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• MBK officially disclosed that they scooped up 5.34% of the Korea Zinc (010130 KS) shares in the tender that wrapped up today.
• MBK scored a partial win by securing more voting rights than Choi, with unexpected backing from foreign and local institutions, likely due to proration risk over legal issues.
• Still, securing just 5.34% puts MBK in a tough position, requiring them to navigate minority shareholder votes while pushing hard on the legal front to block the buyback.

• There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
• We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
• Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.

• Using data from the close on 11 October, there could be 6 adds and 5 deletes for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
• There will also be capping and funding flows that will lead to a one-way turnover of 15% and a one-way trade of TWD 49bn (US$1.52bn)
• Shorts have been building up in some of the forecast deletes and in a couple of the forecast adds as well.

• China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
• Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
• Index inclusions will commence with the HSCI in March 2025 – that will also result in Stock Connect inclusion. The next index inclusion will take place in June.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.

• Hyundai Motor India (1342Z IN) plans India’s largest IPO, valued at Rs. 27,870 crore.
• Historical data shows large IPOs often underperform, raising concerns about valuation and market timing.
• Caution is essential; analyzing fundamentals over hype is crucial for IPO investments.

• STAR 50 index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the December 2024 index rebal event.

• Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. 
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• In this note, we talk about the recent updates from its filings.

• On the 11th September, Hanwha Ocean (042660 KS) and Hanwha Aerospace (012450 KS), collectively holding 25.36%, made a S$0.60/share cash Offer for shares not owned, conditional on a 50% acceptance.
• The transaction stalled on the 24th September, when the estate of Dyna-Mac’s founding shareholder, Desmond Lim Tze Jong (holding ~35% currently) reckoned the Offer “does not adequately reflect” Dyna-Mac’s value.
• Hanwha Group has now bumped terms by 11.67% to S$0.67/share, best & final. That’s a 35.4% premium to undisturbed, and a decade high. No word, yet, from the Lim estate.

• Bossini International Holdings (592 HK), a casual apparel play, is currently suspended pursuant to the Takeovers Code. As is Viva Goods (933 HK), Bossini’s largest shareholder, with 62.91%.
• Former Olympic gymnast Li Ning holds 68.96% of Viva Goods. Viva Goods also holds a 10.37% stake in Li Ning (2331 HK).
• The double suspension is probably a pre-cursor to Viva Goods tabling a delisting Offer for Bossini. 

• As they had announced was their intention, Bain has made a binding offer for Fuji Soft Inc (9749 JP), bidding ¥9,450 against KKR’s ¥8,800. They aim to launch late October.  
• There is no minimum and no maximum. The Founding Nozawa family had thrown their lot in with Bain not KKR and that 18.5% is tied up. 
• There are conditions, and those are ALL-important. And I expect we see in the next week or so how coercive KKR’s “non-coercive” scheme change was. I’ve got 🍿🍿🍿.

• Korea Zinc raised the share buyback and tender offer price from 830,000 won to 890,000 won. Korea Zinc’s share price closed up by only 0.6% today to 794,000 won. 
• As a result, the amount of capital involved in this share buyback and tender offer would increase from 2.7 trillion won to 3.2 trillion won.
• Despite higher share buyback/tender offer of Korea Zinc by Choi family, we believe that this fight for the control of Korea Zinc is increasingly in favor of MBK/Jang family.

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• Nearly US$140bn has flowed into mainland China listed ETFs year to date and there have been big creations in the last few weeks as stocks have surged.
• 97% of all inflows are in ETFs benchmarked to the CSI300, CSI1000, CSI500, SSE50, ChiNext and STAR50 indices. But over US$4bn has gone into other ETFs in the last week.
• The large ETF inflows over the last few weeks has led to index rebalance strategies underperforming in China. But that should reverse from now to rebalance implementation.

