.2% of DigiCo REIT (DIGICO AU) after the IPO while IPO investors will own 72.5% of the company.
Subject to DigiCo REIT being an eligible stapled security, we expect the stock to be included in global and local indices between March and June mopping up 11.7% of float.

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.

CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade

There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.

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

By Michael Causton

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

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register

Paper manufacturer Oji Holdings (3861 JP) has spent 25 years not going anywhere. Their current MTMP isn’t exciting. And it looks like they will fail worse than last time.
But an activist put their head above the parapet recently, and now the company has announced larger new cross-holding selldown targets, and a big 9% buyback, with a ToSTNeT-3 tomorrow.
The stock is at 0.47x book. They have nearly ¥400bn of financial assets which are non-core. They have land and property holdings. And they have lots of cross-holdings to repurchase.

NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered

Yesterday, NEC Corp (6701 JP) extended its Tender Offer to buy controlled subsidiary Nec Networks & System Integr (1973 JP) for another 10 days. It did not have enough shares.
As discussed here 4wks ago, then here yesterday, NEC might not get enough shares unless it offers a higher price. There’s a reason. It is not a high enough price.
METI Fair M&A Guidelines and Guidelines for Corporate Takeovers define fair. Guarantees of a floor price and a fair allocation of synergies. One is questionable. The other is not there.

VCredit (2003 HK): Ma Makes His Move?

VCredit Holdings Ltd (2003 HK), a provider of consumer financial services in China, was listed on the 21st June 2018 at HK$20/share. Shares are currently down 90%.
Ma Ting Hung, VCredit’s chairman, held 35.6% at the time of listing, and currently holds 39.85%.
VCredit was suspended this morning pursuant to the Takeovers Code. Now might be the time for Ma to take VCredit back into the fold.

Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid

IOOF Holdings (IFL AU) shares rose 11% in the final minutes of trade, fueled by media reports suggesting that Bain was in the advanced stages of making a buyout offer.
The presence of several substantial shareholders necessitates an attractive takeover premium. Takeover interest is unsurprising as Insignia trades at a material discount to peers.
We use several methods to triangulate the likely offer, which suggests a price range of A$3.44-5.50 per share, with an average of A$4.67, a 37.4% premium to the last close.

Lufax (6623 HK): On Ping An’s Stake Increases

As discussed in PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It’s worth understanding how Ping An has taken its stake >50% and beyond.

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Dec 12

Most Read: Nec Networks & System Integr, Fosun Tourism, Seven & I Holdings, Topcon Corp, Vishal Mega Mart, Horizon Robotics, Fuji Soft Inc, Palantir Technologies , Zomato and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
Topcon (7732 JP): Privatisation Auction Underscores Underlying Value
Vishal Mega Mart IPO: IPO Details & Index Entry Timing
Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels
Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer
Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

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

By Michael Causton

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

Topcon (7732 JP): Privatisation Auction Underscores Underlying Value

Topcon Corp (7732 JP) shares rose 51% over two days, confirming a Bloomberg report that is conducting a privatisation auction. The process is in the second round of bids.
Exploring the privatisation process is unsurprising, as Topcon has materially underperformed the Nikkei 225 since its last medium-term management term plan was announced on 12 May 2023.
Despite the share price pop, Topcon trades at a discount to median peer multiples. At an offer of JPY3,000, Topcon would trade in line with median peer multiples.

Vishal Mega Mart IPO: IPO Details & Index Entry Timing

Vishal Mega Mart (1620871D IN) is looking to list on the exchanges by selling INR 80bn (US$943m) of stock at a valuation of INR 352bn (US$4.15bn).
Anchor allocations were completed on 10 December, the IPO opens today, and the stock is expected to start trading on 18 December. Grey market premium is around 25%.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and June 2025.

Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels

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.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.

Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer

The battle for Fuji Soft Inc. (9749 JP) took an unexpected turn. Bain revised its offer to JPY9,600, a 1.6% premium to KKR’s JPY9,451 second tender offer.
Bain has introduced a minimum number of shares to be purchased criterion. Bain’s offer is structured to address most but not all of the special committee’s reasons for opposition.
The Board’s first reaction will be to ask KKR, its preferred bidder, to bump. Given the amount of time and effort KKR has put into this bid, it will bump.

Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention

By Dimitris Ioannidis

Palantir Technologies (PLTR US) is anticipated to be the largest addition following its eligibility, which was secured through a listing transfer from NYSE to Nasdaq just before the cut-off date.
Super Micro Computer (SMCI US) is projected to exit the index despite its recent entry in July 2024, as it has ranked above the exit threshold of 125.
ARM Holdings (ARM US) is not an expected deletion due to special ADR market cap treatment. Equinix Inc (EQIX US) is not an expected addition because it is a REIT.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

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Dec 11

Most Read: Topcon Corp, Korea Zinc, Sanrio, CPMC Holdings, Crompton Greaves, Fosun Tourism, Japan Eyewear Holdings , Shanghai Fosun Pharmaceutical (Group), Talabat Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
A Proxy Fight for Korea Zinc in January 2025
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
CPMC (906 HK): Why This Is Still A Buy
AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift
Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)
TOPIX Inclusions: Who Is Ready (Dec 2024)
Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.

A Proxy Fight for Korea Zinc in January 2025

By Douglas Kim

There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.

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

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

CPMC (906 HK): Why This Is Still A Buy

Back on the 29th August 2024, CPMC Holdings (906 HK) announced ORG Technology Co., Ltd. A (002701 CH) had secured SAMR approval. Mofcom and NDRC approvals subsequently followed.
The pre-condition long stop date is the 6th January. SAFE is the outstanding pre-condition. Separately, Zhang Wei’s 22.01% irrevocable expired on the 5th December – with no HKEx announcement.
Quite a lot to pack in with 16 business days to the pre-con long stop. Sounding out people involved with the transaction would be ideal. So that’s what I did.

AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift

We see 7 stocks moving from MidCap to LargeCap, 11 stocks moving from LargeCap to MidCap, 4 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 4 stocks are expected to be added to Large Cap, 3 stocks to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in March.

Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

Fosun Tourism (1992 HK) disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00.
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by <10% of disinterested shareholders).
The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.

TOPIX Inclusions: Who Is Ready (Dec 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Reently-Listed Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), and Intermestic (262A JP) were added to the TOPIX index at the end of November 2024.
Our long-term pre-event candidate Japan Eyewear Holdings (5889 JP) has applied for a Section Transfer to the Prime Market which means there could be TOPIX Inclusion in the near future.

Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook

By Xinyao (Criss) Wang

Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.
Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun’s system.
If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution

By Dimitris Ioannidis

Talabat Holding (TALABAT UH) is expected to be listed on 10 December 2024, on the Dubai Financial Market at a valuation of ~$10.3bn.
Fast-Entry is forecasted to be announced for the one Global Index at the close of 10 December and traded on 20 December in conjunction with the review.
Uncertainty regarding the Fast-Entry arises due to lack of shareholder information in the Institutional Offering which can result in the float market cap being determined as invalid.

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Dec 10

Most Read: Nec Networks & System Integr, Sanrio, Hua Nan Financial Holdings Co Ltd., Workday Inc Class A, CPMC Holdings, Apollo Global Management , Doosan Robotics , China National Building Material and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
Sanrio (8136 JP): The Current Playbook
NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY
CPMC Holdings (906 HK): Steady Nerves Required
S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out
Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed

On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

Sanrio (8136 JP): The Current Playbook

Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.

NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

Oasis has become a substantial shareholder of Nec Networks & System Integr (1973 JP), representing 13.2 million shares or an 8.83% ownership ratio.
Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.
A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact

There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY

Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.

CPMC Holdings (906 HK): Steady Nerves Required

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has one remaining precondition: SAFE approval.
Mr Wei’s irrevocable was terminated. Nevertheless, as a seller, he will accept the offer, as the shares trade below the offer price, and there is no competing offer.
The precondition long stop date is 6 January, sufficient time to satisfy the precondition. It would be highly unusual to secure MOFCOM and NDRC approval but not SAFE approval.

S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out

There are 2 changes for the S&P 500 INDEX, 2 changes for the S&P Midcap400 Index and 6 changes for the S&P SmallCap600 Index at the December rebalance.
Apollo Global and Workday will have large flows from S&P 500 INDEX trackers while AppLovin misses out. The SPX adds will have large inflows from the Select Sector index trackers too.
The outright adds are up a lot in the after-hours and there could be further upside over the next couple of weeks as positioning ramps up.

Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger

If stocks close above the appraisal prices on the 10th, NPS will support the merger; otherwise, they’ll abstain to secure their appraisal rights.
Due to cancellation risk hitting the ceiling, NPS will likely exercise half its position and start buybacks after the results.
With both stocks heavily weighted in KOSPI 200, NPS is likely to opt for a tight buyback window, boosting chances for upward price action on Doosan’s shares in that period.

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

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

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