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• China Traditional Chinese Medicine (570 HK)  (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
• As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
• This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next?  The immediate question now is downside support on Monday.  

• Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
• This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
• Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

• The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
• Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
• With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

• On 11-Oct, Bain submitted a binding proposal for Fuji Soft Inc (9749 JP). On 15-Oct, FSI acknowledged, but questioned the Nozawa family commitment.  Founder Nozawa wrote letters the 17th.
• O 18-Oct, FSI reiterated support for the KKR First Tender in a late night drop. It included fine print, but no media coverage. Today, FSI filed a Target Opinion Amendment.
• That filing included yet more fine print not in the public filing Friday. And KKR extended. The new fine print is nuanced. But worth reading.

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

• With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
• We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
• The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

• Tokyo Metro (9023 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$2.3 billion. The shares will start trading on 23 October.
• We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case, Tokyo Metro (9023 JP) IPO: The Bear Case and Tokyo Metro (9023 JP) IPO: Valuation Insights.
• The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive, particularly relating to the implied dividend yield.

• The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
• Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
• The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.

• Korea Zinc’s delisting daily trading volume cutoff is 20K, about 0.12% of the total. We might see volumes plummet, making it tough to maintain even that 20K level.
• Keep an eye on trading opportunities; we have some time with delisting risks, but low trading volume could lead to being booted from the KOSPI 200 and Global Index.
• This sell-off could spike short-term volatility and create great entry points for trading, especially after the court approved the buyback tender, denying MBK’s injunction.

• The big question is how to cash in on the dissenters’ rights spread for Robotics. The main concern is cancellation risk, but the FSS doesn’t seem too negative on approval.
• To sustain nuclear momentum, Enerbility needs heavy borrowing for facility investments, requiring a lower debt ratio. Offloading debt-heavy Bobcat is a move shareholders might support.
• With NPS unlikely to ignore the government’s nuclear push, Robotics’ spread could narrow quickly. Despite cancellation risk and no hedge, the remaining juice makes an outright position worth considering.

• Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
• This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
• Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

• China Traditional Chinese Medicine (570 HK)  (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
• As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
• This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next?  The immediate question now is downside support on Monday.  

• On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
• Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
• Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
• In Horizon Robotics (9660 HK) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on high related parties’ revenue, customer concentration risk, pricing pressure, uncertain path to profitability, high cash conversion cycle and FCF burn.

• The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
• Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
• KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

• The “industry clearing”  of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
• For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
• China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.

• Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
• Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
• The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

• The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
• Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
• With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

• With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
• We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
• The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

• This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
• The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
• If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still. 

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

• We discuss the next steps in the fight for the control of Korea Zinc, after the completion of the tender offer by the MBK Partners and Young Poong alliance. 
• After the tender offer, MBK and Young Poong’s stake in Korea Zinc increased from 33.13% to 38.47%, coming close to more than half of the voting rights.
• We continue to believe that at current stage, MBK/Young Poong alliance has the advantage in the fight for the control of Korea Zinc.

• There are 3 adds and 2 deletes for the iSharesGlobal Clean Energy ETF while there are 2 adds and 2 deletes for the iShares Global Water UCITS ETF.
• With US$5bn benchmarked to the iSharesGlobal Clean Energy and related ETFs, and US$3.5bn benchmarked to the iShares Global Water and related ETFs, there is multiple days of ADV to trade.
• We see a noticeable rise in cumulative excess volume over the last two trading sessions, so there will be positioning in the stocks. 

• Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
• This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
• Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

• Arvida (ARV NZ) will be deleted from the S&P/NZX 50 Index following its acquisition by Stonepeak Alps BidCo. Tower Ltd (TWR NZ) will be added to the index.
• Passive NZX50 Index trackers will need to buy nearly 18m shares of Tower Ltd (TWR NZ) – that is over 26 days of ADV.
• There has been a lot of positioning in Tower Ltd (TWR NZ) since Stonepeak’s offer for Arvida (ARV NZ). There should be enough supply for the passive trackers. 

