Most Read

The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

Hong Kong Arbs: (Largely) Immune From Trump Tariffs

In Aussie Arbs: Trump Tariffs And MACs, I ran a ruler over the fifteen live deals Down Under, and how they may be affected by the Trump Tariffs.
This insight canvasses the ongoing Hong Kong arbs and wording surrounding material adverse changes (MACs). Hong Kong MACs are typically less onerous, and lack specificity, versus Aussie arbs.
Although the framework exists for an Offeror to enforce a MAC, I’m not aware of any evidence of this occurring under Hong Kong’s Takeovers Code.

MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm

On 3 April mid-day, Mitsubishi Corp (8058 JP) announced its FY25 earnings guidance and new “Shareholder Return Strategy”, a ¥1 trillion buyback, and its “Corporate Strategy 2027” Mid-Term Management Plan.
The FY25 forecast is for a third consecutive decline in underlying operating cashflow, but a hike in dividend from ¥100 to ¥110 and a ¥1trln share buyback, including ¥230bn tender.
The combination of dividend and buyback should be 15% of market cap over the next 12mos. And I expect Warren Buffett will consider buying dips.

Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock

Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to offload their entire stakes in Suzuki Motor (7269 JP) by way of a secondary offering.
With the size of the secondary offering less than 5% of the number of shares, there could be no index buying in the short-term and that will pressure the stock.
If the overallotment option is exercised and the seller of the shares is currently considered as non-float, there could be small passive buying in the short-term.

STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance

Nearing the end of the review period, we forecast 1 change for the SSE STAR50 (STAR50 INDEX) and 4 changes for the STAR100 Index in June.
We estimate turnover of 1.9% for the SSE STAR50 (STAR50 INDEX) and 4.5% for the STAR100 Index. The estimated round-trip trade is CNY 7.5bn (US$1.02bn).
Large ETF inflows could have led to the recent underperformance of a long add/ short delete trade. That could reverse once markets stabilize or when the passives trade the rebalance.

TOPIX Index Upweights: Great Hit Rate; Strong Trade Performance; A Rare Win!

In the TOPIX Index, some “low liquidity” names carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will see index inflows from passive trackers of TOPIX.
The results for April 2025 liquidity factor removal have been confirmed and we achieved very high hit rates for our High and Medium conviction baskets.

UK: Spillover effects from US tariffs

The UK output destroyed by reciprocal US tariffs is only partly due to the direct impact of the new 10% rate (worth ~0.2% of GDP) and generally weaker US prospects (0.1%).
Global GDP growth is depressed by this policy, indirectly destroying demand for UK exports from elsewhere (0.2%), especially if countries harm themselves by retaliating.
An overall 0.6% GDP hit has two-sided risks and a skew lowered by likely negotiations. Fears of items dumping into the UK market are overblown excuses for protectionism.

Key Implications of SK Inc’s Disposal of SK Siltron

SK Inc is selling SK Siltron to cut its 68% debt-to-equity ratio. The sale could reduce borrowings below ₩5T and lower debt ratio to 30-40%.
Chey Tae-won’s divorce lawsuit risks his majority stake in SK Inc. Selling Siltron helps raise ₩1T for alimony without touching his SK Inc shares, potentially reducing the holding company discount.
SK Inc-SK Square merger is unlikely soon, despite asset sales and preparation on both sides, as SK Square recently reaffirmed no current merger plans. Setting a position now seems premature.

Hanwha Aerospace – Lowers Rights Offering Capital Raise Amount To 2.3 Trillion Won

On 8 April, Hanwha Aerospace (012450 KS) announced that it plans to lower its rights offering capital raise amount from 3.6 trillion won to 2.3 trillion won (US$1.6 billion).
The remaining 1.3 trillion won will be secured through a third-party allocation paid-in capital increase targeting three companies, including Hanwha Energy, Hanwha Impact Partners, and Hanwha Energy Singapore.
Hanwha Aerospace disclosed today that it expects sales of 30 trillion won (58% higher than consensus) and operating profit of 3 trillion won (20% higher than consensus) in 2025.

Duality Biotherapeutics (映恩生物) IPO: Valuation Upside at Risk

By Ke Yan, CFA, FRM

Duality, a China-based clinical-stage biotechnology company, launched its IPO to raise up to US$200m via a Hong Kong listing.
We look at the deal dynamics and latest developments in the biotech sector.
The deal initially presented upside for investors but there’s a portion of its valuation now at risk due to the latest development.

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Apr 08

Most Read: ESR Group , De Grey Mining, Suzuki Motor, Treasury Wine Estates, Mitsubishi Corp, Mazagon Dock Shipbuilders , Shanghai Shenzhen CSI 300 Index, Wonik Ips and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HK Merger Arb: Opportunities Amidst the Market Selloff
Aussie Arbs: Trump Tariffs And MACs
Suzuki Motor Placement – Not the Best Time for a US$1.15bn Deal. It Will Be a Long Week.
Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes
Suzuki Motor (7269 JP): A US$1.1 Billion Secondary Offering
MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
US vs EU: Worse to Come
Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
CSI 300 Index Outlook After Trump’s Threat of 50% Tariff on China
Watch This Friday’s TIGER Top 10 Semicon Rebalance

HK Merger Arb: Opportunities Amidst the Market Selloff

The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

Aussie Arbs: Trump Tariffs And MACs

Travis Lundy succinctly summarised the Trump Tariffs in Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated. Do read his note.
From an arb standpoint, most (all?) NBIOs will likely see a downward revision in pricing. Vote risk should also be reduced.
Such tariffs on predominantly domestic businesses should not trigger material adverse changes (MACs) Down Under. But it is still a worthwhile project to dig a little deeper.

