This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
- For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
- There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
- But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected.
2. BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
- BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
- Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
- With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.
3. Korea Short Selling: Off to the Races
- Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
- Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
- The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.
4. Korea Short Selling: What Happened on Day 1?
- Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
- Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
- The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.
5. T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)
- Yesterday, post-close, T&D Holdings (8795 JP) announced ¥40 for 31-Mar-25 FY-end dividend (¥80/yr) and ¥120/share/year in the year to March 2026 on a higher planned payout ratio.
- The company also announced guidance for Adjusted Profit for 2025 at ¥130bn (up), and guidance for March 2026 at ¥140bn (lower growth than this past year).
- They announced the current ¥50bn buyback was 87.5% complete (they have until 13 May to complete) and a new buyback starting 19 May to spend up to ¥100bn over 10.5mos.
6. [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
- The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
- After 4+mos of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
- Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.
7. Nikkei 225 Sep25 Rebal: One ADD, One DELETE Still Probable Unless Kokusai Elec (6525) Offering/Split
- The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
- Kokusai did NOT get added, waiting for a split, an offering, or time to pass. Only one sector change was made. So we see One ADD and One DELETE.
- The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.
8. ENN Energy (2688 HK): This Is An Avoid
- Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
- Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
- The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic.
9. Shin Kong (2888 TT)/Taishin (2887 TT) Deal Gets FSC Approval – Still A Good Swap
- Late Monday, The Financial Supervisory Commission approved the merger where Shin Kong Financial Holding (2888 TT) is to be absorbed by Taishin Financial Holding (2887 TT). Announcement here.
- Yesterday, the chairmen of both Shin Kong and Taishin decided the merger base date, which has been set a bit further out than even I expected, at 24 July 2025.
- The terms tightened yesterday. There is still a worthwhile switch to be done (or arb if you have cheap borrow), and NEWCO is cheap to peers, STILL.
10. Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road
- 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: ENN Energy (2688 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Insignia Financial (IFL AU), Smart Share Global (EM US), Soundwill Holdings (878 HK).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), PointsBet Holdings (PBH AU), Millennium & Copthorne Hotels Nz (MCK NZ), Tonami Holdings (9070 JP).
