In today’s briefing:
- Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- Fuji Soft (9749) – KKR Launches Early to Stymy Bain Who Has a Founding Family Tailwind
- HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- Midea Group H Share Listing: AH Discount Views
- Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- China TCM (570.HK) Privatization Update- Pre-Conditions Won’t Be “An Obstacle” to the Entire Process
- Quiddity Leaderboard S&P 500 Sep 24 Rebal (Final): 2 Changes Possible
- Ohayo Japan | Bracing for Jobs Data
- We Need To Talk About New World (17 HK)
- KOSPI Size Index Reshuffle Results Out Late Today: Early Positioning Delivered Big Gains
Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- On 30 August, 7&i shareholder Artisan Partners (holder since 2019, now at 1%) wrote an open letter to the Board of Directors of Seven & I Holdings (3382 JP)
- There are several comments in bold. “It is imperative that the board of directors negotiate with ACT immediately to achieve the best possible outcome for shareholders” is one.
- The letter is a bit preachy, a bit fluffy, and a bit misleading in parts. But it requests the Company brief shareholders on the negotiations by 19 September 2024.
Fuji Soft (9749) – KKR Launches Early to Stymy Bain Who Has a Founding Family Tailwind
- KKR has launched its deal early to make life difficult for Bain, who has Founding Family support, due diligence, and another hearing with the company to make a Binding Bid.
- The combination of Bain’s PR on 3 September and the new documents out late last night from KKR and Fuji Soft show a picture of KKR/3D somehow acting coercively.
- This is something of a mess. It should become a case study for lawyers/advisors of what NOT to do when a large PE firm approaches you. Expect a bun fight.
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
Midea Group H Share Listing: AH Discount Views
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
- In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.
Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- The Sep24 Nikkei 225 Review Results are out, discussed in Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT.
- That lets us move to Mar25 Nikkei 225 Rebal predictions. For the moment, I see 2 IN and 2 OUT, again.
- And at the moment, another Fast Retailing capping exercise looks likely, for roughly US$3bn a side to trade.
China TCM (570.HK) Privatization Update- Pre-Conditions Won’t Be “An Obstacle” to the Entire Process
- We have seen positive progress of the privatization of China TCM, which is still considered an important project on the agenda. CNPGC’s new leadership is very supportive of the deal.
- The SAMR process has begun. There should be no problem to meet the Pre-Conditions. If the approval process takes more time, Long Stop Date would be extended.
- Considering China Resources has decided to acquire Tasly, we think the integration of TCM business by CNPGC is expected to accelerate. We remain optimistic and this deal will get up.
Quiddity Leaderboard S&P 500 Sep 24 Rebal (Final): 2 Changes Possible
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- The rankings used for the September 2024 index rebal event will be based on yesterday’s (4th September 2024) opening prices.
- In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.
Ohayo Japan | Bracing for Jobs Data
- Wall Street is bracing for Friday’s crucial jobs report, expected to influence Federal Reserve policy. Nonfarm payrolls are forecast to grow by 161,000 in August
- Seven & i Holdings will reject Alimentation Couche-Tard’s $40 billion takeover offer, deeming the price too low
- Effissimo Capital Management, an activist investment fund, has increased its stake in Teijin from 6.03% to 7.67%
We Need To Talk About New World (17 HK)
- 0.08x P/B. That’s where New World Development (17 HK) is currently trading. Less than half the P/B of the next comparable real estate peer.
- So, what’s going on? Announcing an expected HK$19-20bn loss for FY24 last week didn’t help matters. Shares are down 14% this week and 85% since Covid.
- Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers.
KOSPI Size Index Reshuffle Results Out Late Today: Early Positioning Delivered Big Gains
- For this September reshuffle, fewer factors affected price impact, so outlier chances were low. Biggest price moves typically occur 30 days before the effective date, especially during LARGE↔MID transitions.
- Early positioning for this reshuffle paid off. Past trends suggest price action fades before the effective date, so consider exiting positions by tomorrow or early next week.
- Small→Mid migrants historically show weak price impacts, with no clear correlation observed in this September reshuffle either. I’m avoiding those plays targeting the effective date for now.
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