Suzuki Motor Placement – Not the Best Time for a US$1.15bn Deal. It Will Be a Long Week.

Tokio Marine Holdings (8766 JP) and Sompo Holdings (8630 JP) aim to raise around US1.15bn (including over-allotment) via selling around 5% of Suzuki Motor (7269 JP).
While Suzuki doesn’t have much direct exposure to the US markets, its shares have still corrected in line with other auto players.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes

Given its portfolio mix, Treasury Wine Estates (TWE AU) does not expect a material impact on its business from the blanket 10% tariff on all goods imported from Australia/New Zealand.
However, there is a high probability that Treasury Wine Estates (TWE AU) will be deleted from a global index in May and that will lead to large selling from passives.
There has been an increase in short interest and an increase in other positioning. Trading will be volatile but there could be a downward bias over the next few weeks.

Suzuki Motor (7269 JP): A US$1.1 Billion Secondary Offering

Suzuki Motor (7269 JP) has announced a secondary offering of up to 95.7 million shares (110.1 million including overallotment), worth around US$1.1 billion (US$1.3 billion including overallotment).
Suzuki’s goal with the secondary offering is (i) to reduce cross-shareholdings and (ii) to expand and diversify the shareholder base, which should further enhance liquidity.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 21 and 23 April (likely 21 April).

MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm

On 3 April mid-day, Mitsubishi Corp (8058 JP) announced its FY25 earnings guidance and new “Shareholder Return Strategy”, a ¥1 trillion buyback, and its “Corporate Strategy 2027” Mid-Term Management Plan.
The FY25 forecast is for a third consecutive decline in underlying operating cashflow, but a hike in dividend from ¥100 to ¥110 and a ¥1trln share buyback, including ¥230bn tender.
The combination of dividend and buyback should be 15% of market cap over the next 12mos. And I expect Warren Buffett will consider buying dips.

US vs EU: Worse to Come

By Alastair Newton

Policymakers and investors are not fully recognizing the threat posed by the US in response to ‘Liberation Day’.
The threat level has increased as ‘transactional Trump’ is replaced by a new president.
The new president aims to return the US to a perceived golden era in his mission to ‘make America great again’.

Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion

Mazagon Dock Shipbuilders (MAZDOCKS IN) has announced an Offer for Sale of 4.01% of the Government holding in the stock. That is INR 41bn (US$481m) at the last close.
The increase in float brings the stock very close to inclusion in a global index at the May rebalance. However, that is dependent on how the stock performs from here.
Inclusion in the index will bring around US$222m/ 2x ADV of passive inflows and could help support the stock.

CSI 300 Index Outlook After Trump’s Threat of 50% Tariff on China

The Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) was less impacted than other indices by the global sell-off: on Monday it was down only -10% from the recent top.
On Monday Donald Trump posted that if China does not withdraw immediately its +34% tariffs increase, the United States will impose ADDITIONAL Tariffs on China of +50%, effective April 9th!
Although the CSI 300 Index is more insulated than other indices from global market volatility, it is not completely immune and remains vulnerable to the impact of US’s tariff threats.

Watch This Friday’s TIGER Top 10 Semicon Rebalance

After the March avg daily market cap screen, Wonik IPS is swapped for Jusung Engineering. Big passive impact expected—Jusung gets 1x ADTV buy flow, Wonik faces 2.6x ADTV sell.
Watch for passive flow timing—last rebalance (Oct 11), ISC Co Ltd got kicked, Wonik IPS called up. TIGER split Wonik’s rebalance over two trading days to minimize price impact.
The long/short yield was 2.89% on Oct 11, 3.96% over two days. With bigger passive flow impact, TIGER may split the rebalance—enter near Thursday close, exit by Monday afternoon.

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Apr 07

Most Read: SPDR S&P 500, BYD, Solar Industries India, Mitsubishi Logisnext Co., Ltd., Krafton , Treasury Wine Estates, Seven & I Holdings, Topcon Corp, Abacus Storage King and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
US Tariff Impact Estimates
Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil
Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes
Merger Arb Mondays (07 Apr) – Seven & I, Makino, HKBN, OneConnect, Dada, Insignia, Domain, Dropsuite
(Mostly) Asia-Pac M&A: Topcon, Jinke Smart Services, Dropsuite, Domain, Jamco, Shin Kong, Dada Nexus
Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA

Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated

For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected.

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.

AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely

We currently forecast 10 stocks moving from MidCap to LargeCap, 10 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in September.

US Tariff Impact Estimates

New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale

There was a Nikkei article in December about the Mitsubishi Heavy Industries (7011 JP) selling its interests in Mitsubishi Logisnext Co., Ltd. (7105 JP).
The stock popped. Then popped some more. It was not expensive yet, but no longer dirt cheap. Now the stock is falling as Trump Tariffs threaten to throttle exports.
The reasons why this takeout price could be “high” are unchanged. Tariffs meant to drive US-manufacturing don’t reduce need for forklifts. Logisnext is not badly placed.

