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• 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.

• 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.

• Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
• It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
• It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.

• Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
• The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
• There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.

• Rakuten Securities (RAKUSEC JP), a leading Japanese online brokerage, seeks to raise US$500 million. Rakuten Bank (5838 JP) (80.01%) and Mizuho Financial Group (8411 JP) (19.99%) are its shareholders.   
• Rakuten Securities has grown its business by pursuing a low-cost, high-volume strategy. It has the largest number of non-consolidated securities accounts among Japanese securities companies.
• The key elements of the bull case rest on rapid customer growth, low-cost fees, market share gains, synergies with the Rakuten ecosystem and improving profitability trends.

• 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.
• During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.

• 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.

• Dismal share price performance for China Gas Holdings (384 HK) has created an opportunity for bottom fishing. Management also looks positive with 30% profit growth guidance for FY23.
• There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is also a value-enhancing move. 
• De-Rating over the last three years has put the stock on undemanding multiples of 8x PER and 0.75x P/B. Its 14.8% 3-year EPS CAGR is also better than sector average.

• The Korean government has initiated the M&A privatization of HMM, the largest container shipping company in Korea. 
• We are Negative on the shares of HMM Co., Ltd. (011200 KS) in the next 6-12 months. We expect additional 20% to 30%+ downside risk on HMM in this period.
• Although HMM has a strong balance sheet, more investors are likely to emphasize on the negatives including excessive share dilution risk and worsening environment for the global shipping industry.

• 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.

• 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.

• 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.

• Yonhap News reported on the exclusive coverage of Ecopro BM and L&F’s KOSPI transfer listing.
• L&F announced through the disclosure that they are considering the KOSPI transfer listing. Ecopro BM told another local news outlet that they are not currently reviewing the KOSPI transfer listing.
• It seems that L&F’s KOSPI transfer listing is almost a confirmed fact. However, the Ecopro company in question may be Ecopro Co, not Ecopro BM.

• Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
• The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
• There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.

• Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
• It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
• It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.

• Invincible Investment (8963 JP) plans to raise around US$230m to fund the acquisition of six hotel assets in Japan.
• The stock has done well over the past year and so have most of its deals which we have covered in the past.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.  
• In Lalatech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on market share pressure, KPIs declining growth, declining revenue visibility, maiden profitability built on a shaky foundation and barely positive underlying FCF. 

• Nidec reported strong Q1 results – operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
• The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles. 
• We remain bearish for now given valuation of 25x EV/EBIT.  We are not sure that the new growth driver in Motion & Energy will offset lowered expectations for EVs. 

• Rakuten Securities (RAKUSEC JP), a leading Japanese online brokerage, seeks to raise US$500 million. Rakuten Bank (5838 JP) (80.01%) and Mizuho Financial Group (8411 JP) (19.99%) are its shareholders.   
• Rakuten Securities has grown its business by pursuing a low-cost, high-volume strategy. It has the largest number of non-consolidated securities accounts among Japanese securities companies.
• The key elements of the bull case rest on rapid customer growth, low-cost fees, market share gains, synergies with the Rakuten ecosystem and improving profitability trends.

• 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.
• During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.

• 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). 

• 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.

• Yonhap News reported on the exclusive coverage of Ecopro BM and L&F’s KOSPI transfer listing.
• L&F announced through the disclosure that they are considering the KOSPI transfer listing. Ecopro BM told another local news outlet that they are not currently reviewing the KOSPI transfer listing.
• It seems that L&F’s KOSPI transfer listing is almost a confirmed fact. However, the Ecopro company in question may be Ecopro Co, not Ecopro BM.

• Invincible Investment (8963 JP) plans to raise around US$230m to fund the acquisition of six hotel assets in Japan.
• The stock has done well over the past year and so have most of its deals which we have covered in the past.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Rakuten Securities (RAKUSEC JP), the online securities arm of Rakuten, aims to raise around US$500m (estimated) in its Japan listing.
• It is the largest online securities firm in Japan with a 33.7% market share. In FY22, it had over 8.64m accounts, with around JPY18.2tn (US$131bn) of assets under custody.
• In this note, we talk about the positive aspects of the deal.

