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• Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
• The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
• Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.

• At the September rebalance, we expect changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index. Announcement is on 2 September with implementation on 16 September.
• Potential adds/deletes with large flow and impact include Shopping Cntrs Austrls (SCP AU), Sayona Mining (SYA AU), Charter Hall Social Infrastructure REIT (CQE AU) and Capricorn Metals (CMM AU).
• Shorts have increased significantly on a few stocks over the last few weeks, indicating that there could be some pre-positioning on these stocks.

• There are 3 changes each for the IDX30 Index and LQ45 Index and 11 changes for the IDX80 Index at the upcoming rebalance to be implemented on 29 July.
• There is passive inflow on Bank Jago Tbk PT (ARTO) due to index inclusion, and on Bank Rakyat Indonesia (BBRI) and Bank Central Asia (BBCA) due to capping changes.
• With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

• Expectations are spreading in the market that the free-float rate of LG Energy will increase from 9% to 15% at the MSCI August QIR. However, this possibility is quite low.
• Only 1.57% will be reflected in this QIR, and 4.26% will be in November. So, the August IR will see 0.59x ADTV, and the November IR will welcome 2.93x ADTV.
• A conservative approach is still valid for flow trading on LG Energy for now, and a more aggressive approach is needed with long/short trading with LG Chem.

• If short-selling accounts for more than 30% of total daily trade volume, it will be newly designated as an overheated short-selling stock, resulting in a one-day short-selling ban.
• If the stock price falls by more than 5% on the day of the short-selling restriction, the restriction period is automatically extended by one more day.
• We should pay attention to a possible increase in the trading volume of single-stock futures (SSF) due to short-selling bans, which can result in a more significant basis distortion.

• Powerchip Semiconductor Manufacturing Corp (6770 TT) (PSMC) is looking to raise US$420m via its GDS offering.
• The firm is offering 23.3m GDSs (350m common shares at a 1 GDS to 15 common shares ratio) at a 6-9% discount to last close. 
• The deal is well flagged via both media reports and the company’s announcements. Short interest has been growing in tandem as well.

• Advantest Corp (6857 JP) yesterday announced Q1 results, with Revenues/OP/NP at record levels, a H1 div hike of 30%, guidance well ahead of consensus, and a buyback.  
• They also announced a Mid-Term Plan revision which shows forward guidance better than consensus. 
• The buyback is smaller than the last one BUT float is not what you think it is. Understanding float dynamics here is key.

• Baijiu, the most popular liquor in China, is perhaps one of the most addictive and profitable alcoholic beverages in this planet.
• The focus of this insight is a pair trade (go long on Luzhou Laojiao and go short on Jiangsu Yanghe Brewery).
• The major reasons for this pair trade include higher sales growth rate and ROE for Luzhou Laojiao as well as capitalize on the recent share weakness of Luzhou vs Jiangsu.

• BFI Finance Indonesia continued to see rapid momentum behind its recovery with new bookings in 2Q2022 hitting all time highs and spreads improving to 13.5% with NPFs declining.
• The company’s growth is driven by the non-dealer used vehicle market with new bookings coming mainly through agents and repeat customers, and digital initiatives in place to improve origination.
• BFIN is the best quality multifinance player in Indonesia, with an ROE now above 21%. There will be more collaboration and synergies with Bank Jago going forward further driving growth.

• Renesas stock is down around 8% following quarterly earnings and a very conservative Q3 outlook
• We think the market is over reacting and believe that Renesas is a key beneficiary of secular growth in auto and industrial electronics
• The stock trades at a discount to global peers, despite a strong story for improving shareholder returns

• Glencore is looking to raise US$293m (A$422m) from selling its stake in Yancoal Australia (YAL AU). This would be a clean up sale.
• Glencore has been sitting on its stake for a while now, and the two have a JV in the Hunter Valley Operations, the latter which commenced in Jul 2017.
• The deal, while a large one to process at 135.6 days of three month ADV, represents just 5.6% of Yancoal Australia’s current mcap.

