Event-Driven

The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal

Overnight, we got news that the JIC Consortium Deal for Shinko Electric Industries (6967 JP) was approved 27Dec2024. That was the last approval required (other than TSE TOB Launch approval).
This is “on schedule” or slightly early from the previously-announced expected launch date.
This morning, the stock is up sharply and is trading <0.75% from terms. Expect an announcement within two weeks. Current arb annualised at high 6% is OK. One could hold.

WH Group (288 HK): Smithfield’s IPO Doc Now Out

On 17 November 2024, WH Group (288 HK) announced an EGM to approve the spin-off and separately list subsidiary Smithfield Foods on the NYSE or NASDAQ.
WHG, the world’s largest pork producer, announced on the 6th December the spin-off overwhelmingly gained shareholder approval.
Yesterday, the Smithfield NASDAQ IPO doc was made public. As per the filing: “the number and dollar amount of Smithfield Shares to be offered and sold have not been determined“.

GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down

Quite a lot of new news to digest – GAPack (468 HK)‘s IFA, not altogether surprisingly, concluded that shareholders should not accept the Offer – in bold, red caps.
But more surprisingly, is the disclosure announcement that China Mengniu Dairy Co (2319 HK) has reduced its stake below 5%.
Evidently Mengniu is keeping its options open to tender – or not – and not have to make public disclosures. Keep an eye out on CCASS movements.

Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn

SigmaHealthcare and ChemistWarehouse shareholders meet on 29 January. If the merger resolutions are approved, Second Court Hearing is on 3 February and the merger will be effective on 4 February.
Upward migration in one large global index could take place on 13 February while upweights and upward migrations in the S&P/ASX indices should be at the close on 21 March.
Upward migration in the other global index could take place in March or June. Total passive buying estimate is A$2.76bn. This will be offset by positioning and CWG shareholders selling.

Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote

The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread widened after the initial tightening due to the precondition satisfaction.
Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain it.
I think these concerns are unwarranted, and the vote should pass. At the last close and for a 15 February payment, the gross/annualised spread is 4.7%/55.0%.

US Defense Dept Designates Tencent and CATL as Military Companies – Impact on Korean Competitors

By Douglas Kim

The U.S. Department of Defense announced that it has added numerous Chinese companies including Tencent and CATL as companies that work with China’s military.
This is likely to negatively impact Tencent and CATL’s prices in the next several weeks but positively impact on some of the major Korean rechargeable battery and gaming stocks.
The higher probability scenario at this point is for Tencent and CATL to be officially included in the Chinese Military Industrial Complex list in the coming weeks.

Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing

Jiangsu Hengrui Medicine (600276 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$2bn.
In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
There will be no Fast Entry in any indices but there will be index inclusions in multiple indices if the raise is larger or once the cornerstone investor lock-up ends.

LUNA Faces Nasdaq Delisting Amid Financial Restatement Delays and Strategic Review for Potential Sale

By Dalius Tauraitis

LUNA stock faced a 57% decline due to Nasdaq delisting notice, with trading volume 25 times the average.
White Hat Capital Partners invested $50m in December 2023 and increased the loan facility to $30m in October 2024.
Luna Innovations specializes in fiber optic sensing solutions, with notable contracts in aerospace, automotive, and oil & gas industries.

EQD | S&P 500 (SPX Index) – An Options Strategy for 2025

The Insight presents two S&P 500 INDEX (SPX INDEX) options strategies for 2025. Call overwriting can generate premium income and potentially enhance returns in a choppy but mildly positive market.
The second strategy is a Risk Reversal, using the proceeds from a short call to buy a protective put option, providing downside protection while still allowing for some upside potential.
Both strategies are designed to align with the expected market conditions, considering factors such as inflation, economic growth, and market volatility.

