Event-Driven

Core Lithium Ltd (CXO AU), Lake Resources Nl (LKE AU) and Piedmont Lithium ADR have been added to the MVIS Global Rare Earth/Strategic Metals Index. AVZ Minerals has been deleted.
Core Lithium Ltd (CXO AU) and Lake Resources Nl (LKE AU) are S&P/ASX 200 additions that will be also implemented at the close of trading on 17 June.
With only 4 trading days to implementation (Monday is a holiday), the stocks with significant days of ADV to trade could out(under)perform their peers and the market.

Kito (6409) – Shareholder Register Quirks Evolving – Becoming More Arb-Y Less Friendly

The Kito Corporation (6409 JP) take-private by KKR which is in process started with an interesting register. It has become interestinger.
One possibly-strategic “pure investment” holder has gone 10+%. A “friendly activist” has gone below. Another large friendly holder sold 4%. Volume since it achieved near-deal-price has been 24.7% of votes.
The register has likely become more arb-y and possibly strategic, and less friendly to Kito, but it is up to the holders to follow up. And there is a warning.

MVIS Vietnam Index Rebalance: Two Adds, One Delete, Capping & Float Changes

There are 2 additions and 1 deletion for the MVIS Vietnam Index at the upcoming rebalance at the close on 17 June. Plus capping and float changes.
The adds are Saigon – Hanoi Commercial (SHB VN) and Viet Nam Construction & Impo (VCG VN), while Tien Phong Securities (ORS VN) is the deletion.
The largest passive outflows are on Vingroup Jsc (VIC VN), Feng Tay Enterprise (9910 TT) and Eclat Textile Company (1476 TT).

Last Week in Event SPACE: Atlas Arteria, Frasers Hospitality, DTAC/True, Crown Resorts, Saratoga

It’s not clear why it would be better for Frasers Hospitality (FHT SP)‘s assets to be unlisted rather than listed, so this is purely financial not strategic given the ownership.
Atlas Arteria (ALX AU) boasts low risk, stable yielding, toll road assets. That’s an attractive proposition for cash-up IFM, which now has a 15% economic interest.
If DTAC TB / TRUE TB‘s merger goes through, the top two players control ~96% of the market. Even the generally complicit Thai regulator might be reluctant to grant approval.

China VAST (6166 HK): Jinmao’s Pre-Conditional Offer

Urban planner China Vast Industrial Urban Development (6166 HK) has received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
The cancellation price is HK$2.40/share, a ~30% premium to the undisturbed price. The Offer Price is final.
Pre-Conditions include approvals from SAMR, SASAC, and NDRC. These won’t be an issue as Jinamo is backed by SOE Sinochem.

Tullow Oil/Capricorn Energy: Lowering Leverage

By Jesus Rodriguez Aguilar

Tullow offers 3.8068 shares per Capricorn share in a transaction meant to repair Tullow’s balance sheet and develop both Tullow’s and Capricorn’s assets in a supportive crude price environment.
Although Tullow’s share price has declined by 95% over the last ten years, the company has managed to remain as a going-concern due to a successful restructuring in 2021.
It is not completely clear that Capricorn’s shareholders will vote the scheme. Their shares are worth 6% more than the shares to be received under the exchange equation.

Index Rebalance & ETF Flow Recap: STAR50, S&P500, REMX, MVIS Vietnam, Atlas Arteria, OOIL

Last week saw the rebalance implementation of the KOSPI2 INDEX, KOSDAQ 150, HSI INDEX, HSCEI INDEX, HSTECH INDEX, CSI 300 Index, STAR50 INDEX and the SSE family of indices.
The coming week has the rebalance implementation of the FTSE All-World/All-Cap, EPRA Nareit, FTSE China 50, FTSE China A50, FTSE TWSE Taiwan 50 and S&P/ASX indices.
Big inflows to the Yuanta/P-shares Taiwan Top 50 ETF (0050 TT) as we enter dividend season. The trade looks bigger than usual this year.

Asia-Pac Weekly Risk Arb Wrap: Tunas Ridean, Hwa Hong, China VAST, Mapletree, Giordano

There are 48 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals this week: Jardine Cycle & Carriage (JCNC SP) & Tunas Andolan’s indirect delisting proposal for Tunas Ridean (TURI IJ) & China Vast Industrial Urban (6166 HK)‘s pre-conditional Offer.
Key updates took place for: Yancoal Australia (YAL AU), Hwa Hong Corp (HWAH SP), Mapletree North Asia Commercial Trust (MAGIC SP), and Lanzhou Zhuangyuan Pasture (1533 HK).

Before it’s here, it’s on Smartkarma

Jun 11

Event-Driven: HKEX, China Vast Industrial Urban Development, Sk Discovery, Korea Electric Power, LONGi Green Energy Technology, Iljin Hysolus and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
China VAST’s Underwhelming Privatisation Bid from China Jinmao
Short-Covering Trend of KOSPI 200 Deletions by Month-End
NPS Plans to Increase Its Stake in KEPCO from 6.4% to Up to 10.0%
Shanghai/Shenzhen Northbound Connect: Weekly Moves (9 June 2022)
Shorting Trend Projections on KOSPI 200 Additions

Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$0.6bn, split (roughly) <US$0.1bn for Shanghai and US$0.5bn for Shenzhen.
The largest inflows were into Kuaishou Technology (1024 HK) and Wuxi Biologics (2269 HK). The largest outflows were in CNOOC Ltd (883 HK) and Tencent (700 HK).

China VAST’s Underwhelming Privatisation Bid from China Jinmao

China Vast Industrial Urban Development (6166 HK) announced a pre-conditional privatisation offer from China Jinmao Holdings (817 HK) at HK$2.40 per share, a 30.4% premium to the undisturbed price.
Key conditions include approval by at least 75% disinterested shareholders (<10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
The headcount test (if still applicable) is a key challenge as minorities are likely to be unimpressed. We would be buyers up to HK$2.26 per share (implies 75% deal probability).

