Event-Driven

Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.

Henlius (2696 HK): LVC Sits On A Blocking Stake. And Me (Maybe) Eating Humble Pie

I was wrong. Loyal Valley Capital (LVC) have stopped buying Shanghai Henlius (2696 HK) – or have not bought since reaching a blocking stake of 7.8295% on the 9th January.
LVC could either use that stake as leverage to negotiate with the Offeror on the scrip terms. Or blow up the deal and pick up shares after the deal breaks
OR perhaps, as per my initial impression, LVC tenders. And they may still do that. It should be this straightforward; but the fact that it is not raises questions.

Henlius (2696 HK): Hurtling Towards a Likely Deal Break

The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.
I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.
Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.

Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel

Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).

KRX H1 SSF Reshuffle: Play Setup from Last Round’s Learning Curve

Last time, price action showed up a week early, suggesting market makers are getting ahead, likely due to learning effects.
This round’s a letdown—no KOSDAQ names and fewer plays. Still, lower-volume KOSPI names showed solid price action correlation in the last reshuffle.
This round, focus on low-volume KOSPI names, enter 5 days before the listing, and exit just before it drops, using the learning curve from the last reshuffle.

Foshan Haitian Flavouring & Food (603288 CH): Index Inclusion Post H-Share Listing

Foshan Haitian Flavouring & Food (603288 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$1.5bn.
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.
The stock will not get Fast Entry to any indices but there should be inclusions at subsequent rebalances, especially once the cornerstone investor lock-up expires.

Samsung Electronics’ Key Inflection Point: Lee Jae-Yong’s Final Appeal Ruling on February 3

Some speculate Samsung might delay the value-up announcement until after the February 3 ruling, using it strategically to influence the verdict and align with the appeal’s outcome.
Market chatter even surrounds Samsung’s HBM test delays with NVIDIA, with some linking it to Lee Jae-yong’s February 3 appeal ruling—though it seems more like speculative conspiracy.
If Lee Jae-yong wins his appeal on February 3, it could trigger key events like value-up disclosure and HBM pass, significantly impacting Samsung’s short-term price action and positions.

JAMCO (7408 JP): Bain’s Tender Offer Is Light but Likely a Done Deal

Jamco Corp (7408 JP) announced a preconditional tender offer from Bain Capital at JPY1,800 per share, a 27.8% premium to the last close.
The offer, which is preconditional on regulatory approvals and will open in mid-February, is attractive compared to historical trading ranges.
On the other hand, the offer is light as it is below the midpoint of the IFA DCF valuation range. However, the modest required acceptance rate suggests a done deal.

AVJennings (AVJ AU): Ho Bee’s Superior Proposal

Back on the 28th November, AVJennings Ltd (AVJ AU), a reputable home builder in Australia/New Zealand, entered into a deed granting the AVID consortium exclusive confirmatory due diligence.
The AVID consortium, comprising Proprium Capital Partners and AVID Property Group, pitched an NBIO (by way of a Scheme) of A$0.67/share. Singapore’s SC Global (54.5% shareholder) was supportive.
In what appeared to be clean deal, Ho Bee Land Ltd (HOBEE SP) then acquired a 5.39% stake on the 23rd December. Now they’ve made their own NBIO at A$0.70/share.

Ahead of Macquarie’s PUSU Deadline

Macquarie’s final offer of 870 pence per share represents a 57% premium over Renewi’s November 27, 2024, closing price, valuing the company at approximately €1.06 billion.
Macquarie secured irrevocable undertakings from major shareholders holding 15.1% of shares and aims to finalize the offer by January 23, 2025, pending due diligence.
The offer aligns closely with Renewi’s intrinsic value, offering investors an attractive exit opportunity with a market-implied deal probability of 78.5%. Via Scheme, completion by end of March/early April.

