Category

Event-Driven and Index Rebalance

Feb 16
0

Weekly Top Ten Event-Driven and Index Rebalance – Feb 16, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. 7&I (3382) – In Limbo, Dipping, But Stories Coming Together

By Travis Lundy, Quiddity Advisors

  • In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
  • We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
  • York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.

2. Japan: Last Look at Potential Passive Selling in February

By Brian Freitas, Periscope Analytics

  • There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
  • Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
  • The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.

3. China/HK: Passive Activity Expected Later This Month

By Brian Freitas, Periscope Analytics

  • There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
  • The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
  • Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.

4. Australia: Last Look at Potential Passive Selling in February

By Brian Freitas, Periscope Analytics

  • There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks. 
  • If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
  • The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.

5. NIFTY NEXT50 Index Rebalance Preview: Final List of Potential Changes in March

By Brian Freitas, Periscope Analytics

  • With the review period now complete, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
  • Bajaj Housing Finance (BHF IN) and Swiggy (SWIGGY IN) are a hair’s breadth apart on market cap and only one of them could be added to the index.
  • With quantitative criteria now being used to add stocks to the F&O segment, it is possible there is no change to the index methodology to limit inclusion to F&O members.

6. Kaonavi (4435 JP) – Small HR Software Co Gets 121% Premium LBO from Carlyle

By Travis Lundy, Quiddity Advisors

  • Another Japanese smallcap takeover at a huge premium. Must be a day ending in “y.” It is a thing recently. 
  • Interestingly, this is NOT an MBO. It is an LBO. Carlyle is buying out Kaonavi Inc (4435 JP) at ¥4,380/share which is 19x book and 89x EBIT. Nice price.
  • I expect this gets done easily because the co-CEO with 28.7% and Recruit with 20.6% are putting in. There’s another easy 9.7%. One more holder and this is done.

7. S&P/NZX Index Rebalance Preview: Couple of Changes in March

By Brian Freitas, Periscope Analytics

  • There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.
  • The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.
  • A2 Milk Co Ltd (ATM NZ) is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.

8. Taiwan Top 50 ETF Rebalance Preview: Eva Air (2618 TT) Winging Its Way In

By Brian Freitas, Periscope Analytics

9. SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer

By Travis Lundy, Quiddity Advisors

  • On Friday, SBI Sumishin Net Bank (7163 JP) fell 12.5% in the last 90 minutes of trading. This was not due to their Q3 earnings release (out 30 January).
  • It seemed due to investor disappointment in the content of the NTT earnings call. As discussed in the forked insight, there had been speculation NTT would buy SBI Sumishin.
  • Investors had thought NTT would pay more than 28x earnings and a ¥600bn premium to book to buy the business. At 23.7x Mar25e EPS and 4.1x book, it’s still expensive.

10. Nifty IT Index Rebalance Preview: Oracle Financial Services Could Replace L&T Tech

By Brian Freitas, Periscope Analytics

Feb 09
0

Weekly Top Ten Event-Driven and Index Rebalance – Feb 9, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. India: Potential Free Float Changes & Passive Flows in February

By Brian Freitas, Periscope Analytics

  • Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-June.
  • The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
  • Depending on the date that the shareholding was published, there could be 13 stocks with passive inflows from global trackers while 4 could see passive outflows in February.

2. FXI ETF: Potential Changes in the Year of the Snake

By Brian Freitas, Periscope Analytics

3. Taiwan’s Yageo (2327 TT) Announces Hostile Tender on Shibaura Electronics (6957 JP) – I Have 🍿🍿

By Travis Lundy, Quiddity Advisors

  • Today, Taiwanese passive components maker Yageo Corporation (2327 TT) announced its Board had approved the launching of a Tender on Shibaura Electronics (6957 JP). 
  • It turns out YAGEO approached them in October, Shibaura stonewalled for 3mos, required an NDA to meet, and refused to budge. METI Corporate Takeover Guidelines were likely ignored.
  • This could set off a flurry of activity including competition, an auction, promises of dividends, and who knows what. It will be exciting but it’s not C&F.

4. Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month

By Brian Freitas, Periscope Analytics

  • Barito Renewables Energy (BREN IJ) stock has gone through a series of gyrations as index inclusion was announced and then retracted due to the concentrated holding of the stock.
  • With pre-IPO PE/VC investors selling some stock, the increase in float could result in the inclusion of Barito Renewables Energy (BREN IJ) in a global index later this month.
  • The inclusion of the stock in the index will require passive trackers to buy just over 400m shares of the stock. That is over 14x ADV and will be impactful.