Short-Covering Trend of KOSPI 200 Deletions by Month-End

As expected, most of the KOSPI 200 deletions, except for Bukwang Pharm, significantly outperformed the KOSPI index today.
Those that fit the pattern shown in the last rebalancing are CJ CGV and Bukwang. The problem, however, is that they have potential events triggering their price to fall.
So, I suggest paying attention to Yungjin Pharm and SK Discovery, which also have a sizable level of short interest and are expected to have stable short-coverings by end-June.

NPS Plans to Increase Its Stake in KEPCO from 6.4% to Up to 10.0%

After the market close today, KEPCO announced that NPS plans to increase its ownership of the company from 6.43% to as high as 10% by 2025.
This announcement is likely to have a positive impact on KEPCO’s shares both in the near term as well as over the next three years.
If NPS has a greater stake in KEPCO, this could encourage the government to raise electricity prices since the government wants the investments made by the NPS to perform well.

Shanghai/Shenzhen Northbound Connect: Weekly Moves (9 June 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock-Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$6.5bn, split between Shanghai (+US$5.5bn) and Shenzhen (+US$1.0bn).
The largest inflows were into LONGi Green Energy Technology (601012 CH) and Kweichow Moutai (600519 CH). The largest outflows were in CATL (300750 CH) and Cosco Shipping Holdings (601919 CH).

Shorting Trend Projections on KOSPI 200 Additions

All of these additions experienced significant levels of short trading yesterday. In particular, those newly listed stocks saw harsher shorting attacks, similar to what we witnessed at the last rebalancing.
A certain level of short selling trend for newly listed stocks will likely work the same this time, and the applicable period is expected to be 3-4 trading days.
That is, we need to target the newly listed stocks again for this rebalancing: Iljin Hysolus (271940 KS), K Car (381970 KS), and SD Biosensor (137310 KS).

Before it’s here, it’s on Smartkarma

Jun 09

Event-Driven: Mapletree North Asia Commercial Trust, Giordano International, Alibaba Group, Atlas Arteria, HS Holdings, Lotte Chilsung Beverage Co, Uniti Group Ltd, ACM Research Shanghai Inc, Kakao Pay and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Minute MNACT Arb and Index Selling
Giordano (709 HK): Cheng Family Offer Or Cashing Out?
Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures
Atlas Arteria (ALX AU): IFM Investors Comes Knocking
HS Holdings (8699 JP): Khan Bank IPO Delayed but Path Clear
Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte
Uniti Group: 15th July To Vote On Morrison/Brookfield’s Scheme
STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
Uniti’s Scheme Meeting on 15 July, IE’s Opinion
Kakao Pay: Comp Valuation Analysis Suggests Additional 40% Downside Risk

Last Minute MNACT Arb and Index Selling

Today is the last day of trading for Mapletree North Asia Commercial Trust (MAGIC SP) also known as MNACT.
That means today is index deletion day for any number of global indices, even though MNACT is not in many of the major ones.
Payment will be S$1.949/unit plus a Clean-Up Distribution. There may be opportunities at the close. Strategy below.

Giordano (709 HK): Cheng Family Offer Or Cashing Out?

Giordano International (709 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook?
And just for some (possible) added excitement, David Webb holds 5.1%.

Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures

By Oshadhi Kumarasiri

Ant Financial Services Group (6688 HK) is declaring a dividend at a time when regulators have forced the company to increase its capital base.
Moreover, Ant’s financial performance doesn’t support a dividend payment of RMB 11.8bn in the short term.
We think the sale of 5.0m Kakao Pay (377300 KS) shares today was forced upon Ant through the lack of usual funding sources at Alibaba Group (9988 HK)’s disposal.

Atlas Arteria (ALX AU): IFM Investors Comes Knocking

Fresh from successfully taking out Sydney Airport (SYD AU) earlier this year, IFM is reportedly on the cusp of submitting a non-binding indicative proposal for Atlas Arteria (ALX AU)
A proposal is contingent on being granted limited due diligence. Meanwhile, IFM has accumulated an economic interest in ALX of 15%.
ALX said they have not received any information on a proposal. Expect that to occur shortly.

HS Holdings (8699 JP): Khan Bank IPO Delayed but Path Clear

The saga that has been the Sawada now HS Holdings (8699 JP) effective control change and change in Mongolian Banking Law has been interesting but the end game is clear.
Last week, the Mongolian parliament extended the listing deadline for the top 5 Mongolian banks from June 2022 to June 2023. The IPO has been pushed back. Which is good.
The stock is not what people think it is, and the implied PBR and PER of Khan Bank exposure on a cash-adjusted basis is VERY low.

Lotte Chilsung Beverage: Block Deal Sale by Hotel Lotte

After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.
The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won).
We have a Positive view on Lotte Chilsung Beverage and we would take this deal.

Uniti Group: 15th July To Vote On Morrison/Brookfield’s Scheme

The Scheme Booklet for Morrison/Brookfield/CSC’s Offer for Uniti Group Ltd (UWL AU) has now been despatched. The Scheme Meeting will be held on the 15th July.
The Independent Expert considers the terms to be fair and reasonable with a fair value range between A$4.65-A$5.20 compared to the Offer price of $5.00/share.
Trading tight to terms, as it has done since parties entered into the Scheme Implementation Deed.

STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant

With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.

Uniti’s Scheme Meeting on 15 July, IE’s Opinion

Unsurprisingly, the independent expert (IE) considers the consortium’s offer of A$5.00 per share to be fair and reasonable. We think that IE’s valuation approach is sound.
The key condition is approval from Uniti Group Ltd (UWL AU) shareholders and regulatory authorities (FIRB). The scheme meeting is scheduled for 9:30 am on 15 July.
We continue to think that offer is attractive. At the last close price and for the 4 August implementation date, the gross and annualised spread is 0.8% and 5.1%, respectively.

