In today’s briefing:
- JAPAN PASSIVE: Who Owns What 2023?
- Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
- End of Mandatory Lock-Up Periods for 40 Companies in Korea in August 2023
- Toshiba – Earnings Preview 1QFY24
- Macquarie Korea Infra Fund Announces A Rights Offering Worth 361 Billion Won
- EQD | Nikkei 225 (NKY) MONTHLY Trajectories
- (Mostly) Asia M&A, July 2023: Costa Group, Pacific Current, IMAX, Takisawa Machine Tools, Yachiyo
JAPAN PASSIVE: Who Owns What 2023?
- The 2023 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each.
- Even if you do not “play” index changes, understanding impact is important. Advantest is up 100% in 3mos. Existing passive ownership and new passive buying were crucial to that performance.
- Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks in Japan.
Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
- The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
- There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
- If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).
End of Mandatory Lock-Up Periods for 40 Companies in Korea in August 2023
- We discuss the end of the mandatory lock-up periods for 40 stocks in Korea in August 2023, among which 2 are in KOSPI and 38 are in KOSDAQ.
- These 40 stocks on average could be subject to further selling pressures in August and could underperform relative to the market.
- Among these 40 stocks, the top five market cap stocks include HK inno.N, PhilEnergy, CJ CGV Co Ltd, Sure Soft Tech, and CanariaBio.
Toshiba – Earnings Preview 1QFY24
- Toshiba announced on Friday that JIP’s upcoming tender offer would not make the July end deadline.
- At this point delays for Toshiba are par for the course and we do not think anything needs to be read into this.
- With earnings coming up next week we examine the likely trends and the possibility of a revision to guidance.
Macquarie Korea Infra Fund Announces A Rights Offering Worth 361 Billion Won
- On 28 July, Macquarie Korea Infra Fund (088980 KS) announced that it will conduct a rights offering worth 361 billion won, representing 7.4% of its current market cap.
- The major uses of funds from the rights offering include acquisition of a city gas supplier (128 billion won) and investment in Incheon-Gimpo Expressway private investment project (128 billion won).
- We have a positive view of this rights offering. We believe the acquisition of CN City Energy and the investment in Incheon-Gimpo Expressway will add additional value on the company.
EQD | Nikkei 225 (NKY) MONTHLY Trajectories
- The Nikkei 225 (NKY INDEX) rallied +27% in the first 6 months of 2023. 6 months closed up, July closed (barely) down. The index can rise further in Aug/Sep.
- If August is down, a LONG opportunity: look at support prices between 32391 and 30600, good probability to see the market going higher from there.
- If rallying in August, Nikkei could rise between +1.73% (33745) and +3.29% (34265). Continuation of the rally into September could reach higher prices but will encounter resistance at +8.29% (35922).
(Mostly) Asia M&A, July 2023: Costa Group, Pacific Current, IMAX, Takisawa Machine Tools, Yachiyo
- For the month of July 2023, 6 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$2.2bn.
- The average premium for the new deals announced (or first discussed) in July was 40%. The average YTD is 36%.
- This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.
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