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• Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
• There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
• While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.

• The Tender Offer by SBI Holdings (8473 JP) to take private SBI Shinsei Bank (8303 JP) is almost done. The tender closes on 23 June. 
• The stock has not traded below theTOB Price since the announcement. People have built positions. Expect minimal liquidity from here on out. I expect a somewhat ‘weak’ result.
• Now starts a series of ‘technical’ events and deadlines which will culminate for some in delisting at end-Q3/start-Q4 and for some ends in years after an Appraisal Rights case.

• A capital increase event of this size allows for a classic arbitrage trading strategy involving the acquisition of subscription rights and the simultaneous sale of an equal amount of SSF.
• We can aim to profit from the price movements between warrants and SSF during the warrants trading period by getting out of the positions before the trading period ends.
• We will also likely encounter a significantly juicy price difference between warrants+subscription and SSF, given a discount rate of 25% with an enormous capital increase rate, 

• HS Holdings (8699 JP) remains an interesting hodgepodge of assets. It owns just under 50% of Mongolia’s biggest bank, recently IPOed  Khan Bank (KHAN MO). 
• It has a pile of cash. And it has a glorified pawn shop business in Japan. The bank shares must be sold, to a significant degree, by end of year. 
• Today it announced a buyback tomorrow of 6.4% of shares out. I expect it is one of two large individual holders. We’ll probably know more within a week.

• 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.
• I currently expect one change for the ASX 100 index and five changes (including one intra-review change) for the ASX 200 index.
• There could be 7 ADDs and 5 DELs for the ASX 300 index.

• A major reason for investors’ disappointment is that the number of new projects in 23H1 were significantly lower-than-expected. The impact of slowdown in financing activity began to show in 23H1.
• Higher revenue growth of non-COVID projects is needed to achieve the performance guidance target.If the management fail to fulfill the commitment to accelerate business recovery in 23H2,they may lose creditability.
• It’s unlikely to receive AD drugs orders this year. The market would react directly to short-term sentiment. Without big catalysts, it’s difficult for WuXi Bio’s stock price to perform well.

• Large portion of the business is in secular decline and facing pricing pressure
• Ricoh Company Ltd (7752 JP) appears to be losing share in a shrinking market
• Estimates are above overly optimistic guidance making shares look optically inexpensive

• Keep Inc (KEEP HK) is looking to raise around US$100m in its upcoming Hong Kong IPO.
• Keep is an online fitness platform, offering online fitness content, smart fitness devices and fitness products.
• In this note, we discuss the updates since our last note.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stock mentioned in this regular insight is China Feihe (6186 HK)

• OVERSEAS. SPX -0.5% with Tech highflyers bearing the run of the decline; Fed Chair Powell thinking two more hikes this year; Tesla downgraded as rally not backed back fundamentals
• JAPAN. NKY Futs -0.1% Disc to Cash;  Expect Japan tech to take the signal from the US; Kishida vow to deliver on wage growth; Panasonic and Mazda do battery deal
• NUGGET.  Mitsubishi Motors(7211) – Issues in China fully capture the stuggles for OEMs without a competitive BEV product/strategy.

• Canon Inc (7751 JP) has, as discussed in these pages, conducted 18 buybacks since the GFC. Every single one is ¥50bn. They are short and sharp. The longest? 23 days.
• The most recent took 18 days, and was only 15% of ADV, significantly lower than the average of the last dozen at 23-24%.
• This time, 3 days after the finished they launched another. The stock popped 5% the first day. There’s a reason for that. Shareholder structure STILL matters a lot. 

• 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.

• The Tender Offer by SBI Holdings (8473 JP) to take private SBI Shinsei Bank (8303 JP) is almost done. The tender closes on 23 June. 
• The stock has not traded below theTOB Price since the announcement. People have built positions. Expect minimal liquidity from here on out. I expect a somewhat ‘weak’ result.
• Now starts a series of ‘technical’ events and deadlines which will culminate for some in delisting at end-Q3/start-Q4 and for some ends in years after an Appraisal Rights case.

• EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high. 
• Preceding my comments on EcoPro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
• There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
• While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.

• Daniel Zhang’s transition to a less prominent role within Alibaba’s Cloud business, after previously serving as CEO and Chairman of Alibaba Group (9988 HK), could be seen as a demotion.
• We suspect that there could be some government influence on these proposed leadership changes.
• Nonetheless, the situation is not encouraging, especially as the company enters a turbulent phase with multiple units poised to pursue IPOs in the near future.

• Doosan Enerbility (034020 KS) aims to raise around US$220m via selling around 4.9% of Doosan Bobcat Inc (241560 KS) .
• This will be the third selldown in the company in less than a year with the previous two deals in Nov 22 and May 23 having delivered mixed results
• In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

• A capital increase event of this size allows for a classic arbitrage trading strategy involving the acquisition of subscription rights and the simultaneous sale of an equal amount of SSF.
• We can aim to profit from the price movements between warrants and SSF during the warrants trading period by getting out of the positions before the trading period ends.
• We will also likely encounter a significantly juicy price difference between warrants+subscription and SSF, given a discount rate of 25% with an enormous capital increase rate, 

• Piramal Enterprises (PIEL IN) plans to raise around US$600m via selling its entire 8.3% stake in Shriram Finance.
• The deal is very well flagged with Piramal having sold half its stake in 2019 and having publicly stated its intention to completely exit as well.
• In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

• OVERSEAS.  SPX -0.5% with most Sector in the Red; Residential Construction STRONG; China Rate Cut disappoints; TESLA +5.3% bags Rivian for Charging Network.
• JAPAN. NKY Futs -0.9% vs Cash; Blackrock’s Fink say Japan benefitting from China Flight; Labor market loosing as JP workers shying away from liftime employment; Yamato HD exits mail delivery
• NUGGET. Nintendo(7974) – Doing a Disney..using its IP…Now Mario out, Rumour are “Legend of Zelda” Movie in the works.. 

• On 8 May I wrote JAPAN FLOW: Foreign Investor Inflows May Increase.  Since the data used in that insight, TSE data shows net foreign buying of ¥3.5trln+. 
• Investor flows appear to work in patterns which are correlated to TOPIX gains and outperformance vs S&P500. 
• The history of autocorrelation of net buying suggests while the current streak may end, a four week average of net buys could remain positive for a while. 

• 24 different HK-listed stocks will be tradable in RMB on the HKEX starting 19 June. They make up 35% of HKEX market cap, 40% of total turnover. They are fungible.
• The ultimate goal is to allow mainland investors to trade HK stocks in RMB, but we’re not there yet. Southbound has yet to be approved for the 21 SB-eligible names.
• Only five of the 24 have A-shares, and of those, three (China Mobile, CNOOC, and Great Wall Motor) have wide H-share discounts. Those should be the ones to look at.

• This issue offers two trading opportunities. The first is the passive inflow resulting from an increase in the float rate. The second is the possibility of additional stake sales.
• It will provide LG Energy with a passive inflow of 760K shares (₩426.4 billion), which is a significant passive impact at approximately 3.2x ADTV.
• There would be further stake sales of LG Chem’s shares in LG Energy. LG Chem plans to pursue additional stake sales targeting local institutional investors.

• The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
• Stocks with buy flows dropped 0.8% on average on Friday while the stocks with sell flows rose 0.27%. On a flow weighted basis, the numbers were -0.63% vs +1.99%.
• The stocks with outflows have outperformed stocks with inflows by a huge margin in the recent past and short interest has jumped on most stocks recently.

• After the market close on 16 June, it was reported in the local media that LG Chem is close to selling about 2 trillion won worth of LG Energy Solution.
• This block deal sale is likely to pose overhang on more stake sales of LG Energy Solution (about 10% stake) in the next 3-5 years.
• Our NAV valuation analysis of LG Chem suggests an implied price of 1,057,770 won per share, which is 41% higher than current share price.

