Most Read

We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.

Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities

On Friday, Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced the Tsuruha/Welcia merger and Partial Tender to get Aeon to 50+% of NEWCO.
The scrip ratio short-changes Tsuruha shareholders. The subsequent partial offer to raise Aeon’s stake above 50% is low too. 9.7% shareholder Orbis is already out with a complaint.
But… all is not lost. There are some interesting angles here to complain.

Midea Group (300 HK): Cornerstone Lock-Up Expiry and Upcoming Index Flows

Midea Group listed in September 2024 by selling 650.85m shares (including the overallotment option) and raising HK$35.7bn (US$4.6bn). A large part of the offering was allocated to cornerstone investors.
Given the large company market cap and a free float that met the inclusion threshold, Midea Group (300 HK) was added to global indices via Fast Entry.
The lock-up expiry on cornerstone investors will increase the float for the stock in the global indices and Hang Seng TECH Index (HSTECH INDEX) over the next two months.

Makino Milling Machine (6135 JP): Proposes Countermeasures

The Makino Milling Machine Co (6135 JP) Board has proposed introducing countermeasures to nudge Nidec Corp (6594 JP) to delay the start of the tender to 9 May.
The countermeasure was likely needed to facilitate a competing offer rather than force Nidec to provide the required information and delay the start (Nidec is still evaluating the request).
Nidec’s offer at current terms has a low chance of success, necessitating revised terms. The Board claims that there is a sufficient probability of a competing proposal.

The Skew in the Tsuruha-Welcia-Aeon Combination

Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced their deal whereby Tsuruha merges with Welcia in December, and Aeon gains control of MERGECO.
Orbis Investments – owner of 9.7% of shares out – complained. I think with good reason. Tsuruha is trading a little expensive to the ratio, but there’s 7.5mos to go.
Interestingly, there’s real skew on this trade. It’s not overly complicated, and it is worthwhile thinking about it.

UK: Green Shoots For Unemployment Wilt

Signs that statistical effects might lower the unemployment rate in the Spring have weakened, with stability at 4.4% now more likely amid stagnant underlying trends.
Levels remain healthy and redundancies are low despite falling vacancies, suggesting resilience survives rather than thrives. Rapid wage growth is more problematic.
Dovish hopes that excesses will break soon, aided by destructive US trade policy, keep the BoE on track to cut in May. Sterling strength also adds disinflationary space.

CES China Semiconductor Chips Index Rebalance Preview: Multiple Adds for Some Stocks Increase Flow

There could be three changes for the CES China Semiconductor Chips Index at the close of trading on 13 June.
Based on the assets tracking the index, passive trackers will need to trade between 0.1-0.4x ADV in the stocks.
Bestechnic Shanghai (688608 CH) and Suzhou Kematek (301611 CH) will also have net inflows from passive trackers of other indices at the same time, adding to the flow.

The End-April TOPIX Rebalance – US$2.1bn a Side

This year there are 10 Free Float Weight Changes for April. There are 20 Liquidity Factor Changes, 2 Inclusions, and 3 M&A-related downweights. There are 90+ Share Count Change Downweights.
This is a bigger Big April Basket than normally comes around. And there are some big flows. All trades are 28 April at the close.
Total flow is ~US$2.1bn a side. 64 trades of >2 days of ADV, and of those, 27 with >US$10mm to trade (7 of US$50mm+). Top 20 in USD average 5dADV.

Fast Retailing (9983 JP): More Capping-Led Selling in September (And Maybe More in March)

Fast Retailing (9983 JP)‘s weight in the Nikkei 225 (NKY INDEX) has increased to 10.81% which will lead to another reduction in the CPAF in September.
Even after the reduction in CPAF and an increase in BayCurrent Consulting‘s PAF in September, there is a possibility of Fast Retailing being capped again in March 2026.
The continued passive selling sets up interesting trading opportunities after periods of Fast Retailing (9983 JP) outperformance versus the other index constituents.

Know Your Rare Earth Elements As China Restricts Exports

China recently escalated restrictions on the export of rare earths. Not just to the US as the two global players go toe-to-toe on tariffs; but to all countries.
China’s latest round of restrictions target critical materials used in defense, electronics, and EVs.
Apart from China, the world’s largest refining – not just the largest miner – who else refines rare earth elements, specifically heavy rare earths?

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Apr 15

Most Read: PDD Holdings, Tsuruha Holdings, Suzuki Motor, Mini Kospi 200 Futures, Posco Future M, AEON Mall, Midea Group, TKP Corporation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

What if China ADRs Are Delisted from US Exchanges?
Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies
Timing the Announcement of POSCO Future M’s Rights Issue
Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set
Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
US Tariffs: Of Words And Bonds
Midea Group (300 HK): Cornerstone Lock-Up Expiry and Upcoming Index Flows
TKP Corp (3479) – A Second Big Buyback In Short Order

What if China ADRs Are Delisted from US Exchanges?

We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.

Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities

On Friday, Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced the Tsuruha/Welcia merger and Partial Tender to get Aeon to 50+% of NEWCO.
The scrip ratio short-changes Tsuruha shareholders. The subsequent partial offer to raise Aeon’s stake above 50% is low too. 9.7% shareholder Orbis is already out with a complaint.
But… all is not lost. There are some interesting angles here to complain.

Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX

Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX).
With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.

FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies

The FSS is banning arb trades under the MM book, requiring separate books for any arb positions to keep them distinct from MM flow.
Most local shops lack the resources to set up a separate arb desk. Splitting teams, creating new workflows, and hiring extra staff isn’t feasible given their tight P&L.
Building a tracker for MM dropouts could spot dislocations, as the crackdown creates short-term inefficiencies—if we’re dialed in, there’s alpha to be made.

Timing the Announcement of POSCO Future M’s Rights Issue

All three local CRAs are pushing hard — an equity raise isn’t optional, it’s the only shot at keeping the AA- rating intact. Street says it’s not if, it’s when.
Late April to mid-May looks like the key window. And start keeping tabs on the flow real tight.
Leak channels are still active. FSC’s pointed at IB sales and law firm staff. If we see outsized sell prints—especially from local hedge funds, that’s our cue to act.

Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set

AEON Mall (8905 JP) announced a share exchange offer by Aeon Co Ltd (8267 JP) at 0.65 Aeon shares per Aeon Mall share, a 30.9% premium to the undisturbed price.
The share exchange ratio is reasonable compared to historical price ratios and IFA valuation ranges. The implied offer multiple is attractive compared to peer multiples.
Aeon’s 58.16% shareholding ensures that Aeon Mall’s vote on 22 May is low-risk. The share exchange’s effective date is 1 July.

Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June

By Dimitris Ioannidis

Midea Group (300 HK) went public on HKEX on 17 September 2024 and achieved fast-entry in both global indices due to high free float and a market cap of ~$4.5bn.
The 6-month lockup on cornerstone investors expired on 17 March 2025.
The free float is forecasted to increase from ~65% to ~75% for both global indices in May and June 2025 following the lockup expiry.

US Tariffs: Of Words And Bonds

By Alastair Newton

Donald Trump’s recent policy reversal may provide an opportunity for the completion of bilateral trade agreements with certain US partners.
However, neither China nor the EU is expected to reach an agreement soon, particularly in the current context.
This is largely due to the evident vulnerability of America to the bond market.

Midea Group (300 HK): Cornerstone Lock-Up Expiry and Upcoming Index Flows

Midea Group listed in September 2024 by selling 650.85m shares (including the overallotment option) and raising HK$35.7bn (US$4.6bn). A large part of the offering was allocated to cornerstone investors.
Given the large company market cap and a free float that met the inclusion threshold, Midea Group (300 HK) was added to global indices via Fast Entry.
The lock-up expiry on cornerstone investors will increase the float for the stock in the global indices and Hang Seng TECH Index (HSTECH INDEX) over the next two months.

TKP Corp (3479) – A Second Big Buyback In Short Order

TKP Corporation (3479 JP) is a fascinating little company. It rents space. From people. To people. Then adds on services. Meeting, recruiting, training, seminar, banquet, party, etc rooms.
Last year they bought control of two small businesses to add features. Revenues are up. The new FY suggests revenue growth, OP growth, and now a buyback.
The buyback is the interesting bit. They did one last FY with interesting parameters, and Quiddity has a new tool we are trying out, so we showcase an example here.

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Apr 14

Most Read: Posco Future M, Tsuruha Holdings, PDD Holdings, AEON Mall, Suzuki Motor, Midea Group, JX Advanced Metals and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea Short Selling: Biggest Changes in Shorts & Trade Performance
Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive
Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
What if China ADRs Are Delisted from US Exchanges?
“Tiny Win for Guess The Ratio” Aeon (8267) Pays a SMALL Premium for Aeon Mall (8905)
Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
Timing the Announcement of POSCO Future M’s Rights Issue
Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set
Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
TOPIX Inclusions: Who Is Ready (Apr 2025)

Korea Short Selling: Biggest Changes in Shorts & Trade Performance

The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive

Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) announced a merger through a share exchange followed by a partial tender offer by Aeon for a 50.90% stake of the merged entity.
The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha shareholder vote is high risk as Orbis, the second-largest shareholder, intends to vote NO.
Aeon Co Ltd (8267 JP)’s follow-up partial offer for Tsuruha is unattractive compared to its previous offer for the Oasis stake, peer multiples and premium to the undisturbed price.

Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities

On Friday, Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced the Tsuruha/Welcia merger and Partial Tender to get Aeon to 50+% of NEWCO.
The scrip ratio short-changes Tsuruha shareholders. The subsequent partial offer to raise Aeon’s stake above 50% is low too. 9.7% shareholder Orbis is already out with a complaint.
But… all is not lost. There are some interesting angles here to complain.

What if China ADRs Are Delisted from US Exchanges?

We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.