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Jan 07

Daily Brief Event-Driven: Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal. and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.
Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer
Korea Short Selling Comeback: How Pre-Registering Accounts Will Affect the Trading Scene
S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger
GA Pack (468 HK): Shandong Xinjufeng’s Offer Gets a Boost as Mengniu Sells Down
HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025
EQD | Meituan (3690 HK) In the Bear’s Grip – Popular Option Strategies and Top Trades
Quiddity Leaderboard HSTECH Mar 25: One High-Conviction Change; US$475mn One-Way
Insignia Financial (IFL AU): CC Capital’s Non-Binding Offer Could Spark a Bidding War
EQD | Tencent (700 HK) – Popular Option Strategies and Top Trades, Low Vola Presents Opportunity

Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.

In December 2019, an article in slightly odd Japanese business magazine Sentaku (選択) suggested Fujitsu Ltd (6702 JP) would imminently seek to address dual listings of subs.
Some subs went early. The auction for Fujitsu General (6755 JP) started spring 2023, failed, started again, failed again, and the shares languished.
Two years later we have a deal. Large privately-held company Paloma-Rheem Holdings is the buyer in a split-price deal which comes at a decent but not exorbitant premium.

Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer

Fujitsu General (6755 JP) announced a preconditional tender offer from Paloma Rheem Holdings Co at JPY2,808 per share, a 23.5% premium to the last close.
The offer, which is preconditional on regulatory approvals and will open in early July, is attractive compared to historical trading ranges and peer multiples.
The process is lacking as Fujitsu declined to conduct an auction. The offer is below the midpoint of the IFA DCF valuation range, and the Board requested price.

Korea Short Selling Comeback: How Pre-Registering Accounts Will Affect the Trading Scene

By Sanghyun Park

KRX and FSS confirmed the NSDS is ready and account registration numbers will be issued, confirming short selling will resume on April 1st, despite no official FSC statement yet.
Today’s buzz is about pre-registration for short selling, with FSS tracking accounts down to individual desks. This could limit short-selling flexibility, despite addressing the overseas lending issue.
Exposing too much info on short-selling accounts could shrink securities lending participants, causing supply-demand imbalances, spiking borrowing fees, and creating unique trading opportunities early on.

S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger

Nearing the end of the review period, there could be 36 adds/deletes across the S&P/ASX family of indices in March.
Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
Completion of the merger with Chemist Warehouse in February will set off huge passive buying in Sigma Healthcare (SIG AU) over the February to June period.

GA Pack (468 HK): Shandong Xinjufeng’s Offer Gets a Boost as Mengniu Sells Down

China Mengniu Dairy Co (2319 HK), Greatview Aseptic Packaging (468 HK)‘s largest customer, has ceased to be a substantial shareholder. Mengniu opposes the Shandong Xinjufeng offer.
This development suggests that Mengniu has low confidence in a management competing offer and will likely shift its business away from GA Pack.
The stake sale will help the Shandong Xinjufeng Technology Packaging (301296 CH) offer turn unconditional as it will nudge minorities to tender, partly due to GA Pack’s uncertain outlook.

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

EQD | Meituan (3690 HK) In the Bear’s Grip – Popular Option Strategies and Top Trades

This Insight analyses Meituan (3690 HK) tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility insights are provided.
The vast majority of traders opt for bearish strategies, but there are examples of contrarian trades.
Although one-month implied volatility is historically low in its 7th percentile, it is above realized volatility. With an implied just below 40%, option premiums are significant in absolute terms.

Quiddity Leaderboard HSTECH Mar 25: One High-Conviction Change; US$475mn One-Way

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
We expect one change for the HSTECH index in March 2025 and combined with capping flows currently see US$475mn one-way flows.

Insignia Financial (IFL AU): CC Capital’s Non-Binding Offer Could Spark a Bidding War

Insignia Financial (IFL AU) disclosed a non-binding privatisation offer from CC Capital at A$4.30, a 7.5% premium to the rejected Bain non-binding proposal of A$4.00.
While the offer is attractive compared to historical trading ranges, it is light compared to peer and precedent transaction multiples.
The presence of several substantial shareholders necessitates an attractive takeover premium. To facilitate better terms, the board should provide due diligence access.

