Smartkarma Daily Briefs

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ).
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade

By Janaghan Jeyakumar, CFA

The ADDs/DELs for the ASX index family for the March 2025 index rebal event were announced after market close on Friday 7th March 2025.
There are 22 ADDs and 18 DELs collectively for ASX 50, ASX 100, ASX 200, and ASX 300.
In this insight, we take a final look at the flow expectations for each of these index changes.

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

By Sanghyun Park

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors

The USTR issued a Section 301 report in January 2025. The report suggests China has tried to achieve dominance in global shipping, to the detriment of US commerce.
The report is flawed, in data (it somehow manages to make up data which is otherwise available from MARAD), analytics, and conclusions, but the Trump administration has run with it.
In February, the USTR announced “Proposed Actions” – fees for Chinese liners and international liners with Chinese ships, and restrictions on future exports. US users lose. And there are loopholes.

Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity

In late January, Daihatsu Diesel Mfg (6023 JP) announced its once/former parent would sell all its shares; in part to a private company in the industry and a 20% buyback.
The buyback – a below-market own-share tender offer – was priced low enough to be a big win. Accretion added to that.
Buyback Tender Results and External Changes signal overhang and opportunity. Either way, it’s cheap, but good governance could make it even cheaper.

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.

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Mar 10

Daily Brief South Korea: SK Innovation, Korea Stock Exchange KOSPI 200, Hanmi Pharm and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
The Week Ahead in Options – 10 March
Kospi Index Options Weekly (Mar 04 – 07): Market Stabilizes After Sharp Drop
Hanmi Pharm (128940 KS): Corporate Value Enhancement Plan Targets W5 Trillion Revenue by 2033

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

By Sanghyun Park

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

The Week Ahead in Options – 10 March

By Gaudenz Schneider

US steel and aluminum tariffs (effective 12 March US time) will take effect on March 13 across the Asia-Pacific region. Volatility can be expected in Japan, South Korea, India, China.
Major quarterly derivatives expirations will occur on March 13 in Japan (Nikkei 225, TOPIX, Stocks), South Korea (KOSPI 200, KOSDAQ 150, Stocks), and India (BSE Stock Futures and Options).
Earnings announcements for AIA Group (1299 HK) and Li Auto (2015 HK/LI US) are scheduled for March 14, while India’s markets will be closed that day for the Holi holiday.

Kospi Index Options Weekly (Mar 04 – 07): Market Stabilizes After Sharp Drop

Kospi takes a breather this week after last Friday’s sell-off to trade in a narrow range.
Short-Term volatility eases in trade shortened week pulling implied vol down.
We highlight the dynamic between implied and historic volatility and discuss whether long or short volatility strategies have been the most effective this year.

Hanmi Pharm (128940 KS): Corporate Value Enhancement Plan Targets W5 Trillion Revenue by 2033

By Tina Banerjee

Hanmi Pharm (128940 KS) targets revenue CAGR of at least 15% during 2025–2027 (2021–24: 7.5%) to achieve revenue of KRW2.3T in 2027 and KRW5T by 2033.
Hanmi expects to achieve operating profit of KRW380B in 2027, with operating margin of 16.5% (2024:14.4%). Operating profit is expected to reach KRW1T in 2033, with operating margin of 20.0%.
R&D pipeline should play a major role in achieving the targets. The company plans to gradually increase the R&D spending to 15%+ of revenue.

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Mar 10

Daily Brief Australia: Sigma Healthcare and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices
Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade

By Janaghan Jeyakumar, CFA

The ADDs/DELs for the ASX index family for the March 2025 index rebal event were announced after market close on Friday 7th March 2025.
There are 22 ADDs and 18 DELs collectively for ASX 50, ASX 100, ASX 200, and ASX 300.
In this insight, we take a final look at the flow expectations for each of these index changes.

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Mar 10

Daily Brief Indonesia: Multi Bintang Indonesia and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Multi Bintang Indonesia (MLBI IJ): Steady FY24, 9% Yield and >80% ROCE

Multi Bintang Indonesia (MLBI IJ): Steady FY24, 9% Yield and >80% ROCE

By Sameer Taneja

Multi Bintang Indonesia (MLBI IJ) delivered steady FY24 growth, with revenue and profits up 1.9% and 7.1% YoY, respectively. Q4 FY24, however, underperformed expectations with revenue/profits up 0.6%/1.7% YoY.
Although Q4 typically represents >30% of overall annual revenue/profits, being the strongest season, its performance was disappointing compared to the strong 21%/35% YoY revenue/profit growth seen in Q3 2024.
Multi Bintang Indonesia (MLBI IJ) represents tremendous value with a dividend yield of 9% (100% payout), ROEs exceeding 80%, and a cheap multiple of 11x FY24 PE.