20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil

In this insight, we discuss 20 Korean stocks that could outperform the market in the next two months amid global tariff war and local political turmoil.
Going forward, we believe these 20 Korean stocks could continue to outperform the market in the next couple of months.
As the market tries to digest further the uncertainties due to tariff war and the local Presidential election, these 20 stocks could provide sound defensive outperformance.

Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes

Given its portfolio mix, Treasury Wine Estates (TWE AU) does not expect a material impact on its business from the blanket 10% tariff on all goods imported from Australia/New Zealand.
However, there is a high probability that Treasury Wine Estates (TWE AU) will be deleted from a global index in May and that will lead to large selling from passives.
There has been an increase in short interest and an increase in other positioning. Trading will be volatile but there could be a downward bias over the next few weeks.

Merger Arb Mondays (07 Apr) – Seven & I, Makino, HKBN, OneConnect, Dada, Insignia, Domain, Dropsuite

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), Insignia Financial (IFL AU), ENN Energy (2688 HK), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US), Soundwill Holdings (878 HK).
Lowest spreads: Sinarmas Land (SML SP), Makino Milling Machine Co (6135 JP), Millennium & Copthorne Hotels Nz (MCK NZ), Shibaura Electronics (6957 JP), Tonami Holdings (9070 JP).

(Mostly) Asia-Pac M&A: Topcon, Jinke Smart Services, Dropsuite, Domain, Jamco, Shin Kong, Dada Nexus

I tally 54 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
Two news new deals discussed this week: Reject Shop (TRS AU) and Topcon Corp (7732 JP). Jinke Smart Services (9666 HK) also suspended pursuant to the Takeovers Code.
Key updates/news took place on Dropsuite (DSE AU), AVJennings Ltd (AVJ AU), Domain Holdings (DHG AU), Jamco (7408 JP), Shin Kong Financial Holding (2888 TT), and Dada Nexus (DADA US).

Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA

Abacus Storage King (ASK AU) was demerged from Abacus Property Group in 2023 and the stock has traded in a range since listing.
Now, Ki Corp and Public Storage (PSA US) have made a conditional and non-binding proposal to take Abacus Storage King (ASK AU) private at A$1.47/share.
The offer is a 27% premium to the last close of the stock and is higher than the price that the stock has traded at since listing.

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Apr 06

Most Read: Nick Scali Ltd, Indian Hotels, Hanmi Semiconductor, Solar Industries India, Mitsubishi Logisnext Co., Ltd., NIFTY Index, S&P 500 INDEX, Bangkok Chain Hospital, Krafton and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows
NIFTY Indices: Flows (Post Capping) At the Close Today; Round-Trip US$2.6bn
Korea Short Selling: What Happened on Day 1?
AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
Global Stocks Outlook: Where Is the Bottom for This Crash?
HEW: Yikes, At Tonto Tariff Hikes
SP500: Friday Sell-Offs, the VIX, and a Bit of 1987
Bangkok Chain Hospital – Expect Strong Earnings Growth in 2025E with a Higher ERP
20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil

Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows

Northern Star Resources (NST AU)‘s acquisition of De Grey Mining (DEG AU) is expected to complete in the next 3 weeks.
There will be an ad hoc inclusion to the S&P/ASX 200 (AS51 INDEX) and passive buying in Northern Star Resources (NST AU) from a bunch of trackers of different indices.
The acquisition brings Northern Star Resources (NST AU) close to inclusion in the S&P/ASX 20 Index, but it’s not there yet.

NIFTY Indices: Flows (Post Capping) At the Close Today; Round-Trip US$2.6bn

The NIFTY Index, Nifty Next 50 Index, Nifty Bank Index, Nifty IT Index, Nifty Midcap 150 Index, Nifty100 Low Volatility30 Index and the CPSE ETF rebalance at the close today.
The round-trip trade across the indices is US$2.6bn and there are 26 stocks with over 1 day of ADV to trade from passive trackers.
Stocks with the largest impact are Britannia Industries, Bharat Petroleum, Adani Total Gas, Indian Hotels, Jio Financial, IRCTC, Zomato, Federal Bank, Union Bank Of India and Crompton Greaves.

Korea Short Selling: What Happened on Day 1?

Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.

AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely

We currently forecast 10 stocks moving from MidCap to LargeCap, 10 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in September.

Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale

There was a Nikkei article in December about the Mitsubishi Heavy Industries (7011 JP) selling its interests in Mitsubishi Logisnext Co., Ltd. (7105 JP).
The stock popped. Then popped some more. It was not expensive yet, but no longer dirt cheap. Now the stock is falling as Trump Tariffs threaten to throttle exports.
The reasons why this takeout price could be “high” are unchanged. Tariffs meant to drive US-manufacturing don’t reduce need for forklifts. Logisnext is not badly placed.

Global Stocks Outlook: Where Is the Bottom for This Crash?

Analysis of the NIFTY, Nikkei 225, Hang Seng, KOSPI 200, S&P/ASX 200, S&P 500 and Nasdaq-100 stock indices: where is the bottom for the global stock market rout?
As explained in this insight, our models have been battle-tested since 2008. While they can’t predict the future, they provide valuable insights for identifying market bottoms during crashes.
What follows is a focused analysis of each market index we track, aimed at identifying potential bottoms amid extreme sell-offs, helping position ahead of the next Bear Market rally/reversal.