• With three quarters of the review period complete, there could be one change for the S&P/ASX 50 Index and two changes for the S&P/ASX 200 (AS51 INDEX) in December. 
• There are two stocks that could be deleted from global indexes in November and that could keep those names under pressure for the next few weeks.
• Passive trackers will need to buy between 4-5x ADV in the forecast adds and sell between 2-8x ADV in the forecast deletes. Shorts have been building up in some names.

• MBK officially disclosed that they scooped up 5.34% of the Korea Zinc (010130 KS) shares in the tender that wrapped up today.
• MBK scored a partial win by securing more voting rights than Choi, with unexpected backing from foreign and local institutions, likely due to proration risk over legal issues.
• Still, securing just 5.34% puts MBK in a tough position, requiring them to navigate minority shareholder votes while pushing hard on the legal front to block the buyback.

• Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.3 billion at a valuation of US$19 billion.
• We previously discussed the IPO in Hyundai Motor India IPO: The Bull Case, Hyundai Motor India IPO: The Bear Case and Hyundai Motor India IPO: The Investment Case. 
• Our valuation analysis suggests that the IPO price range of Rs1,865-1,960 per share is attractive. Therefore, we would participate in the IPO.

• The HS HK-Listed Biotech Index (“Hang Seng Biotech Index”) represents the 50 largest biotech companies listed in Hong Kong (HKEX).
• In this insight, we take a look at the final rankings of potential ADDs/DELs and our capping flow expectations for the December 2024 index rebal event.
• We expect two changes for the HSHKBIO index in December 2024. 

• KRX will launch 12 ETFs tracking the Korea Value-Up Index on November 4—9 passive and 3 active—aiming for an initial AUM exceeding 1 trillion KRW.
• KRX is pressuring ETF operators to reveal initial capital by November 4, with expectations to exceed 1 trillion KRW due to government pressure.
• Early signs of position buildup are emerging, so it’s essential to monitor stocks with significant passive impact closely moving forward.

• Intouch (INTUCH TB)‘s strange journey with Gulf Energy (GULF TB) continues. In April 2021, GULF made a surprising VTO for INTUCH. This past July, the two companies announced an amalgamation. 
• The merger was not fair to INTUCH shareholders, with an estimated earnings value destruction of ~26.5% (for FY24E). But that didn’t stop shareholders overwhelmingly approving the 3rd October EGM resolutions.
• What now? The next step  is the low-balled VTOs for Advanced Info Service (ADVANC TB) and Thaicom (THCOM TB). Then amalgamation. Then, arguably, the next unorthodox development will take place.

• As they had announced was their intention, Bain has made a binding offer for Fuji Soft Inc (9749 JP), bidding ¥9,450 against KKR’s ¥8,800. They aim to launch late October.  
• There is no minimum and no maximum. The Founding Nozawa family had thrown their lot in with Bain not KKR and that 18.5% is tied up. 
• There are conditions, and those are ALL-important. And I expect we see in the next week or so how coercive KKR’s “non-coercive” scheme change was. I’ve got 🍿🍿🍿.

For our next Corporate Webinar, we are glad to welcome Kina Bank’s executive management to Smartkarma. In the upcoming webinar, they will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Daniel Tabbush. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 15 October 2024, 17:00 SGT.

About Kina Bank

Kina Securities Limited (Kina Bank) was established in 1985 and is Papua New Guinea’s
second largest bank and financial services company. Kina Bank offers customers end-to-end financial solutions – from savings accounts to business loans, investments to mortgages, financial advice and investment management. It is also the largest wealth management business in PNG, with more than PGK11 billion of funds under management. As the country’s largest fund administrator, they administer accounts on behalf of more than 938,000 beneficiaries whose funds total almost PGK19 billion. Kina Bank is also the leading stockbroking company in PNG and is listed on the Australian Securities Exchange (ASX:KSL) and the PNG’s Stock Exchange (PNGX:KSL). 

