In today’s briefing:
- FTSE China A50 Index Rebalance: One Set of Surprises & Large Turnover
- KRX New Deal Index Rebalance: No Surprises as LG Chem Not Deleted from Battery Index
- Hitachi Metals (5486) – Where IS Undisturbed?
- FTSE EPRA Nareit Index Rebalance: Four Inclusions for Asia; Some High Impact Names
- FTSE China 50 Index Rebalance: Three Changes as Index Turnover Soars
- Kadokawa – Rather Than Waste Time Considering a Sony Buyout of Square Enix Look at This Instead
- 51job (JOB US)’s Offer Price Back Up To $61
- Crown Resorts: AUSTRAC And Prescribed Occurrences
- 51job’s Improved $61 Offer Gets the Board Onside
- MSCI Announces It Will Exclude Russia from MSCI EM Indices
FTSE China A50 Index Rebalance: One Set of Surprises & Large Turnover
- There are three sets of changes for the FTSE China A50 index at the March rebalance with implementation on 18 March. Two changes were expected while one is a surprise.
- The March rebalance will also see the Foreign Ownership Limits applied to the stocks. Estimated one-way index turnover is 17.39% and will result in a one-way trade of CNY 9,360m.
- As the surprises, we’d keep an eye on China State Construction A (601668 CH) and China Life Insurance (601628 CH) over the next few days.
KRX New Deal Index Rebalance: No Surprises as LG Chem Not Deleted from Battery Index
- The announced changes are exactly in line with our forecasts with one change each for the Secondary Battery, Bio and Game Index. There are three changes to the Internet Index.
- There are two changes to the BBIG Index with LG Energy Solution (373220 KS) replacing LG Chem Ltd (051910 KS) and AfreecaTV (067160 KS) replacing Douzone Bizon (012510 KS).
- The largest buying impact will be on AfreecaTV (067160 KS) while the largest selling impact will be on Douzone Bizon (012510 KS), Soulbrain (357780) and LG Chem Ltd (051910 KS).
Hitachi Metals (5486) – Where IS Undisturbed?
- Hitachi Metals (5486 JP) is currently awaiting regulatory approval for its takeover by a consortium led by Bain Capital, announced in late April 2021.
- The deal was originally expected to see a Tender Offer launched in November 2021, but that was delayed because the bidders lacked some necessary regulatory approvals.
- Since then, the stock has sold off. Today it sold off a LOT. Deal break? Market ructions? Someone getting a tap on the shoulder? How far down is the gap?
FTSE EPRA Nareit Index Rebalance: Four Inclusions for Asia; Some High Impact Names
- There will be four inclusions for Developed Asia in the FTSE EPRA Nareit – One REIT, Takara Leben Real Estate Investment, Vital Healthcare Property Trust and ESR Kendall Square REIT.
- There will be around US$77m to buy from passive funds across all inclusions. The largest impacts will be on Vital Healthcare Property Trust (VHP) and ESR Kendall Square REIT (365550).
- The Japan inclusions are a result of the companies publishing reports in English with an independent auditor signing off on them.
FTSE China 50 Index Rebalance: Three Changes as Index Turnover Soars
- As expected, Nongfu Spring (9633), China Overseas Land & Investment (688) and XPeng (9868) will replace Geely Auto (175), China Tower (788) and JD Health (6618) in the index.
- The adds, deletes and capping changes will result in one-way turnover estimated at 9.14% and will result in a one-way trade of HK$4,576m.
- Shorts in Nongfu Spring (9633 HK), JD Health (6618 HK) and China Tower (788 HK) have over 10 days of ADV to cover.
Kadokawa – Rather Than Waste Time Considering a Sony Buyout of Square Enix Look at This Instead
- Over the past few quarters Square Enix has repeatedly been the subject of M&A speculation related to both Microsoft and Sony.
- We consider such speculation to be nonsense and have repeatedly said so.
- However, there is a far more intriguing M&A prospect in Kadokawa and it has not gotten much press…
51job (JOB US)’s Offer Price Back Up To $61
- Back on the 12 January this year, 51 Job Inc (JOBS US) announced the Offeror had proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
- Yesterday 51job said it has entered into a revised merger agreement at US$61.00/share, a 6.55% bump in terms, but still 22.8% down the initial terms.
- Presumably, the amended proposal still requires no PRC regulatory filing. This transaction appears to be done this time, with completion in the 2Q22.
Crown Resorts: AUSTRAC And Prescribed Occurrences
- AUSTRAC has commenced civil penalty proceedings against Crown Resorts (CWN AU) for alleged serious and systemic non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws.
- The statement of claim does not include any quantification of the penalty sought. For Blackstone to walk away from the Crown deal, the fine needs to be at least $750mn.
- A prescribed occurrence appears to have been triggered. But technically, that is not accurate.
51job’s Improved $61 Offer Gets the Board Onside
- The consortium has improved the offer price by 6.6% to $61.00 in cash per ADS. The consortium represents 54.9% of the voting rights.
- The Board intends to recommend shareholders vote in favour of the transaction. The transaction is expected to close during the first half of 2022.
- The combination of the improved offer price and the tech shares sell-off improves the chance of meeting the two-thirds shareholder approval threshold. At last close, the gross spread is 7.0%.
MSCI Announces It Will Exclude Russia from MSCI EM Indices
- MSCI announced this morning (3 March) that it will exclude Russia from MSCI EM indices as of 9 March.
- As a result of this decision, this will further devastate the Russian stock market but it should benefit other MSCI EM included countries including China, Korea, Taiwan, India, and Brazil.
- Some of the Korean stocks which could benefit from the greater passive index capital flowing in include Samsung Electronics Pref, LG Chem Pref, and Hyundai Motor Pref.
Before it’s here, it’s on Smartkarma
