In today’s briefing:
- CSI300 Index Rebalance Preview: Rising Markets and ETF Creations Take Round-Trip Trade to US$8.5bn
- ESR (1821 HK): Sell First, Ask Questions Later
- Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics
- Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- Quiddity Leaderboard CSI 300/500 Dec 24: Final-Minute Changes to Expectations; Time for a Trade
- A Proxy Fight for Korea Zinc in January 2025
- Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades
- Nikkei: MUFG To Launch TOB on WealthNavi (7342)
- Dai-Nippon Printing (7912) – The First Equity Offering by Cross-Holders – Small And Lots More To Go
CSI300 Index Rebalance Preview: Rising Markets and ETF Creations Take Round-Trip Trade to US$8.5bn
- There could be 17 changes at the December rebalance with the Industrials and Materials sectors could gaining 2 spots each and the Information Technology sector losing 3 spots.
- Estimated one-way turnover of 3% at the December rebalance leading to a one-way trade of CNY 30.2bn (US$4.3bn). There are 14 stocks with over 2x ADV to trade.
- The forecast adds have outperformed the forecast deletes over the last month despite rising markets and a wall of money flowing into Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) ETFs.
ESR (1821 HK): Sell First, Ask Questions Later
- Back on the 13th May 2024, ESR Group (1821 HK) announced a delisting proposal from a consortium of investors formed by Starwood Capital Operations, Sixth Street Partners, and SSW Partners.
- The consortium initially controlled 15.7%. Warburg (~14%) and ESR founders (~7.4%) tipped in their stakes. As did Qatar (3%) earlier this month, bringing the collective total to 39.9%.
- No terms have been made public. Yesterday a Bloomberg article flagging “an agreement also might not be reached” saw shares freefall. Plus Capital Group recently trimmed its stake.
Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics
- Overnight, Sanrio (8136 JP) announced a placement of 25.87m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 3.88m shares.
- There will be limited passive buying in the short-term and the shares offered is a large percentage of real float of the stock.
- However, Sanrio (8136 JP) is the highest ranked non-constituent stock in a global index universe and a drop in the stock price could be used to accumulate positions.
Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon
- Today, Sanrio (8136 JP) announced a large secondary offering where banks would sell down shares and the Tsuji family would sell a few shares at the margin.
- The stock has been on a rocket for two years. It’s expensive. Growth slows next year. Will this cause momentum to turn? Maybe. The offering is 38% of Max RWF.
- I think one could give this a pass, and even sell it if it opens down small.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- There are now new changes forecast for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
- Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
- The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.
Quiddity Leaderboard CSI 300/500 Dec 24: Final-Minute Changes to Expectations; Time for a Trade
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
- The reference period for December 2024 index rebal event ended on 31st October 2024.
- In this insight, we take a look at our final list of expected ADDs and DELs.
A Proxy Fight for Korea Zinc in January 2025
- There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
- Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
- FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.
Korea Zinc Saga Turning into a Comedy Show: MBK’s Speculative Move & How It’s Shaping Our Trades
- Lee Bok-hyun, head of the Financial Supervisory Service, unexpectedly voiced concerns about MBK winning Korea Zinc’s management battle, catching everyone off guard.
- The key question is how Michael ByungJu Kim will handle government pressure, with MBK possibly aligning with the opposition if the Democratic Party pushes for commercial law reform.
- Korea Zinc now becomes a proxy war over governance reform. Watch MBK’s political stance, as it could drive the stock higher, especially if Michael teams up with the opposition.
Nikkei: MUFG To Launch TOB on WealthNavi (7342)
- Early this morning, a Nikkei article said Mitsubishi UFJ Financial (MUFG) (8306 JP) would buy out the remaining 85% of WealthNavi (7342 JP). Expected to be completed by March.
- MUFJ Bank and WealthNavi signed a Business Alliance in February. WealthNavi issued 9.11mm new shares to MUFJ at ¥1,718/share. That was a discount to market and shares are down ~40%.
- WealthNavi’s AUM is growing (¥1.3trln at end-Oct) and the goal is to launch a money advisory platform by FY2026. Now they need to decide on the premium.
Dai-Nippon Printing (7912) – The First Equity Offering by Cross-Holders – Small And Lots More To Go
- Today after the close Dai Nippon Printing (7912 JP) announced 16 corporate and financial entities would be selling cross-held shares in a ~US$240mm equity offering.
- The stock has gotten shellacked (relatively speaking given structurally low volatility) since three weeks ago. There’s a reason for that. But it makes it cheaper.
- This offering is only 10% of the cross-held total. There’s more to come. But there is more outbound cross-holding to sell too. There’s value here.
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