Kakao Pay: Comp Valuation Analysis Suggests Additional 40% Downside Risk

Our base case valuation of Kakao Pay is market cap of 7.1 trillion won or 53,767 won per share, which represents an additional 40% downside risk from current levels.
Our base case valuation is based on 5x EV/Sales multiple and applying this to the consensus estimated sales of 898 billion won in 2023.
The fact that the share price ended 15.6% lower (much bigger than block deal discount range of 8.5% to 11.8%) suggests a lower probability of an MSCI Korea index inclusion.

Before it’s here, it’s on Smartkarma

Jun 08

Event-Driven: HKEX, JD.com Inc., Kakao Pay, Yancoal Australia, Hwa Hong Corp, Perenti Global, Gongniu Group Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ETFs in Stock Connect: Criteria & Potential Southbound Inclusions
HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping
Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)
Alipay’s Kakao Pay Exit: Common Prosperity Policy or Partnership Starting to Crack?
Yancoal, Not Surprisingly, Rejects Yankuang’s Proposal
Kakao Pay’s MSCI August QIR Inclusion: Screening/Passive Flow Calculations
Hwa Hong’s Revised Voluntary Conditional Offer at S$0.40
Perenti Recycling Cash with Big (Impactful) Buyback
Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal
Stock Connect Changes & MSCI/FTSE Deletions on Friday

ETFs in Stock Connect: Criteria & Potential Southbound Inclusions

On 27 May, the SFC and CSRC announced that they had agreed in principle to the inclusion of Exchange Traded Funds by mainland and Hong Kong exchanges in Stock Connect.
We currently see 6 ETF being eligible for inclusion in Southbound Connect and another couple that could be included at a subsequent review.
Increased mainland participation in the ETF market could lead to sustained premium/discount on the ETFs and this will be transmitted to index futures and affect pricing of short-term/long-term repo.

HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).

Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)

After the market close today, Kakao Pay (377300 KS) announced that there will be a block deal sale of the company’s shares (5 million) by Alipay Singapore Holdings.
Alipay is the second largest shareholder of Kakao Pay with a 38.52% stake. After the block deal sale, there will be continued overhang on the remaining shares held by Alipay.
We continue to have a NEGATIVE view on Kakao Pay and we also have a negative view on this block deal sale as well.

Alipay’s Kakao Pay Exit: Common Prosperity Policy or Partnership Starting to Crack?

Alipay’s return on investment is 10x, so it may be natural to realize a profit for some stakes. But the local market believes that the strategic partnership is cracking.
Starting with this stake sale, it is highly likely that Alipay will go through a multi-phased stake sale process similar to that of Temasek/JPM’s Celltrion stake sales.
Meanwhile, we should also pay attention to the possibility that this block deal by Alipay will likely lead to the inclusion of Kakao Pay in the MSCI August IR.

Yancoal, Not Surprisingly, Rejects Yankuang’s Proposal

The rejection of Yankuang Energy (1171 HK)‘s proposal by Yancoal Australia (3668 HK) independent board was always on the cards.
Yet the bigger question remains – why was this unorthodox structure, involving the issuance of H-Share convertible bonds, tabled in the first place?
Back in Yankuang’s court. Revise terms? Walk away? To note, Yancoal has not, to date, received any formal offer or proposal from Yankuang.

Kakao Pay’s MSCI August QIR Inclusion: Screening/Passive Flow Calculations

Alipay’s stake sale raises another critical issue: Kakao Pay’s MSCI inclusion. Kakao Pay comfortably satisfies the full MC threshold but tightly exceeds the float MC hurdle.
As for the passive flow, we should see an inflow of 6.11x ADTV, equivalent to 1.48% of SO. It represents nearly 2M shares, close to ₩210B.
If we build up a position betting on Kakao Pay’s downward trend due to Alipay’s block deal risk, we should consider temporarily switching the position when this event is triggered.

Hwa Hong’s Revised Voluntary Conditional Offer at S$0.40

Sanjuro United has increased its voluntary conditional cash offer for Hwa Hong Corp (HWAH SP) by 8.1% to S$0.40 per share. The offer may be revised in a competitive situation.
The offer which closes on 28 June continues to be subject to a 50%+ minimum acceptance condition. The offeror including valid acceptances represents 24.70% of outstanding shares.
The shares are trading in line with the revised offer price. The brewing family feud for the control of Hwa Hong suggests a possibility of a counterbid.

Perenti Recycling Cash with Big (Impactful) Buyback

Global mining services business Perenti Global (PRN AU) was formed through the merger of Barminco and Ausdrill in late 2018.
Revenues to Dec 2021 are up 156% vs the year to June 2018. Gross profits are up 156% too. OP is up much less because D&A are up dramatically.
But the company today announced capital management and rationalisation activities had delivered A$134.7mm. They’ve launched a buyback to repurchase 10% of shares. It’s worth a look.

Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal

Yancoal Australia (YAL AU)’s independent board committee unanimously concluded that Yankuang Energy Group (1171 HK)’s H-Share CBs offer is not in the best interests of Yancoal’s minority shareholders.
Yankuang is open to continuing its discussions with Yancoal Australia (3668 HK) but maintains that the offer was based on long-term factors including expectations of future coal prices.
Overall, the wording of Yankuang’s response suggests that it is more inclined to bide its time rather than return with a better offer. Required FIRB approval remains an overhang.

Stock Connect Changes & MSCI/FTSE Deletions on Friday

Changes to the Northbound Stock Connect Buy and Sell list were announced yesterday with 35 SSE-listed stocks becoming sell-only, and 32 SZSE-listed stocks becoming sell-only.
This will result in the deletion of 45 stocks from the FTSE All-World, All-Cap and Micro-cap indices, while there will be 9 deletions from the MSCI Standard Index.
There are a few stocks with over 1 day of ADV to sell from passive trackers and these stocks could trade weaker than the market over the next few days.