• Canon Inc (7751 JP) has, as discussed in these pages, conducted 18 buybacks since the GFC. Every single one is ¥50bn. They are short and sharp. The longest? 23 days.
• The most recent took 18 days, and was only 15% of ADV, significantly lower than the average of the last dozen at 23-24%.
• This time, 3 days after the finished they launched another. The stock popped 5% the first day. There’s a reason for that. Shareholder structure STILL matters a lot. 

• Syngenta AG (SYNN SW) has passed the listing committee meeting to raise CNY 65bn (US$9.1bn) in a Main Board listing on the Shanghai Stock Exchange.
• We forecast Syngenta AG (SYNN SW) will be added to the SSE180 Index, SSE50 Index and the CSI 300 Index (SHSZ300 INDEX) indices at the December rebalance.
• Inclusion in the SSE A Share Index could take a year and that will hold up inclusion in Northbound Stock Connect and consequently in global indices.

• 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.

• HUTCHMED developed Fruquintinib has demonstrated positive results in a Phase III FRESCO-2 study which reduced the risk of death by 34% in patients with previously treated metastatic colorectal cancer.
• In addition, Fruquintinib also has been validated and accepted for regulatory review (for marketing authorization) by the European Medicines Agency (EMA) last week.
• In January 2023, Takeda Pharmaceutical (4502 JP) entered into an exclusive licensing agreement with HUTCHMED to further develop and commercialise Fruquintinib outside of Mainland China, Macau and Hong Kong.

• Hotel and investment property play Amara Holdings (AMA SP) announced that its controlling shareholders are in discussions with a third party in relation to a possible transaction. 
• Shares up for grabs controlled by the Teo family are estimated to exceed 65% of shares out. 
• No price was mentioned. And there is no guarantee a firm Offer will unfold. Shares have gained 38% in the past three trading sessions. 

• On 8 May I wrote JAPAN FLOW: Foreign Investor Inflows May Increase.  Since the data used in that insight, TSE data shows net foreign buying of ¥3.5trln+. 
• Investor flows appear to work in patterns which are correlated to TOPIX gains and outperformance vs S&P500. 
• The history of autocorrelation of net buying suggests while the current streak may end, a four week average of net buys could remain positive for a while. 

• The trigger for yesterday’s sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.
• There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.
• There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.

• 24 different HK-listed stocks will be tradable in RMB on the HKEX starting 19 June. They make up 35% of HKEX market cap, 40% of total turnover. They are fungible.
• The ultimate goal is to allow mainland investors to trade HK stocks in RMB, but we’re not there yet. Southbound has yet to be approved for the 21 SB-eligible names.
• Only five of the 24 have A-shares, and of those, three (China Mobile, CNOOC, and Great Wall Motor) have wide H-share discounts. Those should be the ones to look at.

• There were a bunch of rebalances across different index families that were implemented at the close of trading on Friday.
• The coming week is quieter though there are a couple of ad hoc rebalances for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX). 
• Yet another week of inflows to Tracker Fund of Hong Kong Ltd (2800 HK) as the number of units outstanding is nearly the highest over the last couple of years.

• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) will replace Jaymart PCL (JMART TB) and JMT Network Services (JMT TB) in the SET 50 Index in June.
• Estimated one-way turnover is 1.7% and will result in a one-way trade of THB 1,533m. The Financials and Real Estate sectors gain at the expense of the other sectors.
• The largest impact of passive buying will be on Thai Life Insurance (TLI TB) in terms of days of ADV to buy and in terms of free float to buy. 

• Activist investor influence in distributing Keisei Electric Railway Co (9009 JP)‘s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside
• Intouch Holdings (INTUCH TB) is coming up cheap versus Advanced Info Service (ADVANC TB). Yet the longer-term view suggests otherwise. 
• Abacus Property (ABP AU) confirmed the spin-off of an ASX-listed self-storage REIT with A$3bn in total assets. There’s a trade here. 