• FFW changes and Mercari Inc (4385 JP)‘s inclusion in the TOPIX will lead to a one-way turnover of 0.55% and one-way trade of JPY 443bn (US$3.23bn) at the close today.
• There is net buying in Consumer Discretionary, Financials and Communication Services stocks, while there will be net selling in Consumer Staples and Health Care stocks.
• The upweights have outperformed the downweights since announcement of the changes and there has not been a lot of excess volume traded in the last couple of weeks.

• SK Telecom (017670 KS) has continued to underperform KT Corp (030200 KS) even as foreign investors continue buying. Local institutions have been selling the stock.
• With foreign room currently at 1.68% and consistently below 3.75% recently, SK Telecom (017670 KS) should be deleted from the MSCI Korea Index at the August QIR.
• There will be more selling from FTSE trackers in September. With the SK Tel/KT Corp price ratio trading at the lows, the passive selling could provide a good entry point.

• In JPX-Nikkei 400 2022 Rebal: Final Predictions, I discussed Quiddity’s final predictions for Potential ADDs/DELs for the JPX-Nikkei Index August 2022 Annual Review.
• In that insight, I classified the potential ADDs/DELs by conviction levels and discussed why the high conviction ADDs and DELs deserved a higher weight than the other baskets.
• Since then, the LONG High Conviction ADDs – SHORT High conviction DELs Trade has outperformed the other LONG-SHORT combinations.

• If short-selling accounts for more than 30% of total daily trade volume, it will be newly designated as an overheated short-selling stock, resulting in a one-day short-selling ban.
• If the stock price falls by more than 5% on the day of the short-selling restriction, the restriction period is automatically extended by one more day.
• We should pay attention to a possible increase in the trading volume of single-stock futures (SSF) due to short-selling bans, which can result in a more significant basis distortion.

• Australian Unity Office Fund (AOF AU) was the subject of six successive bids by Starwood between 2018-2020 and a bid by Charter Hall (CHC AU) and Abacus Property (ABP AU).
• Large AOF shareholder Hume knocked back the ABP/CHC bid and Starwood never got to the final stages. But Aliro Group’s (CEO is ex-CHC) bid at A$2.45 got Hume’s support. 
• Then on 25 July, Aliro walked. And the shares fell. From A$2.21 to A$1.80. Ouch. 

• MACA Ltd (MLD AU) recently announced a friendly off-market cash offer from fellow contractor Thiess, at A$1.025/share, a 28.1% premium to previous close.
• The Offer is subject to limited conditions, including FIRB , ACCC sign-off, no prescribed occurrences, no issue of convertible securities, derivatives, or other rights, and 90% minimum acceptances.
• The Offer has unanimous support from MACA’s board. Applications to FIRB and the ACCC have already been submitted. The announcement suggests MACA remains open to alternative approaches.

• Shin Etsu Chemical (4063 JP) reported Q1 earnings after the close on 27 July, and they blew the lights out. Higher margins and 10-year record high Q1 progression ratios.
• The company also announced guidance which was pretty healthy, but progression ratios suggest it is conservative.
• The company announced its second ¥100bn buyback in three months. This one lasts 6 months so impact will be lower, but it will have some impact.

• JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.
• This appears to be the first selldown by JG Summit and doesn’t appear to have been very well flagged either.
• In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.

• Powerchip Semiconductor Manufacturing Corp (6770 TT) (PSMC) is looking to raise US$420m via its GDS offering.
• The firm is offering 23.3m GDSs (350m common shares at a 1 GDS to 15 common shares ratio) at a 6-9% discount to last close. 
• The deal is well flagged via both media reports and the company’s announcements. Short interest has been growing in tandem as well.

• Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
• The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
• Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.

• This morning – 26 July – Alibaba (ADR) (BABA US) / Alibaba Group (9988 HK) issued an announcement it would pursue a primary listing on the HKEX.
• When Alibaba listed in NY, it was on ADRs. When it listed in HK, it was the shares underlying the ADRs but it was a quickie secondary listing.
• It will now seek a dual primary listing as others have. This will make BABA Southbound-eligible and will slightly improve BABA’s HSI funding trade prospects in future. 