• On 19 July, there were local media accounts that L&F Co Ltd (066970 KS) is considering on switching its listing from KOSDAQ to KOSPI. 
• L&F’s main business involves making cathode active materials for rechargeable batteries.
• Despite this positive move, we believe the valuations of L&F have become too high. Its operating margins also worsened from 9.6% in 1Q 2022 to 3.0% in 1Q 2023. 

• 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.

• Those that the local market is particularly interested in are the 192nd convertible bonds (CB) held by KDB, along with the 193rd bonds with warrants (BW) owned by KOBC.
• These two bonds’ call option exercise date is September 25th. Upon conversion of these bonds, 200M new shares will be issued (41% of SO and a 30% dilution).
• The key is the trade-off between not disrupting the selling process and avoiding any breach of trust. The prevailing local sentiment suggests that KDB and KOBC will choose stock conversion.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the September 2023 Rebalance.
• Some semiconductor/electronic component stocks have seen their share prices skyrocket in recent months due to AI-related excitement causing drastic shifts in Leaderboard rankings.
• In my last insight, I expected two T50 changes and one T100 change. Now I expect five T50 changes and three T100 changes.

• OVERSEAS.  SPX eaks out gains as markets continue to bid inflation moderation/soft landing narrative; GS Reports the futures is better; TELSA earnings beat despite aggressive price cuts
• JAPAN. Nikkei Futures flat vs Cash; USDJPY 139.7; Inbound Tourist back in full force; Daily Goods Manufacturers form logistics alliance to combat lack of drivers; Nidec, Disco reports today
• NUGGET. JP Office Equipment Makers – could be investment opportunities if they are proactive consolidation. Falling demand and overcapacity demands aggressive industry restructuring.

• 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.

• Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
• That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
• SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.

• Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.” 
• Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
• Lots of moving parts on this one, but in the end, Retail probably decides this.

• 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). 

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023. 
• The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
• We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares. 

• Since the announcement of the proposed Tokyo Disney Sea expansion in 2015, Keisei Electric Railway Co (9009 JP)‘s price perfromance has significantly diverged from Oriental Land (4661 JP)‘s price performance.
• The valuation disparity may result from the Disney Sea expansion’s impact, possibly due to Keisei Electric’s value-oriented investor base.
• Fantasy Springs’ opening could resolve the valuation distortion, leading to potential rewards in a Long Keisei Electric and Short Oriental Land trade.

• 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.

• Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and  51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
• Preceding my comments on SZ Int’l/SZ E’Way are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• After the Blackmores Ltd (BKL AU) Scheme Meeting result was announced earlier today, post-close the S&P/ASX team announced Ventia (VNT AU) would replace it on 21 July at the close.
• This is not that surprising. Janaghan Jeyakumar, CFA expected it in June, and it was a super-close second recently for him for the Sep rebalance. 
• Given the shareholder structure and flow dynamics, it’s worth taking a closer look.

• OVERSEAS. SPX new 52W highs on Bank earnings, AI (thx to MSFT), and Resilient Retail print; MSFT prices Copilot at high end; US bank CEOs showing optimism.
• JAPAN. NKY Futures +0.8% vs Cash; USDJPY 138.8; Look for continued follow through in Japan equity bid; Bank bid thematic gaining more traction on BOJ tweak view;   Kishida cabinet reshuffle?
• NUGGET. Isuzu(7202) – Big EV Spending but Still looks Cheap at 1x PBR. A 15% FY3/26 ROE as per mid term plan makes this look interesting for LT investors here.

• Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
• That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
• SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.

• 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). 

• 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), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP). 

• Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.” 
• Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
• Lots of moving parts on this one, but in the end, Retail probably decides this.

• One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
• Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
• We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.

• According to local media (Seoul Economic Daily), Hahn & Company plans to make a second round of tender offer for Lutronic Corp, in order to meet the delisting requirements.  
• The tender offer price is 36,700 won, the same as the first tender offer price.
• We believe that Hahn & Co is likely to successfully complete this second round of tender offer of Lutronic and it is likely to be delisted in the coming months.

