In today’s briefing:
- Korea: Short Selling Is Back in March; Trade Ideas
- SSE50 Index Rebalance Preview: Three Changes; Some Misses
- Maynilad Water (MYNLD PM): Index Inclusion Timing for a Large Philippines IPO
- DN Solutions IPO: Index Inclusion Timing Depends on Lock-Up Expiry Schedule
- Nikkei 225 Outlook After the Mar25 Rebalance
- Hankyu Hanshin REIT (8977) – Good Fundamental News, a Bigly Buyback, and Cascading Flows to Come
- KOSDAQ150 Index Adhoc Rebalance: Binex (053030 KS) To Replace HLB Life Science (067630 KS)
- Korea’s FSC Just Dropped the Final Playbook on the Full Restart of Short Selling.
- LY Corp (4689) Launches Beenos (3328) Tender Offer at ¥4,000
- HK Connect SOUTHBOUND Flows (To 21 Mar 2025); Lots Of “Day Trading” And Behind the Scenes Div-Buying
Korea: Short Selling Is Back in March; Trade Ideas
- Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though.
- Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
- There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.
SSE50 Index Rebalance Preview: Three Changes; Some Misses
- With nearly 90% of the review period complete, 2 non-constituents are in inclusion zone and 3 constituents are in deletion zone.
- We estimate one-way turnover of 4.7% at the June rebalance leading to a round-trip trade of CNY 16.4bn (US$2.27bn). Index arb balances will increase the impact on the stocks.
- The forecast adds have outperformed the forecast deletes over the last 6 months but there has been a retracement in returns over the last month.
Maynilad Water (MYNLD PM): Index Inclusion Timing for a Large Philippines IPO
- Maynilad Water Services (MYNLD PH) is looking to raise up to US$860m by selling shares at ₱20/share, valuing the company at US$2.82bn.
- The market cap and free float will depend on the number of shares sold in the IPO and whether the shares in the upsize option are primary or secondary shares.
- Global index inclusions should take place in November and December, while Philippines Stock Exchange PSEi Index (PCOMP INDEX) inclusion could take place in August 2026.
DN Solutions IPO: Index Inclusion Timing Depends on Lock-Up Expiry Schedule
- DN Solutions (298440 KS) is looking to raise up to KRW 1,573bn (US$1.08bn), valuing the company at KRW 5.66 trillion (US$3.9bn) at the top end of the IPO price range.
- The highest probability of DN Solutions being added to the KOSPI200 Index is at the June 2026 rebalance. The stock needs to move 60% higher to be added in December 2025.
- Inclusion in global indices could commence in August/November and will depend on institutional investor lock-up schedules. Flows are small unless the stock moves higher and is included in bigger indices.
Nikkei 225 Outlook After the Mar25 Rebalance
- The Nikkei 225 (NKY INDEX) has been in a paralyzed trend since August 2024. Then at the end of February 2025 it started to correct.
- As explained by Travis Lundy and Brian Freitas the index rebalance on March 5th, 2025 was a bit unexpected and minimal in terms of changes.
- The index bottomed 1 week after the March 2025 Nikkei 225 Average Review, and then started a rally, quite modest for now which could be signaling short-term tactical weakness.
Hankyu Hanshin REIT (8977) – Good Fundamental News, a Bigly Buyback, and Cascading Flows to Come
- 3D Investment Partners launched a Partial Tender Offer to buy a 10+% stake in Hankyu Hanshin REIT, Inc. (8977 JP). The REIT finally responded with a “Neutral” stance.
- But they also upgraded earnings forecasts, bought a building, and announced the Sponsor would buy units in the market over the next year. It’s big.
- And that creates flows, which then engender other reactive flows, and cascading flows, and because the sector isn’t rich, there may be a tailwind.
KOSDAQ150 Index Adhoc Rebalance: Binex (053030 KS) To Replace HLB Life Science (067630 KS)
- HLB Life Science (067630 KS) was added to the Investment Attention Issue list on 21 March and traded limit down. Then came the announcement of the KOSDAQ 150 Index deletion.
- As the highest ranked non-constituent from the Healthcare sector at the December rebalance, Binex (053030 KS) will be added to the KOSDAQ 150 Index at the close on 25 March.
- Historically, intra-review inclusions have moved higher between announcement and implementation and there has been reversion post the index inclusion.
Korea’s FSC Just Dropped the Final Playbook on the Full Restart of Short Selling.
- Today’s update clarifies which brokers are fully linked to NSDS, giving them an edge in short-selling speed and flexibility, while others face more execution constraints.
- This leads to a clear execution risk gap, requiring traders to factor in trade efficiency differences based on their broker.
- With lower short-selling restriction triggers, liquidity and short-covering dynamics will shift, requiring traders to reassess market impact and adjust strategies accordingly.
LY Corp (4689) Launches Beenos (3328) Tender Offer at ¥4,000
- On Friday 21 March, LY (4689 JP) made an announcement it had received all the required approvals and would launch the Tender Offer on 24 March.
- Some were upset about the price originally but unlike other deals, this one traded below terms for three months since original announcement. Three activish funds had pitched in their 30%.
- This is now trading tight, and will continue to trade tight. If you own, whether you hold through early May depends on whether you are bullish or bearish the market.
HK Connect SOUTHBOUND Flows (To 21 Mar 2025); Lots Of “Day Trading” And Behind the Scenes Div-Buying
- Gross SOUTHBOUND volumes dropped again somewhat but still high at HK$619bn. NET buying by SOUTHBOUND was HK$23bn which is much smaller than the last several weeks.
- The flows here are still striking and net to buy. There has to be institutional buying. And I assume it is to get the earnings yield and div pickup.
- Included is a summary of important China Stocks-relevant news as I saw it this week.
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