• The TOPIX Free-Float Rebalance for July will be executed tomorrow at the close. 
• There should be about US$3.5bn to trade one-way with 150+ names down-weighted, 36 names up-weighted, and one inclusion – Mercari Inc (4385 JP).
• The trade has performed well so far, and excess volume appears limited in most cases. It appears uncrowded.

• China started mulling an expansion of its Stock Connect relationships in late 2021 with plans to allow GDR issuance in Switzerland and eventually Germany.
• New GDR issuance rules came into effect in February and companies started planning to issue GDRs in Switzerland in March.
• The new SIX Listing Rules went into effect 25 July. Two companies priced GDRs on 22 July and two more yesterday. US$1.5bn so far. There are 6 more near-term.

• Many employees of both companies must have participated in the ESOP subscription with stock-backed loans.
• At the last close, the Kakao Bank ESOP must pay 14.34% of the initial total investment as additional withholdings. Krafton is much worse at 30.25%.
• It seems highly likely that this situation will lead to a short-term flow distortion, substantial enough for us to consider setting up a position aimed at this.

• Glencore is looking to raise US$293m (A$422m) from selling its stake in Yancoal Australia (YAL AU). This would be a clean up sale.
• Glencore has been sitting on its stake for a while now, and the two have a JV in the Hunter Valley Operations, the latter which commenced in Jul 2017.
• The deal, while a large one to process at 135.6 days of three month ADV, represents just 5.6% of Yancoal Australia’s current mcap.

• Alibaba Group (9988 HK) announced yesterday that it is seeking to change its listing status in Hong Kong to a primary listing before the end of 2022.
• With the risk of de-listing from the US, a dual-primary-listing in Hong Kong would allow Alibaba (ADR) (BABA US) to smoothly transition all its trading from the US to Hong Kong.
• In addition, the company could possibly use this opportunity to raise more money from capital markets as it is desperately seeking funding for its loss making ventures.

• FFW changes and Mercari Inc (4385 JP)‘s inclusion in the TOPIX will lead to a one-way turnover of 0.55% and one-way trade of JPY 443bn (US$3.23bn) at the close today.
• There is net buying in Consumer Discretionary, Financials and Communication Services stocks, while there will be net selling in Consumer Staples and Health Care stocks.
• The upweights have outperformed the downweights since announcement of the changes and there has not been a lot of excess volume traded in the last couple of weeks.

• In JPX-Nikkei 400 2022 Rebal: Final Predictions, I discussed Quiddity’s final predictions for Potential ADDs/DELs for the JPX-Nikkei Index August 2022 Annual Review.
• In that insight, I classified the potential ADDs/DELs by conviction levels and discussed why the high conviction ADDs and DELs deserved a higher weight than the other baskets.
• Since then, the LONG High Conviction ADDs – SHORT High conviction DELs Trade has outperformed the other LONG-SHORT combinations.

• Expectations are spreading in the market that the free-float rate of LG Energy will increase from 9% to 15% at the MSCI August QIR. However, this possibility is quite low.
• Only 1.57% will be reflected in this QIR, and 4.26% will be in November. So, the August IR will see 0.59x ADTV, and the November IR will welcome 2.93x ADTV.
• A conservative approach is still valid for flow trading on LG Energy for now, and a more aggressive approach is needed with long/short trading with LG Chem.

• Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
• The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
• Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.

• We have completed days 1-5 in the review period for the MSCI August QIR. This is the last review that will use the current QIR methodology.
• Most changes are expected in China with the largest inflows on Gcl Poly Energy Holdings Limited (3800 HK), Tianqi Lithium (002466 CH) and Qinghai Salt Lake Industry (000792 CH). 
• There are a few stocks that will have same way flows from the FTSE All-World and All-Cap trackers at the September SAIR.

• At the September rebalance, we expect changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index. Announcement is on 2 September with implementation on 16 September.
• Potential adds/deletes with large flow and impact include Shopping Cntrs Austrls (SCP AU), Sayona Mining (SYA AU), Charter Hall Social Infrastructure REIT (CQE AU) and Capricorn Metals (CMM AU).
• Shorts have increased significantly on a few stocks over the last few weeks, indicating that there could be some pre-positioning on these stocks.

