Most Read

We take a look at Ecopro Co Ltd (086520 KS), Kum Yang (001570 KS) and Jyp Entertainment (035900 KS) since they appear to be on investor radars.
Foreign investors have been buyers while retail have been sellers in Ecopro Co and Kum Yang over the last month, while foreign investors have continued to buy Jyp Entertainment.
Short interest on all stocks has dropped over the last month, though there has been a recent tick up in shorts on Jyp Entertainment (035900 KS).

Yuanta ETFs Rebalance Preview: Soaring Stocks, Rising Shorts; AI Beats Shipping

Using data from the close on 19 July, there could be 5 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 2 deletions for the Yuanta/P-Shares Taiwan Dividend Plus ETF.
Stocks that are expected to benefit from the AI revolution could gain ETF inclusion while shipping stocks are the ones expected to be deleted from the ETF.
There has been a huge increase in shorts on some of the potential inclusions and on most of the potential deletions. That will affect how stocks trade near term.

NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented

Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.

JAPAN PASSIVE: Who Owns What 2023?

The 2023 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each.
Even if you do not “play” index changes, understanding impact is important. Advantest is up 100% in 3mos. Existing passive ownership and new passive buying were crucial to that performance.
Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks in Japan.

OCI Swap Arbitrage: A Bit More Complex Structure, Still Juicy Spread in Play

This is a classic swap arbitrage of shorting the acquirer and using the tendered shares to repay it. However, executing now would be meaningless as the swap ratio isn’t finalized.
Nevertheless, we should consider securing a long position in OCI Holdings in advance. The target (45%) is quite substantial, indicating that the practical allocation rate won’t plummet dangerously below 1.
Additionally, the likelihood of OCI Holdings’ swap price plummeting to completely nullify the 5.6% spread immediately after its determination appears to be low based on the current context.

STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends

The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).

OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS).
The tender offer price of OCI Co is 139,000 won. The method of this tender offer is to issue new common shares of OCI Holdings.
In the short term (one month), we expect OCI Co’s shares to outperform OCI Holdings shares. This deal is structured to mainly benefit the OCI Group’s insiders.

End of Mandatory Lock-Up Periods for 40 Companies in Korea in August 2023

We discuss the end of the mandatory lock-up periods for 40 stocks in Korea in August 2023, among which 2 are in KOSPI and 38 are in KOSDAQ.
These 40 stocks on average could be subject to further selling pressures in August and could underperform relative to the market.
Among these 40 stocks, the top five market cap stocks include HK inno.N, PhilEnergy, CJ CGV Co Ltd, Sure Soft Tech, and CanariaBio.

Macquarie Korea Infra Fund Announces A Rights Offering Worth 361 Billion Won

On 28 July, Macquarie Korea Infra Fund (088980 KS) announced that it will conduct a rights offering worth 361 billion won, representing 7.4% of its current market cap.
The major uses of funds from the rights offering include acquisition of a city gas supplier (128 billion won) and investment in Incheon-Gimpo Expressway private investment project (128 billion won).
We have a positive view of this rights offering. We believe the acquisition of CN City Energy and the investment in Incheon-Gimpo Expressway will add additional value on the company.

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Jul 31

Most Read: Nomura Real Estate Master Fund,, KDDI Corp, Nice Information Service Co, Korea Stock Exchange Kospi Index, MOG Holdings, Zydus Lifesciences Ltd, JSR Corp, Eoflow , Piotech , Oci Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nomura Real Estate To Buy Nomura RE Master Fund Units
KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!)
KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)
Finally, Korea Launches English Search Service for All Disclosures Starting July 31st
Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT
NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented
JSR Corporation (4185 JP): Tender Offer Risk/Reward
Merger Arb Mondays (31 Jul) – Eoflow, JSR, Toshiba, Pacific Current, Costa, Estia, Newcrest, Dali
STAR50 Index Rebalance Preview: Potential Changes Playing Catchup
OCI Swap Arbitrage: A Bit More Complex Structure, Still Juicy Spread in Play

Nomura Real Estate To Buy Nomura RE Master Fund Units

Today, Nomura Real Estate Master Fund, (3462 JP) – the largest REIT in the ‘Diversified REIT’ JREIT space – announced sponsor Nomura Real Estate (3231 JP) would up its stake.
They would lift their stake from 4.47% by 2.54% to 7.01%. There is a reason for this, just like there was last time with Japan Excellent (8987 JP).
Understanding the reason is how you understand the trade to do.

KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!)