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Jan 14

Daily Brief Event-Driven: Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move
Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
SHIFT (3697) The Next – Potential Big Index Add
Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
BayCurrent Consulting (6532) – High Growth, OK Multiple, Big Index Inclusion Coming Up?
HMM’s Shaping up to Be a Solid Pick for Classic Dividend Arbitrage Plays
Insignia Financial (IFL AU): Bain Calls CC Capital’s $4.30/Share NBIO
CVSG: A Special Sit with 2x Potential
STAR Chip Index Rebalance Preview: Changes in March
EQD | Hong Kong Single Stock Options Weekly January 06 – 10

Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.
There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions.
I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.

Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand

Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved.
Lockup expiry is next week, and there is a likely large index event in ~10 weeks.

SHIFT (3697) The Next – Potential Big Index Add

Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them.
Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.

BayCurrent Consulting (6532) – High Growth, OK Multiple, Big Index Inclusion Coming Up?

BayCurrent Consulting (6532 JP) is a high-growth consulting company. This year sees 22% annual revenue growth and 25% OP growth to Feb 2025. Q3 results come out tomorrow.
The stock has a fairly large and concentrated active institutional holder base, though interestingly, the foreign active insto base is very long-tailed. LOTS of investors hold this.
The company is likely to see an index inclusion imminently which will over time mean a buy of more than a third of Maximum Real World Float.

HMM’s Shaping up to Be a Solid Pick for Classic Dividend Arbitrage Plays

To stay in the Value-up index by June, HMM needs to maintain high ROE, but with 2023’s dip and a 2024 estimate around mid-10%, they’ll be borderline in the rankings.
Local markets expect HMM’s dividend payout to range from 840 KRW to mid-1,000 KRW, with a yield of 4.5% to 8%, while futures show mild backwardation in February and March.
HMM may finalize the dividend and announce the record date by late January, with the record date likely in mid to late February.

Insignia Financial (IFL AU): Bain Calls CC Capital’s $4.30/Share NBIO

By Triple S Special Situations Investing

After wealth manager Insignia Financial (IFL AU) announced – and subsequently rejected Bain’s A$4.00/share Offer, CC Capital waded in on the 6th January with its own A$4.30/share NBIO.
IFL have yet to reach an opinion on CC Capital bid. And to make things interesting, Bain has sweetened its Offer to $4.30/share, matching CC Capital’s terms.
What now? Either, IFL opens the data room to both parties. Or rejects both. I think they should engage.

CVSG: A Special Sit with 2x Potential

CVS Group plc (“CVSG”) has seen its share price take a hit recently, but the decline seems to stem from two short-term issues rather than any real damage to the business fundamentals.
The first blow came in March 2024 when the UK’s Competition and Markets Authority (CMA) unexpectedly announced a nationwide review of veterinary services for household pets.
These investigations typically last 12 to 18 months, so we’re looking at a resolution by late 2025 with a mid term resolution being around the corner mid-year.

STAR Chip Index Rebalance Preview: Changes in March

There could be 1 constituent change for the STAR Chip Index at the March rebalance. There will also be a few capping changes.
Estimated one-way turnover is 6.5% resulting in a round-trip trade of CNY 3.12bn (US$426m). Passives need to trade between 0.24-0.33x ADV in the potential changes.
There is one very close add and the final list could change depending on price performance over the next 10 trading days.

EQD | Hong Kong Single Stock Options Weekly January 06 – 10

By John Ley

Tough week with 82% of optionable stocks we survey declining on the week but no sign of panic as investors still prefer Calls over Puts.
Tencent was far and away the volume leader, accounting for 37% of all option trading.
Materials was the only Sector to see price gains and implied vol rose across all Sectors we survey.

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Jan 13

Daily Brief Event-Driven: Merger Arb Mondays (13 Jan) – ESR and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
Weekly Deals Digest (12 Jan) – Henlius, GA Pack, Fujitsu General, Fuji Soft, Pressance, LG CNS
HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent
Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance
FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline
Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking
A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.
Coca-Cola Europacific Partners (CCEP LN): Halfway In F100

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

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: Smart Share Global (EM US), Pressance Corp (3254 JP), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK).
Lowest spreads: Lifestyle China (2136 HK), Makino Milling Machine Co (6135 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU).