Before it’s here, it’s on Smartkarma

Jun 07

Event-Driven: Kyokuto Kaihatsu Kogyo Co, Jardine Cycle & Carriage, Toshiba Corp, Lanzhou Zhuangyuan Pasture, KakaoBank, Renesas Electronics, SK Innovation and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind
Tunas Ridean (TURI IJ): JCNC & Tunas Andolan’s Quasi Delisting Proposal
Toshiba – Surprise, Surprise, More Drama
Zhuangyuan Pasture (1533 HK): 29th June EGM For H-Share Offer
KOSPI200 Index Rebalance: Float Changes, Flows & Trades
KOSPI 200 Rebalancing Minimal Flow at the Close on June 9 For Day Basket-Trading
A Modest Proposal to the Nikkei Index Committee for Nikkei 225 Methodology Change
SK Inc & SK Innovation Plan to Buy Stake in Bill Gates’ TerraPower + SKC Sells PET Film Business

Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind

Kyokuto Kaihatsu Kogyo Co (7226 JP) has always been cash-rich. Recently there are better noises. Sold real estate. New Mid-Term Plan. Raised the payout ratio to 50%. Slowly selling crossholdings.
But it isn’t fast enough, and activist Strategic Capital this spring announced a flurry of AGM agenda items to extract value for shareholders.
The company today announced a buyback – additive, but there is a lot to look at here. Shareholder structure is key. And forward cash-flows tell you more buybacks could come.

Tunas Ridean (TURI IJ): JCNC & Tunas Andolan’s Quasi Delisting Proposal

Tunas Ridean (TURI IJ) announced a plan to change its status from an open company to a closed company.
In effect, TURI will undertake a buyback of its shares at Rp1,700/share, a lifetime high. Those who do not tender will be left holding unlisted scrip.
Jardine Cycle & Carriage (JCNC SP) and Tunas Andalan both hold 46.24%, leaving 7.52% in public hands. The proposal requires a shareholder vote. It appears no shareholder needs to abstain.

Toshiba – Surprise, Surprise, More Drama

By Mio Kato

The days since Toshiba’s last briefing session have been eventful with METI expressing concern about foreign investor control and a split emerging in the board over director nominations.
These developments create significant risk of activist-friendly director candidates being vetoed in our view.
Toshiba stock has been trading in line with Hitachi’s strong performance of late despite being more expensive and thus risk has increased.

Zhuangyuan Pasture (1533 HK): 29th June EGM For H-Share Offer

Back on the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share. The Offer Doc is now out.
This two-step voluntary cash offer involves a Scheme-like vote and a 90% tendering condition. The EGM will be held on the 29 June.
This transaction could potentially be wrapped up late-July. The FY21 dividend should also be added to the Offer terms.

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.

KOSPI 200 Rebalancing Minimal Flow at the Close on June 9 For Day Basket-Trading

Flows from the ETFs/index funds serve as a minimal flow for rebalancing trading at the close on June 9. The total AUM is ₩18.9T: ETFs ₩15.0T and index funds ₩3.9T.
There are only three trading days left until the rebalancing trading. At this point, a setup aimed at the NPS/Insurance’s preemptive trading seems a bit off, timing-wise.
It seems more appropriate at this point to design a day basket-trading based on the minimal flow size on the day of rebalancing trading, June 9.

A Modest Proposal to the Nikkei Index Committee for Nikkei 225 Methodology Change

The Nikkei Index team proposed several changes to the Nikkei 225 Average methodology last week. They include capping, a semi-annual (vs annual) review, and a change in “liquidity” measure.
It helps move membership away from the low price low weight names which populate the bottom of the index. Slowly. 6 names a year. That’s not enough.
And it doesn’t fix the historical anomalies rendering the index unsuitable as benchmark (and BOJ tool). I propose more changes below. You can submit this or yours in the consultation.

SK Inc & SK Innovation Plan to Buy Stake in Bill Gates’ TerraPower + SKC Sells PET Film Business

SK Group has been the the most active M&A player among the major chaebols in Korea in the past decade. SK Group is once again making some big M&A moves.
In this insight, we discuss SK Inc and SK Innovation’s plans to purchase a minority stake in Bill Gates’ TerraPower nuclear SMR technology company.
We also discuss the recent sale of the PET film business by SKC for 1.6 trillion won and how SKC may try to acquire the controlling interests of Iljin Materials.

Before it’s here, it’s on Smartkarma

Jun 06

Event-Driven: Keurig Dr Pepper Inc, Link Administration Holdings, Kakao Pay, Xiamen International Port H, Hensoldt AG and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P500 Index Rebalance: One-Way Trade of US$30bn
Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal
Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?
Merger Arb Mondays (6 Jun) – Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office
DAX, MDAX, SDAX, TecDAX June 2022 Rebalance: Encavis & Hensoldt Top Positives; Hypoport Top Negative

S&P500 Index Rebalance: One-Way Trade of US$30bn

There are quite a few changes for stocks across the S&P 500 (SPX INDEX), MidCap 400 Index and SmallCap 600 Index that will result in a one-way trade of US$30bn.
There are adds/deletes that have over 5 days of ADV to trade from passive funds, plus many stocks that have over +/-1 day of ADV from other changes.
The largest impact of passive buying will be on Keurig Dr Pepper Inc (KDP US), On Semiconductor (ON US) and VICI Properties Inc (VICI US).

Weekly Deals Digest (5 Jun): Link Admin, Cocoaland, Xiamen Port, Link Net, WM Motor, GOGOX, Yancoal

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
On the ECM front, WM Motor Technology Co Ltd (WMT CH) filed for a US$1bn IPO and GoGoX Holdings (GOGO HK) aims to shortly launch a US$100-150m IPO.
On the Event-Driven front, key developments at Xiamen International Port H (3378 HK), Link Net (LINK IJ), Link Administration Holdings (LNK AU), Yancoal Australia (YAL AU), Cocoaland Holdings (COLA MK).