HEW: Yikes, At Tonto Tariff Hikes

Severe global tariff increases have significantly impacted market sentiment, leading to lower equity prices and rate expectations. The market’s eagerness to discount ongoing US labour market resilience is considered excessive.
The new tariff rates are set to take effect in the coming week. Any further trade conflicts could be the main macro news.
US inflation, UK GDP, and the RBNZ are the conventional highlights, but these data may be disregarded as old news.

SP500: Friday Sell-Offs, the VIX, and a Bit of 1987

By John Ley

Drops greater than 5% on a Friday are rare, we examine historical returns after such events.
We revisit 1987 price action and reconstructed VIX levels to add historical context.
With circuit breakers now in place and political volatility elevated, we assess what today’s sell-off might mean for the next trading day.

Bangkok Chain Hospital – Expect Strong Earnings Growth in 2025E with a Higher ERP

By Waraporn Wiboonkanarak

We initiate our coverage on BCH with a Neutral rating and a fair value estimate of Bt15.70, based on the earnings yield method using a required return of 3.8%.
KTX’s valuation view is positive on strong long-term growth potential, with 2025-27E core EPS CAGR expected at +9%, outpacing the industry average of +5%.
However, the fundamental outlook is seen as neutral, with the fair value offering 8% upside and the tactical view also neutral.

20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil

In this insight, we discuss 20 Korean stocks that could outperform the market in the next two months amid global tariff war and local political turmoil.
Going forward, we believe these 20 Korean stocks could continue to outperform the market in the next couple of months.
As the market tries to digest further the uncertainties due to tariff war and the local Presidential election, these 20 stocks could provide sound defensive outperformance.

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Apr 05

Most Read: Rio Tinto Ltd, Hanmi Semiconductor, Solar Industries India, The Shanghai Commerical & Sa, Makino Milling Machine Co, Mitsubishi Logisnext Co., Ltd., Korea Stock Exchange Kospi Index, Dada Nexus , Regencell Bioscience Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification
Korea Short Selling: What Happened on Day 1?
AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas
US Tariff Impact Estimates
Nidec Launches on Makino Milling (6135) – Others Presumably Wait In the Wings
Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade
Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
Is This Chinese Biotech Going Out of Business?

Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification

Palliser Capital, which reportedly holds ~$300mn in Rio Tinto Ltd (RIO AU/LN) shares across its dual-head structure, has campaigned for near-on a year to unify the primary listing in Australia.
Palliser’s reasonings (and others) to unify make sense, such as access to stock-based mergers and eliminating franking wastage. A recent independent assessment from Grant Thornton is also supportive of unification.
Shareholders will vote on the resolution on 3rd April for UK-listed shares and 1st May for Australian-listed shares. The UK line holds the key to the vote outcome.

Korea Short Selling: What Happened on Day 1?

Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.

AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely

We currently forecast 10 stocks moving from MidCap to LargeCap, 10 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in September.

Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas

The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2025 index rebal event.
We expect five changes for the TDIV index. On top of that, there will be capping flows too.

US Tariff Impact Estimates

New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

Nidec Launches on Makino Milling (6135) – Others Presumably Wait In the Wings

Nidec Corp (6594 JP) bid ¥11,000 for Makino Milling Machine Co (6135 JP) in December, saying it expected to launch on 4-April. It launched its ¥11,000 bid on 4-April.
A Nikkei article in March suggested Makino had found multiple competing bidders, some who had put in “legally binding bids.” No news on those yet, but we have a month.
Earnings are 9-May. Strategy on timing for Makino differs according to its desired outcome. It has to opine on Nidec’s bid by about 18 April. Be long. Carry 🍿🍿🍿 .

Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale

There was a Nikkei article in December about the Mitsubishi Heavy Industries (7011 JP) selling its interests in Mitsubishi Logisnext Co., Ltd. (7105 JP).
The stock popped. Then popped some more. It was not expensive yet, but no longer dirt cheap. Now the stock is falling as Trump Tariffs threaten to throttle exports.
The reasons why this takeout price could be “high” are unchanged. Tariffs meant to drive US-manufacturing don’t reduce need for forklifts. Logisnext is not badly placed.

Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade

The Constitutional Court approved President Yoon’s impeachment. The PM steps in as interim president, with a new election expected by May 28, 2025, before June 3.
The Democratic Party is the frontrunner, and if they win, expect a “regime change trade” with policy shifts toward green energy, welfare, public stimulus, and SME-focused initiatives.
Big-Cap builders, nuclear stocks, and major financials may struggle if the new regime focuses on public housing, anti-nuclear policies, and pro-SME, labor-friendly initiatives.

Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer

Back on the 27th January, Dada Nexus (DADA US), a Chinese on-demand retail and delivery platform, announced a preliminary non-binding proposal from JD.com (9618 HK).
JD.com, a 63.2% shareholder, was offering US$0.50/share (US$2.00/ADS), a 42% premium to last close. Those terms are now firm and a definitive agreement entered into.
The merger is expected to close in the third quarter. Trading at 4.7%/15%, gross/annualised spread, assuming a four month off-ramp.