• The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
• Stocks with buy flows dropped 0.8% on average on Friday while the stocks with sell flows rose 0.27%. On a flow weighted basis, the numbers were -0.63% vs +1.99%.
• The stocks with outflows have outperformed stocks with inflows by a huge margin in the recent past and short interest has jumped on most stocks recently.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• OVERSEAS.  SPX -0.4%  1st down day  7 as Markets price in Peak rates/rate declines;  SPX Looks risky here(More BELOW); China revamps NEV subsidies; Putin places tactical Nukes in Belarus..mmm
• JAPAN. NKY Futs flat vs Cash;  USDJPY 141.8 post-BOJ on Friday;  NKY wins for 10th week; Kishida survives no-confidence motion; TEPCO goes full into Renewables; Lawsons makes a China push
• NUGGET. SBI HD(8473) – Carbon Trading, Jumping in Early in what sets up to be a major opportunity

• Amara Holdings (AMA SP) received a written notification from Mr Albert Teo Hock Chuan (CEO) and Ms Susan Teo Geok Tin (Company Secretary) that they mulling an offer. 
• The shares entered a trading halt on 16 June as the share price increased 23.9% from S$0.355 on 14 June to S$0.440 per share on 16 June.
• Recent SGX privatisation proposals have shown that offerors tend to be miserly with their premiums. The sharp share price rally makes it challenging to launch an offer.

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• The CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will have its quarterly rebalancing at the close on 29 June.
• There are no constituent changes for the indices in June but there will be capping and float changes for the stocks and there is a reasonable impact on many stocks.
• Both indices have performed well over the recent past and active investors can take advantage of the passive flows to increase or decrease existing positions.

• The review period for the September rebalance ends 31 July. We expect the changes to be announced 25 August with the implementation taking place after the close on 8 September.
• We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
• One way turnover is estimated at 3.45% resulting in a one-way trade of CNY 3,675m. The impact on the deletions will be larger than that on the inclusions.

• In this insight, we provide gap trade opportunities among 30 small cap Korean preferred stocks with market cap of less than 100 billion won and more than 20 billion won.
• Among these 30 companies, there are some in interesting gap trade opportunities, especially among those with relatively high dividend yields (more than 5%).
• We have ranked these 30 stocks in terms of three criteria including market cap, pref/common share price ratio, and dividend yields. 

• The latest aggregate and fund level stock holding metrics among active China A-Share investors.  
• CATL (A) (300750 CH) , Kweichow Moutai (600519 CH) and LONGi Green Energy Technology (601012 CH)  are the most widely owned stocks in the A-Share universe
• Agricultural Bank of China (601288 CH) , Bank Of Communications (601328 CH) and Shanghai Pudong Development Bank Co. (600000 CH) mostly avoided by active A-Share Funds.

• The stars are aligned for a rally in the Japanese equity markets – Earnings, Activism, and Capital Allocation. 
• We highlight some of the stocks that moved the market this week – Toyota excited the market with promises of Solid State battery production
• Shareholders continue to test Japanese management with a barrage of proposals

• There were a bunch of rebalances across different index families that were implemented at the close of trading on Friday.
• The coming week is quieter though there are a couple of ad hoc rebalances for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX). 
• Yet another week of inflows to Tracker Fund of Hong Kong Ltd (2800 HK) as the number of units outstanding is nearly the highest over the last couple of years.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Almac announced its IPO price of 50,000 won, which is 11% higher than the high end of the IPO price range. Demand ratio was very high at 1,697 to 1.
• A 98.7% of the IPO shares applied thought that the company’s value is more than 45,000 won
• Given the exceptional demand for IPO shares, it is likely that the IPO share price is likely to trade at higher end of the IPO range in our sensitivity analysis.