5. STAR50/STAR100 Index Rebalance Preview: One Is Meh; The Other Is👍

By Brian Freitas, Periscope Analytics

  • With the review period complete, we forecast 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index. There are a few migrations between the indices.
  • We estimate turnover of 3.8% for the SSE STAR50 (STAR50 INDEX) and 9.9% for the STAR100 Index. The estimated net round-trip trade is CNY 13bn (US$1.8bn).
  • The forecast adds to the STAR50 INDEX have underperformed the forecast deletes. For the STAR100 Index outright changes, the forecast adds have outperformed the forecast deletes by a lot.

6. Kyocera (6971) – Changes Policies – Will Sell KDDI Faster and Buy Back Shares

By Travis Lundy, Quiddity Advisors

  • Today, in conjunction with the release of Q3 earnings, Kyocera Corp (6971 JP) announced a change in its Corporate Governance Code doc, a change in Cross-holding Policy, and Buyback Policy.
  • Full-Year earnings guidance revision was non-salutary. Revs -1%, OP -69%, Net Profit -72% vs previous predictions from 30 October (those were -1.5%, -38.2%, -36.6% vs April guidance at the time). 
  • Based on this disappointment, they announced they would speed up the sale of crossholdings and buy back shares this year and over the following three years.

7. KOSPI200 Index Rebalance Preview: 6 Potential Changes in June; LG CNS Listing Could Increase That

By Brian Freitas, Periscope Analytics

  • Halfway through the review period, there could be 6 changes for the Korea Stock Exchange KOSPI200 (KOSPI2 INDEX) in June. The LG CNS (LGCNSZ KS) listing could increase that number.
  • The impact on the potential inclusions ranges from 2.1-26 days of ADV while the impact on the potential deletions varies from 5-11 days of ADV.
  • The forecast adds have outperformed the forecast deletes over the last few months and the performance gap is near its widest point.

8. KRX New Deal Index Rebalance Preview: Smaller Deal Than Usual

By Brian Freitas, Periscope Analytics

9. Osaka Steel (5449) Large Buyback At a Discount Ruins Fun For Activists

By Travis Lundy, Quiddity Advisors

  • Osaka Steel (5449 JP) is 65% owned by Nippon Steel Corporation (5401 JP). They make a relatively simple set of steel products used by shipbuilders, construction companies, and warehouse builders. 
  • Activist Effissimo Capital went over 5% in October 2016 and is still a top holder. Activist Strategic Capital went over 5% in December 2023 and now owns 10+% of votes. 
  • The “hope” had been that Nippon Steel buy out minorities and Osaka Steel would be rescued from mediocre capital returns. That was not to be. Activists are disappointed. 

10. Korea: 11 Potential Index Deletions in February

By Brian Freitas, Periscope Analytics

  • There are 11 stocks (maybe 12) in Korea that could be deleted from a global index in February and that will result in large selling from passive trackers.
  • With announcement in a week and implementation in just over 3 weeks, there is positioning in a lot of the names.
  • With short selling still banned, positioning will not be as high as the passive selling and the stocks could still drop over the next few weeks.
Feb 02
0

Weekly Top Ten Event-Driven and Index Rebalance – Feb 2, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?

By Travis Lundy, Quiddity Advisors

  • Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.
  • The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.
  • The setup very near-term could be pretty interesting, and worth watching.

2. Guotai Junan/Haitong Sec Merger: The Many Index Flows Around the Corner

By Brian Freitas, Periscope Analytics

3. Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade

By Brian Freitas, Periscope Analytics

4. Sigma Healthcare (SIG AU): Shareholders Approve Merger; Passives Could Start Buying in Two Weeks

By Brian Freitas, Periscope Analytics

  • Sigma Healthcare (SIG AU) and Chemist Warehouse (CWG) shareholders have approved the merger with 99.86% and 100% of the votes cast in favour.
  • The Second Court Hearing is on 3 February and the merger will be implemented on 12 February, which is when the passive buying could commence.
  • Sigma Healthcare has continued to trade higher on a record margin and sales expansion for CWG and expected passive buying that could top A$3bn over the next few months.