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Mar 10

Daily Brief United States: DoorDash , Middleby Corp and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility
Weekly Update (IDT, RHLD, SNRE, SNDK)

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

Weekly Update (IDT, RHLD, SNRE, SNDK)

By Richard Howe

There were no new spin-off announcements this week.
The Middleby Corporation (MIDD) announced its plan to spin off its food processing business on February 25, 2025.
This strategic move aims to allow Middleby to concentrate on its core commercial foodservice and residential kitchen equipment sectors, while enabling the new entity to focus exclusively on food processing operations.

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Mar 10

Daily Brief China: China Vanke (H), Tencent, ESR Group , JD.com , Mixue Group, Hang Seng Index, Chifeng Jilong Gold Mining, Soundwill Holdings, J&T Global Express , AviChina Industry & Technology H and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms
Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet
JD.com (9618 HK) FY Earnings Recap: Intra-Day Swing of 7.3%.
MIXUE Group (2097.HK) – Updates on Performance Forecast and Valuation Outlook
Hong Kong Single Stock Options Weekly (March 03 – 07): From Caution to Euphoria as Sentiment Flips
Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value
Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share
J&T Global Express H224 Results: Levers That Drove Earlier Improvement Are Losing Power
AviChina Industry (2357 HK): The Discount to Narrow

A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.

HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms

Gross SOUTHBOUND volumes dropped somewhat but still high. NET buying by SOUTHBOUND was HK$35bn which is still quite strong. Round-tripping volume down 20% week-on-week.
The flows here are still striking. >20% of the top 100 most liquid Southbound eligible stocks saw SOUTHBOUND buy more than 10% of weekly volume.
It feels like there is some common understanding among SOUTHBOUND investors which I do not understand. The numbers are big/growing.

Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet

By Arun George

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: Naigai Trans Line (9384 JP), Soundwill Holdings (878 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US).
Lowest spreads: Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), PointsBet Holdings (PBH AU), Makino Milling Machine Co (6135 JP), Proto Corp (4298 JP).

JD.com (9618 HK) FY Earnings Recap: Intra-Day Swing of 7.3%.

By Gaudenz Schneider

JD.com (9618 HK) Q4 2024 earnings significantly exceeded analyst expectations with revenue reaching RMB 347 billion (13.4% YoY increase).
The stock experienced a volatile two-day reaction, rising 8.4% on March 6 followed by a 5.0% decline on March 7, resulting in a net gain of 3.03%.
Options strategies including straddles, strangles, and call calendar spreads were actively traded ahead of earnings with potential intraday profitability. Longer dated implied volatility decreased following the announcement.

MIXUE Group (2097.HK) – Updates on Performance Forecast and Valuation Outlook

By Xinyao (Criss) Wang

MIXUE’s IPO debut was stellar. the IPO pricing of HK$202.5/share was indeed conservative. MIXUE is able to obtain more valuation premium space after IPO from a relatively low IPO pricing.
However, concerns on future performance growth remains. Investors need to pay attention to the performance verification. Market sentiment is becoming “overheated”, and the pressure for short-term stock price corrections increases.
We updated our forecast for 2025-2027. If based on P/E of 20-25x, market value is HK$109.4-136.8 billion, HK$122.5-153.2 billion, HK$134.8-168.5 billion based on 2025, 2026 and 2027 net profit, respectively.

Hong Kong Single Stock Options Weekly (March 03 – 07): From Caution to Euphoria as Sentiment Flips

A dramatic shift saw stocks surge as market sentiment reversed week over week.
Single stock option volumes were significantly lower vs prior two weeks.
We highlight stocks that have had unusual moves in price, volume and implied volatility.

Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value

By Nicholas Tan

Chifeng Jilong Gold Mining (600988 CH) , a gold mining company in China, raised around US$363m in its H-share listing in Hong Kong.
It operates six gold mines in Asia and Africa and has been listed on the Shenzhen Stock Exchange since 2004.
We have covered the company and deal background in our previous notes. In this note, we talk about the trading dynamics.

Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share

By David Blennerhassett

After small-cap property developer Soundwill Holdings (878 HK) was suspended pursuant to the Takeovers Code, I expected an Offer by way of Scheme.
And that is what unfolded. Grace Foo (ED) and her family, controlling 74.97% of shares out, are Offering $8.50/share, including a $1.00/share dividend, a 62.84% premium to undisturbed.
That’s still a whopping 87.66% discount to the most recent NAV (30th June 2024). But what are the options for minorities (apart from the headcount test)? And terms are final.