Today, with Q1 earnings, which I found less than great, KDDI Corp (9433 JP) announced a Tender Offer Buyback to repurchase up to 64,102,500 shares for up to ¥250.03175bn.
The Tender Offer – at ¥3900/share vs Last at ¥4,271/share (designed for cross-holding unwinds) – goes from 31-July through 28-August. It fills the 83.3% of the buyback programme announced 11-May.
Toyota Motor (7203 JP) has announced it would sell ¥250bn of shares into this Tender Offer. This is less interesting than it looks. The whole thing is.

KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)

The KRX has approved Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Board to the KOSPI Board. The transfer could take place in the next two weeks.
Hydro Lithium (101670 KS) was the highest ranked non-constituent from the Industrials sector at the June rebalance and could replace Nice Information Service (030190 KS) in the KOSDAQ 150 Index.
Nice Information Service Co (030190 KS) has no chance of inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) and will not be short sell eligible post section transfer.

Finally, Korea Launches English Search Service for All Disclosures Starting July 31st

Starting Monday, July 31st, the FSS-operated disclosure website, DART (Data Analysis, Retrieval, and Transfer System), will provide an English search service for all disclosures.
This measure will open up possibilities for diverse position strategies that require timeliness and comparability for Korean local stocks, leading to a significant turning point.
This calls for a more comprehensive approach in identifying the overall market flow. We should be attentive to potential alterations in the structure of foreign flows.

Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

The changes to the LQ45/IDX30 were announced last week and will be implemented Monday. The PSE also announced that there would be no changes for the PCOMP INDEX in August.
There are a bunch of review cutoffs on Monday, most notably for the Nikkei 225 (NKY INDEX), STAR50 INDEX, the NIFTY family of indices and the KRX New Deal indices.
There were inflows to China focused ETFs and outflows from Taiwan and Korea focused ETFs during the week.

NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented

Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.

JSR Corporation (4185 JP): Tender Offer Risk/Reward

JSR Corp (4185 JP)‘s pre-conditional tender offer from JIC is JPY4,350 per share. Since the deal announcement on 26 June, the gross spread has averaged 6.4%.
The wide gross spread reflects the risk in satisfying the pre-conditions related to country approvals, particularly in China. JIC, unusually can waive all or part of the conditions precedent.
The wild card is geopolitical developments. There are three China approval scenarios. The likely scenario is the deal approval under a normal procedure with a delay to the tender start.

Merger Arb Mondays (31 Jul) – Eoflow, JSR, Toshiba, Pacific Current, Costa, Estia, Newcrest, Dali

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 – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Kenedix Retail REIT (3453 JP), ARTERIA Networks Corp (4423 JP).

STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.

OCI Swap Arbitrage: A Bit More Complex Structure, Still Juicy Spread in Play

This is a classic swap arbitrage of shorting the acquirer and using the tendered shares to repay it. However, executing now would be meaningless as the swap ratio isn’t finalized.
Nevertheless, we should consider securing a long position in OCI Holdings in advance. The target (45%) is quite substantial, indicating that the practical allocation rate won’t plummet dangerously below 1.
Additionally, the likelihood of OCI Holdings’ swap price plummeting to completely nullify the 5.6% spread immediately after its determination appears to be low based on the current context.

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Jul 30

Most Read: Data#3 Ltd, Mitra Adiperkasa, Wistron Corp, SK Biopharmaceuticals , Nomura Real Estate Master Fund,, Nice Information Service Co, BFI Finance Indonesia, Softbank Group, MOG Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
LQ45 Index Rebalance: Two Changes in a Few Days
Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
Nomura Real Estate To Buy Nomura RE Master Fund Units
KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)
Ohayo Japan| AI Bid; Strong GDP->more Hikes? Stocks Drop; NUGGET: Steel Decarb-Advantage Tokyo Steel
BFI Finance Indonesia (BFIN IJ) – Short-Term Blip Provides Opportunity
SoftBank Group (9984 JP) – Reasons to Be Careful
Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September

Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.

LQ45 Index Rebalance: Two Changes in a Few Days

Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.

Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs

JFSL spun off from Reliance Industries (RIL IN) last week and Ventia (VNT AU) replaced Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX).
The IDX should announce the changes to the IDX30, LQ45 and IDX80 indices early in the coming week.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) while Taiwan focused ETFs had outflows.

KRX New Deal Index Rebalance Preview: Review Period Nearly Complete

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.

Nomura Real Estate To Buy Nomura RE Master Fund Units

Today, Nomura Real Estate Master Fund, (3462 JP) – the largest REIT in the ‘Diversified REIT’ JREIT space – announced sponsor Nomura Real Estate (3231 JP) would up its stake.
They would lift their stake from 4.47% by 2.54% to 7.01%. There is a reason for this, just like there was last time with Japan Excellent (8987 JP).
Understanding the reason is how you understand the trade to do.

KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)

The KRX has approved Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Board to the KOSPI Board. The transfer could take place in the next two weeks.
Hydro Lithium (101670 KS) was the highest ranked non-constituent from the Industrials sector at the June rebalance and could replace Nice Information Service (030190 KS) in the KOSDAQ 150 Index.
Nice Information Service Co (030190 KS) has no chance of inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) and will not be short sell eligible post section transfer.

Ohayo Japan| AI Bid; Strong GDP->more Hikes? Stocks Drop; NUGGET: Steel Decarb-Advantage Tokyo Steel

By Mark Chadwick

OVERSEAS. SOX 1.9% bid as Generative AI drives bid for semis/tech hardware; Booming US Economy as GDP prints 2.4% driving yields higher; But USD weaker vs Yen on BOJ.
JAPAN. NKY Futures -1% vs Cash; USDJPY 139. 5; Really all about the BOJ as the Nikkei broke news on potential YCC tweak; Earnings deluge: -ve Shin-etsu; Fujitsu.
NUGGET. Tokyo Steel has more advantages than meets the eye. No need for the massive capex in the crucial process that Nippon Steel or JFE needs to put out. Bullish.

BFI Finance Indonesia (BFIN IJ) – Short-Term Blip Provides Opportunity

By Angus Mackintosh

BFI Finance Indonesia (BFIN IJ) booked a solid set of 1H2023 results that were marred by an operational blip, with 2Q2023 impacted but this is likely to abate in 2H2023.
The company continues to stand out for its leading position in collateralized lending backed by 4W, 2W, heavy equipment, shophouses and property, with an accomplished 15-year track record
BFI Finance Indonesia remains the top pick to play the increasing growth from multi-finance in Indonesia. It trades on 2x FY2023E PBV, forecast to book an ROE over 20%.

SoftBank Group (9984 JP) – Reasons to Be Careful

By Victor Galliano

The SoftBank share price rally is, in our view, based on optimism around the Arm IPO, the Yen’s relative weakness and recovering share prices of public companies in the portfolio
Nvidia’s emergence as a potential anchor investor in the Arm IPO has boosted SoftBank shares, yet there is still a big disparity between groups in terms of Arm’s potential valuation
Aside from a recovery in public tech companies’ shares, Yen weakness has supported SoftBank’s asset values; monetary policy moves now indicate the prospect of a stronger Yen versus the USD

Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

The changes to the LQ45/IDX30 were announced last week and will be implemented Monday. The PSE also announced that there would be no changes for the PCOMP INDEX in August.
There are a bunch of review cutoffs on Monday, most notably for the Nikkei 225 (NKY INDEX), STAR50 INDEX, the NIFTY family of indices and the KRX New Deal indices.
There were inflows to China focused ETFs and outflows from Taiwan and Korea focused ETFs during the week.

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Jul 29

Most Read: Mitra Adiperkasa, SK Biopharmaceuticals , Toshiba Corp, Nomura Real Estate Master Fund,, LG Uplus Corp, Eoflow , NVIDIA Corp, Shanghai United Imaging Health, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LQ45 Index Rebalance: Two Changes in a Few Days
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong
Nomura Real Estate To Buy Nomura RE Master Fund Units
A Long Short Arb Event on SKT & LG U+ Targeting SKT’s Index Inclusion in November with Buyback
EOFLOW/Medtronic Tender: Assessing the Wide Spread
NVIDIA: Global Funds Hit New Highs
Quiddity Leaderboard CSI 300/500 Dec 22: Massive Baskets, US$2.5bn One-Way
LGES: Slowing Sales in Europe & A Turning Point in Momentum for Korean Rechargeable Battery Sector?
Japan Watch: 1% with Added Flexibility – More or Less Printing from Here?

LQ45 Index Rebalance: Two Changes in a Few Days

Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.

KRX New Deal Index Rebalance Preview: Review Period Nearly Complete

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.

Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong

It has been four months since JIP officially announced their intention to launch a Tender Offer for Toshiba Corp (6502 JP) by end-July. 7 weeks since Toshiba’s Board supported it.
There’s been no material public griping. Peers are sharply higher. There have been news stories suggesting a Western Digital/Kioxia deal is close. That’s now extended. The Toshiba deal possibly too.
But huge outperformance by peers, and possible clarity from Kioxia deal terms are unlikely to move the Toshiba Board to demand more.

Nomura Real Estate To Buy Nomura RE Master Fund Units

Today, Nomura Real Estate Master Fund, (3462 JP) – the largest REIT in the ‘Diversified REIT’ JREIT space – announced sponsor Nomura Real Estate (3231 JP) would up its stake.
They would lift their stake from 4.47% by 2.54% to 7.01%. There is a reason for this, just like there was last time with Japan Excellent (8987 JP).
Understanding the reason is how you understand the trade to do.