5. 3D Launches Partial Tender Offer on NTT UD REIT (8956)

By Travis Lundy, Quiddity Advisors

  • Seemingly out of the blue, Singapore-based activist investment fund 3D Investment Partners has launched a partial tender offer at a small premium on NTT UD REIT Investment Corporation (8956 JP). 
  • 3DIP currently owns 2.2% and at maximum, will own 15.00% of the REIT units outstanding less treasury units. It intends to own the units for “pure investment purposes.”
  • “Shareholder” structure is different for J-REITs vs companies. And this J-REIT has an interesting future possibility. But…

6. Solactive Global Uranium & Nuclear Components Index Rebalance: DeepSeek Led Selloff & 1 Delete

By Brian Freitas, Periscope Analytics

  • Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There is only 1 delete with implementation at the close on 31 January.
  • As expected, GoviEx Uranium (GXU CN) will be deleted from the index and there will be a bunch of capping changes, especially for non-pure play stocks.
  • Estimated one-way turnover is 5.8% resulting in a round-trip trade of US$386m. There are many stocks with multiple days of ADV to trade.

7. Indian Renewable Energy (IREDA IN) QIP: Index Implications

By Brian Freitas, Periscope Analytics

  • IREDA has announced a Qualified Institutional Placement (QIP) of a maximum of INR 50bn as long as the Government of India’s holding does not drop by more than 7%.
  • There will be passive buying at the time of settlement of the QIP shares while the increase in float will bring the stock closer to inclusion in another global index.
  • With the stock close to index inclusion level and down 37% from its peak, there could be positioning in the stock for passive inflows.

8. PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON

By Brian Freitas, Periscope Analytics

9. Global Foods Creators (7559) – Another Stupidly Cheap MBO With Rigged DCF

By Travis Lundy, Quiddity Advisors

  • Today after the close, Global Food Creators (7559 JP) announced that the CEO would sell his 1.23% of the company into an MBO by a company he set up. 
  • The family company which owns 27%, and he would fund the takeover of the other 73% with 1% equity taken from his share sale, and 99% bank loans. 
  • The TOB is at 0.65x book for a cash-rich company. Liquidate the cash and the rest is being taken over at 0.33x book. Aaaaargh. 

10. EQD | DeepSeek’s New AI: Price Supports and Broader Implications for META, NVDA, S&P 500, Nasdaq 100

By Nico Rosti, MRM Research

  • News that DeepSeek’s latest AI release appears to be superior to latest OpenAI’s ChatGPT in  most (if not all) of the benchmark tasks have apparently shaken markets today.
  • DeepSeek may be able to beat its competitors (including other AI developed by other US companies like Meta Platforms (META US) ), using lower cost chips and less data.
  • Tech companies like NVIDIA Corp (NVDA US) are falling hard (like -12%) in pre-market, and so are the US Indices. Let’s see where support for reversal rallies can be found.
Jan 26
0

Weekly Top Ten Event-Driven and Index Rebalance – Jan 26, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion

By Brian Freitas, Periscope Analytics

  • With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.
  • ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
  • The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.

2. Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening

By Brian Freitas, Periscope Analytics

3. CATL (300750 CH): Index Inclusion Post H-Share Listing

By Brian Freitas, Periscope Analytics

4. Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes Next Week

By Brian Freitas, Periscope Analytics

  • Based on prices and turnover from 22 January, there could be one deletion from the index in January. Plus there will be capping and float changes.
  • There are four stocks that meet the inclusion criteria, but all are non-pure play companies, and the index is already at the limit of 15 non-pure play companies.
  • Estimated one-way turnover is 6.8% resulting in a round-trip trade of US$506m. There are many stocks with multiple days of ADV to trade.

5. Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?

By Travis Lundy, Quiddity Advisors

  • JIC gave an official statement yesteday about the expected start of its Shinko Electric Industries (6967 JP) Tender Offer. A later-than-expected start has people asking questions.
  • It has traded tighter since the SAMR approval news (I warned on 16 Dec it was coming and the next day it closed 6.6% gross).
  • Below I discuss the language of the Conditions Precedent which would allow a MAC. 

6. J&T Global Express (1519 HK): Global Index Inclusion Coming Up

By Brian Freitas, Periscope Analytics

7. NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March

By Brian Freitas, Periscope Analytics

  • With 10 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
  • Estimated one-way turnover is 15.9% resulting in a one-way trade of INR 52bn (US$600m). All forecast changes, bar one, have over 1.5x ADV to trade from passive trackers.
  • All the forecast deletes are F&O members while two adds are not. NSE Indices could revisit the index membership criteria especially given the launch of futures on the index.