• China Traditional Chinese Medicine (570 HK)  (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
• As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
• This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next?  The immediate question now is downside support on Monday.  

• On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
• Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
• Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

• U.S. stocks showed a “slightly bullish” trend this week, driven by stronger-than-expected September Retail Sales, which pushed the S&P 500 up 0.9%
• Japan’s stock market experienced a volatile week, with the Nikkei 225 Index declining 1.6% and the broader Topix Index down 0.6%
• ASML’s cautious guidance hit Japanese SPE Stocks, but AI-related chip demand remains “insane” according to TSMC

• I  tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deals discussed this week: Bossini International (592 HK) low-balled scrip Offer from Viva Goods (933 HK). Beijing Capital Grand (1329 HK) also suspended due to the Takeovers code. 
• Key updates took place on: GJS (2611 HK)/Haitong Securities (600837 CH), Fuji Soft Inc (9749 JP), Hotel Property Investments (HPI AU), TCM (570 HK) and Dyna Mac Holdings (DMHL SP) 

• Allegro MicroSystems presented their first fiscal quarter 2025 results, positioning themselves within a competitive and challenging market environment.
• Positive indicators can be discerned from their performance, although there remain areas of concern which reflect broader market conditions and segment-specific issues.
• Starting with the positives, Allegro MicroSystems reported first-quarter sales of $167 million, which was above the midpoint of their guidance.

• Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance. 
• Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was “inappropriate”.
• If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.

• China Traditional Chinese Medicine (570 HK) (TCM) will fall today. Perhaps a lot.
• With two days left on the clock to secure the pre-conditions (18th October), the Offeror said “it remains uncertain” whether it can secure an extension from the investor group.
• Such wording could be viewed as boilerplate SFC legalise. I would argue the use of “uncertain” is superfluous, unhelpful, and for investors, downright worrying. 

• Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP). 
• There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government. 
• None of that will win the hearts and minds of the Special Committee. 

• Arvida (ARV NZ) will be deleted from the S&P/NZX 50 Index following its acquisition by Stonepeak Alps BidCo. Tower Ltd (TWR NZ) will be added to the index.
• Passive NZX50 Index trackers will need to buy nearly 18m shares of Tower Ltd (TWR NZ) – that is over 26 days of ADV.
• There has been a lot of positioning in Tower Ltd (TWR NZ) since Stonepeak’s offer for Arvida (ARV NZ). There should be enough supply for the passive trackers. 

• Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
• This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked. 
• Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

• The institutional demand forecasts were much worse than expected, leading to the company’s blunt admission in the latest filing that the book-building flopped, prompting them to cancel the IPO.
• Bankers NH and KB suggested an offering price below 8,500 KRW, but pre-IPO backers like Bain Capital and MBK strongly opposed, unhappy with shrinking proceeds, pushing for cancellation.
• K-Bank plans to regroup and adjust the heavy 50% secondary share portion to retry the IPO in six months before their prelim review window expires.

• Devil is in the legal loophole. Issuing treasury shares to employees as bonuses is an exception that is not bound by the condition of ‘6 months after treasury shares acquisition.
• It would be nearly impossible for Korea Zinc to sell 2.4% of its treasury stock to an external friendly force and transform it into a friendly stake by February 2025.
• Although MBK/Young Poong Alliance has the advantage right now in this M&A battle for Korea Zinc, it is by no means over.