Kakao Pay Shorting Entry Point: June 9 KOSPI 200 or June 17 FTSE?

As for the FTSE rebalancing, when basket trading was not feasible, the individual trading setup of large-cap additions had a significantly lower win rate.
Local tutes use the FTSE rebalancing as a selling opportunity. And this trading pattern of local tutes was particularly prominent in large-cap additions.
I suggest avoiding flow trading for the additions this time. Kakao Pay? We should aim at the June 9 KOSPI 200 instead of the June 17 FTSE for shorting entry.

Merger Arb Mondays (6 Jun) – Xiamen Port, Link Admin, Cocoaland, Link Net, Australian Unity Office

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
This week, the highest spreads are Xiamen International Port H (3378 HK), Sezzle Inc (SZL AU), 21Vianet Group (VNET US), Link Administration Holdings (LNK AU), Alliance Aviation Services (AQZ AU)
Lowest gross spreads are Yancoal Australia (YAL AU), Hwa Hong Corp (HWAH SP), Virtus Health (VRT AU), Irongate Group (IAP AU), Uniti Group Ltd (UWL AU), AKM Industrial (1639 HK).

DAX, MDAX, SDAX, TecDAX June 2022 Rebalance: Encavis & Hensoldt Top Positives; Hypoport Top Negative

By Janaghan Jeyakumar, CFA

The index changes for DAX, MDAX, SDAX, and TecDAX were announced yesterday.
Beiersdorf AG (BEI GR) will move from MDAX to DAX while Delivery Hero SE (DHER GR) will move from DAX to MDAX.
Below is a closer look at the excess volume expectations and historical price and volume performance of the names involved in this Rebalance Event.

Before it’s here, it’s on Smartkarma

Jun 05

Event-Driven: Block, VICI Properties Inc, Cocoaland Holdings, Celltrion Inc, Toshiba Corp, New World Development, SPH REIT and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
S&P500, S&PMid400, and S&PSmall600 Index Changes for June 2022 – More Interesting Than Usual
Cocoaland (COLA MK): F&N Scheme At RM1.50/Share
FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT
Cocoaland’s RM1.50 Per Share Privatisation Offer from Fraser & Neave
Last Week in Event SPACE: Toshiba, Woodside, Genting Berhad, SPH REIT, Virtus Health, Xiamen Port
Index Rebalance & ETF Flow Recap: NKY, CSI300, SSE, REMX, ASX, SET50, CH50/A50, EPRA, Mercari, GOTO
Asia-Pac Weekly Risk Arb Wrap: Australian Unity Office, Nissui Pharma, Virtus, SPH REIT, Cocoaland

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes

There is one set of changes to the S&P/ASX 50, one deletion for the S&P/ASX 100, and four adds/ five deletes for the S&P/ASX 200 (AS51 INDEX).
Passive trackers will need to trade between 2-6 days of ADV on nearly all stocks. Short interest spikes in a few names indicate pre-positioning for the passive flow.
Core Lithium Ltd (CXO AU) is a potential inclusion to the MVIS Global Rare Earth/Strategic Metals Index in June and that could add to the passive inflows on the stock.

S&P500, S&PMid400, and S&PSmall600 Index Changes for June 2022 – More Interesting Than Usual

On 3 June 2022, the S&P DJI Global Index team announced changes to the S&P500, S&P Midcap 400, and S&P SmallCap 600 indices (and a number of other smaller indices).
VICI Properties (VICI) will replace Cerner (CERN) in S&P500 at close of 7 June. Keurig DrPepper and ON Semiconductor will replace UnderArmour and IPG Photonics at close 17 June.
This set of rebalances is particularly interesting in terms of non-offsetting flows, unlike many rebals which are just a game of musical shares between the three top indices.

Cocoaland (COLA MK): F&N Scheme At RM1.50/Share

Fraser & Neave Holdings (FNH MK) is proposing to privatise 27.66%-held Cocoaland Holdings (COLA MK) at RM1.50/share by way of a Scheme.
The Offer price is a 26.1% premium to last close. Leverage Success, the largest shareholder with 40.65% stake has given an irrevocable undertaking to vote for the Scheme.
The board of Cocoaland has until the 17 June to respond.

FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.
We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.
I suggest using KB Financial and Celltrion Healthcare as hedges of LONG & SHORT for Shinhan and Celltrion, respectively.

Cocoaland’s RM1.50 Per Share Privatisation Offer from Fraser & Neave

Cocoaland Holdings (COLA MK) announced a privatisation offer from Fraser & Neave Holdings (FNH MK) at RM1.50 per share, a 26.1% premium to the undisturbed price.
The key conditions are the headcount test and <10% rejection from all disinterested shareholders. The shareholder (Leverage Success) with a blocking stake has provided an irrevocable.
The offer is attractive in comparison to long-term historical share prices and multiples. The Board must respond by no later than 5 pm on 17 June.

Last Week in Event SPACE: Toshiba, Woodside, Genting Berhad, SPH REIT, Virtus Health, Xiamen Port

Eight proposals seem a lot for Toshiba Corp (6502 JP). However, if you are a PE fund on the radar of private equity LP investors, you have to get involved.
The size of the trade is apparently 38 million shares. If you have been in the Woodside Petroleum (WPL AU) / Santos Ltd (STO AU) trade, take the deal, tactically.
Perhaps a big pharma could make a splashy bid for Genting Bhd (GENT MK)‘sTauRx, but we’re not there yet.