A Long Short Arb Event on SKT & LG U+ Targeting SKT’s Index Inclusion in November with Buyback

The chances of SKT’s inclusion in the August MSCI Review seem slim. SKT narrowly missed meeting the 15% threshold on both Day 1 and Day 2 during this review.
SK Telecom’s buyback completion can be accelerated to align with the MSCI November Review period, just like the previous case of KT Corp back in April.
The estimated size of passive funds flowing into SKT is approximately ₩160 billion, which is expected to be around 5.5 times the average daily trading volume (ADTV).

EOFLOW/Medtronic Tender: Assessing the Wide Spread

Medtronic Plc (MDT US) aims to acquire Eoflow (294090 KS) through share purchase agreements (SPA), a share subscription agreement (SSA) and a public tender offer at KRW30,000.
Since the deal announcement on 26 May, the spread has widened, reflecting deal risk around patent litigation risk, regulatory approvals and the minimum acceptance condition.
Our assessment of these risks suggests a low probability of a deal break. At the last close, the gross spread is an attractive 8.5%.

NVIDIA: Global Funds Hit New Highs

By Steven Holden

Global Fund exposure in NVIDIA Corp (NVDA US) has moved to record levels after a doubling of the share price this year.
New positions from UniNachhaltig Global, JP Morgan Global Focus and BNY Mellon Global Equity (3.36%) were among a total of 14 funds who opened exposure to NVIDIA Corp in 2023.
Growth and Aggressive Growth funds are at maximum levels of ownership, whilst Value managers are showing some hesitancy here.

Quiddity Leaderboard CSI 300/500 Dec 22: Massive Baskets, US$2.5bn One-Way

By Janaghan Jeyakumar, CFA

CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in December 2023.
I currently expect 13 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500.

LGES: Slowing Sales in Europe & A Turning Point in Momentum for Korean Rechargeable Battery Sector?

LGES provided a lower sales guidance in 3Q 2023 due to slower sales in Europe. LGES expects its sales in 3Q 2023 to decline in a QoQ basis.
The share prices of the top 12 rechargeable battery names in Korea are down on average 13.9% in the past two trading days.
We believe that the overall sentiment on the rechargeable battery sector in Korea has started to turn sour which could have a further negative impact on companies such as LGES.

Japan Watch: 1% with Added Flexibility – More or Less Printing from Here?

By Andreas Steno

The Bank of Japan moved the needle on the 10yr YCC from an effective cap 0.5% to a new effective cap at 1% but with a larger flexibility being introduced to the setup.
This also means that JGBs are now effectively tradeable again and that two-way-traffic is introduced as the BoJ can decide to guide the 10yr point both higher and lower within the accepted range given incoming data on prices ahead.
This is very different from just communicating a new clear cap and the 10yr yield is trading around +56 bps on the screens by the time of writing.

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Jul 28

Most Read: Rakuten Group , Tata Motors DVR, Toshiba Corp, SK Telecom, Nomura Real Estate Master Fund,, Nexen Tire Corp, Eoflow , LG Uplus Corp, Pacific Current and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side
Tata Motors (TTMT IN) – Goodbye to the DVR Arb
Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong
SK Telecom – Major Share Buyback & Cancellation
Interpretation of China’s Politburo – The A-Share Bull Market Is Coming?
Nomura Real Estate To Buy Nomura RE Master Fund Units
KRX Autos Sept Rebalancing: Less Known, Still Juicy Trading Event with 4 Constituent Changes
EOFLOW/Medtronic Tender: Assessing the Wide Spread
A Long Short Arb Event on SKT & LG U+ Targeting SKT’s Index Inclusion in November with Buyback
GQG Mulls Offer As Pacific Current Balks At Regal’s NBIO

July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side

In the two weeks since the announcement, Large ADDs (>2d ADV, >$5mm) have outperformed Large DELs by 1.3%. Smaller ADDs vs DELs (>2d, >$2<$5mm) have outperformed by 1.3%.
Using only >$20mm >2d DELs vs Top 5 $amt >2d ADDs, that’s a bit better than 1%. And the really obvious large ones? Not so obvious.
There is still a large reverse funding trade, with some large sells.

Tata Motors (TTMT IN) – Goodbye to the DVR Arb

Tata Motors Ltd (TTMT IN) has announced a Scheme of Arrangement where all the Tata Motors DVR (TTMT/A IN) shares will be cancelled.
For every 10 shares of Tata Motors DVR (TTMT/A IN) held, shareholders will receive 7 shares of Tata Motors Ltd (TTMT IN).
The process is expected to take 12-15 months to complete and there will be passive buying in Tata Motors Ltd (TTMT IN) at the end of it.