• Although WuXi XDC has financing needs, we’re more inclined to view this spin-off listing as another capital operation of WuXi AppTec/WuXi Bio, who may not want to take risks alone.
• Global ADC/broader bioconjugate market is at a nascent stage of development, with high R&D risks/commercialization uncertainties. We cannot guarantee whether WuXi XDC will maintain its industry-leading position in the future.
• Although high growth can bring good stories, we’re not sure how much actual market space WuXi XDC will have in the future,which is the key to determining the valuation ceiling.

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 29%+ stake was released from lock-up today.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. 
• In this note, we will talk about the lockup dynamics and possible placement.

• OVERSEAS.  SPX hit 52W highs as Yellen sees no US Recession;  Rates fall on “inflation behind us” narrative; Global HF unwind bearish US positions; EV WARS as Ford Slashes prices. 
• JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 138.7%; Japan Back after Marine Day Holidays to lower US rates, stronger yen, Weaker China, and Tech bid; Blackrock lifts Japan stock outlook
• NUGGET.  JAL(9201) Double Winner(Margins+Emmissions) with Fleet Upgrade. Share price has run, but strong tailwinds on demand and operational efficiency. Watch for pullback to pick up.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023. 
• The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
• We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares. 

• 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.

• 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.

• 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). 

• Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
• That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
• SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.

• In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
• Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
• We highlight 38 pair trades that involve Korean holdcos and opcos.

• According to Invest Chosun, Celltrion Inc (068270 KS) plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• Canon (7751 JP)‘s most recent buyback should be done now-ish. They have been ~15-20% of volume over the past month. The Trade would be short Canon vs Ricoh (7752 JP).

• 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), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP). 

• According to local media (Seoul Economic Daily), Hahn & Company plans to make a second round of tender offer for Lutronic Corp, in order to meet the delisting requirements.  
• The tender offer price is 36,700 won, the same as the first tender offer price.
• We believe that Hahn & Co is likely to successfully complete this second round of tender offer of Lutronic and it is likely to be delisted in the coming months.

• TSMC: 9.9% premium, continues to stay above one standard deviation from historical median… Earnings coming this week.
• UMC: 0.0% ADR premium… Trading on par with local shares… Earnings next week.
• Chunghwa Telecom: -0.8% discount represents relatively deep discount vs. history.

• In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run up to the September 2023 Rebalance.
• Blackmores Ltd (BKL AU) could get deleted from the index family, triggering intra-review changes in the next few days.
• Including the intra-review changes, ASX 300 could see 12 ADDs and 10 DELs, ASX 200 could see 4 changes, and ASX 100 could see one change between now and September.

• Two thirds of the way through the review period, we see 10 potential adds/8 potential deletes in December. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 5.8% at the December rebalance leading to a one-way trade of CNY 4.67bn. Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes over the last six months and there has been renewed outperformance over the last month.

• Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
• The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
• There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.

• 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.

• 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.

• 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.

RL Commercial REIT (1888938D PM)/RLC REIT is the REIT platform of Robinsons Land Co (RLC PM), one of the leading property developers in the Philippines. RLC REIT has opened its books for an IPO in the Philippines to raise PHP24.4 billion ($483 million) through a secondary offering of 3.3 billion units (33.6% of outstanding units) at a maximum price of PHP7.31 per unit. The bookbuilding period will end on 20 August with pricing is set for 20 August. The official subscription period will run from 25 August to 3 September. 

RLC REIT’s portfolio consists of 14 commercial real estate assets across the Philippines with an aggregate Portfolio GLA of 425,315 sqm and an appraised value of PHP73,884 million ($1,522 million).

RLC REIT’s IPO will the third REIT listing on the PSE after Areit (AyalaLand REIT) (AREIT PM), DDMP REIT (DDMPR PM) and Filinvest REIT (FILRT PM). RLC REIT’s listing will be quickly followed by the IPO of Megaworld Real Estate Investment Trust (MREIT PM) – Megaworld REIT (MREIT) IPO: At the Front of the Back Office.