EQD | Tencent (700 HK) – Popular Option Strategies and Top Trades, Low Vola Presents Opportunity

This Insight analyzes Tencent (700 HK) tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility insights are provided.
Historically low implied volatility favors bullish or bearish long volatility strategies.
Calendar Spreads are a popular strategy. Bulls and bears are both very active in the market, expressing their views through trades.

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Jan 06

Daily Brief Event-Driven: Merger Arb Mondays (06 Jan) – Vesync and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO
NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed
Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades
EQD / NSE NIFTY50 Vol Update / High & Down Vol State Confirmed. Greenlight for Selling Smile/ Vega.
Selected European HoldCos and DLC: 2024 Report

Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I

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: Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), ESR Group (1821 HK), Goldlion Holdings (533 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).

Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS

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: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Get Nice Financial Group Ltd (1469 HK), Greatview Aseptic Packaging (468 HK), Macromill, Inc (3978 JP), Avjennings Ltd (AVJ AU).

HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade

The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes

The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms

SOUTHBOUND gross trading activity was quite light the last two weeks of the year. Non-SB trading of HK was even lighter. Net buying was strong.
Net buying on tech was VERY big but not on Alibaba Group Holding (BABA US) (small positive) or Meituan (3690 HK) (largest outflow).
Financials and High Div SOEs are back on the menu. SOUTHBOUND has been a Very Big Percentage of traded volume.

Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO

Last month, wealth manager Insignia Financial (IFL AU) announced – and subsequently rejected – a A$4.00/share non-binding and indicative proposal from PE outfit Bain Capital.
The question was whether Bain returned to the well, in a space where Regal (RPL AU) recently binned its Platinum (PTM AU) tie-in; and Perpetual (PPT AU)‘s carve-out has hit a snag.
Roughly two weeks after that Bain rejection, US-based asset investment manager CC Capital Partners has now tabled a A$4.30/share, in cash, non-binding Offer. That’s probably enough for Insignia to engage.

NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed

Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) should replace Bharat Petroleum Corp (BPCL IN) and Britannia Industries (BRIT IN) in the NIFTY Index (NIFTY INDEX) in March.
Passive NIFTY Index trackers will need to trade at least 4.5x ADV and 8.8x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
There does not appear to be a lot of positioning in Jio Financial Services (JIOFIN IN) and the stock could outperform its peers over the next few months.

Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades

This Insight analyzes Hang Seng Index (HSI INDEX) tailor-made option strategies over the last five trading days, providing strategy analysis, trends, highlights, and volatility context.
Despite the holidays and generally low volume, last week saw some interesting strategies traded.
The highest premium earned was for a January ’25 Butterfly. The largest trade was a January ’25 Bull Call Spread, reflecting the popularity of long volatility strategies and spreads.

EQD / NSE NIFTY50 Vol Update / High & Down Vol State Confirmed. Greenlight for Selling Smile/ Vega.

By Sankalp Singh

IVs higher alongside the underlying index. Weekly expiry (02.01.2025) served as the inflection point sending IVs back down. Monthly IVs: 12.7% (Open) -> 14.4% (02.01.2025) -> 13.3% (Close).
Vol Term-structure swung between Contango & Backwardation around expiry date. Skew in Monthly contracts compressed as IVs moved higher. Smile unchanged.
Trading Strategy Implications: Reengage Smile/ Vega harvesting structures. Abandon wait-and-watch stance – “High & Down” vol state confirmed.