Is This Chinese Biotech Going Out of Business?

By J Capital Research

This Nasdaq-listed, Hong Kong-based company hopes to apply Traditional Chinese Medicine (TCM) to significant illnesses like ADHD, but that seems unlikely. The company is a family affair, with all research provided by the CEO’s father, so one wonders how objective scientific assessment can be.
The stock surged by more than 700% in a month without patent approval, a buyout offer, or other notable news. The CEO funded a share buyback, but rather than demonstrating faith in the company, the repurchase looked suspiciously like a way to inflate the short-term share price, possibly for an equity issue or insider self- enrichment since the CEO’s compensation is tied to market capitalization.
This is a highly speculative business run by a family team from Hong Kong, thus little trusted in the U.S. and very volatile.

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Apr 04

Most Read: SPDR S&P 500, Nick Scali Ltd, Contemporary Amperex Technology (CATL), Hanmi Semiconductor, ENN Energy, Solar Industries India, The Shanghai Commerical & Sa, HKBN Ltd, Makino Milling Machine Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
HKBN (1310 HK): MBK Ups Stake Via VLN Conversion
Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows
CATL A/H Listing – Thoughts on A/H Premium
Korea Short Selling: What Happened on Day 1?
ENN Energy (2688 HK): This Is An Avoid
AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas
HKBN (1310 HK): I Squared Inches Closer to a Competing Offer
Makino Milling Machine (6135 JP): Nidec Launches Its Offer

Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated

For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected.

HKBN (1310 HK): MBK Ups Stake Via VLN Conversion

China Mobile (941 HK) has made a pre-conditional HK$5.23/share voluntary Offer for HKBN Ltd (1310 HK). However, a possible separate Offer from I Squared continues to make the news.
In an unusual move, MBK, via Twin Holding, has converted HK$970.5mn of VLNs, at a whopping HK$11.60/share conversion price, lifting MBK’s stake to 16.39% on a fully diluted basis.
Speculation is rife that MBK provides an irrevocable to I Squared for its enlarged shareholding. Maybe. I still don’t see China supporting a U.S.-based infrastructure firm over an SOE .

Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows

Northern Star Resources (NST AU)‘s acquisition of De Grey Mining (DEG AU) is expected to complete in the next 3 weeks.
There will be an ad hoc inclusion to the S&P/ASX 200 (AS51 INDEX) and passive buying in Northern Star Resources (NST AU) from a bunch of trackers of different indices.
The acquisition brings Northern Star Resources (NST AU) close to inclusion in the S&P/ASX 20 Index, but it’s not there yet.

CATL A/H Listing – Thoughts on A/H Premium

Contemporary Amperex Technology (CATL) (300750 CH), one of the world’s largest battery solutions providers, aims to raise at least US$5bn in its H-share listing.
CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
We have looked at the company’s past performance in our earlier notes. In this note, we talk about its recent updates and provide our thoughts on valuations.

Korea Short Selling: What Happened on Day 1?

Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.

ENN Energy (2688 HK): This Is An Avoid

Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic.

AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely

We currently forecast 10 stocks moving from MidCap to LargeCap, 10 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in September.

Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas

The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2025 index rebal event.
We expect five changes for the TDIV index. On top of that, there will be capping flows too.

HKBN (1310 HK): I Squared Inches Closer to a Competing Offer

Today’s HKBN Ltd (1310 HK) monthly update notes that I Squared has completed due diligence and is finalising the terms of a possible preconditional offer.
The I Squared bid will likely be a modest premium to the China Mobile offer with a 50% minimum tendering condition. The key unknown is securing regulatory approvals.
China Mobile (941 HK) will first react to an I Squared offer by maintaining terms. However, regardless of whether I Squared secures regulatory approvals, it is likely to match terms.

Makino Milling Machine (6135 JP): Nidec Launches Its Offer

Nidec Corp (6594 JP) has launched its offer for Makino Milling Machine Co (6135 JP) at an unchanged JPY11,000. The offer is open from 4 April to 21 May.
The offer was launched despite securing all regulatory approvals and the Board’s postponement request. The launch could also be an attempt to thwart a competing proposal.
Despite the launch, Nidec’s offer at current terms has a low chance of success, necessitating revised terms. There remains a medium-to-high probability of a competing proposal.

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Apr 03

Most Read: Nick Scali Ltd, BYD, Shin Kong Financial Holding, Kokusai Electric , Contemporary Amperex Technology (CATL), Hanmi Semiconductor, Chagee Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows
BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers
Shin Kong (2888 TT)/Taishin (2887 TT) Deal Gets FSC Approval – Still A Good Swap
Nikkei 225 Sep25 Rebal: One ADD, One DELETE Still Probable Unless Kokusai Elec (6525) Offering/Split
CATL A/H Listing – Thoughts on A/H Premium
Korea Short Selling: What Happened on Day 1?
Quiddity Leaderboard T50/100 Jun25: Taishin-Shin Kong Merger Could Cause Two Changes
Tariff Transition Smoothing
Chagee Holdings (CHA US) IPO: The Bull Case

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.

Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows

Northern Star Resources (NST AU)‘s acquisition of De Grey Mining (DEG AU) is expected to complete in the next 3 weeks.
There will be an ad hoc inclusion to the S&P/ASX 200 (AS51 INDEX) and passive buying in Northern Star Resources (NST AU) from a bunch of trackers of different indices.
The acquisition brings Northern Star Resources (NST AU) close to inclusion in the S&P/ASX 20 Index, but it’s not there yet.

BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers

A recent insight by Brian Freitas signals that BYD (1211 HK)buying from global index trackers is done (more passive buying from HSI/HSCEI trackers may come later this month).
As of Tuesday, the stock is currently in the middle of a modest pullback, 1 week down, reached a support area where the probability of a bounce is around 50%.
We are at the start of the month, it may be early to benefit from the passive buying discussed by Brian Freitas, however this pullback could support a buy-the-dips strategy.

Shin Kong (2888 TT)/Taishin (2887 TT) Deal Gets FSC Approval – Still A Good Swap

Late Monday, The Financial Supervisory Commission approved the merger where Shin Kong Financial Holding (2888 TT) is to be absorbed by Taishin Financial Holding (2887 TT). Announcement here.
Yesterday, the chairmen of both Shin Kong and Taishin decided the merger base date, which has been set a bit further out than even I expected, at 24 July 2025.
The terms tightened yesterday. There is still a worthwhile switch to be done (or arb if you have cheap borrow), and NEWCO is cheap to peers, STILL.

Nikkei 225 Sep25 Rebal: One ADD, One DELETE Still Probable Unless Kokusai Elec (6525) Offering/Split

The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
Kokusai did NOT get added, waiting for a split, an offering, or time to pass. Only one sector change was made. So we see One ADD and One DELETE.
The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.

CATL A/H Listing – Thoughts on A/H Premium

Contemporary Amperex Technology (CATL) (300750 CH), one of the world’s largest battery solutions providers, aims to raise at least US$5bn in its H-share listing.
CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
We have looked at the company’s past performance in our earlier notes. In this note, we talk about its recent updates and provide our thoughts on valuations.

Korea Short Selling: What Happened on Day 1?

Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.

Quiddity Leaderboard T50/100 Jun25: Taishin-Shin Kong Merger Could Cause Two Changes

The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
In this insight, we take a look at the potential ADDs and DELs for the June 2025 index rebal event.
Currently, we see one change for T50 and one change for T100.

Tariff Transition Smoothing

President Trump’s tariffs embed structural cost pressures, compounding supply chain changes and creating a stagflationary shock central banks cannot offset.
Potential retaliation risks raising inflation expectations, constraining the extent to which monetary policy can smooth transitional pains through temporary easing.
We still believe any dovish policy imperative is likely to be short, shallow, and reversed, with central banks forced to remain flexible and focused on shorter horizons again.

Chagee Holdings (CHA US) IPO: The Bull Case

Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO.
According to iResearch, as of December 31, 2024, Chagee was the largest premium freshly made tea drink brand in China by the number of stores.
The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.

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Apr 02

Most Read: BYD, T&D Holdings, Jusung Engineering, Korean Air Lines, Skyworth Group Limited, Nick Scali Ltd, Kcc Corp, WuXi XDC Cayman and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)
HEM: Fear of Fear Itself
FnGuide Semiconductor Top10 Index Rebalance Preview: Just One Change Likely
Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2025
Skyworth Group (751 HK)’s Latest Partial Buyback. Thoughts On Proration
Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows
BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers
KCC Corp: Considering on Issuing an Overseas EB for Its 10% Stake in Samsung C&T
Wuxi XDC Placement – Following Biologics Playbook, past Deals Have Been Mixed

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.

T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)

Yesterday, post-close, T&D Holdings (8795 JP) announced ¥40 for 31-Mar-25 FY-end dividend (¥80/yr) and ¥120/share/year in the year to March 2026 on a higher planned payout ratio.
The company also announced guidance for Adjusted Profit for 2025 at ¥130bn (up), and guidance for March 2026 at ¥140bn (lower growth than this past year).
They announced the current ¥50bn buyback was 87.5% complete (they have until 13 May to complete) and a new buyback starting 19 May to spend up to ¥100bn over 10.5mos.

HEM: Fear of Fear Itself

US surveys indicate a fear of tariffs and DOGE, leading to a negative sentiment.
Despite these fears, resilient labour markets suggest that concerns may be exaggerated.
There is an expectation of reversing unnecessary easing in 2026 due to high underlying price and wage inflation.

FnGuide Semiconductor Top10 Index Rebalance Preview: Just One Change Likely

With the averaging period for the April rebalance now complete, we forecast just 1 change for the FnGuide Semiconductor Top10 Index at the upcoming rebalance.
Based on the passive assets tracking the index, there will be between 0.8-2.2x ADV to trade in the forecast changes.
The resumption of short selling makes it easier to position for these events. That could also result in the shorts moving a lot ahead of implementation.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2025

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2025.
Among the 38 holdcos/opcos, there have been several pairs that have resulted in significant price ratio divergence which could provide trading opportunities in terms of their pricing gaps closing reversal.
Given the resumption in short selling in Korea, there is going to be a lot more interest in pair trades in Korea, especially among the major Korean holdcos/opcos.