Weekly Deals Digest (12 Jan) – Henlius, GA Pack, Fujitsu General, Fuji Soft, Pressance, 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: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Fujitsu General (6755 JP), Fuji Soft Inc (9749 JP), Pressance Corp (3254 JP), Smart Share Global (EM US).

HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent

SOUTHBOUND gross trading activity was not stronger per day than the previous two weeks. But SB Net Buying was HUGE. The biggest week since global index deletions in January 2021.
The story was similar. On Tuesday in the US, Tencent was put on a DoD list leading to a possible CMC list appearance (which would lead to index deletions).
Tencent saw US$4bn of SOUTHBOUND net buying. SMIC, Xiaomi, and China Mobile were another $1bn.

Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness

Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.

STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance

95% of the way through the review period, there could be 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index.
We estimate turnover of 4.1% for the STAR50 INDEX and 9.3% for the STAR100 Index. The net round-trip trade is CNY 14.1bn (US$1.9bn).
The forecast adds to the STAR50 INDEX have outperformed the forecast deletes with steady outperformance over the last 3 months; the performance for the STAR100 Index is a lot better.

FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly

Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven & I Holdings (3382 JP) MBO.
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing.
The article suggests that the MBO valuation could be lower than previously reported. However, 7&i’s underlying value supports a JPY8 trillion MBO valuation (market cap).

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

Coca-Cola Europacific Partners (CCEP LN): Halfway In F100

By Dimitris Ioannidis

Coca-Cola Europacific Partners (CCEP LN) was transferred on 15 November 2024, to the index’s eligible FCA listing category under the new regime.
The security needs to pass the liquidity test in both January and February 2025 to be assigned a UK nationality and become eligible for the March 2025 review.
The security has already passed the liquidity threshold by ~20% in November and December thus it has a solid probability of being added to F100 at the March 2025 review.

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Jan 12

Daily Brief Event-Driven: Last Week in Event SPACE: Seven & I and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Fuji Soft, WH Group
Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap
(Mostly) Asia-Pac M&A: Insignia Financial, Arcadium, CPMC, GAPack, Haitong Sec., Shinko Electric
Pressance (3254 JP): Open House (3288 JP) JPY2,390 Tender Offer a Done Deal
Yibin Bank (2596 HK): 100% IPO Float Fails to Secure Global Index Inclusion

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Fuji Soft, WH Group

Seven & I Holdings (3382 JP)‘s analysts’ call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.
Those who bought into Ping An Healthcare and Technology (1833 HK)‘s punchy dividend, whether in cash or scrip, the trade has panned out well.
KKR extends its Offer for Fuji Soft Inc (9749 JP). Separately, Bain said it had destroyed confidential data, as requested, but it’s unclear how and when that data was destroyed.

Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

Four-Plus years ago, Open House (3288 JP) bought the stake in Pressance Corp (3254 JP) owned by its embattled CEO (who had been arrested for a scandal).
Four years ago, Open House launched a partial tender and capital injection to go to ~65%. A takeout was a matter of time.
That time has come. Today Open House announced a Tender Offer to take Pressance fully-private. This is an easy deal. A done deal. Done too cheap.

(Mostly) Asia-Pac M&A: Insignia Financial, Arcadium, CPMC, GAPack, Haitong Sec., Shinko Electric

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: CC Capital’s NBIO for Insignia Financial (IFL AU).
Key updates/news took place on: Arcadium Lithium (LTM AU), CPMC Holdings (906 HK), Greatview Aseptic Packaging (468 HK), Haitong Securities (H) (6837 HK), and Shinko Electric Industries (6967 JP).

Pressance (3254 JP): Open House (3288 JP) JPY2,390 Tender Offer a Done Deal

Pressance Corp (3254 JP) announced a tender offer from Open House (3288 JP) at JPY2,390 per share, a 22.1% premium to the last close.
While the offer is below book value, it represents an all-time high and broadly aligns with the mid-point of the target IFA’s DCF valuation range.
The low minimum acceptance condition (2.3 million or 3.25% ownership ratio) suggests a done deal. The offer runs from 14 January to 26 February (30 business days).