8. Taiwan: Potential Global Index Changes; Last Review Day Today

By Brian Freitas, Periscope Analytics

  • There could be 2 adds and 2 deletes for Taiwan in a global index in February. Today is the last trading day ahead of the CNY holidays.
  • Passive trackers will need to trade between US$76m to US$370m of the stocks and impact will vary between 3.2x-7x ADV to trade.
  • Shorts are small in the potential adds and there has been short covering recently, while there has been a big increase in shorts for one of the potential deletes.

9. Henlius (2696)’s Fail Sets (Another) Bad Precedent

By David Blennerhassett, Quiddity Advisors

  • The question was asked in Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal? Well, now we have one as LVC inexplicably blocked.
  • It didn’t appear to make economic rationale for LVC to crash the party – knowing they would do so, and not bother to reduce their position accordingly.
  • In tandem with the TCM (570 HK) debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.

10. Tsuruha (3391) – Welcia (3141) Future Merger Ratio – Pounding the Table

By Travis Lundy, Quiddity Advisors

  • In late December, a Jiji article said Tsuruha & Welcia would look to integrate by end-2025, now that they no longer need SEC approval. Odd language, but we’ll take it.
  • That means we look to what might happen between here and there. The companies will hire Legal and Financial Advisors, wait until both report FY, then start negotiating.
  • What has been the long-term trend and the trend of the last two years is different. It’s worthwhile looking at valuations and expectations to decide how to trade. It’s good.
Jan 19
0

Weekly Top Ten Event-Driven and Index Rebalance – Jan 19, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

By Brian Freitas, Periscope Analytics

  • The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
  • Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
  • The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.

2. Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness

By David Blennerhassett, Quiddity Advisors

  • Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
  • After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
  • Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.  

3. Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel

By Brian Freitas, Periscope Analytics

  • Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
  • Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
  • The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).

4. Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand

By Travis Lundy, Quiddity Advisors

  • Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
  • It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved. 
  • Lockup expiry is next week, and there is a likely large index event in ~10 weeks.

5. Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

By Arun George, Global Equity Research Ltd

  • The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.
  • There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions. 
  • I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.

6. Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness

By Brian Freitas, Periscope Analytics

  • A group of 7 shareholders are looking to sell 61.3m shares in Murata Manufacturing (6981 JP) to raise JPY 143.8bn (US$916m). That is 3.3% of shares outstanding.
  • The shares are being offered at a price range of JPY 2296-2345.5/share, a discount of 5-7% to the last close of the stock.
  • With the offering less than 5% of shares outstanding and less than US$1bn in size, there is no immediate passive buying and there could be further weakness in the stock.

7. Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

By Brian Freitas, Periscope Analytics

  • Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
  • Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
  • Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

8. Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap

By Travis Lundy, Quiddity Advisors

  • Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
  • It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
  • And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.

9. SHIFT (3697) The Next – Potential Big Index Add

By Travis Lundy, Quiddity Advisors

  • Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them. 
  • Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
  • There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.

10. Hyundai Motor (HYUNDAI IN): Anchor Lock-Up Expiry Increases Float; Index Inclusions Near

By Brian Freitas, Periscope Analytics

  • The lock-up on the second half of the anchor investor allocation for Hyundai Motor India (HYUNDAI IN) ends after market close today and the shares will be available for sale tomorrow.
  • The lock-up expiry further increases free float for the stock and there will be multiple index inclusions over the next few months.
  • The largest index inclusion will be in February, followed by smaller inclusions in March and June. In total, passives will mop up around 16% of the float.
Jan 12
0

Weekly Top Ten Event-Driven and Index Rebalance – Jan 12, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing

By Brian Freitas, Periscope Analytics

2. Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

By Brian Freitas, Periscope Analytics

  • The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
  • There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
  • If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

3. 7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace

By Travis Lundy, Quiddity Advisors

  • Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
  • Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
  • The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again. 

4. HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
  • There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
  • Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

5. Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn

By Brian Freitas, Periscope Analytics

  • SigmaHealthcare and ChemistWarehouse shareholders meet on 29 January. If the merger resolutions are approved, Second Court Hearing is on 3 February and the merger will be effective on 4 February.
  • Upward migration in one large global index could take place on 13 February while upweights and upward migrations in the S&P/ASX indices should be at the close on 21 March.
  • Upward migration in the other global index could take place in March or June. Total passive buying estimate is A$2.76bn. This will be offset by positioning and CWG shareholders selling.

6. S&P/​​​​​​​​​ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger

By Brian Freitas, Periscope Analytics

  • Nearing the end of the review period, there could be 36 adds/deletes across the S&P/ASX family of indices in March.
  • Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
  • Completion of the merger with Chemist Warehouse in February will set off huge passive buying in Sigma Healthcare (SIG AU) over the February to June period.

7. HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

By Brian Freitas, Periscope Analytics

  • We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
  • There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

8. Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.

By Travis Lundy, Quiddity Advisors

  • In December 2019, an article in slightly odd Japanese business magazine Sentaku (選択) suggested Fujitsu Ltd (6702 JP) would imminently seek to address dual listings of subs.
  • Some subs went early. The auction for Fujitsu General (6755 JP) started spring 2023, failed, started again, failed again, and the shares languished. 
  • Two years later we have a deal. Large privately-held company Paloma-Rheem Holdings is the buyer in a split-price deal which comes at a decent but not exorbitant premium.

9. Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March

By Brian Freitas, Periscope Analytics

  • The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
  • There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
  • Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

10. NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed

By Brian Freitas, Periscope Analytics

Jan 05
0

Weekly Top Ten Event-Driven and Index Rebalance – Jan 5, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

By Travis Lundy, Quiddity Advisors

  • In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
  • On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
  • The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

2. HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

By Brian Freitas, Periscope Analytics

3. ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)

By Brian Freitas, Periscope Analytics

  • ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
  • ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
  • There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.

4. Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

By David Blennerhassett, Quiddity Advisors

  • HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
  • The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
  • Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?

5. Australia: Six Stocks in Passive Selling Crosshairs for February

By Brian Freitas, Periscope Analytics

  • Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
  • If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
  • The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

6. InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

By Brian Freitas, Periscope Analytics

  • InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
  • InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
  • Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

7. Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

By Brian Freitas, Periscope Analytics

  • Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
  • There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
  • With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

8. NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

By Brian Freitas, Periscope Analytics

9. Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

By Arun George, Global Equity Research Ltd

10. Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction

By Arun George, Global Equity Research Ltd

  • Grandblue Environment Co A (600323 CH) continues to make steady progress in satisfying the precondition for its HK$4.90 privatisation offer for Canvest Environmental Protection Group (1381 HK). 
  • Two of the five preconditions are satisfied, and another will be satisfied by 20 January. The long stop date of 17 July provides ample time to satisfy the remaining two. 
  • Although the peers have materially re-rated, the offer implies a premium compared to peer multiples. Vote risk remains low, aided by selling by a shareholder with a blocking stake. 
Dec 29
0

Weekly Top Ten Event-Driven and Index Rebalance – Dec 29, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Japan: Potential Passive Selling in February

By Brian Freitas, Periscope Analytics

  • Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
  • There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
  • Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

2. Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback

By Travis Lundy, Quiddity Advisors

  • Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025… 
  • Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
  • Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.

3. KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
  • A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
  • Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

4. Korea: Potential Relegations from K League 1

By Brian Freitas, Periscope Analytics

  • There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
  • There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
  • Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

5. LG CNS IPO: Limited Float Pushes Back Passive Buying

By Brian Freitas, Periscope Analytics

  • LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
  • As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
  • Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

6. [Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback

By Travis Lundy, Quiddity Advisors

  • Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
  • Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December. 
  • I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected. 

7. Nidec Goes Hostile On Makino Milling at ¥11,000/Share

By Travis Lundy, Quiddity Advisors

8. NEC Networks (1973 JP) Next To Last Showdown – NEC Lowers Minimum, Bumps Tiny, Ignores Synergies

By Travis Lundy, Quiddity Advisors

  • On Friday, NEC Corp (6701 JP) raised the price for its Tender Offer on Nec Networks & System Integr (1973 JP) from ¥3,250 to ¥3,300. 
  • It also lowered the minimum to 10.153mm shares (6.82%). It had proposed to do so earlier but NESIC demanded a bump, and NEC didn’t want to. 
  • Now it’s bumped. That’s the “final price.” But it still does not include “a fair allocation of a portion of the value that cannot be realised without an acquisition.”

