In today’s briefing:
- Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
- CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
- Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
- Hulic (3003) Launches TOB to Take Out Raysum (8890) – HUGE Win for Good Governance And Activism
- MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
- MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
- Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
- K Bank IPO Preview
- (Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
- Constituent changes to the S&P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
- The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
- The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&P 500 INDEX (SPX INDEX) trackers.
CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
- There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
- We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
- Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.
Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
- Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
- Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
- The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.
S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
- There are 3 changes for the S&P 500 INDEX, 8 changes for the S&P Midcap400 Index and 15 changes for the S&P SmallCap600 Index at the September rebalance.
- Dell Technologies (DELL US) and Palantir Technologies (PLTR US) were finally added to the S&P 500 INDEX (SPX INDEX) and there is huge size to trade in the stocks.
- There will also be big buying in Apple (AAPL US) following a float increase driven by Berkshire Hathaway Inc Cl A (BRK/A US) selling last quarter.
Hulic (3003) Launches TOB to Take Out Raysum (8890) – HUGE Win for Good Governance And Activism
- The change in control of Raysum Co Ltd (8890 JP) has a complex backstory. But one week shy of two years ago, Oasis launched a buyout to own 65%.
- The company had a strong MTMP. Oasis paid ¥1,700/share to own 65%. The MTMP came through, there was an offering, and it stayed near ¥3,000/share.
- Now Hulic Co Ltd (3003 JP) has come out with a Tender Offer to buy the company for ¥5,913/share. That’s a 94% premium and 3.5x what Oasis paid 2yrs ago.
MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
- There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
- Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
- The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in September but there are a lot of float and capping changes.
- TSMC – ADR and NVIDIA are the largest sells with buying spread across ASML Holding NV, Qualcomm Inc, Applied Materials and Micron Technology.
- The selling in NVIDIA Corp (NVDA US) will add to the selling from the Technology Select Sector SPDR (XLK US) due to the market consultation.
Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
- Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
- The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high.
- This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.
K Bank IPO Preview
- K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago.
- Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank.
- Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.
(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
- I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Six new deals: Hotel Property (HPI AU), Guotai (1788 HK)/Haitong (6837 HK), Joban Kosan (9675 JP), Dyna Mac (DMHL SP), Korea Zinc (010130 KS)/Young Poong Precision (036560 KS), Hulic (3003 JP).
- Key updates took place on Namoi Cotton Co Operative (NAM AU), Seven & I Holdings (3382 JP), Fuji Soft (9749 JP), Descente (8114 JP), & Silverlake Axis (SILV SP).
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