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• There were five stocks in Korea that dropped limit down (30%) today. They included Pang Rim, Dongil Industries, Manho Rope & Wire, Taihan Textile, and Dongil Metal.
• The share price decline of these five stocks are similar to the crash in eight stocks in Korea in April which were related to CFD derivatives related margin call selling. 
• Domestic securities firms in Korea have been trying to significantly reduce their exposure to CFD related trading and in this process, these sharp drops could be caused by this selling.

• The CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will have its quarterly rebalancing at the close on 29 June.
• There are no constituent changes for the indices in June but there will be capping and float changes for the stocks and there is a reasonable impact on many stocks.
• Both indices have performed well over the recent past and active investors can take advantage of the passive flows to increase or decrease existing positions.

• The review period for the September rebalance ends 31 July. We expect the changes to be announced 25 August with the implementation taking place after the close on 8 September.
• We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
• One way turnover is estimated at 3.45% resulting in a one-way trade of CNY 3,675m. The impact on the deletions will be larger than that on the inclusions.

• There has been a big divergence in the share prices of Hanmi Science and Hanmi Pharm in the past two months. 
• This divergence in share price appears to be a bit too excessive and we believe this gap is likely to narrow in the coming weeks.  
• We like a pair trade between going long Hanmi Science and going short on Hanmi Pharm. 

• This morning, Abacus Property (ABP AU) units were halted for trading and the Institutional Offer for Abacus Storage King (future ASK AU) units were launched. 
• The Offer is underwritten by Barrenjoey and Morgan Stanley. The Institutional Offer will be completed by Friday, and results announced Monday 19 June, with trading halt lifted. 
• Then the Retail portion of the Offer will be conducted til 27 July. EGM the same day. Delayed settlement trading of ASK and New ABP (ABG AU) will start 1Aug.

• Explosive SPX upside is a result of funds having to chase as most have not participated in the rise above 4,200. 
• Our 4,500 target may need to be upgraded with a fresh projection at 4,547. Bull energy slated to extend into late June and like buying dips.
• Will A and H shares be the next rotation flavor? HSCEI 6,600 bull pivot. A50 13,200 resistance.

• Back on the 23 February, household appliance maker JS Global Lifestyle (1691 HK) proposed spinning off SharkNinja’s ex-Asia Pac ops in the U.S.  
• This spin-off would be undertaken as a distribution in-specie, creating a parallel listing structure for SharkNinja and the remaining operations.
• Shareholders of JSG will vote on the separate listing at the EGM on the 26 June, with the last day cum-entitlement on the 27 June.

• In this insight, we provide gap trade opportunities among 30 small cap Korean preferred stocks with market cap of less than 100 billion won and more than 20 billion won.
• Among these 30 companies, there are some in interesting gap trade opportunities, especially among those with relatively high dividend yields (more than 5%).
• We have ranked these 30 stocks in terms of three criteria including market cap, pref/common share price ratio, and dividend yields. 

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• The CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will have its quarterly rebalancing at the close on 29 June.
• There are no constituent changes for the indices in June but there will be capping and float changes for the stocks and there is a reasonable impact on many stocks.
• Both indices have performed well over the recent past and active investors can take advantage of the passive flows to increase or decrease existing positions.

• The review period for the September rebalance ends 31 July. We expect the changes to be announced 25 August with the implementation taking place after the close on 8 September.
• We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
• One way turnover is estimated at 3.45% resulting in a one-way trade of CNY 3,675m. The impact on the deletions will be larger than that on the inclusions.

• The trigger for yesterday’s sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.
• There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.
• There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.

• This morning, Abacus Property (ABP AU) units were halted for trading and the Institutional Offer for Abacus Storage King (future ASK AU) units were launched. 
• The Offer is underwritten by Barrenjoey and Morgan Stanley. The Institutional Offer will be completed by Friday, and results announced Monday 19 June, with trading halt lifted. 
• Then the Retail portion of the Offer will be conducted til 27 July. EGM the same day. Delayed settlement trading of ASK and New ABP (ABG AU) will start 1Aug.