Toshiba (6502) Tender – Certainly Cheaper. Maybe Delayed, But Toshiba Fatigue Is Strong

It has been four months since JIP officially announced their intention to launch a Tender Offer for Toshiba Corp (6502 JP) by end-July. 7 weeks since Toshiba’s Board supported it.
There’s been no material public griping. Peers are sharply higher. There have been news stories suggesting a Western Digital/Kioxia deal is close. That’s now extended. The Toshiba deal possibly too.
But huge outperformance by peers, and possible clarity from Kioxia deal terms are unlikely to move the Toshiba Board to demand more.

SK Telecom – Major Share Buyback & Cancellation

On 27 July, SK Telecom announced a sizeable share buyback worth 300 billion won (including shares cancellation of 200 billion won) and quarterly dividend of 181 billion won.
SK Telecom will pay a quarterly DPS of 830 won, which represents 1.8% of its current price of 45,900 won.
SK Telecom is trying to boost its share price which has been negatively impacted by the regulators’ pressure to cut telecom tariff rates and also increase competition.

Interpretation of China’s Politburo – The A-Share Bull Market Is Coming?

By Xinyao (Criss) Wang

On China’s Politburo, we did see some rare expressions and highlights worthy of attention. Perhaps, avoiding short-term risks is so important that China needs to temporarily put aside long-term transformation.
Attitude change doesn’t mean returning to old model.Since “expanding domestic demand” is placed in a prominent position, we have reason to be optimistic about the prospects of private economy/A-share market.
The real A-share bull market may not come immediately, but we are optimistic about the performance of A-shares in 23Q4 and 2024. We recommend investors to get prepared in advance.

Nomura Real Estate To Buy Nomura RE Master Fund Units

Today, Nomura Real Estate Master Fund, (3462 JP) – the largest REIT in the ‘Diversified REIT’ JREIT space – announced sponsor Nomura Real Estate (3231 JP) would up its stake.
They would lift their stake from 4.47% by 2.54% to 7.01%. There is a reason for this, just like there was last time with Japan Excellent (8987 JP).
Understanding the reason is how you understand the trade to do.

KRX Autos Sept Rebalancing: Less Known, Still Juicy Trading Event with 4 Constituent Changes

At the current stage, with the three-month review period almost complete, there will likely be two additions and two deletions:
Additions: KG Mobility (003620 KS) & Nexen Tire Corp (002350 KS) Deletions: Sebang Global Battery (004490 KS) & Kumho HT Inc (214330 KS)
In the past few years, KRX Autos has shown a significant price impact for constituent changes on the rebalancing trading day. This pattern will likely repeat in the upcoming rebalancing.

EOFLOW/Medtronic Tender: Assessing the Wide Spread

Medtronic Plc (MDT US) aims to acquire Eoflow (294090 KS) through share purchase agreements (SPA), a share subscription agreement (SSA) and a public tender offer at KRW30,000.
Since the deal announcement on 26 May, the spread has widened, reflecting deal risk around patent litigation risk, regulatory approvals and the minimum acceptance condition.
Our assessment of these risks suggests a low probability of a deal break. At the last close, the gross spread is an attractive 8.5%.

A Long Short Arb Event on SKT & LG U+ Targeting SKT’s Index Inclusion in November with Buyback

The chances of SKT’s inclusion in the August MSCI Review seem slim. SKT narrowly missed meeting the 15% threshold on both Day 1 and Day 2 during this review.
SK Telecom’s buyback completion can be accelerated to align with the MSCI November Review period, just like the previous case of KT Corp back in April.
The estimated size of passive funds flowing into SKT is approximately ₩160 billion, which is expected to be around 5.5 times the average daily trading volume (ADTV).

GQG Mulls Offer As Pacific Current Balks At Regal’s NBIO

By David Blennerhassett

Yesterday (26 July), asset manager Pacific Current (PAC AU) announced a cash/scrip NBIO from Regal Partners (RPL AU).
Under Regal’s proposal, Pacific Current shareholders would receive an implied $10.77/share. Pacific Current considers the current share price doesn’t reflect the underlying value of its portfolio and business.
Now GQG Partners (GQG AU) has announced it intends to submit its own NBIO. No price was mentioned.

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Jul 27

Most Read: L’Occitane, Mitra Adiperkasa, UPL Ltd, SK Biopharmaceuticals , Rakuten Group , Eoflow , POSCO Holdings, Tata Motors DVR, BeiGene , Fadu and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
LQ45 Index Rebalance: Two Changes in a Few Days
India – Potential Float Changes & Impact
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side
An Update on Medtronic’s Tender Offer of Eoflow
KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
Tata Motors (TTMT IN) – Goodbye to the DVR Arb
Quiddity HSCEI Sep 23 Flow Expectations Update: US$367mn One-Way, Beigene Vs Peers Interesting
Fadu IPO Book Building Results Analysis

L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?