Selected European HoldCos and DLC: 2024 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos mainly tightened during 2024. Discounts to NAV: C.F.Alba, 11.8% (vs. 50.8% as of Y/E 2023); GBL, 40.9% (vs. 37.4%); Heineken Holding, 15.8% (vs. 16.7%);
Industrivärden C, 5.5% (vs. 5.5%); Investor B, 4.5% (vs. 12.8%); Porsche Automobile Holding, 32.2% (vs. 36.6%). Rio DLC spread tightened to 23% (vs. 24.2%).
What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

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Jan 05

Daily Brief Event-Driven: Quiddity Leaderboard ASX Mar 25: Several Changes Likely; Major Inflows for Sigma Healthcare and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Quiddity Leaderboard ASX Mar 25: Several Changes Likely; Major Inflows for Sigma Healthcare
Get Nice Financial (1469 HK): Attractive Spread Ahead of Get Nice Holdings (64 HK)’s EGM Vote
2025 Essential Calendar for Option Traders in Asia: Key Dates & Insights
Quiddity Leaderboard TDIV Mar 25: US$208mn Capping Flows One-Way; New Trade Idea
(Mostly) Asia-Pac M&A: Sun Art Retail, AVJennings, Shandong Hi-Speed New Energy, Boqi, Get Nice
Quiddity Leaderboard T50/100 Mar 25: Tung Ho Steel TDIV Deletion Very Close
Last Week in Event SPACE: Tsuruha/Welcia, GAPack, Canvest, HKBN

Quiddity Leaderboard ASX Mar 25: Several Changes Likely; Major Inflows for Sigma Healthcare

In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the March 2025 index rebal event.
We expect two changes for ASX 50, one change for ASX 100, and seven changes for ASX 200. Separately we see 10 ADDs and 8 DELs for ASX 300.
Sigma Healthcare (SIG AU) is likely to experience major index inflows in March 2025 if the merger completes as planned.

Get Nice Financial (1469 HK): Attractive Spread Ahead of Get Nice Holdings (64 HK)’s EGM Vote

The Get Nice Financial Group Ltd (1469 HK)/GNF offer is conditional on the approval by GNH/GNF shareholders. Get Nice Holdings (64 HK)/GNH’s shareholder vote is on 22 January.
The GNH vote will comfortably pass as Mr Hung, the controlling shareholder, represents 66.11% of outstanding shares, just shy of the 66.67% required voting threshold.
The implied offer value has declined by 10%, broadly in line with the median decline in peer share prices. Therefore, the scheme vote remains low-risk.

2025 Essential Calendar for Option Traders in Asia: Key Dates & Insights

Timing expiration, assessing volatility, and managing event risk are crucial for effective option trades.
Exchange holidays, expiries, central bank rate decisions, and index changes can significantly impact volatility and market direction.
The attached document provides key dates to help navigate the complexities of option trading in Australia, Hong Kong, India, Japan, South Korea, and the USA.

Quiddity Leaderboard TDIV Mar 25: US$208mn Capping Flows One-Way; New Trade Idea

The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the March 2025 index rebal event.
Currently, we expect no deletions (but one is pretty close) and we estimate the one-way capping flow to be US$208mn.

(Mostly) Asia-Pac M&A: Sun Art Retail, AVJennings, Shandong Hi-Speed New Energy, Boqi, Get Nice

I tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed this week: Sun Art Retail (6808 HK)‘s (expected) unconditional MGO. A Tsuruha Holdings (3391 JP)/Welcia Holdings (3141 JP) merger was also discussed.
Key updates/news took place on: AVJennings (AVJ AU), GAPack (468 HK), Shandong Hi-Speed New Energy (1250 HK), Canvest (1381 HK), China Boqi Environmental (2377 HK), and HKBN (1310 HK).

Quiddity Leaderboard T50/100 Mar 25: Tung Ho Steel TDIV Deletion Very Close

The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
In this insight, we take a look at the potential ADDs and DELs for the March 2025 index rebal event.
Currently, we see one change for T50 and one change for T100 but there are two more months to the base date and our expectations may change before then.

Last Week in Event SPACE: Tsuruha/Welcia, GAPack, Canvest, HKBN

Tsuruha (3391 JP) and Welcia (3141 JP) may merge quicker than expected. Meaning a one-year “guess the price” ratio. Expect Tsuruha to gain against Welcia from here.
PUSUs exist in Hong Kong. In its bid for GAPack (468 HK), XJF should sound out the SFC to put Bi/Hong on notice.
Canvest Environmental (1381 HK) effectively ticks off another pre-con. This transaction continues to trade too wide to terms.