• In the overheated Indian markets where selling spree by promoters is going at record pace.
• We identified certain interesting companies where promoters are buying giving confidence in their business
• We further delve into the thesis and key triggers for these companies

• Back on the 9th September, pub play Hotel Property Investments (HPI AU) announced – and summarily rejected – a A$3.65/share cash Offer from Charter Hall Retail Reit (CQR AU).
• Charter Hall has now increased terms to A$3.85/share (best & final), a 17.7% premium to undisturbed. The Offer remains conditional on an 50.1% minimum acceptance condition. Charter Hall holds 14.7%. 
• HPI’s reported response? “While Charter Hall’s improved offer provides an attractive exit for shareholders, we remain committed to evaluating all options that deliver the best long-term value.“

• NPS is now viewing their voting rights on Korea Zinc purely from a returns angle, shifting from earlier expectations of siding with Choi due to political pressure.
• We need a tendering strategy for a 20% proration risk, focusing on when MBK will buy that extra 3.7% stake to cut losses on untendered shares.
• MBK will aim to buy leftover shares cheaply. Their approach depends on the progress of Choi and Trafigura’s talks

• Some two weeks after it became apparent Alimentation Couche-Tard (ATD CN) had lobbied a bid in for Seven & I Holdings (3382 JP), Artisan Partners wrote a letter.  
• It was full of misguided analysis, ungrounded insinuation of a general nature without specifying where they would have a problem. It seemed to be complaint for the sake of complaint.
• Today another public letter. This time there are a couple of worthwhile suggestions, some accusations of fiduciary impropriety based on no evidence, and an implicit admission they should have sold?

• China Traditional Chinese Medicine (570 HK) (TCM) will fall today. Perhaps a lot.
• With two days left on the clock to secure the pre-conditions (18th October), the Offeror said “it remains uncertain” whether it can secure an extension from the investor group.
• Such wording could be viewed as boilerplate SFC legalise. I would argue the use of “uncertain” is superfluous, unhelpful, and for investors, downright worrying. 

• Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP). 
• There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government. 
• None of that will win the hearts and minds of the Special Committee. 

• There are a few stocks in Korea that have outperformed/ underperformed their peers and could be added to or deleted from global passive portfolios next month.
• There could be buying in Hyundai Rotem, while there could be selling in KT Corp, Celltrion Pharm, Kum Yang, Hyundai Engineering & Construction, Hyundai Steel, CosmoAM&T and L&F.
• Based on our estimate of passive assets, trackers will need to trade between US$57m to US$230m of the stocks. Impact will vary between 3x-14.5x of ADV to trade.

• Horizon Robotics is looking to raise up to US$696m in its Hong Kong IPO. 
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• Consumption declines by .3% to 356,000 tons in Q1 FY 25
• ATMA says April-Sept 2024 production 37% lower year on year
• ATMA asks Rubber Board to expedite data publishing

• The Hillhouse (Asia-based global PE firm) deal for SAMTY HOLDINGS Co Ltd (187A JP) has seen Samty shares trade tight to terms in the first three days of trading.
• Some 7.5mm shares have traded. This is only 16% of shares out, but it is a much larger portion of Maximum Real World Float. 
• This begs the question of whether the deal could be put in jeopardy by the actions of one or two shareholders. 

• Chosun Business Daily mentioned that K Bank IPO book building results among institutional investors have been very poor so far. 
• As a result, the bankers and K Bank are currently considering on potentially reducing the IPO price to about 8,500 won or even cancelling the IPO altogether. 
• Our base case valuation of K Bank is target price of 9,151 won per share. Even if the IPO is priced at 8,500 won, we would pass on this IPO.

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.    
• Horizon ranked fourth among all global ADAS and AD solution providers in China by solution installation volume in 2023 and 1H24, with a market share of 9.3% and 15.4%, respectively.
• The bull case rests on a large TAM, a blue-chip customer base, a robust backlog, a core business in good health, a high gross margin, and a strong balance sheet.

• Arvida (ARV NZ) will be deleted from the S&P/NZX 50 Index following its acquisition by Stonepeak Alps BidCo. Tower Ltd (TWR NZ) will be added to the index.
• Passive NZX50 Index trackers will need to buy nearly 18m shares of Tower Ltd (TWR NZ) – that is over 26 days of ADV.
• There has been a lot of positioning in Tower Ltd (TWR NZ) since Stonepeak’s offer for Arvida (ARV NZ). There should be enough supply for the passive trackers. 

• Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance. 
• Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was “inappropriate”.
• If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.

• Horizon Robotics (1395186D CH) is offering 1.355bn shares in its IPO at a price range of HK$3.73-3.99/share. With the overallotment option, the IPO could raise up to HK$6.2bn (US$801m).
• Cornerstone investors will take up a third of the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
• Index inclusions will commence with the HSCI in March 2025 – however, as a stock with Weighted Voting Rights, inclusion in Southbound Stock Connect will only take place in May.

• Up to 9 stocks could be deleted from global passive portfolios in November. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
• There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
• The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.

• TSMC: +15.6% Premium; Relatively Aggressive Trade is to Long Premium
• ASE: -3.0% Discount; Good Level to Go Long the Premium
• CHT: -2.8% Discount; Good Level to Go Long the Premium

• China Traditional Chinese Medicine (570 HK)’s monthly update notes that the consortium has secured SAMR approval and made progress in obtaining the other regulatory approvals. 
• As expected, the precondition will not be satisfied before the 18 October long stop date. Unexpectedly, whether the consortium members will consent to the extension remains uncertain.
• The extension will be forthcoming as the delay is procedural, there is a reputational risk from a deal break, the time investment is significant, and the warning was legally required.

• We discuss the next steps in the fight for the control of Korea Zinc, after the completion of the tender offer by the MBK Partners and Young Poong alliance. 
• After the tender offer, MBK and Young Poong’s stake in Korea Zinc increased from 33.13% to 38.47%, coming close to more than half of the voting rights.
• We continue to believe that at current stage, MBK/Young Poong alliance has the advantage in the fight for the control of Korea Zinc.

• Some two weeks after it became apparent Alimentation Couche-Tard (ATD CN) had lobbied a bid in for Seven & I Holdings (3382 JP), Artisan Partners wrote a letter.  
• It was full of misguided analysis, ungrounded insinuation of a general nature without specifying where they would have a problem. It seemed to be complaint for the sake of complaint.
• Today another public letter. This time there are a couple of worthwhile suggestions, some accusations of fiduciary impropriety based on no evidence, and an implicit admission they should have sold?

• With 95% of the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index at the close on 13 December.
• We estimate a one-way turnover of 11% at the rebalance resulting in a one-way trade of CNY17.56bn (US$2.48bn). The Information Technology and HealthCare sectors gain at the expense of Industrials.
• After drifting lower over the last couple of months, the forecast adds have outperformed the forecast deletes over the last couple of weeks. There should be more to go here.

• Back in March, the CSRC said it aimed to “form two to three investment banks and institutions with international competitiveness and market leadership by 2035″.
• Last week’s announced merger between China’s leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong (6837 HK), is a move in that direction. Expect more scrip mergers to follow. 
• There have also been some media reports that the GJS/Haitong terms disadvantage holders of other Hong Kong broker stocks if potentially acquired in a merger. It’s not quite that simple. 

• There are 3 adds and 2 deletes for the iSharesGlobal Clean Energy ETF while there are 2 adds and 2 deletes for the iShares Global Water UCITS ETF.
• With US$5bn benchmarked to the iSharesGlobal Clean Energy and related ETFs, and US$3.5bn benchmarked to the iShares Global Water and related ETFs, there is multiple days of ADV to trade.
• We see a noticeable rise in cumulative excess volume over the last two trading sessions, so there will be positioning in the stocks. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

About Kina Bank

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

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

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

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

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

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads Seven & I Holdings (3382 JP), Shanghai Henlius Biotech (2696 HK), Canvest Environmental Protection Group (1381 HK), Haitong Securities Co Ltd (H) (6837 HK), Shinko Electric Industries (6967 JP).
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Xingda International (1899 HK), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Descente Ltd (8114 JP), T Gaia Corp (3738 JP). 

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

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

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

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

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

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

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

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

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

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

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

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

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