• This morning – 26 July – Alibaba (ADR) (BABA US) / Alibaba Group (9988 HK) issued an announcement it would pursue a primary listing on the HKEX.
• When Alibaba listed in NY, it was on ADRs. When it listed in HK, it was the shares underlying the ADRs but it was a quickie secondary listing.
• It will now seek a dual primary listing as others have. This will make BABA Southbound-eligible and will slightly improve BABA’s HSI funding trade prospects in future. 

• There are 3 changes each for the IDX30 Index and LQ45 Index and 11 changes for the IDX80 Index at the upcoming rebalance to be implemented on 29 July.
• There is passive inflow on Bank Jago Tbk PT (ARTO) due to index inclusion, and on Bank Rakyat Indonesia (BBRI) and Bank Central Asia (BBCA) due to capping changes.
• With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website. 
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
• These insights also flags those companies where shares have been pledged, both recently and ongoing.

PT Metrodata Electronics, Tbk (MTDL:IJ), publicly listed company on Indonesia Stock Exchange since 1990, is a Digital Solution Provider and Technology Innovator in Indonesia that leads and enables the digital economy hub. MTDL builds strategic alliances with world-class ICT companies. The Company has two main business units, including Distribution Business (providing World-Class ICT Hardware and Software) that handles distribution through Omnichannel to partnered dealers (both offline and online) and ICT solution companies, as well as runs an e-commerce business (e-catalogue for Government/B2G). Its Distribution network covers more than 150 cities in Indonesia and has more than 5,200 channel partners and more than 100 world-class IT products and service brands. The second business unit, Solution & Consulting Business, is a digital solution provider that provides a complete range of ICT solutions based on Metrodata’s 8 Pillars of Digital Solutions, which consist of Cloud Services, Big Data & Analytics, Hybrid IT Infrastructure, Security, Business Application, Digital Business Platform, Consulting & Advisory Services, and Managed Services to support digital business transformation, for Enterprise, Corporate, SME, and Public Sector segment.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• China started mulling an expansion of its Stock Connect relationships in late 2021 with plans to allow GDR issuance in Switzerland and eventually Germany.
• New GDR issuance rules came into effect in February and companies started planning to issue GDRs in Switzerland in March.
• The new SIX Listing Rules went into effect 25 July. Two companies priced GDRs on 22 July and two more yesterday. US$1.5bn so far. There are 6 more near-term.

• After the close, Walmart slashed its quarter and full-year profit guidance – the second inflation-induced cut this year – stock down sharply 
• The company said inflation is causing consumers to spend more on must-have things such as food and less on electronics 
• Japanese electronics retailers will face a similar problem as inflation feeds through to weaker consumption of high-end goods  

• MACA Ltd (MLD AU) has recommended a A$1.025 per share offer from Thiess. The offer price represents a 28.1% premium to the unaffected price of A$0.80 (on 25 July).
• The offer is conditional on a 90% minimum acceptance condition and regulatory approvals (FIRB and ACCC). The target statement will be released in late August.
• We think that the offer is reasonable in the context of historical share prices and multiples. At the last close, the gross spread is 3.5%.

• We have completed days 1-5 in the review period for the MSCI August QIR. This is the last review that will use the current QIR methodology.
• Most changes are expected in China with the largest inflows on Gcl Poly Energy Holdings Limited (3800 HK), Tianqi Lithium (002466 CH) and Qinghai Salt Lake Industry (000792 CH). 
• There are a few stocks that will have same way flows from the FTSE All-World and All-Cap trackers at the September SAIR.

• At the September rebalance, we expect changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index. Announcement is on 2 September with implementation on 16 September.
• Potential adds/deletes with large flow and impact include Shopping Cntrs Austrls (SCP AU), Sayona Mining (SYA AU), Charter Hall Social Infrastructure REIT (CQE AU) and Capricorn Metals (CMM AU).
• Shorts have increased significantly on a few stocks over the last few weeks, indicating that there could be some pre-positioning on these stocks.