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Jan 04

Daily Brief Event-Driven: Bossini (592 HK): 10th Feb Scheme Vote and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Bossini (592 HK): 10th Feb Scheme Vote
Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer
Samsung Group ETF Rebalancing Event to Watch for in June
SSI’s 2024 Review: Portfolio Underperformance, Event-Driven Strategies, and Lessons from Losses

Bossini (592 HK): 10th Feb Scheme Vote

On the 16th October, Li Ning-backed Viva Goods (933 HK) announced a scrip Offer, by way of a Scheme, for 62.91%-held Bossini International Holdings (592 HK), a casual apparel play.
One new Viva share for five Bossini shares backed an implied scrip price of HK$0.108/share, a 12.2% discount to undisturbed.
Bossini’s Scheme Doc is now out, with a Court Meeting on the 10th February, and expected settlement on the 24th March. The IFA says “fair and reasonable”.

Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer

On the 5th November, Get Nice Holdings (64 HK) (GNH) announced a scrip Offer, by way of a Scheme, for 72.99%-held Get Nice Financial Group Ltd (1469 HK) (GNF).
With an implied scrip price & divvy of HK$1.116/share, against a book value of HK1.736/share – and net cash of ~HK$1.00/share – this is probably being down too cheaply.
GNH’s Circular is now out, with an EGM to be held on the 22nd Jan. GNF’s Scheme Doc is expected to be dispatched one or before the 10th Feb.

Samsung Group ETF Rebalancing Event to Watch for in June

By Sanghyun Park

With Samsung finalizing the call option on Rainbow Robotics in February, the FTC will add it to Samsung Group in March, ensuring its inclusion in the ETF by June.
With the market cap boost from the call option, Rainbow Robotics is set to easily exceed 2% weight in the ETF by June.
The rebalancing from June 2-9 will direct 30% of daily volume into Rainbow Robotics, likely enough to move the needle on price action, especially on the first day.

SSI’s 2024 Review: Portfolio Underperformance, Event-Driven Strategies, and Lessons from Losses

By Dalius Tauraitis

SSI’s Tracking Portfolio ended 2024 with a -1% return, hindered by cash holdings and significant losses in MSTR, BHIL, and BOOM.
SSI shared 85 investment ideas in 2024, including 14 Portfolio Ideas, 69 Quick Pitches, and 2 “Why I’m Not Involved” overviews.
Portfolio Ideas suffered losses over 50% due to ignored red flags, while Quick Pitches had a 60% win rate.

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Jan 03

Daily Brief Event-Driven: Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction
NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
EQD | KOSPI 200 Index – Buy January Straddle

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?

Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction

Grandblue Environment Co A (600323 CH) continues to make steady progress in satisfying the precondition for its HK$4.90 privatisation offer for Canvest Environmental Protection Group (1381 HK).
Two of the five preconditions are satisfied, and another will be satisfied by 20 January. The long stop date of 17 July provides ample time to satisfy the remaining two.
Although the peers have materially re-rated, the offer implies a premium compared to peer multiples. Vote risk remains low, aided by selling by a shareholder with a blocking stake.

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

EQD | KOSPI 200 Index – Buy January Straddle

The implied move for January is less than what has been historically experienced. Sixteen of the last 26 years have had price movement > current implied move.
January punches above its weight in terms of both historic volatility (most volatile month) and the amount of price movement relative to that historic volatility.
Trades at the current implied move historically would have been winners 61.5% of the time with the average winner being more than double the average loser.

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Jan 02

Daily Brief Event-Driven: ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
Australia: Six Stocks in Passive Selling Crosshairs for February
ITC Hotels Demerger: Listing Anticipation and Index Implications
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
ITC Hotels Demerger: An Emerging Behemoth & Hospitality Play
Quiddity JPX-Nikkei 400 Rebal 2025: End-Dec 2024 Ranks

ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)

ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.