• Ever since Lo Ying-shek, the founder of Great Eagle (41 HK) passed away in 2006, as invariably happens, family relations deteriorated as the children sought to assert control over GE.
• Matters reached a crescendo when Lo’s wife brought legal action against HSBC International Trustee in 2016 as executor of a large % of shares into GE. 
• That plaintiff action failed, as did subsequent appeals. The latest battle centers on a judge’s ruling which extensively incorporated (read copied) the defendant’s submission in his final decision. 

• OVERSEAS.  US Equity Rally Continues in spite of Recession fears/profit slowdown;  SPX 1.2% as  all sectors positive as Defensives led overnight;  Rally broading out out beyond Tech..it would seem
• JAPAN. NKY Futs -0.1% disc vs Cash;  BOJ Decision Day- No change expected in policy stance;  Kishida says no Snap elections
• NUGGET. Son-san/Softbank poised for a rebirth like a Phoenix from the ashes thanks to ARM IPO.

• Austal Ltd (ASB AU) is drawing takeover interest from Cerberus Capital, according to AFR. Cerebus joins Arlington Capital Partners and Bondi Partners as rumoured suitors, increasing the bid odds.
• Takeover interest in Austal is driven by the desire to capitalise on the opportunities presented by the AUKUS defence pact between Australia, the US and the UK. 
• Andrew Forrest’s 19.34% stake can make or break a deal. Peer multiples point to an offer of at least A$2.80, a 22% premium to the last close.  

• There has been a big divergence in the share prices of Hanmi Science and Hanmi Pharm in the past two months. 
• This divergence in share price appears to be a bit too excessive and we believe this gap is likely to narrow in the coming weeks.  
• We like a pair trade between going long Hanmi Science and going short on Hanmi Pharm. 

• Today after the close, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov 1.
• Kenedix Office REIT (KDO) will be the surviving entity, and what is now three REITs of ¥150-250bn in size will become one diversified REIT of ¥630-650bn.
• That will trigger a size uplift and should also trigger index inclusion.

• Kenedix Office Investment Co, Kenedix Residential Investment and Kenedix Retail REIT have announced a three-way absorption merger to create Kenedix Realty Investment Corporation.
• The increased size and liquidity of the merged entity will put the stock on the radar of active investors and there could be a re-rating higher.
• There will be some passive flows into the merged entity at the time of merger implementation and this will help the stock outperform its peers.

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• There were five stocks in Korea that dropped limit down (30%) today. They included Pang Rim, Dongil Industries, Manho Rope & Wire, Taihan Textile, and Dongil Metal.
• The share price decline of these five stocks are similar to the crash in eight stocks in Korea in April which were related to CFD derivatives related margin call selling. 
• Domestic securities firms in Korea have been trying to significantly reduce their exposure to CFD related trading and in this process, these sharp drops could be caused by this selling.

For our next Corporate Webinar, we are glad to welcome UMP Healthcare’s  Chief Investment & Project Officer, Patrick Cheung. 

In the upcoming webinar, Patrick will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Monday, 19 June 2023, 17:00 SGT/HKT.

About UMP Healthcare

Founded in 1990, UMP Healthcare is a medical group listed on the main board of the Hong Kong Stock Exchange (stock code 722.HK) and is one of the leading comprehensive healthcare service platforms in the Hong Kong market. We have been committed “To provide comprehensive, diversified and coordinated care for everyone” by creating a network of high-quality and effective medical services for patients, payers, providers and partners.

Along with providing healthcare services that address a wide range of individual needs, UMP closely works with more than 2,000 local and international businesses and insurance organizations to establish and administer corporate healthcare benefit programs for members. The medical service network spans over 1,000 self-owned and affiliated institutions across Hong Kong, Macau, and Mainland China, offering services such as family medicine, specialist consultation, dental care, diagnostic imaging and laboratory testing, preventive medicine and health examination, physical therapy, day surgery, and endoscopy, among others. In 2022, the annual volume of outpatient visits under UMP exceeded 1.1 million.