L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples.

LQ45 Index Rebalance: Two Changes in a Few Days

Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.

India – Potential Float Changes & Impact

Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-June. There are a few companies with significant float changes from end-March and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
We see 6 stocks where there could be passive inflows and 2 stocks that could have passive outflows – but there are caveats.

KRX New Deal Index Rebalance Preview: Review Period Nearly Complete

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.

July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side

In the two weeks since the announcement, Large ADDs (>2d ADV, >$5mm) have outperformed Large DELs by 1.3%. Smaller ADDs vs DELs (>2d, >$2<$5mm) have outperformed by 1.3%.
Using only >$20mm >2d DELs vs Top 5 $amt >2d ADDs, that’s a bit better than 1%. And the really obvious large ones? Not so obvious.
There is still a large reverse funding trade, with some large sells.

An Update on Medtronic’s Tender Offer of Eoflow

In this insight, we provide an update of Medtronic’s tender offer of Eoflow.
The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July.
We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023.

KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor

KRX stated in this press release that they have identified the suspected stocks involved in illegal trading and have reported them to the financial authorities (Korea FSC and Korea FSS).
The primary concern in the short term seems to revolve around whether the battery stocks are among the ones suspected of illegal trading, as reported to the financial authorities.
We must remain vigilant and ready for the potential recurrence of CFD-related price plunges, as seen in the recent two instances, affecting specific stocks in the short term.

Tata Motors (TTMT IN) – Goodbye to the DVR Arb

Tata Motors Ltd (TTMT IN) has announced a Scheme of Arrangement where all the Tata Motors DVR (TTMT/A IN) shares will be cancelled.
For every 10 shares of Tata Motors DVR (TTMT/A IN) held, shareholders will receive 7 shares of Tata Motors Ltd (TTMT IN).
The process is expected to take 12-15 months to complete and there will be passive buying in Tata Motors Ltd (TTMT IN) at the end of it.

Quiddity HSCEI Sep 23 Flow Expectations Update: US$367mn One-Way, Beigene Vs Peers Interesting

By Janaghan Jeyakumar, CFA

In three more weeks, the index changes and the indicative capping changes for the September 2023 rebalance will be officially announced.
We first looked at the potential HSCEI index changes and the resultant capping flows for September 2023 in Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way
In this insight, we take a look at Quiddity’s updated flow expectations which account for the changes in prices in the last ~1.5 months.

Fadu IPO Book Building Results Analysis

Fadu’s IPO price has been confirmed at 31,000 won (top end of the IPO valuation range). A total of 1,082 institutions participated, with a demand ratio of 362.9 to 1.
Fadu is one of the biggest IPOs in Korea so far in 2023.
Our base case valuation analysis suggests implied market cap of 2.2 trillion won or 43,676 won per share, which represents 41% higher than the IPO price.

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Jul 26

Most Read: MOG Holdings, LG Energy Solution, ZTE Corp H, L’Occitane, Hanmi Semiconductor, NTT (Nippon Telegraph & Telephone), SK Biopharmaceuticals Co Ltd, UPL Ltd, Eoflow , Kum Yang and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MOG Digitech (1942 HK): What the Flow Is Going On?
LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
FXI Rebalance Preview: One Potential Change in September
L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
KOSPI Size Indices – Plenty of Overlap With Other Index Flows
NTT (9432) – LDP Consideration of Full Sale Is Not Necessarily Overhang
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
India – Potential Float Changes & Impact
An Update on Medtronic’s Tender Offer of Eoflow
Seeking Clues for a Preemptive Position in the Korean Local Block Deal Market in H2

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

FXI Rebalance Preview: One Potential Change in September

As of 24 July, there could be one set of changes for the iShares China Large-Cap (FXI) (FXI US) in September.
There should be less than 1x ADV to buy on ZTE Corp H (763 HK) while there will be nearly 2x ADV to sell on Anhui Conch Cement (914 HK).
Short interest has been inching higher on ZTE Corp H (763 HK) while it is barely moving on Anhui Conch Cement (914 HK) as the stock trades near its lows.

L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?

L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples.

KOSPI Size Indices – Plenty of Overlap With Other Index Flows

The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

NTT (9432) – LDP Consideration of Full Sale Is Not Necessarily Overhang

Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.
The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.
As discussed in NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?, there are questions on overhang. BUT… presumably there are mitigants.

KRX New Deal Index Rebalance Preview: Review Period Nearly Complete

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.

India – Potential Float Changes & Impact

Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-June. There are a few companies with significant float changes from end-March and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
We see 6 stocks where there could be passive inflows and 2 stocks that could have passive outflows – but there are caveats.

An Update on Medtronic’s Tender Offer of Eoflow

In this insight, we provide an update of Medtronic’s tender offer of Eoflow.
The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July.
We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023.