• The focus was on the currency this week ahead of the next BOJ meeting and waning inflationary pressures in the US. 
• Japanese stocks were basically flat. Retailers were up first announcing results – those with significant operations in China are doing very well.
• Advantest continues to defy gravity. The stock is up 200% over the past twelve months. Think about that….a Japanese stock up 200%!

• In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
• Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
• We highlight 38 pair trades that involve Korean holdcos and opcos.

• 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). 

• According to Invest Chosun, Celltrion Inc (068270 KS) plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• Canon (7751 JP)‘s most recent buyback should be done now-ish. They have been ~15-20% of volume over the past month. The Trade would be short Canon vs Ricoh (7752 JP).

• Two thirds of the way through the review period, we see 10 potential adds/8 potential deletes in December. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 5.8% at the December rebalance leading to a one-way trade of CNY 4.67bn. Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes over the last six months and there has been renewed outperformance over the last month.

• Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
• The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
• There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.

• Plus Alpha Consulting (4071 JP) listed on TSE Growth at end-June 2021 at ¥2300/share, which was 90x the trailing fiscal year’s earnings. but only about 65x then-current year earnings.
• The stock popped 20+% on Day 1 to close ¥2803. Last Friday, two years and 13% higher at ¥3185/share, the company announced a Secondary Offering and move to TSE Prime.
• It’s a big offering. It’s a smaller TOPIX inclusion event. Next spring we’ll see more upweights.  

• 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). 

• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
• Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.

• Canon Inc (7751 JP) announced a second buyback this fiscal year on 15 June. As discussed here previously, Canon buybacks are short, sharp, and sweet. 
• The recent one should be done imminently (15 May start ended 13 July). 16 June start? (Note: Canon reports buyback results at 3pm local time, and did not report today).
• This time we have a double-setup with buyback ending and a large TOPIX sell on Canon on 28 July. 

• IMAX China Holding (1970 HK) disclosed a scheme privatisation offer from IMAX Corp (IMAX US) at HK$10.00 per share, a 39.5% premium to the undisturbed price (HK$7.17 on 10 July).
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• The offer price is final. While the offer price is light compared to peer multiples and historical share prices, the deal will likely succeed. 

• The important point is that the regulations also incorporate a provision mandating the disclosure of the actual end traders’ identities when brokerages engage in CFD transactions disguised as proprietary trading.
• Recent suspicious incidents raise concerns because they are carried out through brokerages’ proprietary trading practices, making them relatively more difficult for local regulatory authorities to detect and monitor.
• We need to closely monitor the market’s abnormal volatility following the strengthened new rules on CFDs and carefully consider the setup for responding to these changes.

• The RMB has undergone significant changes in its history, evolving into a currency with increasing influence on global financial markets
• RMB has significant impact on China’s economy, mainly through the trade balance (export/import) and its impact on outbound tourism
• China has made key steps regarding internationalization of the currency, however, full internationalization is dependent on further financial market liberalization and opening up of the capital account.

• ALT’s IPO price has been determined a 25,000 won, which is 22% higher than the high end of the IPO price range.
• A total of 1,937 institutional investors participated in the IPO offering with a competition demand ratio of 1,836 to 1.
• Our base case valuation of ALT is market cap of 299 billion won or 33,365 won per share, which represents 33% higher than the IPO price range of 25,000 won.

• Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
• The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.  
• The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.

• According to Invest Chosun, Celltrion plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
• Given that the approximate timing of the merger registration statement submission has already been exposed to the market, we can track the difference between the spot and exercise prices.
• Celltrion Inc will likely attempt to minimize the appraisal rights price. We can consider capitalizing on this possibility by shorting Celltrion Inc while going long on the other two companies.

• Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
• Some of these other recent announcements represent a possible change in ad hoc methodology.
• Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is > 3 days ADV.

• 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). 