Skyworth Group (751 HK)’s Latest Partial Buyback. Thoughts On Proration

Back on the 23 December 2022, Skyworth Group (751 HK) announced (another) partial buyback, at HK$3.80/share, a 20.25% premium to undisturbed. On the 28 March, terms were bumped to $5.00/share.
At the close of the Offer, the Wong Concert Group held 50.35%, and were no longer subject to the creeper rule. The Group now holds 56.04%
Yet another Partial Offer has been announced (HK$3.11/share, a 15.19% premium)), which will lift the Group’s stake to 66.45%. Minimum pro-ration is 37.84%. It is likely to go higher.

Northern Star’s Acquisition of De Grey Mining: The Many Index Implications & Flows

Northern Star Resources (NST AU)‘s acquisition of De Grey Mining (DEG AU) is expected to complete in the next 3 weeks.
There will be an ad hoc inclusion to the S&P/ASX 200 (AS51 INDEX) and passive buying in Northern Star Resources (NST AU) from a bunch of trackers of different indices.
The acquisition brings Northern Star Resources (NST AU) close to inclusion in the S&P/ASX 20 Index, but it’s not there yet.

BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers

A recent insight by Brian Freitas signals that BYD (1211 HK)buying from global index trackers is done (more passive buying from HSI/HSCEI trackers may come later this month).
As of Tuesday, the stock is currently in the middle of a modest pullback, 1 week down, reached a support area where the probability of a bounce is around 50%.
We are at the start of the month, it may be early to benefit from the passive buying discussed by Brian Freitas, however this pullback could support a buy-the-dips strategy.

KCC Corp: Considering on Issuing an Overseas EB for Its 10% Stake in Samsung C&T

Kcc Corp (002380 KS) is considering on issuing an overseas exchangeable bond (EB) for its 10% stake in Samsung C&T (028260 KS).
KCC is the second largest shareholder of Samsung C&T with a 10% stake in the company which is worth 2 trillion won (US$1.4 billion).
Our NAV valuation of KCC Corp suggests NAV per share of 332,947 won, which is 27% higher than current price.

Wuxi XDC Placement – Following Biologics Playbook, past Deals Have Been Mixed

WuXi AppTec (2359 HK) aims to raise around US$250m via selling around 3.5% stake in WuXi XDC Cayman (2268 HK).
WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will talk about the placement and run the deal through our ECM framework.

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Apr 01

Most Read: NetEase , BayCurrent Consulting , KOSDAQ 150 Index, BYD, Hang Seng TECH Index, Hanwha Corporation, Skyworth Group Limited, Fast Retailing, China Merchants Bank H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase
Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows
Korea Short Selling: Off to the Races
BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
ETF Flows in Q1: Inflows for Taiwan, Outflows for China
Hanwha’s Surprise Gift Disclosure: Three Major Takeaways
Skyworth (751 HK): Another Buyback
Fat Inheritance Taxes for Hanwha Group Chairman Kim’s Three Sons Post Receiving Hanwha Corp Shares
Fast Retailing (9983) | Buying Opportunity Ahead of Q2 Results
A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase

Hang Seng Indexes has announced a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the next rebalance in June.
NetEase (9999 HK), Baidu (9888 HK), Trip.com (9961 HK), NIO (9866 HK), New Oriental Education & Techn (9901 HK) and Weibo (9898 HK) benefit; GDS Holdings (9698 HK) loses out.
The FAF changes along with capping changes will result in a round-trip trade of HK$34.2bn (US$4.4bn) at the June rebalance with the largest turnover for the Hang Seng TECH Index.

Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows

The Nikkei 225 March 2025 rebalance is today. The ADD is big, with more to buy later. The SELL is a really big sell in terms of float.
The Sell, Mitsubishi Logistics (9301 JP), means Max Real World Float doubles. It’s like a huge offering, with warning.
There’s a big cap trade on Fast Retailing (9983 JP) where timing is not on its side, leaving US$2bn to buy in funding. 25 names at 0.4x ADV to buy.

Korea Short Selling: Off to the Races

Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.

ETF Flows in Q1: Inflows for Taiwan, Outflows for China

The largest ETF inflows in the region have been in Taiwan as investors rush into indices that have higher dividend yields.
China had large inflows last year as markets floundered. With markets trading in a range over the last 6 months, those flows have reversed in Q1 this year.
Australia has seen net inflows this year, while there have been net outflows from Hong Kong, India and Japan focused ETFs.

Hanwha’s Surprise Gift Disclosure: Three Major Takeaways

The chances of a Hanwha Corp-Hanwha Energy merger just dropped significantly. With the brothers now owning 43%, the merger’s effectively off.
The three brothers face a KRW 200B gift tax bill and need liquidity. They’ll raise cash via Hanwha Energy’s IPO, with the youngest brother set to sell a 10% stake.
Hanwha Corp will likely fund its Hanwha Aerospace rights issue through a rights offering, using KRW 1.3 trillion from Hanwha Energy, after shutting down merger rumors.

Skyworth (751 HK): Another Buyback

On 27 March, Skyworth Group Limited (751 HK) launched a conditional buyback to acquire a maximum of 350.0m shares (15.67% of outstanding) at HK$3.11, a 15.2% premium to undisturbed price.
Unlike the previous buybacks, the controlling shareholder can vote. Therefore, while the buyback offer is unattractive, the shareholder vote will pass.
Based on the irrevocables, a 100% share minority participation rate implies a minimum proration of 37.84%. The actual proration was around twice the minimum proration for the previous two.