Seeking Clues for a Preemptive Position in the Korean Local Block Deal Market in H2

As the possibility of implementing the pre-disclosure rule in the second half of this year arises, the local block deal market is expected to become more active.
Specifically, there are observable movements among Kosdaq mid-sized companies that are particularly sensitive to deal execution risk. This suggests that LHJ’s KIS may further solidify its dominance.
Significant increases in trading volume through KB Securities could serve as potential clues indicating the imminence of block deals in companies where the likelihood of such deals is high.

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Jul 25

Most Read: MOG Holdings, LG Energy Solution, Wistron Corp, Tryt Inc, JSR Corp, Travelsky Technology Ltd H, Rakuten Group , Celltrion Healthcare, Hanmi Semiconductor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MOG Digitech (1942 HK): What the Flow Is Going On?
LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs
TRYT IPO: Trading Debut
Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals
Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
Travelsky (696): Time to Fly
ECM Weekly (23rd July 2023) – Tryt, Genda, Rakuten, Mobovi, Samhi, Indigo, Federal Bank, Invincible
Alpha Generation Through Share Buybacks in Korea: June & July 2023
KOSPI Size Indices – Plenty of Overlap With Other Index Flows

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs

JFSL spun off from Reliance Industries (RIL IN) last week and Ventia (VNT AU) replaced Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX).
The IDX should announce the changes to the IDX30, LQ45 and IDX80 indices early in the coming week.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) while Taiwan focused ETFs had outflows.

TRYT IPO: Trading Debut

Tryt Inc (9164 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$339 million. The shares will start trading on 24 July.
We previously discussed the IPO in TRYT IPO: The Bull Case, TRYT IPO: The Bear Case, TRYT IPO: Valuation Insights and TRYT IPO: Revised IPO Price Range Remains Unattractive.
The market sentiment on the sector has broadly remained unchanged since the release of the prospectus. Our analysis suggests that Tryt is, at best, fully priced at the IPO price.

Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals

By Clarence Chu

Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
In this note we will talk about the trading dynamics.

Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods

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 – Chindata Group (CD US), Estia Health (EHE AU), 111 Inc (YI US), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), ARTERIA Networks Corp (4423 JP), Inner Mongolia Yitai Coal Company Ltd (3948 HK).

Travelsky (696): Time to Fly

By Henry Soediarko

Share price of Travelsky Technology Ltd H (696 HK) is still down YTD as investors are still overly cautious on Chinese travel data.
YTD operational data shows that the number of flights processed is very close to the pre-COVID era.
The company announced a profit alert recently, that should help to boost share price.

ECM Weekly (23rd July 2023) – Tryt, Genda, Rakuten, Mobovi, Samhi, Indigo, Federal Bank, Invincible

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, the coming week will see Tryt Inc (9164 JP) and Genda Inc (9166 JP) listing, along with Fadu (440110 KS) bookbuild.
For placements, Japan and India placements continue to flow, while there are no signs of any major Hong Kong activity.

Alpha Generation Through Share Buybacks in Korea: June & July 2023

In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in June and July 2023.
We provide a list of 38 stocks in the Korean stock market that have announced share buyback programs in June and July 2023.
The top four market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Hyundai Elevator, and SFA.

KOSPI Size Indices – Plenty of Overlap With Other Index Flows

The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

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Jul 24

Most Read: Tryt Inc, LG Energy Solution, SBI Shinsei Bank, Wistron Corp, 111 Inc, JSR Corp, Rakuten Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals
TRYT IPO: Trading Debut
LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs
111 (YI US): The Privatisation Offer Gets a Reboot
Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin
Ohayo Japan | This Week: Fed Hike in the Bag, All Eyes on BOJ; NUGGET: Top 5 Reasons We Like Sony
Block Deals Pre-Disclosure Rule Changes in Korea Likely to Be Implemented Around October 2023

Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals

By Clarence Chu

Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
In this note we will talk about the trading dynamics.

TRYT IPO: Trading Debut

Tryt Inc (9164 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$339 million. The shares will start trading on 24 July.
We previously discussed the IPO in TRYT IPO: The Bull Case, TRYT IPO: The Bear Case, TRYT IPO: Valuation Insights and TRYT IPO: Revised IPO Price Range Remains Unattractive.
The market sentiment on the sector has broadly remained unchanged since the release of the prospectus. Our analysis suggests that Tryt is, at best, fully priced at the IPO price.

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle

The SBI Holdings Tender Offer for SBI Shinsei Bank (8303 JP) was completed about four weeks ago, and in something of a surprise, only 3.7% of 26.98% minority holdings tendered.
The stock traded above terms every day during the Tender Offer Period. People accumulated in order to pursue their appraisal rights later. That is big.
This week, SBI Shinsei announced the schedule of dates relating to the squeezeout EGM. The record date was early. The reverse stock split announced is as expected, possibly game-able.

Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs

JFSL spun off from Reliance Industries (RIL IN) last week and Ventia (VNT AU) replaced Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX).
The IDX should announce the changes to the IDX30, LQ45 and IDX80 indices early in the coming week.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) while Taiwan focused ETFs had outflows.

111 (YI US): The Privatisation Offer Gets a Reboot

111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS.
The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods

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 – Chindata Group (CD US), Estia Health (EHE AU), 111 Inc (YI US), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), ARTERIA Networks Corp (4423 JP), Inner Mongolia Yitai Coal Company Ltd (3948 HK).

Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin

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 – Tryt Inc (9164 JP), Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group IPOs.
Event-Driven developments – 111 Inc (YI US), Healius (HLS AU), Invocare Ltd (IVC AU), Newcrest Mining (NCM AU), Origin Energy (ORG AU).

Ohayo Japan | This Week: Fed Hike in the Bag, All Eyes on BOJ; NUGGET: Top 5 Reasons We Like Sony

By Mark Chadwick

OVERSEAS. SPX managed to rise +0.7%WoW, despite the Tech weakness last week; Fed and ECB on tap as both to lift rates by +25bps; Twitter/Musk exile the Blue Bird logo
JAPAN. NKY Futures +1.2% vs Cash; USDJPY 141.7; The wild card this week is the BOJ- mounting speculation that there could be a tweak with Japan’s inflation above US.
NUGGET. Top 5 Reasons We Like Sony: Dream team Mgmt; PS5; Crunchyroll; Tax-free spin-off; Image Sensors

Block Deals Pre-Disclosure Rule Changes in Korea Likely to Be Implemented Around October 2023

As a result of the likely implementation of the changes to the block deal pre-disclosure rules in Korea, numerous block deal sales are likely in the next 2-3 months.
Block deal sales worth 50 billion won or more totaled 5.2 trillion won in 2022. As of 17 July 2023, it was 1.1 trillion won.
We provide shareholding structures of the top 20 stocks in KOSDAQ and a few companies in this list could announce block deal sales in 2H 2023.

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Jul 23

Most Read: Surya Esa Perkasa, Liontown Resources, Cameco Corp, Eoptolink Technology Inc Ltd, Neuren Pharmaceuticals, Data#3 Ltd, SBI Shinsei Bank, Nippon Paint Holdings, Tryt Inc, ROHM Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
S&P/ASX Index Rebalance Preview: Potential Changes in September
Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes
ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance
Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
Nippon Paint (Part I): A Deep Dive into NP’s Japan Business
TRYT IPO: Trading Debut
Rohm (6963): Investment in Toshiba Rounds Out Long-Term Plans

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation

There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

S&P/ASX Index Rebalance Preview: Potential Changes in September

We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.

Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes

Based on prices and turnover from 10 July, there could be one deletion from the index in July. Plus there will be capping and float changes.
There are four stocks that meet the inclusion criteria but all are non-pure play companies and the index is already at the limit of 15 non-pure play companies.
There will be a large impact on a lot of stocks but the flows are not very large due to the limited assets tracking the index.

ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance

One third of the way through the review period, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the 5 months. We’d wait for a pullback to re-enter positions.

Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY

Busy week in India with the adhoc changes to the NIFTY, NSE Nifty Next 50, S&P BSE SENSEX and Nifty Bank due to the HDFC Limited and HDFC Bank merger.
The IDX could announce the changes to the IDX30, LQ45 and IDX80 indices in the coming week, though there is no firm schedule for announcements.
Yet another week of inflows to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF and outflows from the Hang Seng H Share Index ETF (2828 HK).

S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September

Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.

SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle

By Shifara Samsudeen, ACMA, CGMA

The SBI Holdings Tender Offer for SBI Shinsei Bank (8303 JP) was completed about four weeks ago, and in something of a surprise, only 3.7% of 26.98% minority holdings tendered.
The stock traded above terms every day during the Tender Offer Period. People accumulated in order to pursue their appraisal rights later. That is big.
This week, SBI Shinsei announced the schedule of dates relating to the squeezeout EGM. The record date was early. The reverse stock split announced is as expected, possibly game-able.

Nippon Paint (Part I): A Deep Dive into NP’s Japan Business

This is the First of a series of reports on Nippon Paint Holdings (4612 JP) and in this insight, we deep dive into the company’s Japanese business.
The automotive coating biz in Japan is heavily reliant on the domestic automotive market while decorative paints is facing challenges due to slowdown in population in the country.
The outlook for Japan biz remains stagnant with growth rates slowing down and margins on a downward trend.

TRYT IPO: Trading Debut