• If NPS and passive funds each tender half, it could hit 24%, pushing investors to consider both sides. The market’s eyeing a ratio of about MBK 3 to Choi 7.
• This tight vote could drag out the event longer than expected, and MBK might scoop up more shares if they miss their minimum target.
• MBK will likely go for open market buys against Korea Zinc’s buyback. Consider tendering to MBK Monday and spread trading futures, or push Korea Zinc to raise their buyback offer.

• With three quarters of the review period complete, there could be one change for the S&P/ASX 50 Index and two changes for the S&P/ASX 200 (AS51 INDEX) in December. 
• There are two stocks that could be deleted from global indexes in November and that could keep those names under pressure for the next few weeks.
• Passive trackers will need to buy between 4-5x ADV in the forecast adds and sell between 2-8x ADV in the forecast deletes. Shorts have been building up in some names.

• Korea Zinc raised the share buyback and tender offer price from 830,000 won to 890,000 won. Korea Zinc’s share price closed up by only 0.6% today to 794,000 won. 
• As a result, the amount of capital involved in this share buyback and tender offer would increase from 2.7 trillion won to 3.2 trillion won.
• Despite higher share buyback/tender offer of Korea Zinc by Choi family, we believe that this fight for the control of Korea Zinc is increasingly in favor of MBK/Jang family.

• Nearly US$140bn has flowed into mainland China listed ETFs year to date and there have been big creations in the last few weeks as stocks have surged.
• 97% of all inflows are in ETFs benchmarked to the CSI300, CSI1000, CSI500, SSE50, ChiNext and STAR50 indices. But over US$4bn has gone into other ETFs in the last week.
• The large ETF inflows over the last few weeks has led to index rebalance strategies underperforming in China. But that should reverse from now to rebalance implementation.

• 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 Seven & I Holdings (3382 JP), Shanghai Henlius Biotech (2696 HK), Canvest Environmental Protection Group (1381 HK), Haitong Securities Co Ltd (H) (6837 HK), Shinko Electric Industries (6967 JP).
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Xingda International (1899 HK), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Descente Ltd (8114 JP), T Gaia Corp (3738 JP). 

• Bain’s pre-conditional tender offer for Fuji Soft Inc (9749 JP) is JPY9,450, a 7.4% premium to KKR’s JPY8,800 offer. There is no minimum or maximum acceptance condition.
• The preconditions relate to regulatory approval (Vietnam) and Board recommendation. Bain’s offer is designed to bring KKR to the negotiating table to find a solution to privatisation. 
• KKR can 1) do nothing, 2) work with Bain on a solution, or 3) engage in a price war to prevent the satisfaction of Bain’s Board recommendation precondition.

• China is not in a 2015 boom/bust period with households under-invested in the stock market.
• It is now time for China to begin fiscal stimulus as discussed at the MOF meeting over the weekend.  Central government will relieve local governments’ hidden debt through debt swaps.
• PBOC and MOF will closely watch interest rates and government yields as they roll out fiscal measures.  CNY levels will also be considered in future policy decisions.

• The HS HK-Listed Biotech Index (“Hang Seng Biotech Index”) represents the 50 largest biotech companies listed in Hong Kong (HKEX).
• In this insight, we take a look at the final rankings of potential ADDs/DELs and our capping flow expectations for the December 2024 index rebal event.
• We expect two changes for the HSHKBIO index in December 2024. 

• There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
• Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
• Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

• The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
• We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
• If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

• 85% of the way through the review period, there could be 4 adds and 5 deletes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
• The impact on the potential inclusions ranges from 1.4-17 days of ADV while the impact on the potential deletions varies from 4-8 days of ADV.
• The potential adds outperformed the potential deletes early in the review period before giving up all the gains over the following months.