Australia: Six Stocks in Passive Selling Crosshairs for February

Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

ITC Hotels Demerger: Listing Anticipation and Index Implications

By Nimish Maheshwari

ITC Hotels is demerging with ITC Ltd (ITC IN) to create value for ITC shareholder and unlock value in hotel business.
Record date for ITC Hotel demerger is 6-Jan-25 and listing can be done in 60 days after NCLT order i.e. 16-Dec-24.
Discussed inclusion and exclusions of various Index including MSCI Emerging Markets Index (MXEF INDEX), FTSE and NIFTY Index (NIFTY INDEX) & S&P BSE SENSEX Index (SENSEX INDEX EQUITY).

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

On 26 December, CVC extended its Macromill, Inc. (3978 JP) offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.
The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication.
Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the key takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 14.13% discount to undisturbed.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. But the question is: why would BABA be cashing out at this price?

(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos

For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

ITC Hotels Demerger: An Emerging Behemoth & Hospitality Play

By Nimish Maheshwari

ITC Ltd (ITC IN) Hotels demerger aims to unlock the intrinsic value of the hotels business and enable a sharper focus on growth.
ITC Hotels is aiming to reach a portfolio of 200+ hotels with 18,000+ keys by 2030 from a robust pipeline of 140 Hotels with about 13000 Keys in 2024.
ITC Hotels inheriting a strong balance sheet with zero debt and cash reserves may list around 113-170 per share.

Quiddity JPX-Nikkei 400 Rebal 2025: End-Dec 2024 Ranks

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted capped index composed of 400 constituents.
The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
Below is a look at the rankings of potential ADDs/DELs for the JPX-Nikkei 400 August 2025 rebalance based on trading data as of end-December 2024.

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Jan 01

Daily Brief Event-Driven: EQD | FXI – Buy January Straddle and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EQD | FXI – Buy January Straddle
Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates
EQD | HSI – Buy January Straddle
JSW Energy X O2 Power: 25 GW Powerhouse

EQD | FXI – Buy January Straddle

The implied move for January is considerably less than what has been experienced historically.
January punches above its weight in terms of both historic volatility (most volatile month) and the amount of price movement relative to that historic volatility.
71% of the last 21 January’s have had a larger absolute return for the month than the current implied move of 5.7%. Average January move has been 8.62%.

Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates

TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
609 new CGRs were filed since 31-Nov-2024. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
A surprising number of smaller companies have yet to file a MCoCC/SP Awareness report. As cross-holdings get sold down, I expect they will become activists targets in 2025.

EQD | HSI – Buy January Straddle

The implied move for January is less than what has been historically experienced. Twenty of the last 27 years have had price movement > current implied move.
January punches above its weight in terms of both historic volatility (most volatile month) and the amount of price movement relative to that historic volatility.
January is one of the most volatility months of the year, only October having a higher average historic volatility

JSW Energy X O2 Power: 25 GW Powerhouse

By Nimish Maheshwari

The acquisition of O2 Power brings with it a robust portfolio of 4,696 MW of renewable energy assets, wherein JSWE’s Current operational capacity stands at 7740 MW
JSW Energy’s total locked-in generation capacity will reach nearly 24,708 MW by June 2027, marking a substantial increase of 23% from its previous capacity of 20,012 MW
JSW Energy can leverage its in-house EPC and O&M capabilities to unlock further value from the 4.7 GW portfolio.

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Dec 31

Daily Brief Event-Driven: GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule
AVJennings (AVJ AU): Competing Offer Brewing
EQD | Hong Kong Single Stock Options Weekly December 23 – 27
Extension of Spain’s ‘Anti-Takeover Shield’ and Investor Concerns
HK CEO & Director Dealings (31st Dec 2024): Weimob Inc., Midea Real Estate, Pharmaron Beijing
UniCredit’s Strategic Stake in Commerzbank and Implications for a Takeover

GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule

In the UK, once a Bidder is named in a possible offer announcement, the Bidder has 28 days to either announce a firm Offer intention or walk away.
This is known as a ‘put up or shut up’ or ‘PUSU’ deadline. Hong Kong’s takeover rules has no such provision.
It’s ~21 weeks since co-founders Jeff Bi and Gang Hong tabled a non-binding Offer. With no firm Offer in sight, AND contesting a SAMR ruling, they should fold their tent.