Index Rebalance & ETF Flow Recap: NKY, CSI300, SSE, REMX, ASX, SET50, CH50/A50, EPRA, Mercari, GOTO

Last week was a busy one with the TPX INDEX rebalance, the MSCI rebalance and announcements of changes to the FTSE China A50/50, EPRA, FTSE Taiwan 50 and S&P/ASX indices.
The coming week has the implementation of KOSPI2 INDEX, KOSDQ150 INDEX, HSI INDEX, HSCEI INDEX, HSTECH INDEX, SHSZ300 INDEX, STAR50 INDEX, SSE50 INDEX rebalances and the announcement of REMX changes.
There were inflows to Korea, Japan, Hong Kong and Australia focused ETFs during the week, while there were outflows from China and India focused ETFs.

Asia-Pac Weekly Risk Arb Wrap: Australian Unity Office, Nissui Pharma, Virtus, SPH REIT, Cocoaland

There are 45 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four news deals this week: Australian Unity Office (AOF AU)‘s Aliro bid, Xiamen International Port (3378 HK)‘s parent buyout; Nissui Pharmaceutical (4550 JP)‘s Offer, and Cocoaland (COLA MK)‘s F&N’s Offer.
Key updates took place for: Virtus Health (VRT AU), AKM Industrial (1639 HK), Kito Corporation (6409 JP), and SPH REIT (SPHREIT SP).

Before it’s here, it’s on Smartkarma

Jun 04

Event-Driven: Kito Corporation, Xiamen International Port H, KakaoBank, New Hope Corp, Shanghai Putailai New Energy Technology, Tsingtao Brewery Co Ltd H, Investor AB, Kakao Pay and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Kito (6409) Shareholder Register Getting Interestinger
Xiamen Port (3378 HK)’s Pre-Conditional Offer
KOSPI 200 Official Announcement: Float Rate Changes (11 Up & 5 Down)
S&P ASX June 2022 Rebalance: ADDs Are Mostly Mining Companies; DELs Are Mostly Tech/Financials
Shanghai/Shenzhen Northbound Connect: Weekly Moves (2 June 2022)
Shanghai/Shenzhen Southbound Connect: Weekly Moves (2 June 2022)
Selected European Holdcos and DLCs: May ‘22 Report
Shorting Entry Point Coming on Kakao Pay

Kito (6409) Shareholder Register Getting Interestinger

In mid-May 2022, Kito Corporation (6409 JP) announced KKR would launch a Tender Offer to buy out the company at a big premium. I warned about the register.
Two large shareholders were there prior to the bid – one “engagement-style” activist and one private company in a similar industry. Both had a 9+% holding visible.
Both have now lifted their stakes above 10% post-announcement, at a small spread to terms. This makes things more interesting.

Xiamen Port (3378 HK)’s Pre-Conditional Offer

SOE terminal operator Xiamen International Port (3378 HK) has announced a pre-conditional Offer from Xiamen Port Holding, a Fujian SASAC-controlled entity.
The Offer price is HK$2.25 per H-share, a 55% premium to last close. The Offer price will NOT be increased. The final dividend will be added to the cancellation price.
Pre-Conditions include approvals from NDRC, MoC, SAFE, and CSRC. There is no tendering condition. This deal mirrors Guodian Technology (1296 HK), BCL (2868 HK), and Jin Jiang Capital (2006 HK).

KOSPI 200 Official Announcement: Float Rate Changes (11 Up & 5 Down)

The KRX officially announced the float rate changes of the KOSPI 200 constituents at this June rebalancing: 11 increases and 5 decreases.
Kakao Bank has the most significant change of 43%p, followed by Krafton and Woori Financial. NH Investment and HD Infracore will suffer a drop of 9%p.
As for passive flow x ADTV, Kakao Bank leads the pack at 2.95x, followed by Kakao Pay (1.15x). NH Investment and Korea Gas will face a noticeable outflow.

S&P ASX June 2022 Rebalance: ADDs Are Mostly Mining Companies; DELs Are Mostly Tech/Financials

By Janaghan Jeyakumar, CFA

The index changes for the S&P ASX Index family for the June 2022 Rebalance were announced today.
There will be 4 Adds and 5 Deletes for the ASX 200 Index, mostly in line with our expectations in S&P/ASX Indices: Quiddity Leaderboard for June 2022 Rebalance 2.0.
There are also changes announced for ASX 50 and ASX 100. Below is a closer look at the details of the names involved in this Rebalance Event.

Shanghai/Shenzhen Northbound Connect: Weekly Moves (2 June 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock-Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$6.1bn, split between Shanghai (+US$3.5bn) and Shenzhen (+US$2.6bn)
The largest inflows were into Shanghai Putailai (603659 CH) and Satelltte Chemical (002648 CH). The largest outflows were in Anhui Conch Cement (600585 CH) and Guangzhou Tinci Materials (002709 CH).

Shanghai/Shenzhen Southbound Connect: Weekly Moves (2 June 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$0.8bn, split (roughly) US$0.2bn for Shanghai and US$0.6bn Shenzhen.
The largest inflows were into CNOOC Ltd (883 HK), China Mobile (941 HK), and Kuaishou Technology (1024 HK). The largest outflows were in Tencent (700 HK) and ICBC (1398 HK).

Selected European Holdcos and DLCs: May ‘22 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos have all widened during April: Alba, to 39%; GBL to 34.9%; Heineken Holdings to 21%; Industrivärden C to 15.4%; Investor B to 16%;
Porsche Automobile Holding to 32%. Rio Tinto DLC widened to 13.3%. Spreads tend to widen in bear markets but short term recoveries provide opportunities to bet on tightening discounts.
Recommended trades: GBL vs. listed assets, Industrivärden C vs. listed assets, Investor B vs. listed assets; Porsche vs. VW (long 1 PAH3 GR/short 0.5136 VOW GR), Rio Tinto (DLC).

Shorting Entry Point Coming on Kakao Pay

Is Kakao Pay showing an upward trend after hitting bottom? It doesn’t seem to me yet. The NPS is the only buyer who has recently driven the share price up.
I’d consider betting on the decline in Kakao Pay’s share price once this passive flow is completed. An ideal entry point? I would avoid the June 9 rebalancing trading day.
However, it is unlikely that this passive flow factor will spill over after June 9. So I’d consider building up a short position from late June 9 towards the close.