J&T Global Express H224 Results: Levers That Drove Earlier Improvement Are Losing Power

By Daniel Hellberg

H224 showed moderating top-line growth, but solid Y/Y improvement in EBITDA margin
However, the levers that drove margin improvement in 2024 appear to be losing power
Within China’s express and logistics segment, we find SF Holding to be far more attractive

AviChina Industry (2357 HK): The Discount to Narrow

By Osbert Tang, CFA

The share price of AviChina Industry & Technology H (2357 HK) has picked up in Mar, and it will continue to chase the HSI and HSCEI, in our view.
At 54.1%, AviChina’s discount to its A-share holdings has narrowed 4.2pp YTD, but is still behind the 6.2pp contraction for overall H-A shares. There is more room to catch up.
The increase in defense spending, advancement in domestic commercial aviation and development of the low-altitude economy are major potential drivers.

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Mar 10

Daily Brief India: Jindal Steel & Power, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Jindal Steel & Power (JSP IN) – Cyclical Downturn Provides Attractive Entry Point
Nifty Index Options Weekly (Mar 03 – 07): Rebound Ends Extended Losing Streak

Jindal Steel & Power (JSP IN) – Cyclical Downturn Provides Attractive Entry Point

By Rahul Jain

Strong focus on capacity enhancement. Increasing steelmaking capacity by 65% over the next 3 years to 15.9mt.
Recent margin dip provides attractive entry point. Promoters/insiders have bought into recent decline in stock price
Attractive long-term play on rising domestic steel demand. Low debt levels at <1.4x EBITDA allows for steady capacity addition.

Nifty Index Options Weekly (Mar 03 – 07): Rebound Ends Extended Losing Streak

The Nifty snapped its losing streak with a sharp rebound, rising 1.92% for the week.
Implied volatility struggled to hold up, trading lower through most of the week.
We break down the implied vs. historic vol relationship and what it signals for traders.

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Mar 10

Daily Brief Japan: Nikkei 225, Mitsui O.S.K. Lines, Daihatsu Diesel Mfg, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors
Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity
Significant Share Buybacks Are Key to Improving Profitability of Capital
Nikkei Index Options Weekly (Mar 03–07): Implied Volatility Climbs as Market Extends Decline

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors

The USTR issued a Section 301 report in January 2025. The report suggests China has tried to achieve dominance in global shipping, to the detriment of US commerce.
The report is flawed, in data (it somehow manages to make up data which is otherwise available from MARAD), analytics, and conclusions, but the Trump administration has run with it.
In February, the USTR announced “Proposed Actions” – fees for Chinese liners and international liners with Chinese ships, and restrictions on future exports. US users lose. And there are loopholes.

Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity

In late January, Daihatsu Diesel Mfg (6023 JP) announced its once/former parent would sell all its shares; in part to a private company in the industry and a 20% buyback.
The buyback – a below-market own-share tender offer – was priced low enough to be a big win. Accretion added to that.
Buyback Tender Results and External Changes signal overhang and opportunity. Either way, it’s cheap, but good governance could make it even cheaper.

Significant Share Buybacks Are Key to Improving Profitability of Capital

By Aki Matsumoto

While the company’s attitude toward shareholder returns has been positive, the 11% dividend increase is not expected to reduce cash on hand by much.
In a condition where so much cash has accumulated, it’s not a bad idea to use DOE as a guide to avoid accumulating cash on hand above a certain level.
Since FY3/2025 profits will grow in non-manufacturers, which has relatively low profit margin, the overall profit margin of companies won’t increase. Therefore, unless assets are reduced significantly, ROE will soft.

Nikkei Index Options Weekly (Mar 03–07): Implied Volatility Climbs as Market Extends Decline

Nikkei breaks lower, USD/JPY and trade tensions weighing on the market.
Implied volatility rose as the market declined. We discuss implications of current spot levels that is dominated by Put open interest.
Historic volatility continues to lag implied vol, we provide visuals on the extent of the lag.

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Mar 10

Daily Brief Energy/Materials: SK Innovation, Jindal Steel & Power, Chifeng Jilong Gold Mining, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
Jindal Steel & Power (JSP IN) – Cyclical Downturn Provides Attractive Entry Point
Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value
Nifty Index Options Weekly (Mar 03 – 07): Rebound Ends Extended Losing Streak

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

By Sanghyun Park

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

Jindal Steel & Power (JSP IN) – Cyclical Downturn Provides Attractive Entry Point

By Rahul Jain

Strong focus on capacity enhancement. Increasing steelmaking capacity by 65% over the next 3 years to 15.9mt.
Recent margin dip provides attractive entry point. Promoters/insiders have bought into recent decline in stock price
Attractive long-term play on rising domestic steel demand. Low debt levels at <1.4x EBITDA allows for steady capacity addition.

Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value

By Nicholas Tan

Chifeng Jilong Gold Mining (600988 CH) , a gold mining company in China, raised around US$363m in its H-share listing in Hong Kong.
It operates six gold mines in Asia and Africa and has been listed on the Shenzhen Stock Exchange since 2004.
We have covered the company and deal background in our previous notes. In this note, we talk about the trading dynamics.

Nifty Index Options Weekly (Mar 03 – 07): Rebound Ends Extended Losing Streak