In today’s briefing:
- JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria
- Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
- JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
- Japan – Increasing Shorts on Some Interesting** Stocks
- RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)
- Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher
- SK Innovation: Announces Share Cancellation of Nearly 4.92 Million Shares
- TOPIX Inclusions: Who Is Ready (Feb 2024)
- India: Free Float Changes & Passive Flows in February
JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria
- JSR Corp (4185 JP) announced 2 February on its website that the Research Foundation for the State University of New York (“RF SUNY”) filed suit against JSR subsidiary Inpria 25 January.
- JSR claims no wrongdoing. A court order from the US District Court for the Northern District of New York denied RF SUNY’s request for a hearing by 5 February.
- This may put a short-term damper on sentiment in the name, and I expect the JICC people have been working on this for a week.
Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
- Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
- Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
- Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.
JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
- The FT carries an article this AM saying Elliott Management have built a stake in Mitsui Fudosan (8801 JP) and has asked it to undertake measures to increase ROE.
- Measures requested apparently include a very large buyback and a demand the company sell down its stake in Oriental Land (4661 JP). The article is worth reading.
- Shares are up sharply on this news. The fund was in the news last year about this time regarding Dai Nippon Printing (7912 JP). I’d expect more noise to come.
Japan – Increasing Shorts on Some Interesting** Stocks
- There are some Japanese stocks that have dropped in price even as the broader market has powered higher. That could lead to the stocks being deleted from global portfolios.
- The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
- BayCurrent Consulting (6532 JP) is a dark horse for inclusion in the Nikkei 225 (NKY INDEX) in March and this deletion could take the stock lower before the Nikkei 225 announcement.
RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)
- Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a Merger of Equals that would create a mid-tier gold company.
- Red 5 will acquire 100% of the shares in Silver Lake Resources and Silver Lake shareholders will receive 3.434 RED5 shares for each Silver Lake share held.
- The swap ratio is near the bottom of the historical price range of the stocks and it is no wonder that Silver Lake Resources (SLR AU) is being sold today.
Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- Isetan Mitsukoshi Holdings Ltd (3099 JP) on Friday announced Q3 results, a huge hike in H2 dividend (from ¥12/share guided to ¥20/share newly guided), and a buyback.
- 9mo Revenues were up 9.4%yoy (after +16.7% the previous year), OP +66.7%, and Net Profits +59.0%yoy through three quarters. Full-year Revenues, OP, and NP were all revised up slightly.
- The buyback is for up to 11mm shares, spending up to ¥15bn over the next 8 weeks. Looking at details of the shareholder structure is worthwhile.
Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher
- Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the March rebalance.
- Alchip is trading 330% higher from a year ago and this inclusion will come on the heels of the stock being added to global indices in second half of 2023.
- Short interest in Alchip Technologies (3661 TT) has more than halved over the last week and the stock price has moved higher.
SK Innovation: Announces Share Cancellation of Nearly 4.92 Million Shares
- On 5 February, SK Innovation (096770 KS) announced a large-scale shares cancellation of 4.92 million shares, representing 4.9% of outstanding shares.
- This is the first ever large scale shares cancellation for SK Innovation since it was first established in 2011.
- All in all, despite the company’s disappointing results in 2023, the large scale share cancellation should help to support SK Innovation’s share price in the coming weeks.
TOPIX Inclusions: Who Is Ready (Feb 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- The TOPIX Inclusion events of Visional (4194 JP) and Furuya Metal (7826 JP) took place at the end of January and the price performances were mostly in line with expectations.
- Currently, there are no upcoming TOPIX Inclusion events that have been announced officially but there are couple of pre-event names that should be on your watchlist.
India: Free Float Changes & Passive Flows in February
- Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-December.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- There are 15 stocks that could have passive inflows from global trackers while 9 could see passive outflows in February.
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