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• Late last evening, Rio Tinto Ltd (RIO AU) and Arcadium Lithium (LTM AU) announced a definitive agreement where Rio will acquire Arcadium for US$5.85/share in cash.
• Arcadium Lithium (ALTM US) closed nearly 31% higher at US$5.55/share and Arcadium Lithium (LTM AU) should follow when the stock opens.
• Arcadium Lithium (LTM AU) could move around 40% higher today to catch up with Arcadium Lithium (ALTM US) – that would still leave a 5.4% spread to the offer price.

• With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
• Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
• The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.

• In our previous insight about the Hang Seng Index‘s we theorized a probable continuation of the rally in October, after some resistance, but the index just shoot up straight.
• Resistance appeared last week, from an area considered a tail by our SHORT model, so it was not possible to make a forecast from there.
• The question now is: can the index re-start to rally from here? Or will it pull back more this coming week?

• Heavyweights attended as per previous conferences. Finance Minister (FM) Lan Foan and his three deputies
• Economists’ and market expectations damped down to RMB 1.5 – 2 Trillion in stimulus.
• Some major positive points we believe, but will be a disappointment to some

• If NPS and passive funds each tender half, it could hit 24%, pushing investors to consider both sides. The market’s eyeing a ratio of about MBK 3 to Choi 7.
• This tight vote could drag out the event longer than expected, and MBK might scoop up more shares if they miss their minimum target.
• MBK will likely go for open market buys against Korea Zinc’s buyback. Consider tendering to MBK Monday and spread trading futures, or push Korea Zinc to raise their buyback offer.

• Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
• “Increasing revenue without increasing profits” is actually a “denial” of a company’s business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
• Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor’s valuation and allowing Edding to achieve its goal of going public.

• H1 sales were GOOD. H1 earnings were BAD. New forecasts are UGLY. The CVS initiatives are RESPECTABLE, but US CVS market environment UNFORTUNATE. The creation of the new Holdco ENCOURAGING.
• The Couche-Tard Bid? That’s SEPARATE. Confidential. But three weeks after receiving the new proposal, it hasn’t been publicly rejected. So that’s a thing. 
• 7&i is progressing with its Standalone Plan, as it should, because ACT’s bid is more a show of faith for discussions. The York Holdings structure is INTERESTING.

• Seven & I released 1H24 earnings today as well as details on planned restructuring of its business. Results included some one-off items hitting operating profit as well as lower footfall.
• The bigger news was the plan to hive off the non-CVS retail operations into a new company, York Holdings, leaving a newly named 7-Eleven Corporation running CVS globally.
• Unusually, Seven also mentioned the possibility of new strategic partners investing in York, including even the “original founding families”, suggesting one way of holding on to control.

• Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger. 
• Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
• Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.

• There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
• Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
• Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

• Adani Ports & Special Economic Zone (ADSEZ IN) will replace Wipro Ltd (WPRO IN) in the S&P BSE SENSEX Index at the close on 21 June.
• Adani Ports & Special Economic Zone (ADSEZ IN)‘s inclusion is a big surprise and there should be a move higher in the stock in the short-term. 
• Wipro Ltd (WPRO IN)‘s deletion was expected and there is positioning in the stock. But there is a lot that passives need to sell too.

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I see 2 IN and 2 OUT for the Mar25 Nikkei 225 Rebal.
• There is also a capping event for Fast Retailing which on mild outperformance could become a double-capping event. 
• There is a bit of a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. The Committee will regret not adding PPIH last time.

• 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.
• Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
• PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.

• Another play is spread trading Korea Zinc single-stock futures: go long on the front-month and short on the farther-out contract to profit from price convergence.
• The key is when longer-dated futures’ volume will rise and if the basis difference with front-month futures will create arbitrage opportunities. November’s volume seems more for hedging than arbitrage.
• MBK is likely to launch a second tender offer, potentially extending the spread trading timeline and giving us more chances to hit sweet spots.