• Canon Inc (7751 JP) announced a second buyback this fiscal year on 15 June. As discussed here previously, Canon buybacks are short, sharp, and sweet. 
• The recent one should be done imminently (15 May start ended 13 July). 16 June start? (Note: Canon reports buyback results at 3pm local time, and did not report today).
• This time we have a double-setup with buyback ending and a large TOPIX sell on Canon on 28 July. 

• This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
• The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
• IMAX US holds  71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out. 

• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
• Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.

• The promoters of Patanjali Foods aim to sell up to 9% of the company via an FPO. 
• The sale is being done so as to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
• We have looked at the background of the deal in our earlier note, in this note we talk about the recent update and run the deal through our ECM framework.

• OVERSEAS.  Disinflation Trade on as US PPI provides more tailwinds; Rates, USD Fall; Equites rally, More China Stimulus Coming ? Ripple resolution spurs Crypto bid; AI Wars: Meta Updates BARD
• JAPAN. Nikkei Futures +1% vs Cash; USDJPY 138; Set for Beta bid in Stocks; Blow out Fast Retailing numbers; Barclays see Sept BOJ tweek; Bullish Bank Initiations from UBS
• NUGGET.  Hydrogen is a key part of JP Govt carbon zero strategy. We see KHI(7012) as a Hydrogen winner and see the recent pullback as a good entry opportunity

• TRYT has priced its IPO at ¥1,200 per share, at the midpoint of the indicative IPO price range, at a market capitalisation and post-money EV of ¥120bn and ¥151.6bn respectively.
• In our previous insight, we compared the company’s implied trailing multiples with peer trailing multiples and concluded that TRYT’s IPO is overvalued at the above price range.
• In this insight, we have discussed our forecasts for Tryt Inc (9164 JP) and updated our valuation for the company.

• In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally. 
• It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too. 
• FUD and Flows mean that it is likely to continue to trade wide for the near future.

• Invest Chosun recently reported that the three Celltrion Group companies including Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm are close to announcing a merger in July.
• Although Celltrion was not included this time as suppliers of Humira biosimilar products by OptumRX, there is still a potential for Cigna Express Scripts to include Celltrion’s product this year.
• We think Celltrion Inc and Celltrion Healthcare’s share prices are oversold. 

• 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.

• 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.

• Plus Alpha Consulting (4071 JP) listed on TSE Growth at end-June 2021 at ¥2300/share, which was 90x the trailing fiscal year’s earnings. but only about 65x then-current year earnings.
• The stock popped 20+% on Day 1 to close ¥2803. Last Friday, two years and 13% higher at ¥3185/share, the company announced a Secondary Offering and move to TSE Prime.
• It’s a big offering. It’s a smaller TOPIX inclusion event. Next spring we’ll see more upweights.  

• Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
• Some of these other recent announcements represent a possible change in ad hoc methodology.
• Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is > 3 days ADV.

• Shougang Fushan Resources (639 HK) has launched a partial offer to acquire a maximum of 125.0m shares (2.47% of outstanding) at HK$2.40 per share, a 17.6% premium to the undisturbed price.
• The partial offer is conditional on approval by more than 50% of disinterested shares and the shareholder approval of the whitewash waiver. There is no minimum acceptance condition.
• The 2020 partial offer, which was at a 9.3% premium to the undisturbed price and -17% below the current offer, was overwhelmingly approved. Therefore, the current offer should be approved.  

• Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• As of Apr 23, the firm operated 250 amusement facilities domestically and four facilities in Taiwan. 

• 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). 

• OVERSEAS.  Fed job done; Inflation over- Stocks, Bonds Rally, USD falls; China new June new Credit growth accelerates- spurs Resources; Musk launches xAI ; Big Broker Upgrade to Euro Semi
• JAPAN. NKY Futures +0.3% vs Cash; USDJPY 138.5; US CPI print drives yen strength – headwind to stocks; PayPay to list in US ?  GS Ups Sony to Conviction BUY
• NUGGET. DX Consultant BayCurrent to report on Friday – Generative AI boom the next driver ?