• Today, YFO (WK1 Limited) filed an amendment to its Large Shareholder Filing saying it had increased its stake from 27.19% to 28.51%. GK Yamauchi No10 Family Office bought 1.32%.
• Almost immediately, Toyo Construction (1890 JP) said YFO had likely conducted an illegal act according to US Securities Exchange Act of 1934, Rule 14e-5. This is likely hogwash.
• YFO is upping its stake for a zero premium tender and Toyo is fighting old battles. And the stock chugs higher.

• Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
• The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
• We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.

• Intouch Holdings (INTUCH TB) is coming up cheap versus Advanced Info Service (ADVANC TB). Yet the longer-term view suggests otherwise. 
• Preceding my comments on Intouch are the weekly setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn on a 90-day moving average, and a % market capitalisation threshold of at least 20%.

• Auckland City Council plans to sell 7% of Auckland Intl Airport (AIA NZ)  to fund its budget requirements for 2023-24.
• Auckland City Mayor has been talking about selling the stake since at least Dec 2022 and hence, the deal is already very well flagged.
• In this note, we will talk about the possible placement and other deal dynamics.

• Abacus Property (ABP AU) has proposed the de-stapling of Abacus Storage King (ASK), the self-storage assets, along with the proposed A$225.0 million equity raising in ASK.
• A key logic of the de-stapling is the potential unlocking of the large, implied discount to NTA in the commercial portfolio. The EGM on the de-stapling proposal is in July.
• The equity raise is a key headwind to the rerating. Our SoTP valuation is A$3.10 per unit, which is a 20% upside to the last close price.

• Today after the close, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov 1.
• Kenedix Office REIT (KDO) will be the surviving entity, and what is now three REITs of ¥150-250bn in size will become one diversified REIT of ¥630-650bn.
• That will trigger a size uplift and should also trigger index inclusion.

• Three years ago, Seino Holdings (9076 JP) delivered a lot of its cash back to shareholders in a big buyback. They bought back almost 15mm shares (7.5%).
• Since then, they’ve bought another 2.5%. In February, they changed their Dividend Policy to max(2.4% DOE, 30% payout ratio). Then they set a cap and floor on the dividend.
• Four months later they have a new MTMP, and a new Dividend Policy. Simple. 4.0%+ DOE. Div +70% vs last year. Oh… and there’s an 11% buyback. 

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 16 June. There are no constituent changes, but there are float and capping changes.
• Estimated one-way turnover at the rebalance is 2.7% resulting in a one-way trade of A$16.6m. There is limited impact on the index constituents.
• The largest inflows are on Scentre Group, HomeCo Daily Needs REIT and Region Re, while the largest outflows are on Stockland, Mirvac Group, Dexus Property and Goodman Group.

• In this insight, we discuss the increasing likelihood of delisting of five preferred stocks in Korea at end of June.
• These five preferred stocks are as follows: Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B. 
• Because the combined market cap of these five preferred shares is 37 billion won, it will have only a minor, positive impact on their common counterparts.

• The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week’s seminar served as a proactive way to inform the market about it.
• The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies’ treasury stock holdings.
• Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.

• Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
• The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
• We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.

• Kenedix Office Investment Co, Kenedix Residential Investment and Kenedix Retail REIT have announced a three-way absorption merger to create Kenedix Realty Investment Corporation.
• The increased size and liquidity of the merged entity will put the stock on the radar of active investors and there could be a re-rating higher.
• There will be some passive flows into the merged entity at the time of merger implementation and this will help the stock outperform its peers.

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• Cybersecurity firm Tesserent Ltd (TNT AU) has announced it has entered into a Scheme with France’s Thales SA (HO FP).
• Thales is offering A$0.13/share, a whopping 165% premium to last close. Although, TNT is down 87% from its January 2021 high. 
• The Offer is conditional on TNT shareholder approval and FIRB/OIO approvals. Those regulatory approvals will not be straightforward.