Yibin Bank (2596 HK): 100% IPO Float Fails to Secure Global Index Inclusion

By Dimitris Ioannidis

Yibin City Commercial Bank Co Ltd (2596 HK) is scheduled to debut on the HKEX on 13 January 2025 at a market capitalization of ~$1.6bn.
The IPO free float is 100% as the offered shares represent all the listed shares. However, the significant amount of unlisted shares result in a low fcap.
The security can be added at the June 2025 review if the stock price mimics the IPO debut of Bloks (325 HK) and surges by ~84%.

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Jan 11

Daily Brief Event-Driven: KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing
VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close
GJS/Haitong Merger: One Formality Reg To Go
[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
EQD| SPX Volatility During the Trump Years (2017-2020)
Chung Yong-Jin Will Receive 10% of E Mart Shares from His Mum to Become the Controlling Shareholder
BBVA’s Bid for Sabadell: A Tough Road Ahead
Weekly Update: January 10, 2025
A Strategic Pivot: Adani Enterprises Exits Adani Wilmar for $2B
Destination XL Group Faces Potential Buyout: Fund 1 Investments Considers Raising Initial $3/Share Offer

KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing

KRX confirmed no immediate changes on KRX Semicon and KRX Autos. The universe will switch from BMI to TMI large and mid-caps, with constituent updates happening in the September rebalancing.
TMI rebalances quarterly, while KRX Semicon and Autos rebalance annually in September. KRX confirmed these indices will use the September TMI rebalancing results.
TMI rebalances quarterly, likely releasing results before KRX Sector Indices, giving a window to predict shifts in KRX Semicon and Autos stocks and position ahead of the sector rebalancing.

VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close

Back on the 20 December, VCredit Holdings (2003 HK), a provider of consumer financial services in China, announced a unconditional MGO from Ma Ting Hung, VCredit’s chairman. and concert parties.
The catch? The Offer Price of HK$1.80/share was a 9.09% discount to undisturbed. It will not be increased.
VCredit’s Composite Doc is now out, with the Offer open for tendering, with a 3rd February first close. The IFA says “not fair and not reasonable“. Trading 45% through terms.

GJS/Haitong Merger: One Formality Reg To Go

Back on the 9th October, China’s leading state-backed brokerages Guotai Junan Securities (2611 HK) (GJS) and Haitong Securities (6837 HK) announced a scrip merger, with GJS the surviving entity.
Barring a China Traditional Chinese Medicine (570 HK)-like obstacle/debacle, this transaction was a wrap. Fortunately, key regulatory approvals (SAMR and SASAC) have been ticked off.
Approval from the Shanghai Stock Exchange was secured overnight. That was a formality. One approval remains – CSRC. Expect that condition to be satisfied shortly. GJS is no longer shortable.

[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way

In December, I thought the March 2025 Nikkei 225 Rebalance was going to be 2 ADDs 2 DELETEs and a double-capping for Fast Retailing.
Fast Retailing has fallen sharply vs Nikkei 225, and another stock has announced a large-multiple share split, making it a strong candidate for Nikkei 225 ADDITION in March 2025.
There is short-term path risk on all three ADDs, but they are definitely worth watching. Keep an eye out for separate insights on two of these names.

EQD| SPX Volatility During the Trump Years (2017-2020)

By John Ley

Common perception is that Trump = Volatility. We look at average monthly historic volatility and returns across 2017-2020 and compare with prior 19 years.
Trumps term in office included “Volmageddon”, the Christmas Massacre and Covid but we still find that the returns and historic volatility were not out of line.
Although a small sample size, we see a pattern to how historic volatility deviated from the average over his last term in office.

Chung Yong-Jin Will Receive 10% of E Mart Shares from His Mum to Become the Controlling Shareholder

By Douglas Kim

E Mart’s Chairman Chung Yong-Jin will receive the entire 10% shares of E Mart held by his mum Lee Myung-Hee.
After this transaction, Chung Yong-Jin will become the largest shareholder in E Mart with a 28.6% stake in the company.
This is likely to positively impact E Mart. In Korea, when the final major ownership stake is transferred, there is often a positive boost to the share price.