• We have gone through days 1-5 of the review period for the MSCI September rebalance. There are multiple review cutoffs in the coming week.
• The announcement of the changes to the LQ45/IDX30/IDX80 indices should be made early in the coming week and implemented at the close on 29 July.
• China had the largest ETF inflows over the last week, while there were outflows from Korea focused ETFs.

• Given recent corporate events in S-REIT land, there could be some considerable money to be allocated to the sector near-term
• These flows come at a time when prices are down off highs and liquidity is low.
• There could be some price impact on certain types of S-REITs near-term.

• Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
• The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
• Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.

• There are 3 changes each for the IDX30 Index and LQ45 Index and 11 changes for the IDX80 Index at the upcoming rebalance to be implemented on 29 July.
• There is passive inflow on Bank Jago Tbk PT (ARTO) due to index inclusion, and on Bank Rakyat Indonesia (BBRI) and Bank Central Asia (BBCA) due to capping changes.
• With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

• Renewable energy play Genex Power Ltd (GNX AU) has announced a non-binding indicative proposal from Atlassian’s Scott Farquhar and Stonepeak, by way of a Scheme, at A$0.23/share. 
• That’s around a 64% premium. Farquhar holds a 19.9% stake. 
• Farquhar, along with Atlassian co-founder Mike Cannon-Brookes, backed Genex capital raising in March last year.

• Thai Life Insurance (TLI TB) raised over US$1bn in its IPO and has started trading on the SET today.
• At the last trade price of THB 16/share, Thai Life Insurance (TLI TB) is a borderline Fast Entry add to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX).
• If Thai Life Insurance (TLI TB) is added to the index, Bangkok Life Assurance (BLA TB) is the most likely deletion.

• Gotion High-Tech Co Ltd (002074 CH) (GHT) is looking to raise US$1bn from its Swiss GDR listing. Bookrunners on the deal are CICC and Haitong International.
• The shares offered in GHT’s GDR offering ranges between 16.65m – 33.29m GDRs (83.24m – 166.47m A-shares), ranging the deal size between US$499m-US$1bn. 
• At the top end, in terms of number of GDRs offered, the deal would represent 4.7 days of ADV on the A-share market and 9.6% of current mcap.

• Gem Co Ltd A (002340 CH) is looking to raise around US$245m in its Swiss GDR listing.
• Proceeds will be used mainly for overseas expansion, such as the development of the Indonesian Nickel Resource Base and development of its production base and recycling center in Europe.
• In terms of discount, relative to the most recent two deals, Keda Industrial and Ningbo Shanshan, GEM’s GDRs are offered at a more enticing 11.7-14.2% discount to its A-shares,

• At the September rebalance, we expect changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index. Announcement is on 2 September with implementation on 16 September.
• Potential adds/deletes with large flow and impact include Shopping Cntrs Austrls (SCP AU), Sayona Mining (SYA AU), Charter Hall Social Infrastructure REIT (CQE AU) and Capricorn Metals (CMM AU).
• Shorts have increased significantly on a few stocks over the last few weeks, indicating that there could be some pre-positioning on these stocks.

• We have completed days 1-5 in the review period for the MSCI August QIR. This is the last review that will use the current QIR methodology.
• Most changes are expected in China with the largest inflows on Gcl Poly Energy Holdings Limited (3800 HK), Tianqi Lithium (002466 CH) and Qinghai Salt Lake Industry (000792 CH). 
• There are a few stocks that will have same way flows from the FTSE All-World and All-Cap trackers at the September SAIR.

• We have gone through days 1-5 of the review period for the MSCI September rebalance. There are multiple review cutoffs in the coming week.
• The announcement of the changes to the LQ45/IDX30/IDX80 indices should be made early in the coming week and implemented at the close on 29 July.
• China had the largest ETF inflows over the last week, while there were outflows from Korea focused ETFs.