Before it’s here, it’s on Smartkarma

Jun 03

Event-Driven: Toshiba Corp, SPH REIT, LOTTE Reit Co Ltd, Genting Singapore, Unite Group, Xiamen International Port H, GoTo, Powerchip Semiconductor Manufacturing Corp, BGEO Group PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toshiba (6502) – Now We Have the First Rounds Bids In, And We Wait, But It’s Top of Range
Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness
SPH REIT Offer Goes Unconditional – The Option Now and Index Impacts To Come
FTSE EPRA Nareit Asia – June 2022 Rebalance – BIG Impact on BIG Names
StubWorld: Genting’s TauRx Boost. Also Hanhwa Solutions, Semirara Mining
FTSE100/FTSE250 Index Rebalance: +/-2 for FTSE100; +/-7 for FTSE250
Xiamen Port’s Juicy HK$2.25 Per H Share Privatisation Offer
GoTo Index Inclusion: Fast Entry to IDX30, LQ45, IDX80 Confirmed; BIG Buying Next Week
FTSE TWSE Taiwan 50 Index Rebalance: PSMC (6770) Replaces Momo (8454)
FTSE UK: June 2022 Rebalance: Bank of Georgia and Oxford Biomedica Are Interesting

Toshiba (6502) – Now We Have the First Rounds Bids In, And We Wait, But It’s Top of Range

Since Toshiba reported lacklustre earnings and guidance, there has been a steady flow of articles in the press about the privatisation process going on behind the scenes.
On 25 March, Toshiba let it be known a privatisation process would start. On 31 March, Bain gave notice it would participate. Toshiba has been in talks since 21 April
First round bids were due 30 May, and 10 total submissions were made, with 8 privatisation proposals proffered. Now we wait…

Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness

By Mio Kato

Toshiba provided an update today on its management policy and the status of discussions with potential investors.
The management targets unveiled looked plausible but rather optimistic while the only real new information on the potential privatisation was that 8 bids had been submitted.
In the end the most interesting takeaway for us was that Toshiba Tec would play a key role in Toshiba’s data business.

SPH REIT Offer Goes Unconditional – The Option Now and Index Impacts To Come

Yesterday, it appears that a large holder of SPH REIT (SPHREIT SP) accepted the Cuscaden Chain Offer for the REIT.
This morning just after midnight, the Cuscaden consortium announced that the Chain Offer had become Unconditional.
This makes the 4-week option unconditional, and it means index impacts to come.

FTSE EPRA Nareit Asia – June 2022 Rebalance – BIG Impact on BIG Names

FTSE Russell announced a total of 6 adds and 6 deletes in the FTSE EPRA Nareit Developed Market Series, with the largest number of changes in Asia.
Samty Residential Investment (3459 JP) and LOTTE Reit Co Ltd (330590 KS) are added; Henderson Land Development (12 HK), Hang Lung Properties (101 HK), and New World Development (17 HK) deleted.
The impact on all the names is large. This is worth looking at.

StubWorld: Genting’s TauRx Boost. Also Hanhwa Solutions, Semirara Mining

Genting Bhd (GENT MK) gains 10.3% following the completion of TauRx’s Alzheimer’s drug trial. That’s an RM1.9bn lift in its market cap, or US$0.43bn.
Preceding my comments on Genting, Hanwha Solutions (009830 KS), and Semirara Mining And Power Corp (SCC PM) are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

FTSE100/FTSE250 Index Rebalance: +/-2 for FTSE100; +/-7 for FTSE250

Centrica PLC (CNA LN) and Unite Group (UTG LN) will replace ITV PLC (ITV LN) and Royal Mail PLC (RMG LN) in the UKX Index at the close on 17June.
There are 7 changes for the FTSE 250 Index and the impact of passive trading on the stocks varies from 2-11 days of ADV.
All the changes were expected. The stocks with inflows have outperformed the stocks with outflows over multiple time periods and there will be pre-positions on the stocks.

Xiamen Port’s Juicy HK$2.25 Per H Share Privatisation Offer

Xiamen International Port H (3378 HK) announced a pre-conditional privatisation offer from Xiamen Port Holding at HK$2.25 per H share + final dividend of RMB0.021 per share (ex-div: 15 June).
The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
The offer is attractive in comparison to historical share prices and multiples. We think that the privatisation proposal will likely succeed. At the last close, the gross spread is 55.2%.

GoTo Index Inclusion: Fast Entry to IDX30, LQ45, IDX80 Confirmed; BIG Buying Next Week

The IDX has announced that GoTo (GOTO IJ) will be included in the IDX30, LQ45 and IDX80 indices at a float of 66.4% at the close on 7 June.
Waskita Karya (Persero) (WSKT IJ) will be deleted from the IDX30 and LQ45 indices, while Buyung Poetra Sembada PT (HOKI IJ) will be deleted from the IDX80 index.
Passive trackers need to buy around 12.78% of the real float on GoTo (GOTO IJ). Add the impact from open ended funds and that could move up to 20%.

FTSE TWSE Taiwan 50 Index Rebalance: PSMC (6770) Replaces Momo (8454)

Powerchip Semiconductor Manufacturing Corp (6770 TT) will replace Momo.Com Inc (8454 TT) in the FTSE TWSE Taiwan 50 index at the close of trading on 17 June.
Passive trackers will need to buy 0.7 days of ADV on Powerchip Semiconductor Manufacturing Corp (6770 TT) and sell 0.65 days of ADV on Momo.Com Inc (8454 TT).
There is over 3 days ADV of short interest on Powerchip Semiconductor Manufacturing Corp (6770 TT) and 2.5 days ADV of shorts on Momo.Com Inc (8454 TT).