BBVA’s Bid for Sabadell: A Tough Road Ahead

Lower Acceptance Threshold: BBVA reduced its tender offer threshold to 49.3%, excluding Sabadell’s 1.4% treasury shares to ensure voting rights focus on active shareholders.
Shareholder and Regulatory Hurdles: Retail shareholder resistance, extended antitrust reviews, and opposition from Spanish and Catalonian governments complicate the takeover.
Sabadell’s Defensive Moves: A €2.9 billion shareholder return plan, potential treasury share expansion to 10%, and Zurich’s 3% stake further reduce the offer’s likelihood of success.

Weekly Update: January 10, 2025

By Richard Howe

Galapagos NV (GLPG), a Belgian biotechnology company, announced on January 8, 2025, its plan to split into two publicly traded entities by mid-2025.
Vivendi (VIV), the French media conglomerate, has recently undergone a significant restructuring by spinning off several of its key divisions into independent entities.
On December 30, 2024, Lions Gate Entertainment (LGFA/LGFB) filed its latest proxy related to the spin-off of Lionsgate Studios (LION). You can read it here.

A Strategic Pivot: Adani Enterprises Exits Adani Wilmar for $2B

By Nimish Maheshwari

Adani Enterprises (ADE IN) exits Adani Wilmar (AWLTD IN), selling its entire 44% stake for over $2 billion, redirecting funds toward core infrastructure ambitions.
The exit frees capital for energy, transport, and logistics projects, showcasing Adani’s commitment to strategic resource deployment and robust corporate governance.
Adani’s strategic divestment highlights its focus on infrastructure-driven growth, underscoring the potential for shareholder value creation through timely exits from non-core businesses.

Destination XL Group Faces Potential Buyout: Fund 1 Investments Considers Raising Initial $3/Share Offer

By Dalius Tauraitis

Destination XL Group received a non-binding $3/share proposal from Fund 1 Investments, holding a 21% stake.
Fund 1’s offer values DXLG at 6.1x EBITDA, with potential for a higher bid if additional value is identified.
DXLG repurchased 6.6% of shares in Q3 2024 at an average price of $2.80/share, totaling $10 million.

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Jan 10

Daily Brief Event-Driven: 7&I (3382 JP) – Dippity Doo Dah – Irrational Fears and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry
[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
Suntec REIT (SUN SP): Tang’s Curious Bump
Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump
Quiddity Leaderboard SET50 Jun 25: One Change Possible; Delta on Thin Ice Again
IDT 2024 Annual Meeting Summary
Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors
Brookfield/Neoen: Close to Completion

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace

Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch

The exchange ratio for the merger between Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) is 0.62x.
The merger closing is subject to several effectiveness and implementation conditions. The latest update suggests that the remaining conditions are CSRC and HKEx approvals.
The satisfaction of the remaining conditions is a formality. At the last close and for an end February payment, the gross/annualised spread is 3.2%/26.4%.

Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry

By Dimitris Ioannidis

Bloks (325 HK) is expected to be assigned an index nationality of Hong Kong instead of China due to its incorporation in the Cayman Islands.
The security is expected to be added at the September 2025 review following the 6-month IPO lock-up expiry which increases the fcap above the APAC threshold.
The security is ineligible for the other global index until January 2026 because of the free float being below the minimum threshold of 15%.

[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2025.
We expect six ADDs and six DELs for the KOSPI 200 index during this index rebal event based on the latest available data.

Suntec REIT (SUN SP): Tang’s Curious Bump

Back on the 5th December, Gordan Tang (& his wife Celine) acquired a 2.14% stake in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
This had all the hallmarks of a technical Offer. The Offer price was S$1.16/share compared to the S$1.17/share undisturbed price. The IFA opined the Offer was not fair nor reasonable.
The Tangs have now bumped to S$1.19/share. Terms are not final. The IFA viewpoint won’t budge. This is an opportunistic move from the Tangs. But why not roll the dice?

Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump

KKR has extended the close date of the Fuji Soft Inc (9749 JP) second tender offer period from 9 to 24 January. All other terms remain unchanged.
KKR unconvincingly tries to criticize the Bain offer and unsurprisingly believes there will not be a tender offer by Bain that investors can tender into.
Despite KKR’s gamesmanship, it has not declared its offer final. A bump remains necessary as Bain remains resolute in launching its offer. The final winning offer could be around JPY10,000.

Quiddity Leaderboard SET50 Jun 25: One Change Possible; Delta on Thin Ice Again

By Janaghan Jeyakumar, CFA

The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in June 2025.
Currently, we see one expected change, but since the market cap reference period is yet to start, the rankings can fluctuate significantly before the base date.

IDT 2024 Annual Meeting Summary

By Richard Howe

An accelerated return of capital looks unavoidable. IDT has a net cash balance sheet yet generates substantial cash every quarter.
Traditional business is “adding” ice. Investors (including me) view the traditional telecom business as a “melting ice cube,” but IDT’s CFO says the business might start “adding ice.” Key areas of strength include IDT Digital and Mobile Top Up.
Spin-offs aren’t imminent. NRS is performing incredibly well, but IDT’s CEO doesn’t see a spin-off happening until the business is generating $100MM of EBITDA.

Shift Up IPO Lockup – US$1.2bn Lockup Release of Strategic, Employees and IPO Investors

By Sumeet Singh

Shift Up (462870 KS) raised around US$320m in its South Korean IPO, after pricing at the top. Around US$1.2bn worth of shares will be released from their lockup soon.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
In this note, we will talk about the lockup dynamics and possible placement.

Brookfield/Neoen: Close to Completion

Brookfield acquired a 53.12% stake in Neoen for €39.85/share, triggering a mandatory tender offer for remaining shares and bonds, aiming for a squeeze-out and delisting Neoen.
Regulatory approvals were secured from the EU, France, the US, and Australia, addressing antitrust, foreign investment laws, and energy security concerns.
My PT remains €39.85, in line with the price offered by Brookfield and its partners, which I believe is fair. Completion is expected in Q1 2025. Gross spread is 0.33%.Tender.

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Jan 09

Daily Brief Event-Driven: PA Gooddoctor (1833 HK)’s Unconditional MGO and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

PA Gooddoctor (1833 HK)’s Unconditional MGO
GAPack (468 HK): Additional Thoughts On Mengniu Selling
EQD | Tencent (700 HK) Option Strategy for Navigating a Volatile Market
The Unexpected Passive Trade from the LG CNS IPO: Short LG Corp
TOPIX Inclusions: Who Is Ready (Jan 2025)
Southeast Asia: The Passive Axe Hangs as Positioning Increases
Smart Share Global (EM US): Trustar Capital-Sponsored MBO’s US$1.25 Per ADS Non-Binding Offer
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
Rio Tinto/Arcadium: Home Straight After CFIUS Nod
Nippon Steel/US Steel: Deal Blocked but Offering Robust Standalone Value

PA Gooddoctor (1833 HK)’s Unconditional MGO

Back on the 14th November, Ping An Healthcare and Technology (1833 HK) (PA Gooddoctor announced a change in use of proceeds, including the payment of a punchy HK$9.70/share special dividend.
A scrip option was concurrently afforded. The results of that scrip election have now been announced, the completion of which, triggers an unconditional MGO from Ping An Insurance (601318 CH).
The MGO price is HK$6.12/share, a price made public last month. For those investors trading the event and who bought PA Gooddoctor cum dividend, it has worked out well.

GAPack (468 HK): Additional Thoughts On Mengniu Selling

Following on from the surprise development that China Mengniu Dairy (2319 HK) had reduced its stake below 5%, I’ve had a few readers asking about hypothetical situations regarding its stake.
IF Mengniu is a seller, can’t Mengniu simply sell its entire stake to Shandong Xinjufeng Technology Packaging (301296 CH) (XJF)? Can Mengniu sell to XJF above the Offer Price?
Both questions are addressed in the Takeovers Code. But only one is permitted.