• Today, Hillhouse announced it would buy the 63% of SAMTY HOLDINGS Co Ltd (187A JP) not owned by Daiwa Securities Group (8601 JP) at an 18% premium. 
• It’s a highly-levered real estate company. Huge inventory. Decent margins on sale so embedded profit sitting in inventory. Not a very big premium, but an all-time high. 
• Retail including some large former insiders and passive own the vast bulk of the float here. The former get this done. Or not. 

• This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
• The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
• The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.

• Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x. 
• The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds. 
• The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip. 

• A month after China’s leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong Securities (H) (6837 HK), announced an intention to merge, we have a firm deal. 
• Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded
• Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with TCM (570 HK)‘s Offer, is one of timing.

• H1 sales were GOOD. H1 earnings were BAD. New forecasts are UGLY. The CVS initiatives are RESPECTABLE, but US CVS market environment UNFORTUNATE. The creation of the new Holdco ENCOURAGING.
• The Couche-Tard Bid? That’s SEPARATE. Confidential. But three weeks after receiving the new proposal, it hasn’t been publicly rejected. So that’s a thing. 
• 7&i is progressing with its Standalone Plan, as it should, because ACT’s bid is more a show of faith for discussions. The York Holdings structure is INTERESTING.

• MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
• All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
• If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.

• There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
• Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
• Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

• Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger. 
• Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
• Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.

• Seven & I released 1H24 earnings today as well as details on planned restructuring of its business. Results included some one-off items hitting operating profit as well as lower footfall.
• The bigger news was the plan to hive off the non-CVS retail operations into a new company, York Holdings, leaving a newly named 7-Eleven Corporation running CVS globally.
• Unusually, Seven also mentioned the possibility of new strategic partners investing in York, including even the “original founding families”, suggesting one way of holding on to control.

• Late last evening, Rio Tinto Ltd (RIO AU) and Arcadium Lithium (LTM AU) announced a definitive agreement where Rio will acquire Arcadium for US$5.85/share in cash.
• Arcadium Lithium (ALTM US) closed nearly 31% higher at US$5.55/share and Arcadium Lithium (LTM AU) should follow when the stock opens.
• Arcadium Lithium (LTM AU) could move around 40% higher today to catch up with Arcadium Lithium (ALTM US) – that would still leave a 5.4% spread to the offer price.

• Adani Ports & Special Economic Zone (ADSEZ IN) will replace Wipro Ltd (WPRO IN) in the S&P BSE SENSEX Index at the close on 21 June.
• Adani Ports & Special Economic Zone (ADSEZ IN)‘s inclusion is a big surprise and there should be a move higher in the stock in the short-term. 
• Wipro Ltd (WPRO IN)‘s deletion was expected and there is positioning in the stock. But there is a lot that passives need to sell too.

• This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
• The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
• The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.

• Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x. 
• The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds. 
• The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip. 

• MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
• All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
• If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.

• In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a revised non-binding proposal from Alimentation Couche-Tard (ATD CN). 
• The rumoured revised offer is US$18.19, a 22.4% premium to the initial US$14.86 offer. The revised terms are attractive vs precedent transactions and analyst price targets.
• The Board would cite regulatory concerns and the revised offer’s implied discount compared to peer multiples. At tomorrow’s results, the Board must present a credible alternative value generation path.

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• Arcadium Lithium (LTM AU) has disclosed a binding offer from Rio Tinto PLC (RIO LN) at US$5.85 per share, a 90% premium to the undisturbed price of US$3.08 (4 October).
• The offer is attractive compared to analyst price targets and peer multiples but unattractive compared to cyclical low timing and precedent transactions.
• The shareholder structure requires an activist to disrupt the vote. The long-dated offer provides optionality on a bump if lithium prices materially re-rates. 

• With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
• Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
• The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.

• There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
• Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
• Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for these  indices in the March 2025 index rebal event.
• There are no changes for NIFTY 50 but there could be four changes for NIFTY Next 50 according to current rankings.