Fat Inheritance Taxes for Hanwha Group Chairman Kim’s Three Sons Post Receiving Hanwha Corp Shares

Hanwha Group Chairman Kim Seung-youn (born in 1952) made a major move to give 11.32% of his shares in Hanwha Corporation (000880 KS) to his three sons.
It is estimated that the three sons will need to pay nearly 222 billion won in inheritance taxes associated with receiving additional stakes in Hanwha Corp.
Because the three sons need to pay for the high amounts of inheritance taxes, Hanwha Corp is likely to raise the dividend payout in the next several years.

Fast Retailing (9983) | Buying Opportunity Ahead of Q2 Results

By Mark Chadwick

Fast Retailing (9983 JP) is set to report its second-quarter results on April 10, and we see an opportunity to buy ahead of a strong earnings release
We expect Fast Retailing to post Q2 sales of ¥905bn (+15% YoY), above consensus estimates of ¥881bn. EBIT projected at ¥133bn (+21% YoY), ahead of street expectations of ¥125bn.
Domestic Uniqlo monthly sales and quarterly results from global peers suggest strong sales momentum.

A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

AH Premia bounce higher. Spread curve torsion was as expected. Narrow spreads saw Hs suffer more. Wide spreads saw H outperformance.
The last few weeks I said warning signs were flashing and spreads could widen. This week they widened despite big SOUTHBOUND buying.
I expect the right thing to do is hunker down and be flat H/A risk.

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Mar 31

Most Read: NetEase , Shinko Electric Industries, Topcon Corp, BayCurrent Consulting , Hang Seng TECH Index, Seven & I Holdings, KOSDAQ 150 Index, Jinke Smart Services and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase
Shinko Electric (6967) – Chicken and Logistics
[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows
Topcon (7732 JP): KKR/JICC-Sponsored Preconditional MBO, with Caveats
ETF Flows in Q1: Inflows for Taiwan, Outflows for China
Last Week in Event SPACE: Seven & I, ENN Energy, Sun Corp, Great Eastern Holdings
Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road
Korea Short Selling: Off to the Races
Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase

Hang Seng Indexes has announced a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the next rebalance in June.
NetEase (9999 HK), Baidu (9888 HK), Trip.com (9961 HK), NIO (9866 HK), New Oriental Education & Techn (9901 HK) and Weibo (9898 HK) benefit; GDS Holdings (9698 HK) loses out.
The FAF changes along with capping changes will result in a round-trip trade of HK$34.2bn (US$4.4bn) at the June rebalance with the largest turnover for the Hang Seng TECH Index.

Shinko Electric (6967) – Chicken and Logistics

The Tender Offer closed end of last week. The bidder JICC-04 got 59.281mm shares. Most of what was left over – perhaps even more than 100%, was passive-owned.
More than 100%? How does that work? It works because of how the logistics goes.
And right now, the reason why the stock is trading well through terms is a matter of Chicken and Logistics.

[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share

The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
After 4+mos of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.

Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows

The Nikkei 225 March 2025 rebalance is today. The ADD is big, with more to buy later. The SELL is a really big sell in terms of float.
The Sell, Mitsubishi Logistics (9301 JP), means Max Real World Float doubles. It’s like a huge offering, with warning.
There’s a big cap trade on Fast Retailing (9983 JP) where timing is not on its side, leaving US$2bn to buy in funding. 25 names at 0.4x ADV to buy.

Topcon (7732 JP): KKR/JICC-Sponsored Preconditional MBO, with Caveats

Topcon Corp (7732 JP) recommended a KKR/JICC-sponsored preconditional MBO at JPY3,300, representing an 87.9% premium to the undisturbed price and a 5.4% premium to the last close.
The offer is preconditional on regulatory approvals and is scheduled to start at the end of July. The offer is attractive and represents an all-time high.
The offer comes with caveats: the Board recommendation is not unanimous, the lower limit is set below the two-thirds threshold, and KKR offered a higher price during the discussions.

ETF Flows in Q1: Inflows for Taiwan, Outflows for China

The largest ETF inflows in the region have been in Taiwan as investors rush into indices that have higher dividend yields.
China had large inflows last year as markets floundered. With markets trading in a range over the last 6 months, those flows have reversed in Q1 this year.
Australia has seen net inflows this year, while there have been net outflows from Hong Kong, India and Japan focused ETFs.

Last Week in Event SPACE: Seven & I, ENN Energy, Sun Corp, Great Eastern Holdings

If you don’t think Seven & I (3382 JP)‘s Standalone Plan has legs to go north of here, or ACT gets its act together, then you should sell into strength.
ENN Energy (2688 HK)‘s cash and scrip (into a unlisted H-share-equivalent entity) Offer was not what the doctor ordered.
Sun Corp (6736 JP) is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit.

Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road

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: DN Solutions (298440 KS) seeks to raise US$1.1 billion in a KRX IPO.
Event-Driven developments: Seven & I Holdings (3382 JP), Topcon Corp (7732 JP), ENN Energy (2688 HK), Jinke Smart Services (9666 HK), Sinarmas Land (SML SP), Gold Road Resources (GOR AU).

Korea Short Selling: Off to the Races

Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.

Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?