• Toshiba Corp (6502 JP)‘s bidder list is out. It is Bain, Brookfield, JIP-JIC, and CVC. Overall, the impression of this pool of candidates is negative
• Swire Pacific (A) (19 HK) is trading cheap at a look-through forward P/B of 0.26x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x. 
• Soho China (410 HK)‘s name was toxic after SAMR dinged Blackstone’s deal. It is no less toxic now. Arguably the upside is greater than the downside. But on what timeframe?

• Thai Life Insurance (TLI) raised around US$975m in its Thailand IPO. Cornerstone investors, including GIC, took up around 54% of the deal.
• Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
• In this note, we talk about allocation and the trading dynamics

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• There were no major IPO launches during the week. Thai Life will list early next week
• There were no major placements apart from ANZ and a smallish one in Xtep. There are two major lock-up expiries coming up.

• There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• I see no new transactions were discussed this week on Smartkarma.
• Key updates took place for: Pendal Group (PDL AU),Link Administration (LNK AU), Toshiba Corp (6502 JP), Excelpoint Technology (EXLP SP), and Cocoaland Holdings (COLA MK).

• The tone of stock market action has become more constructive, but the jury is still out as to whether the latest advance is the start of a V-shaped bottom.
• Fundamentally, we are monitoring the evolution of earnings estimates as the Q2 earnings season progresses.
• From a technical perspective, durable advances are accompanied by strong price momentum, which the bulls haven’t demonstrated yet.

• 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, Korea, India and Chinese ADRs.
• On the ECM front, Thai Life Insurance (TLI TB) will start trading on 25 July, Bharat FIH (BFIH IN) aims to launch an August IPO to raise US$625 million.
• Event-Driven developments at DTAC/True, Link Administration (LNK AU), Pendal Group (PDL AU), Tassal (TGR AU), Suncorp (SUN AU), Hwa Hong Corp (HWAH SP), Excelpoint Technology (EXLP SP), Cocoaland.   

• Lotte Confectionery’s screening period for the upcoming rebalancing will be July 20 to October 31, with an increased number of listed shares resulting from the merger.
• To fail inclusion, it must fall below Hyundai Greenfood. There is a market cap gap of ₩300B, suggesting the possibility of inclusion in December is quite high.
• Lotte Confectionery may benefit from concentrated flow from an early stage, given that the outline of inclusion/exclusion candidates for the upcoming rebalancing is still relatively vague.

• The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
• Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
• Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.

• Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
• The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
• However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

• Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business. 
• Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.
• The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.

• Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) shares declined as reports suggest that NBTC’s subcommittees voted 3:1 AGAINST the merger. True said the reports are false.
• An earlier press conference by CP Group and Telenor ASA (TEL NO) reiterated that the NBTC could only prescribe remedial measures. A court ruling on 16 June supports this view.
• NBTC will allegedly review the subcommittees’ findings on 26-27 July. We think this development results in the NBTC prescribing harsher remedial conditions to the merger rather than blocking it. 

• NTT announced it would build and operate a third trans-Pacific subsea cable (JUNO) with NEC as the vendor and a 2024 activation date
• This also represents the second trans-Pacific cable in five years and the one with the highest capacity to date
• This is not core to NTT’s business but it does highlight how capacity needs are expanding as network speeds accelerate and how those costs can be managed

• The Nikkei was up 4.2% over the past 5 days while the yen was slightly stronger (¥138.31 -> ¥136.05 
• Japan’s core consumer inflation stayed above the BOJ target of 2% for a third straight month in June as energy prices remain high. No change to BOJ policy. 
• Japan warns of rising security threats in annual defense report, including technology supply chains, Russia and China/Taiwan

• Toshiba Corp (6502 JP)‘s bidder list is out. It is Bain, Brookfield, JIP-JIC, and CVC. Overall, the impression of this pool of candidates is negative
• Swire Pacific (A) (19 HK) is trading cheap at a look-through forward P/B of 0.26x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x. 
• Soho China (410 HK)‘s name was toxic after SAMR dinged Blackstone’s deal. It is no less toxic now. Arguably the upside is greater than the downside. But on what timeframe?