• There are 3 inclusions for the MVIS Global Rare Earth/Strategic Metals Index at the June rebalance. Plus there are free float and capping changes.
• One way turnover is estimated at 10.6% and will result in a one-way trade of US$66m. There are a few stocks with over 0.5 days of ADV to trade.
• Yunnan Chihong Zinc&Germanium Co, Ltd. (600497 CH) was not added to the index while ioneer Ltd (INR AU) has avoided deletion in June.

• Ansell Ltd (ANN AU) and Challenger Ltd (CGF AU) will be deleted from the MVIS Australia Equal Weight Index at the close of trading on 16 June.
• One way turnover is 5.9% resulting in a one-way trade of A$107m. Only the two deletions have more than 1 day of ADV to sell from passive trackers.
• With the passive selling between 33-50% of short interest on the deletions, there could be short covering at the close on Friday.

• Back in February with the H1 results announcement, Abacus Property (ABP AU) announced an intention to spin off an ASX-Listed Self Storage REIT with A$3bn in total assets.
• The stock popped 7.4% to A$3.06 but is -16% since. In April they dropped their equity holding in National Storage REIT (NSR AU), in May they updated again.  
• Last week they had a big new Investor Presentation saying they would go ahead. There’s a trade in here. 

• On 9 June, skin and cosmetic treatment play Lutronic Corp (085370 KS) announced a Tender Offer from Korean PE outfit Hahn & Company.
• After acquiring 19.41% from Lutronic’s CEO at ₩ 36,700, Hahn will launch an Offer for all remaining shares at the same price. 
• This Offer Price is a lifetime high. There is no minimum tendering condition. 

• Surpassing the pre-COVID average of 49%, the NAV discount currently stands at 61%, implying potential 12% market-neutral returns in the short-term through the recovery of the core transportation business.
• Activist investor influence in distributing Keisei Electric’s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside, surpassing the earlier mentioned 12% gain.
• Thus, there is high likelihood of Keisei Electric Railway Co (9009 JP)‘s continued outperformance over Oriental Land in the medium term.

• Three years ago, Seino Holdings (9076 JP) delivered a lot of its cash back to shareholders in a big buyback. They bought back almost 15mm shares (7.5%).
• Since then, they’ve bought another 2.5%. In February, they changed their Dividend Policy to max(2.4% DOE, 30% payout ratio). Then they set a cap and floor on the dividend.
• Four months later they have a new MTMP, and a new Dividend Policy. Simple. 4.0%+ DOE. Div +70% vs last year. Oh… and there’s an 11% buyback. 

• The KOSPI Index has done well in recent weeks, months, but financials are hardly participating
• There are vast differences amongst the financial in Korea, not only large Chaebol-like banks
• Kakaobank, one of few listed internet banks in the world, is unique with ROA expansion

• After broker Mason Group (273 HK) was suspended pursuant to Hong Kong’s Takeovers Code on the 31 May, it has now announced a privatisation by way of Scheme at HK$0.0338/share.
• The Offer price is only a 20.7% premium to last close, and a 12.7% premium to the three-month average closing price. It has not been declared final.
• The Offeror is Red Emerald. Shareholders with 47.55% of shares out have given irrevocables in support of the Scheme. 

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• OVERSEAS. NDX100 +1.8%  SOX +3.3% vs. SPX +0.9% DOW +0.6%; Tech back ahead of Fed; Energy a different story as Oil fell on D-S worries; All eyes remain on CPI/Fed
• JAPAN. NKY Futs +0.7% premium vs Cash; Japan lead yesterday vs US..rarity; Expect continued Equity follow through; Seino HD(9076) -Massive Buyback, Div hike; TOYOTA-Path to Solid State Battery Commercialization?
• NUGGET. Nidec Succession Resolution in Sight, but Nagamori Premium May Dissappear