In today’s briefing:
- 7&I (3382) – In Limbo, Dipping, But Stories Coming Together
- Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- Japan: Last Look at Potential Passive Selling in February
- China/HK: Passive Activity Expected Later This Month
- Australia: Last Look at Potential Passive Selling in February
- New Tender Trigger in Korea: Small Shareholder Collective Action Via Online Platform on T’way Air
- S&P/NZX Index Rebalance Preview: Couple of Changes in March
- Sharing Intel from IR on the Growing Market Interest in Samsung SDS’s Special Dividend
- NIFTY NEXT50 Index Rebalance Preview: Final List of Potential Changes in March
- Hanwha Aerospace Acquiring Additional 7.3% Stake in Hanwha Ocean for About 1.3 Trillion Won
7&I (3382) – In Limbo, Dipping, But Stories Coming Together
- In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
- We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
- York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.
Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- The TFTC approved in early January, The TFTC said market power would be limited and competition unrestricted. Another CNA article suggested the two FHCs were completing employee placement plans.
- Apparently, as of a month ago, only the Shin Kong Bank employee settlement plan had not been completed but the FSC has rules about that. Consideration likely proceeds.
- There are specific rules about how these things are dealt with. In the meantime, the spread – still wide – is narrowing.
Japan: Last Look at Potential Passive Selling in February
- There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
- Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
- The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.
China/HK: Passive Activity Expected Later This Month
- There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
- The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
- Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.
Australia: Last Look at Potential Passive Selling in February
- There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks.
- If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
- The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.
New Tender Trigger in Korea: Small Shareholder Collective Action Via Online Platform on T’way Air
- ACT’s team for T’way Air’s small shareholders plans to push for a public tender offer once they reach the 3% stake threshold.
- Sono may shift its stance on a public tender offer. With a 3% stake gap, Sono must appease retail shareholders before the AGM, especially after the rights offering backlash.
- FSC probe shows info leaks from brokers and law firms still trigger volume volatility before tender offers. Monitor T’way Air’s trading volume closely until February’s end.
S&P/NZX Index Rebalance Preview: Couple of Changes in March
- There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.
- The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.
- A2 Milk Co Ltd (ATM NZ) is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.
Sharing Intel from IR on the Growing Market Interest in Samsung SDS’s Special Dividend
- SDS seems to wait until after Samsung Electronics and C&T announce their value-up plans. Key dates: JPM IR event on 21st and Board meeting on Feb 18.
- I think they’re leaning toward a special dividend instead of increasing the base payout, based on the tone during our chat.
- The prosecutor’s third-instance appeal likely won’t delay the value-up announcement, as it usually takes a year for a decision, and is unlikely to affect JY Lee or Samsung’s plans.
NIFTY NEXT50 Index Rebalance Preview: Final List of Potential Changes in March
- With the review period now complete, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
- Bajaj Housing Finance (BHF IN) and Swiggy (SWIGGY IN) are a hair’s breadth apart on market cap and only one of them could be added to the index.
- With quantitative criteria now being used to add stocks to the F&O segment, it is possible there is no change to the index methodology to limit inclusion to F&O members.
Hanwha Aerospace Acquiring Additional 7.3% Stake in Hanwha Ocean for About 1.3 Trillion Won
- Hanwha Aerospace announced that it plans to purchase a 7.3% stake in Hanwha Ocean.
- This 7.3% stake in Hanwha Ocean is currently worth about 1.3 trillion won (US$0.9 billion). After this purchase, Hanwha Aerospace’s stake in Hanwha Ocean will increase from 23.14% to 30.44%.
- There could be a further positive momentum on Hanwha Aerospace in the near-term due to its positive earnings report in 4Q24 combined with acquisition of additional stake in Hanwha Ocean.
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