• We have gone through days 1-5 of the review period for the MSCI September rebalance. There are multiple review cutoffs in the coming week.
• The announcement of the changes to the LQ45/IDX30/IDX80 indices should be made early in the coming week and implemented at the close on 29 July.
• China had the largest ETF inflows over the last week, while there were outflows from Korea focused ETFs.

• The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points:South African interest rates and inflation data
• Companies mentioned:iQIYI Inc (IQ US), ByteDance (1439927D CH), DiDi Global (DIDI US), Baidu (9888 HK)

• Thai Life Insurance (TLI) raised around US$975m in its Thailand IPO. Cornerstone investors, including GIC, took up around 54% of the deal.
• Thai Life Insurance is one of the largest life insurance companies in Thailand, third by assets. As of Mar 2022, it had 64,000 insurance agents.
• In this note, we talk about allocation and the trading dynamics

• The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
• Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
• Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.

• Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
• What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
• Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”

• Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
• The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
• However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

• Group Success Investments is looking to raise up to US$133m by trimming its holdings in Xtep International (1368 HK).
• We can’t say that the deal is expected and short interest on the stock hasn’t been creeping up as well. 
• While the deal won’t be a large one, representing just 5.7 days of three month ADV, the firm’s last deal hasn’t done well.

• Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
• Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
• Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.

• Zomato (Zomato IN) raised US$1.3bn in its India IPO in Jul 2021. At that time, it was the largest technology sector listing in India.
• Zomato is one of two leading food delivery app operators in India. It recently acquired Blinkit marking its foray into the instant grocery segment.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Back on 1 March, 51 Job Inc Adr (JOBS US) entered into a revised merger agreement at US$61.00/share, down 22.8% from the initial terms.
• This merger was approved at an EGM on the 27 April and became effective on the 6 May.
• Court proceedings have commenced for dissenters, accounting for a staggering 30.9% of shares out. It’s not just “fair value” under the microscope; but the legality of the downward revision.

• 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. 
• This two-step voluntary cash offer incorporated a Scheme-like vote and a 90% tendering condition. 
• Shareholders voted for the transaction on the 29 June. The tendering condition has now been satisfied. The last day of trading is on the 1 August.  

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices for the September 2022 Rebalance.
• While no names currently satisfy the requirements to move into or out of the DAX Index, there could be some changes for the MDAX and SDAX Index.
• Below is a closer look at the recent price and volume performance of these names.

• Is the inflation ship turning? Price action in markets warrants this question
• The clearest breaks have been in US stocks which should still rally
• Bonds may be the next to move – it is the central market to watch

• The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
• I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
• The impact on Real World Float is non-negligible. One name in particular is deserving of attention. 

• The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
• Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
• Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.

• ANZ got about half its equity raise done, with the shortfall bookbuild only being 5% of the institutional total and clearing above TERP. Now the retail rights.
• Risk management mechanisms suggest rights trade expensive to stock near-term, then cheapen, as ANZ shares experience some selling pressure from arbs.
• But ANZ is cheap. Relative weakness on FY2-FY3 EPS forecasts has contributed to 25% underperformance vs Peers since January but Relative Multiple Deterioration has contributed more.

• Link Administration (LNK AU) announced it has agreed to Dye & Durham’s latest $4.81/share offer, which is 13% below its initial $5.50/share approach last December.
• Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
• This transaction is still subject to Australian Competition and Consumer Commission clearance, which should happen once D&D undertakes to offload its GlobalX ops.

• Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
• What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
• Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”

• Emperador (EMI SP) started trading on the SGX (SGX SP) on 14 July and so far meets all criteria to be included to the FTSE Straits Times Index (STI INDEX).
• However, it is still a borderline inclusion on free float, market cap and liquidity and will need to pass all three criteria to be added to the index in September.
• If added to the STI, the inclusion will take place on the same day as the potential inclusion of Emperador (EMP PM) in the FTSE All-World Index.

