In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- JIC To Launch ¥1 Trillion Takeover on JSR (4185)
- JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
- Alibaba (9988 HK): Daniel Steps Down as Jack Changes Strategy
- Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
- Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW
- Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata
- KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December
- Weekly Deals Digest (25 Jun) – Alibaba, JSR, Shinsei, Arcland, InvoCare, J&T Global, Amman Mineral
- Ohayo Japan|Correction Mode as Recession Fears Reassert; NUGGET: Cosmo Energy (5021) – SHAME ON YOU
Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
- There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade.
- There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.
JIC To Launch ¥1 Trillion Takeover on JSR (4185)
- The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
- JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
- Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.
JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
- Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
- JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
- Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.
Alibaba (9988 HK): Daniel Steps Down as Jack Changes Strategy
- Daniel Zhang stepped down from the Chair and CEO and moved to be the head of cloud intelligence.
- The retail focus will move from physical store and branded product to a platform for third-party retailers.
- We believe the strategy change is correct in the weak consumption market.
Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
- There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY).
- Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
- With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.
Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW
- RMB dual counter started trading. Great Wall Motor (2333 HK)‘s A-shares trade at 3x the multiple. THAT is a big discount to harvest.
- China Feihe (6186 HK)‘s CFO exits an indirect stake of 6.38% around Feihe’s all-time low.
- EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high
Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Silk Laser Australia (SLA AU), United Malt Group Ltd (UMG AU), ENM Holdings (128 HK), Chindata Group (CD US), Estia Health (EHE AU).
- Lowest spreads – Healius (HLS AU), Musgrave Minerals (MGV AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU), Lian Beng (LBG SP).
KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December
- Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
- There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
- The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.
Weekly Deals Digest (25 Jun) – Alibaba, JSR, Shinsei, Arcland, InvoCare, J&T Global, Amman Mineral
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH), Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN) IPOs.
- Event-Driven developments – Invocare Ltd (IVC AU), Arcland Service (3085 JP), JSR Corp (4185 JP), SBI Shinsei Bank (8303 JP), Amara Holdings (AMA SP), Yashili International Holdings (1230 HK).
Ohayo Japan|Correction Mode as Recession Fears Reassert; NUGGET: Cosmo Energy (5021) – SHAME ON YOU
- OVERSEAS. SPX -0.8% on Friday, -1.8%WoW as recession fears resurface post -ve EU PMI, amidst rate hikes to combat inflation; Carmax +10% on earnings beat, but used car px falling
- JAPAN. NKY Futs -0.6% disc to Cash; USDJPY 143.7 reflecting disparity between Japan rates vs Global; Yet JP inflation remains elevated; JIC ¥1trn bid for JSR(4183); Oriental Land hikes px-es
- NUGGET. Cosmo Energy(5021) – set back for Japan corporate governance. The Fourth Estate – Your turn.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