9. GA Pack (468 HK): The State of Play

By Arun George, Global Equity Research Ltd

  • On 20 December, Shandong Xinjufeng Technology Packaging (301296 CH) satisfied the precondition for its Greatview Aseptic Packaging (468 HK) offer. The offer document will be despatched by 27 December.
  • Analysing the EGM vote on 18 October suggests that the 50% minimum acceptance condition will be met if no competing management offer is made. 
  • Management will oppose the offer, but the last EGM protest votes suggest that many minorities will ignore management. At the last close, the gross/annualised spread was 2.3%/25.3%.

10. Henlius (2696 HK): Interesting Shareholder Movements with the Vote on 22 January

By Arun George, Global Equity Research Ltd

  • Shanghai Henlius Biotech (2696 HK)’s IFA opines that Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s HK$24.60 offer is fair and reasonable. The vote is on 22 January. 
  • The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There are recent movements in H Share substantial shareholders. 
  • Key shareholders should be supportive of the cash/scrip offer. At the last close and for a 15 February payment, the gross/annualised spread is 2.9%/16.9%.
Dec 22
0

Weekly Top Ten Event-Driven and Index Rebalance – Dec 22, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. How Has the Index Rebalance Strategy Performed in 2024?

By Brian Freitas, Periscope Analytics

  • It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
  • Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
  • As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

2. TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact

By Brian Freitas, Periscope Analytics

  • There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
  • Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
  • The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.

3. HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

By Brian Freitas, Periscope Analytics

  • We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
  • We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

4. PCOMP Index Rebalance Preview: Two Changes Likely in February

By Brian Freitas, Periscope Analytics

  • The review period for the February rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) ends in two weeks.
  • There could be two changes for the index with passive trackers needing to trade between 23-64x ADV in the stocks.
  • The passive buying is a lot larger than the passive selling, there will be funding outflows for the other index constituents; some stocks will have over 1x ADV to trade.

5. MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks

By Brian Freitas, Periscope Analytics

6. Sony To Buy 7+% Stake in Kadokawa (9468 JP) For ¥50bn, Ending Near-Term Hopes of Takeover

By Travis Lundy, Quiddity Advisors

  • Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
  • 40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason. 
  • Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.

7. A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

By Sanghyun Park, Clepsydra Capital

  • This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
  • We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
  • Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.

8. KRX Value-Up Index Rebalance Results and Estimated Passive Impact

By Sanghyun Park, Clepsydra Capital

  • KRX updated the Value-Up Index with five new names: KB Financial, Hana Financial, KT Corp, SK Telecom, and Hyundai Mobis, with Mobis replacing JB Financial, surprising the market.
  • This is the first rebalancing, packed into one day, so expect notable price action. Reverse moves could also follow Thursday as pre-positioned trades unwind, so monitor price action closely.
  • Even after Thursday’s rebalancing, half of the funds, especially from the National Pension Service, will flow into high-yield stocks, likely driving significant price moves through early next year.

9. 7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

By Travis Lundy, Quiddity Advisors

  • Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
  • Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up. 
  • An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

10. SET50 Index Rebalance: Four Changes; Cal Comp🚀

By Brian Freitas, Periscope Analytics

Dec 15
0

Weekly Top Ten Event-Driven and Index Rebalance – Dec 15, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop

SUBSCRIBE FOR FREE

1. Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

By Travis Lundy, Quiddity Advisors

  • A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
  • ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it). 
  • This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically. 

2. Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet

By Arun George, Global Equity Research Ltd

3. Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side

By Travis Lundy, Quiddity Advisors

  • The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
  • There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
  • There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.

4. NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

By Travis Lundy, Quiddity Advisors

  • Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price. 
  • The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely. 
  • Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares. 

5. S&P/​​​​ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted

By Brian Freitas, Periscope Analytics

6. Yuanta/​P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact

By Brian Freitas, Periscope Analytics

  • There are 8 adds and 7 deletes for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
  • Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
  • There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

7. Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

By Brian Freitas, Periscope Analytics

  • The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
  • The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
  • We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

8. NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

By Brian Freitas, Periscope Analytics

  • There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
  • Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
  • The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

9. Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY

By Brian Freitas, Periscope Analytics

  • Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
  • The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
  • The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.

10. Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

By David Blennerhassett, Quiddity Advisors

  • When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
  • Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
  • The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question.  Clean deal.