AVJennings (AVJ AU): Competing Offer Brewing

On 28 November, Avjennings Ltd (AVJ AU) disclosed a non-binding indicative proposal from AVID at A$0.67 per share, a 103.0% premium to the undisturbed price.
On 27 December, Queensgate Investments became a substantial shareholder, representing 5.39% of outstanding shares. Ho Bee Land Ltd (HOBEE SP), a Singaporean real-estate developer, owns Queensgate.
Ho Bee Land is a strategic investor and is likely contemplating a competing offer, mainly because AVID’s offer is below NTA and AVJennings’s controlling shareholder’s ties to Singapore.

EQD | Hong Kong Single Stock Options Weekly December 23 – 27

Call volumes dominate tradng across single stocks with the Put/Call ratio hitting its 3rd lowest level since the beginning of November. Volumes continue trend lower in place since early November.
Auto companies seeing big increases in option volumes with Li Auto and Great Wall Motor moving in opposite directions since the middle of the month.
We add 2 new tables showing the largest volume increases across Puts and Calls – a conveient way to view unusual changes in trading activity.

Extension of Spain’s ‘Anti-Takeover Shield’ and Investor Concerns

By Jesus Rodriguez Aguilar

The Spanish government extended the anti-takeover shield to December 31, 2026, maintaining oversight of foreign direct investments in critical sectors like energy, defense, and technology to safeguard national interests.
Investor concerns include regulatory uncertainty, lack of clear criteria, and expanded obligations under the 2023 Foreign Investment Law, deterring foreign investments and delaying significant projects.
Balancing security and openness preserves free capital movement benefits, addressing vulnerabilities while avoiding protectionism that could harm competitiveness and strain relationships with foreign partners.

HK CEO & Director Dealings (31st Dec 2024): Weimob Inc., Midea Real Estate, Pharmaron Beijing

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight include: Weimob Inc. (2013 HK), Midea Real Estate Holding (3990 HK), and Pharmaron Beijing (3759 HK).

UniCredit’s Strategic Stake in Commerzbank and Implications for a Takeover

By Jesus Rodriguez Aguilar

UniCredit increased its economic exposure to Commerzbank to approximately 28%, aligning with its strategy to reach a 29.9% stake, pending ECB approval in early 2025.
Commerzbank’s operational inefficiencies and valuation at 0.56x tangible book value highlight challenges for independence, reinforcing the rationale for a potential UniCredit takeover. My core position would be long Commerzbank.
Projected synergies for a UniCredit-Commerzbank merger range from €705 million to €1.409 billion annually, with significant upside for Commerzbank’s share price if a takeover occurs.

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Dec 30

Daily Brief Event-Driven: Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
EQD | Nikkei Index Options Weekly – December 23 – 27
EQD | Kospi Index Options Weekly – December 23 – 27

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO

Shandong Hi-Speed Holdings Gro (412 HK) completed the acquisition of CITIC Securities 13.52% stake in Shandong Hi-Speed New Energy G (1250 HK) at HK$1.78 per share.
SPA completion triggers a mandatory unconditional offer at HK$1.78 per share. The composite document will be sent, and the offer will open by 28 January.
At the last close and for an early February payment, the gross and annualised spread of the offer is 2.9% and 30.2%, respectively.

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports

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: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Malaysia Airports Holdings (MAHB MK).

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

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: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.

EQD | Nikkei Index Options Weekly – December 23 – 27

NKY looks to be playing catch-up with USD/JPY, rising 4.03% on the week and breaking out of recent range after not moving much in the first half of the month.
Implied volatility continues to slide lower with 1M implied vol down 2.5 points on the week.
Call volumes larger than Put volumes for the first time in a while on Fridays 1.80% price surge.

EQD | Kospi Index Options Weekly – December 23 – 27