FTSE UK: June 2022 Rebalance: Bank of Georgia and Oxford Biomedica Are Interesting

By Janaghan Jeyakumar, CFA

The index changes for the FTSE UK Indices for the June 2022 Rebalance were announced yesterday. There will be 2 changes for FTSE 100 and 7 changes for FTSE 250.
The changes are the same as specified in my discussion point (link) yesterday.
Below is a closer look at the Inclusion Parameters and price performance of the names involved in this Rebalance Event.

Before it’s here, it’s on Smartkarma

Jun 02

Event-Driven: Woodside Petroleum, Henderson Land Development, Core Lithium Ltd, Jaymart PCL, Tongwei Co Ltd A, China Longyuan Power, Virtus Health, Hwa Hong Corp, Metrovacesa SA and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days
Woodside Block – Medium Bigly, Well-Prepared, and More To Come
FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes
SET50 Index Rebalance Preview: Two High Probability Changes; One Low
FTSE China A50 Index Rebalance: Three Changes, As We Expected
FTSE China 50 Index Rebalance: Two Sets of Changes as Expected
Virtus Health: How BGH’s Offer Plays Out From Here
Hwa Hong’s Conditional Offer Open For Acceptances
FCC/Metrovacesa: Acceptance Period

BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days

By Sumeet Singh

BHP shareholders received US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger.
As a part of the distribution, some shares belonging to ineligible and other small shareholders are being sold by the sales agent, JPM, in a US$823m block.
In this note, we will look at the possible deal dynamics and run the deal through our ECM framework.

Woodside Block – Medium Bigly, Well-Prepared, and More To Come

The Australian Financial Review’s “Street Talk” column says the Woodside Petroleum (WPL AU) (new ticker is WDS AU) block is out.
Bookbuild is at $28.65 to $30.19 a share with is a 0% to 5.1% discount to the close (stock was up 1.44% today).
The size of the trade is apparently 38 million shares. If you have been in the Woodside/Santos trade, I would take the deal, tactically.

FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact

Samty Residential Investment and LOTTE Reit are inclusions while Hang Lung Properties, Henderson Land Development and New World Development are deletions for the FTSE EPRA Nareit Developed Asia Index.
There is a large impact on all stocks, but the flow is much higher on the deletions and the stocks could drop and underperform their peers.
Ichigo Inc (2337 JP) is a surprise non-inclusion and could trade lower today providing an opportunity to buy the stock while waiting for a late inclusion announcement.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes

Close to the 85% inclusion threshold, Core Lithium Ltd could be added to the MVIS Global Rare Earth/Strategic Metals Index in June. Lake Resources Nl (LKE AU) is also close.
Australian Strategic Materials (ASM AU) is very close to the 98% deletion threshold. Even if it is not deleted, there will be passive selling due to capping changes.
Yesterday was the cutoff date for the June review, so today’s steep fall in prices will not affect the ranking of the potential changes.

SET50 Index Rebalance Preview: Two High Probability Changes; One Low

The market cap and liquidity review period for the June rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ended yesterday.
JMT Network Services (JMT TB), Jaymart PCL (JMART TB) and Berli Jucker (BJC TB) could replace Sri Trang Gloves (STGT TB), Ratch Group PCL (RATCH TB) and IRPC PCL (IRPC).
Asset World Corporation (AWC TB) could be deleted depending on which levers the index committee tweaks, and that could save IRPC PCL (IRPC TB) from index deletion.

FTSE China A50 Index Rebalance: Three Changes, As We Expected

Anhui Conch Cement, China Citic Bank and Tongwei will replace Chongqing Zhifei Biological, Gree Electric Appliances and PetroChina in the FTSE China A50 Index at the close on 17 June.
All changes are as we expected, but there are still trades to do off the back of the announced changes.
Estimated one-way index turnover at the rebalance is 2.83% and will result in a one-way trade of CNY1,436m. There is negligible impact of the funding trade on the other stocks.

FTSE China 50 Index Rebalance: Two Sets of Changes as Expected

China Longyuan Power (916 HK) and China Railway Group Ltd H (390 HK) will replace Smoore International (6969 HK) and Sunny Optical (2382 HK) in the FTSE China 50 Index.
The adds, deletes, float changes and capping changes will result in one-way turnover estimated at 4.23% and in a one-way trade of HK$2,091m at the close on 17 June.
Short interest has been increasing gradually on China Railway Group Ltd H (390 HK) while it has spiked on Smoore International (6969 HK).

Virtus Health: How BGH’s Offer Plays Out From Here

BGH played a shrewd game. It bumped its Offer to A$8.15, matching CapVest’s Scheme price. With BGH (then) holding 22.38% of shares out, CapVest folded its tent.
As CapVest was not returning calls, Virtus Health (VRT AU) commenced discussions with BGH and ultimately reversed course and recommended BGH’s Offer.
BGH now has 71.63% of the voting power, edging towards the 90% threshold, following which a special fully franked dividend will be paid.

Hwa Hong’s Conditional Offer Open For Acceptances

On the 17 May, Ong Choo Eng, his son Ong Eng Yaw, along with Roswell Assets, Dymon Asia, and Crytalic Star launched an Offer for Hwa Hong Corp (HWAH SP).
The Offer Doc is now out and is open for acceptances. The first close is the 28th June.
This Doc does not include an IFA opinion. That will be included in the Circular which is expected to be despatched on or before the 14 June.

FCC/Metrovacesa: Acceptance Period

By Jesus Rodriguez Aguilar

On 31 May the acceptance period started, it will run until 14 June (inclusive). The adjusted offer price is €7.2 (around 50% of NAV, not too generous in my view).
Slim seeks to build a large real estate landlord and developer. Top shareholders are Santander and BBVA (49.5% and 20.9% respectively), but cannot tender without booking losses on their stakes.
In the long term, this stock should be worth more, albeit it won’t be very liquid. For now, gross spread is 1.8% (est. 33% annual return). Long.

Before it’s here, it’s on Smartkarma