• Stocks advanced for a second straight session Wednesday, with the S&P 500 and Dow Jones Industrial Average closing at record highs
• Japan’s Prime Minister Ishiba dissolved parliament for an October 27 snap election, seeking mandate amid low public support due to a fundraising scandal
• Canadian retailer Couche-Tard has increased its takeover offer for Seven & i Holdings to $47 billion, up from $38.5 billion

• Tokyo Metro (9023 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
• At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
• The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.

• Post-Close on the 5th business day of October every year, the TSE announces the Free Float Weight review for all stocks where the FY ends in the Jan-March quarter.
• Yesterday saw 210 decent changes to FFW (more up than down). There are still 400+ Phased Weight Reductions, 3 new adds (3663, 3993, 9341), and some share cancellation-based share-count reductions.
• It turns out there is a LOT to trade. I see ¥2trln one-way (¥2trln net to buy on 245 names, and ¥2trln to sell on the other nearly 1,900 names). 

• Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
• Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
• Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO. 

• This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
• The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
• The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

• The rally of the Asia Tech sector (+24% YTD) is highly concentrated in a handful of stocks. TSMC is up 64% but Samsung is down -22% YTD. 
• With the exception of AI, end-demand isn’t great. Smartphone up 8% but below 2019-21 level. PC flattish. x86 Server flattish. Telecom capex declining. Automotive electronics declining.   
• AI is the most disruptive trend since Cloud in 2010. Years of increasing Capex are in front of us. But short-term, stocks are properly valued to rich, growth is slowing.

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• Hyundai Motor India (1342Z IN) has set an IPO price range of 1,865 to 1,960 rupees per share, aiming for a valuation as high as US$19 billion. 
• Hyundai Motor (005380 KS) is selling a 17.5% stake in Hyundai Motor India in this public offering. Hyundai Motor India IPO is scheduled to trade starting 22 October.
• Our updated base case valuation of Hyundai Motor India is market cap of US$19.7 billion based on P/E of 25.9x our estimated net profit of 64.1 billion INR. 

• Hyundai Motor (005385 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
• HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
• In our previous notes, we have looked at the company’s past performance and provided our thoughts on valuations. In this note, we talk about index inclusion.

• The review period for the LQ45 Index October rebalance ended 30 September. The changes should be announced the last week of October, becoming effective after the close on 31 October.
• We highlight 4 potential inclusions and 5 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
• There are a few stocks that will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

• 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 December 2024.
• We expect up to five ADDs and six DELs for the KOSPI 200 Index during this rebal event based on the latest available data. Small increase vs two weeks ago.

• Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
• Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

• Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer 
• ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
• If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

• The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.

• Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
• The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
• Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish. 

• MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
• Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
• We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

• Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition. 
• No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
• Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable. 

• Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering. 
• Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
• Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

• Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%. 
• The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month. 
• Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH).  The question: how much more in the tank?

• Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
• Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
• Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO. 

• This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
• The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
• The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

• Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
• Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid. 
• Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal. 

• In August, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
• Everyone had expected a delay, but the stock fell. Then tech/AI fell out of bed, Ibiden crashed, China export restrictions noise/pushback caused further upset. But Ibiden and tech are rebounding.
• At 9% it was a raging buy;post-dip at 7% it was good. Now it’s 6+%. Still wide, still interesting, still stable but year-end path dependency… So I still like Ibiden.

• We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares. 
• Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc. 
• We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc. 

• ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
• The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.   
• The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.

• Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
• The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
• Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish. 

• The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.

• 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: Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), K Bank (279570 KS) and China Resources Beverage (CRB HK) IPOs.
• Event-Driven developments: ASM Pacific Technology (522 HK), Greatview Aseptic Packaging (468 HK), Samson Holding (531 HK), Descente Ltd (8114 JP), T Gaia Corp (3738 JP). 

• The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.

• MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
• Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
• We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

• Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer 
• ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
• If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.