EQD | Tencent (700 HK) Option Strategy for Navigating a Volatile Market

Tencent (700 HK) shares fell 7.3% on 7 January, after being designated a Chinese Military Company by the U.S. Department of Defense, prompting volatility to spike.
Given the potential for further downside, or a relief rally, significant price movements and high volatility are to be expected.
A long straddle is detailed to capitalize on the anticipated volatility in Tencent (700 HK) .

The Unexpected Passive Trade from the LG CNS IPO: Short LG Corp

I’m focusing on the price action of LG Corp when LG CNS enters the KOSPI 200 IT sector, causing LG Corp to be removed from the index.
With LG Corp’s 6% weight, its removal could trigger ETF rebalancing (TIGER), leading to an outflow exceeding twice the usual daily trading volume.
If LG CNS misses Fast Entry, it’ll enter in December, not June. We’ll time our short position on LG Corp to align with passive outflows during that window.

TOPIX Inclusions: Who Is Ready (Jan 2025)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Japan Eyewear Holdings (5889 JP) continues to be our top pre-event pick for TOPIX Inclusion.
Core Concept Technologies Inc (4371 JP) is another potential TOPIX Inclusion candidate but it is quite far away from being satisfy the main Section Transfer requirements.

Southeast Asia: The Passive Axe Hangs as Positioning Increases

There are 8 stocks listed in Indonesia, Malaysia, Thailand and Philippines that could be deleted from passive portfolios in February.
There is a fair bit to sell in the stocks with over US$50m flow and between 3.5-64x ADV. Positioning is not very high in a lot of the stocks.
Stocks could avoid deletion if they move higher in the next week or two. But increased positioning could keep a lid on that.

Smart Share Global (EM US): Trustar Capital-Sponsored MBO’s US$1.25 Per ADS Non-Binding Offer

On 6 January, Smart Share Global (EM US) disclosed a non-binding proposal from a Trustar Capital-sponsored MBO at US$1.25 per ADS, a 74.8% premium to the undisturbed price of US$0.72.
The offer is unattractive to the IPO price (US$8.50), average sell-side price targets (US$1.87) and historical trading ranges.
Despite the light offer, the shareholder vote is done (two-thirds voting threshold) as the buyer consortium represents 64.0% of the voting power. A binding proposal will be forthcoming.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March

The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

Rio Tinto/Arcadium: Home Straight After CFIUS Nod

Arcadium Lithium (LTM AU)‘s spread to Rio Tinto Ltd (RIO AU)‘s terms steadily increased subsequent to the US elections, ostensibly over Trump (Musk?) bluster, blowing out to 21% before Xmas.
Overnight, the transaction received the go ahead from CFIUS. Shares popped ~8.2% on the news. The transaction remains subject to investment screening approvals in Australia, Canada and Italy.
Unlike Greenland and the Panama Canal, the takeover of Arcadium should complete “before mid-2025”; possibly this quarter.

Nippon Steel/US Steel: Deal Blocked but Offering Robust Standalone Value

Nippon Steel’s $14.9 billion acquisition bid for U.S. Steel, announced in December 2023, faced regulatory resistance and was blocked by the Biden administration over national security concerns.
U.S. Steel’s Big River Steel 2 expansion will double capacity to 6.3 million tons by 2026, contributing over 50% of EBITDA and supporting enhanced free cash flow generation.
Despite the failed merger, U.S. Steel’s intrinsic value, supported by a $39.75 fair value estimate, easing capex, and reshoring tailwinds, offers a ~19% upside from the $33.30 closing price.

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Jan 08

Daily Brief Event-Driven: Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
WH Group (288 HK): Smithfield’s IPO Doc Now Out
GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down
Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn
Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote
US Defense Dept Designates Tencent and CATL as Military Companies – Impact on Korean Competitors
Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing
LUNA Faces Nasdaq Delisting Amid Financial Restatement Delays and Strategic Review for Potential Sale
EQD | S&P 500 (SPX Index) – An Options Strategy for 2025

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

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

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

By Janaghan Jeyakumar, CFA

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