In today’s briefing:
- Korea FSS Releases Final Guidelines for Short Selling Compliance: Trading Implications
- Couche-Tard Targets Seven & I: Seven & I’s Pride on the Line
- Trading Considerations for Won Appreciation & Korean ADR Premium Volatility
- Iriso Electronics (6908 JP): Murakami Becomes a Substantial Shareholder
- Guzman Y Gomez (GYG AU): Free Float to Determine Index Inclusion
- APM Human Services (APM AU): Scheme Vote on 18 September
- APM Human Services (APM AU): 18th Sept Vote On Madison Dearborn’s Offer
- Quiddity Leaderboard ASX Sep 24: Trade Delivers Strong Return Again; 3 Days Remaining for Base Date
- FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- Galderma (GALD): Successful Injection in Swiss & Global Indices
Korea FSS Releases Final Guidelines for Short Selling Compliance: Trading Implications
- This final guideline formalizes earlier drafts by the FSS. Though not strictly mandatory, its detailed requirements mean it functions as a de facto rule that must be followed closely.
- The new, stringent requirements are likely to eliminate common stock borrowing practices in Korea, making timely transactions difficult.
- New trading patterns and market flows may emerge when short selling resumes in April, with increased importance of borrow balance data and potential rise in counter-flow trading.
Couche-Tard Targets Seven & I: Seven & I’s Pride on the Line
- It was reported yesterday that Alimentation Couche-Tard (ATD CN) has put forward a bold proposal to acquire Seven & I Holdings (3382 JP).
- The offer price remains undisclosed, but the market may be anticipating a significant premium based on the share price movement following the news.
- However, we believe the offer price could fall short of market expectations, and it is likely that Seven & i will reject the proposal.
Trading Considerations for Won Appreciation & Korean ADR Premium Volatility
- Increased exchange rate volatility affects the ADR premium, but past patterns show that exchange rate and ADR premium directions may not always align, requiring consideration of specific contextual factors.
- If the won appreciates below the 1,300s range, overseas institutions may shift to asymmetric selling of underlying shares for foreign exchange profit, as shown by rising ADR premiums.
- We should watch for peak conditions to capture significant ADR premiums. Trading options include borrowing underlying shares for ADR conversion, even under the current short-selling ban.
Iriso Electronics (6908 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s entities, City Index Eleventh and Aya Nomura, reported a 5.06% position in Iriso Electronics (6908 JP). The purchases were from 25 July to 13 August.
- Murakami’s average buy-in price over the last 60 days was JPY2,378.90 per share, a 7.8% discount to the last close price.
- Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Iriso is cash-rich with a P/B less than 1x.
Guzman Y Gomez (GYG AU): Free Float to Determine Index Inclusion
- Guzman Y Gomez (GYG AU) listed on 20 June and is eligible for inclusion in the S&P/ASX family of indices at the September rebalance.
- Whether the stock is included in indices depends on the index providers estimate of free float. We expect index providers to assign floats of between 25-35% for the stock.
- Inclusion in one global index could come in November and another in December. Inclusion in the S&P/ASX indices will depend on whether float is higher than 30% or lower.
APM Human Services (APM AU): Scheme Vote on 18 September
- The APM Human Services (APM AU) IE considers Madison Dearborn Partners (MDP)’s A$1.45 offer fair and reasonable as it is within the A$1.40 to A$1.74 valuation range.
- The offer is conditional on FIRB, US HSR and shareholder approval. FIRB approval should be forthcoming as MDP is the second-largest shareholder.
- While the offer remains underwhelming, rollover shareholders and quiet retail boards should ensure the vote passes. At last close and for the 10 October payment, the gross/annualised spread is 1.4%/10.1%.
APM Human Services (APM AU): 18th Sept Vote On Madison Dearborn’s Offer
- Back on the 31st May, employment and disability services play APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, entered a Scheme at A$1.45/share, in cash.
- That’s a 74.7% premium to undisturbed. A scrip option was afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option, if the Scheme is implemented.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 18th September. Expected implementation on the 10 October. The IE says fair & reasonable.
Quiddity Leaderboard ASX Sep 24: Trade Delivers Strong Return Again; 3 Days Remaining for Base Date
- In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the September 2024 index rebal event.
- We continue to expect one change for ASX 100 and two changes for ASX 200.
- Separately, there could be 14 ADDs and 6 DELs for ASX 300.
FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- With the start of the review period around the corner, there could be two changes for the FnGuide Semiconductor Top10 Index at the October rebalance.
- Wonik Ips (240810 KS) and Techwing Inc (089030 KS) are potential adds while ISC Co Ltd (095340 KS) and Dongjin Semichem (005290 KS) are potential deletes.
- Passives will need to trade more than 2x ADV on two potential changes and more than 1x ADV on another potential change.
Galderma (GALD): Successful Injection in Swiss & Global Indices
- Galderma (GALD SW) is one of the largest Global and Swiss Index additions at the August and September 2024 reviews following its recent IPO valued at ~$17bn.
- The company is forecasted to get added in the second Global Index at the September 2024 review. Estimated demand is ~$162m and ~5.0 ADV.
- The IPO lock-up expiry is forecasted to generate an additional demand of ~$42m and ~1.3 ADV at the December 2024 review.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
