Most Read: Lasertec Corp, I-TAIL , Nickel Asia, Toshiba Corp, Posco International Corporation, Hengan International Group, Cainiao Smart Logistics, Vedanta Resources, Keiyo Co Ltd and more

• The September 2023 Nikkei 225 Rebalance is tomorrow at the close. This will engender a lot of buying of three names, and a lot of selling of 3 names.  
• It will also engender a funding trade of nearly ¥460bn. 
• I am going to beat the dead horse and warn about certain issues with this rebalance.

• There could be two changes for the SET50 INDEX with JMT Network Services (JMT TB) and I-TAIL (ITC TB) replacing Srisawad Power (SAWAD TB) and Ngern Tid Lor (TIDLOR TB). 
• With no further inclusions on the Market Surveillance Measure list, Delta Electronics Thai (DELTA TB) should be safe at the December rebalance.
• There are a couple of stocks that are close to passing/failing the liquidity tests and that could result in further changes to the index.

• In a surprise development, UnionBank of the Philippines (UBP PM) will be deleted from the Philippines Stock Exchange PSEi Index (PCOMP INDEX) and replaced with Nickel Asia (NIKL PM). 
• There will be a BIG impact on both stocks as a result of the change with passive trackers need to trade in excess of 30 days ADV.
• Expect both stocks to move today and then continue that move for the next few days till the changes are implemented.

• Last week on 20 Sep I published Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule and Sunday, The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour. 
• They were based on an expectation the TSE would announce the initial selldown for Sep-end as they normally would. Unbeknownst to me, on 22 Sep they announced end-Oct.
• The initial TOPIX selldown is 30 Oct, not 28 Sep. This affects expected reverse funding today.

• We believe that Warren Buffett’s investments in Japanese trading companies have also positively impacted several Korean trading companies in the past three years. 
• We highlighted seven Korean trading companies three years ago including Posco International and their share prices are up more than 76% on average in this period. 
• Despite their outstanding share price performance in the past three years, there could be some significant headwinds ahead, as evidenced by the steep inverted yield curve.

• Hengan International Group (1044 HK) and Vinda International (3331 HK) are both market leaders in China’s personal care industry.
• Hengan’s operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda’s revenue. Both companies have been impacted by an increase in wood pulp prices.
• Hengan is trading cheap; but Vinda’s bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds. 

• Cainiao Smart Logistics, Alibaba Group Holding (9988 HK)’s logistics linked arm, is planning to raise at least US$1bn in its Hong Kong IPO.
• Cainiao is the largest provider of cross-border e-commerce logistics services globally and a leader in China logistics services, according to CIC.
• In this note, we talk about the not-so-positive aspects of the deal.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Vedanta Resources

• Today after the close, DCM Holdings (3050 JP) announced it would launch a friendly takeover by Tender Offer for Keiyo Co Ltd (8168 JP) 
• This is totally not a surprise. They signed a Business and Capital Alliance in 2017. DCM bought more at a premium last autumn. This takeover was obvious in the long-term.
• There are enough friendly holders to get this done. Activism would be hard unless it was really cheap, which it does not seem to be, but process wasn’t great. 

• Lately, we’ve been quite outspoken regarding the imminent threat posed by the USD/Oil dynamics, which has the potential to unleash turmoil within the emerging markets sphere.
• While we typically don’t shy away from challenging prevailing opinions, it appears that, in this specific context, our perspective is slowly becoming the consensus view (which, I might add, is more lucrative than the opposite order).
• But perhaps it is worthwhile to question and assess the fundamental drivers behind the current predicament-  and ask what does it take to turn things around?