• Group Success Investments is looking to raise up to US$133m by trimming its holdings in Xtep International (1368 HK).
• We can’t say that the deal is expected and short interest on the stock hasn’t been creeping up as well. 
• While the deal won’t be a large one, representing just 5.7 days of three month ADV, the firm’s last deal hasn’t done well.

• Life Insurance Corp of India (LIC) (LICI IN) and Tata Power (TPWR IN) will replace Nmdc Ltd (NMDC IN) and Piramal Enterprises (PIEL IN) at the close on 5 August.
• In September, Adani Wilmar (AWLTD IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN), Hindustan Aeronautics Ltd (HNAL IN) and Mphasis Ltd (MPHL IN) are potential inclusions.
• At over 4 days of deliverable volume to trade, the impact is especially large on  Bharat Electronics (BHE IN), Zydus Lifesciences Ltd (ZYDUSLIF IN) and Lupin Ltd (LPC IN). 

• Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
• Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
• Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.

• Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
• The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
• However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.

• The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
• I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
• The impact on Real World Float is non-negligible. One name in particular is deserving of attention. 

• Yesterday I published Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out. Assuming correct, and we move the last 6mos of data 6mos forward, March23 Rebal is below.
• This too is 3 in, 3 out. But it is complicated. “Required” changes would move the sector balance further out of whack. 
• And while some of the trades are “interesting”, the rebal is smaller and the bigger question is “What comes after that?”

• Overnight, Toshiba Corp (6502 JP) has released an update “Progress Report on Discussions with Potential Investors and Sponsors. Four advance to the second round, including both PE and strategic investors.  
• Nikkei reported those advancing were Bain, CVC, Brookfield, and JIP-JIC. Blackstone did not advance. Yesterday, Reuters reported that KKR had declined to bid, but might join another bid.
• Now parties will start due diligence, and Toshiba will examine bids for “measures to enhance corporate value” and certainty of execution (given national security-sensitive issues, and funding). 

• Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
• We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.
• The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.

• The Nikkei reported yesterday that Toshiba had winnowed the pool of potential partners down to four candidates. 
• All four names (Bain, CVC, Brookfield and Japan Industrial Partners/Japan Investment Corp) have been connected to Toshiba previously. 
• We wonder whether this pool of candidates points to a higher likelihood of a strategic partnership rather than a full buyout.

• In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the September 2022 Rebalance.
• I expect there to be 7 ADDs and 7 DELs for the ASX 200 Index and 23 ADDs and 18 DELs for the ASX 300 Index.
• Based on recent price performance, I believe the Potential ADDs could outperform the Potential DELs over the next few weeks.

• Back on the 4 April, asset manager Pendal Group (PDL AU) announced a non-binding proposal from investment firm Perpetual Ltd (PPT AU).
• As widely expected, Pendal’s board unanimously determined that the indicative cash/scrip Offer significantly undervalued the current and future value of the company.
• Pendal said yesterday that it is still in discussions with Perpetual regarding a potential transition.  Using yesterday’s close, and applying the same terms, backs out an indicative price of A$5.67/share. 

• DB was notified of the conversion to a holding company by the Korea FTC. DB must complete the conversion to a holding company by January 1, 2024.
• DB has no option but to ECO DB HiTek, the same trick employed for LG Energy Solution, to meet the 30% stake obligation for DB HiTek.
• There are still opportunities for outright shorting on DB HiTek as DB will likely announce DB HiTek split before August 12.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices for the September 2022 Rebalance.
• In addition to the Indices specified above, I have also discussed the upcoming index change expectations for the FTSE TWSE Taiwan Dividend+ Index.
• I also discussed some interesting LONG-SHORT trades involving some potential ADDs and DELs.

• On 19 July, Cooke, the spurned suitor, increased its stake in Tassal (TGR AU) to 10.49%. The average price to build the 10.49% stake is A$4.14 per share. 
• Cooke also hired Phil Wiese, the former CEO of Huon Aquaculture (HUO AU), as a MD in Canada. Mr Wiese is well qualified to run Tassal should Cooke acquire it. 
• With shareholders happy to sell to Cooke despite the Board’s assertions that the previous bid undervalued Tassal, a new offer will force the Board to engage.