In today’s briefing:
- TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way – Some Big Sell Names
- Mercari (4385) – End-July TOPIX Inclusion Update
- TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade
- Hong Kong CEO & Director Dealings – 11th July 2022
- Link’s Board Shows Its Hand
- Local Pensions’ Spot/Futures Arb on Samsung Electronics & 1P Discount Distortion
- Pan Pacific (7532) To Up Stake in Kanemi (2669) Through Partial Tender
- KOSDAQ150 Index Rebalance Preview (Dec 2022): Changes Galore Early in the Review Period
TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way – Some Big Sell Names
- The July-end TOPIX FFW Rebalance is larger than most expected, I believe.
- There should be US$3.5bn one-way, with only a couple of major buy names.
- Chugai Pharmaceutical (4519 JP), Canon Inc (7751 JP), Unicharm Corp (8113 JP), Kubota Corp (6326 JP), Asahi Group Holdings (2502 JP), and Shiseido (4911) are each US$170mm+ to sell.
Mercari (4385) – End-July TOPIX Inclusion Update
- In mid-January, I wrote about Mercari’s likely TOPIX inclusion 4-5 months later. 4.5mos later, it had been included (Mercari (4385) TOPIX Inclusion, Finally… And It’s Bigger Than It Looks) .
- The publicly-visible announcement data often does not show TOPIX inclusion parameters. A little sleuthing gets you there.
- It’s still bigger than it looks, but some large holders have recently been selling.
TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade
- Mercari Inc (4385 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 28 July.
- There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.
- We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).
Hong Kong CEO & Director Dealings – 11th July 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- This insight also flags those companies where shares have been pledged, both recently and ongoing.
Link’s Board Shows Its Hand
- The Link Administration (LNK AU) Board will not recommend Dye&Durham/DND’s revised lower offer of A$4.57 per share due to shareholder feedback, the underlying value and alternative options.
- The slightly above guidance is designed to show that Link’s contribution to DND’s build a billion objective remains on track and there is little chance of triggering the MAC clause.
- DND needs to secure a deal this week to use its attractive deal financing, according to AFR. This could be the cue for DND to give a little more.
Local Pensions’ Spot/Futures Arb on Samsung Electronics & 1P Discount Distortion
- The Samsung Electronics single-stock futures trading volume has increased significantly. In the most recent F 202207, the futures/cash TV ratio soared to 80%, considerably higher than the usual 40% level.
- Local pension funds are doing spot/futures arbitrage quite aggressively on Samsung Electronics, resulting in unintended consequences, including the 1P discount distortion we witnessed on June 16.
- This 1P discount distortion provides a higher spread than futures/spot arbitrage. So, we need to preemptively set up pref arbitrage while closely monitoring Samsung Electronics’ basis.
Pan Pacific (7532) To Up Stake in Kanemi (2669) Through Partial Tender
- Pan Pacific International Holdings (7532 JP) has announced a Tender Offer on Kanemi Co Ltd (2669 JP) to buy out the remaining shares of its one-time co-owner, Familymart.
- The Tender Offer is for 11.83% of shares (ex-Treasury) at a 3% discount to last. It will get PPIH to near 40%, but together with friendlies, they own ~70%.
- There is a small but extraordinarily illiquid opportunity here. I’d avoid, but there is an interesting potential put option.
KOSDAQ150 Index Rebalance Preview (Dec 2022): Changes Galore Early in the Review Period
- One third of the way through the review period for the June rebalance, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
- One-Way turnover is estimated at 3.88% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
- The potential adds have outperformed the potential deletes over the last few months. With the potential adds not short sell eligible, there could be more to go here.
💡 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
