In today’s briefing:
- CSI Liquor/ Alcoholic Drink Index Rebalance: Capping to Drive Larger Flows
- 7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- STAR Chip Index Rebalance: 3 Changes; US$413m Round-Trip Trade
- Merger Arb Mondays (02 Dec) – Shinko, WealthNavi, AVJennings, SG Fleet, Latin Res, Get Nice, GA Pack
- Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Dec24), TSE Updates
- CES China Semiconductor Chips Index Rebalance: Multiple Index Inclusions for the Adds
- Quiddity STAR 50/100 Dec 24 Results: US$793mn Capping Outflow for SMIC; 4 Changes for STAR 100
- CSI All Share Semiconductor Index Rebalance: Methodology Change Leads to 7 Adds, 29 Deletes
- Northern Star’s A$5bn Tilt for De Grey (DEG AU)
- Quiddity SSE50/180 Dec 24 Results: All SSE 50 ADDs in the LONGs Basket; Positive Start; More to Come
CSI Liquor/ Alcoholic Drink Index Rebalance: Capping to Drive Larger Flows
- There is 1 add/ 2 deletions for the CSI Alcoholic Drink Index and no constituent changes for the CSI Liquor Index.
- The largest flows arise as a result of capping of constituents to 15% of the index weight. Impact on the stocks varies from 0.2-0.6 days of ADV.
- WeiLong Grape Wine outperformed the deletes in early October, but the deletes moved higher and closed the gap. The gap has started to open up again in the last week.
7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
- I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
- This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness
STAR Chip Index Rebalance: 3 Changes; US$413m Round-Trip Trade
- CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
- There are 3 changes for the index and we estimate passive buying of 0.3-0.65x ADV in the adds and selling of between 0.4-0.6x ADV in the deletes.
- On average, the adds to the index have outperformed the deletes over the last 5 weeks with the adds moving higher and the deletes trending lows.
Merger Arb Mondays (02 Dec) – Shinko, WealthNavi, AVJennings, SG Fleet, Latin Res, Get Nice, GA Pack
- 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: WealthNavi (7342 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), Canvest.
- Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Elematec Corp (2715 JP), I-PEX (6640 JP).
Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Dec24), TSE Updates
- TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
- 344 new CGRs were filed since 31 October. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
- The TSE Council for the Followup to Market Restructuring met a month ago. They want more progress and more fairness in fair takeovers. Worth reading the docs (here).
CES China Semiconductor Chips Index Rebalance: Multiple Index Inclusions for the Adds
- CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
- There are 3 changes for the index, and we estimate one-way turnover of 1.7% resulting in a round-trip trade of CNY 570m (US$79m).
- Nexchip Semiconductor (688249 CH) and United Nova Technology (688469 CH) are adds to other indices as well and the impact on the stocks will be a lot higher.
Quiddity STAR 50/100 Dec 24 Results: US$793mn Capping Outflow for SMIC; 4 Changes for STAR 100
- The December 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 29th November 2024.
- There will be zero changes for the STAR 50 index and four changes for the STAR 100 index.
- We expect one-way flows of approximately US$793mn and US$136mn for the STAR 50 and STAR 100 index rebal events respectively.
CSI All Share Semiconductor Index Rebalance: Methodology Change Leads to 7 Adds, 29 Deletes
- Following a methodology change in mid-November for the CSI All Share Semiconductor Index, there are 7 adds and 29 deletes for the index in December.
- Estimated one-way turnover at the rebalance is 6% leading to a round-trip trade of CNY 3.15bn (US$435m).
- The adds outperformed the deletes bigly in the first 2 weeks of November. Some of those gains have been given back but a new uptrend seems to be taking shape.
Northern Star’s A$5bn Tilt for De Grey (DEG AU)
- De Grey Mining (DEG AU), which boasts one of Australia’s largest undeveloped gold projects, has announced a merger, by way of Scheme, with Northern Star Resources (NST AU).
- Northern Star is offering 0.119 new shares for every De Grey share, and will hold ~80.1% of the combined entity, with De Grey shareholders the remaining ~19.9%.
- Terms back out an implied price of A$2.08/share, or a ~37% premium to last close. This Offer has the unanimous backing of both boards.
Quiddity SSE50/180 Dec 24 Results: All SSE 50 ADDs in the LONGs Basket; Positive Start; More to Come
- The December 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 29th November 2024.
- There will be 4 changes for SSE 50 and 18 changes for SSE 180 during the December 2024 index rebal event.
- SSE 50 ADDs and DELs will see large index flows while the SSE 180 flow names have fairly insignificant flow expectations.
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