“Tiny Win for Guess The Ratio” Aeon (8267) Pays a SMALL Premium for Aeon Mall (8905)

In an announcement after the close Friday 11 April, Aeon Co Ltd (8267 JP) and AEON Mall (8905 JP) announced their merger ratio, and timing.
The ratio is 0.65 to 1.0, meaning Aeon Mall shareholders don’t get a lot of credit for their real estate. The timing is short-dated. The AGM is end-May. Merger July1.
This may be a tad light, but it is a done deal. Active shareholder base is almost all retail and crossholders+dom passive gets Aeon to 70%.

Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX

Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX).
With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.

Timing the Announcement of POSCO Future M’s Rights Issue

All three local CRAs are pushing hard — an equity raise isn’t optional, it’s the only shot at keeping the AA- rating intact. Street says it’s not if, it’s when.
Late April to mid-May looks like the key window. And start keeping tabs on the flow real tight.
Leak channels are still active. FSC’s pointed at IB sales and law firm staff. If we see outsized sell prints—especially from local hedge funds, that’s our cue to act.

Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set

AEON Mall (8905 JP) announced a share exchange offer by Aeon Co Ltd (8267 JP) at 0.65 Aeon shares per Aeon Mall share, a 30.9% premium to the undisturbed price.
The share exchange ratio is reasonable compared to historical price ratios and IFA valuation ranges. The implied offer multiple is attractive compared to peer multiples.
Aeon’s 58.16% shareholding ensures that Aeon Mall’s vote on 22 May is low-risk. The share exchange’s effective date is 1 July.

Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June

By Dimitris Ioannidis

Midea Group (300 HK) went public on HKEX on 17 September 2024 and achieved fast-entry in both global indices due to high free float and a market cap of ~$4.5bn.
The 6-month lockup on cornerstone investors expired on 17 March 2025.
The free float is forecasted to increase from ~65% to ~75% for both global indices in May and June 2025 following the lockup expiry.

TOPIX Inclusions: Who Is Ready (Apr 2025)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
The TOPIX Inclusions of Baudroie (4413 JP) and JX Advanced Metals (5016 JP) are expected to take place at the end of April 2025.
Separately, the 0.75x TOPIX Liquidity Factor removal event will also take place at the same time. We expect one-way flows of US$514mn for this event.

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Apr 13

Most Read: Bestechnic Shanghai , Mazagon Dock Shipbuilders , Posco Future M, De Grey Mining, Tsuruha Holdings, Suzuki Motor, CRH , Hyundai Rotem Company, Shandong Fengxiang and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance
Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
Korea Short Selling: Biggest Changes in Shorts & Trade Performance
Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations
Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive
Suzuki Motor (7269 JP): The Current Playbook
[Quiddity Index Apr25] S&P500/600 Jun25 Rebal: Lots of Intraview Changes Possible
Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 14 April 2025)
HEW: Sipping ECB Dove-Juice
Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00

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.

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.

Korea Short Selling: Biggest Changes in Shorts & Trade Performance

The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations

The MV Jr-Gold Miners index represents the performance of small-cap gold and silver mining companies listed around the world.
This index is reviewed semiannually in March and September. There will be no index changes for the June 2025 index rebal event but there will be capping flows.
We expect one-way flows of US$81mm for June 2025 which translates to a turnover of 1.4%.

Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive

Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) announced a merger through a share exchange followed by a partial tender offer by Aeon for a 50.90% stake of the merged entity.
The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha shareholder vote is high risk as Orbis, the second-largest shareholder, intends to vote NO.
Aeon Co Ltd (8267 JP)’s follow-up partial offer for Tsuruha is unattractive compared to its previous offer for the Oasis stake, peer multiples and premium to the undisturbed price.

Suzuki Motor (7269 JP): The Current Playbook

Since the announcement of the US$1.1 billion secondary offering, Suzuki Motor (7269 JP)’s shares have remained broadly unchanged at the undisturbed price of JPY1570.5 per share (7 April).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. Suzuki’s share performance is the joint best among recent large placements.
However, the shares have underperformed the Nikkei 225 index (up 7.9%). The offering will likely be priced on 14 April. The average large Japanese placement tends to generate positive returns.

[Quiddity Index Apr25] S&P500/600 Jun25 Rebal: Lots of Intraview Changes Possible

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
In this insight, we take a look at the upcoming constituent changes in the run up to the June 2025 index rebal event.
We expect two regular changes in June 2025. BUT… there are multiple live spin-off and M&A events likely to trigger intra-review index changes. Three are likely!

Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 14 April 2025)

In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks starting 14 April.
Our top 10 picks in the most recent bi-weekly was down 2.5% on average, outperforming KOSPI which was down 4.9% in the same period.
The top 10 picks in this bi-weekly include Binggrae, Hyundai Rotem, Krafton, Nongshim, SK Telecom, Hanwha Systems, APR, SK Inc, Korean Air, and Samsung Heavy Industries.

HEW: Sipping ECB Dove-Juice

Market disruptions occurred over the past week due to volatility in reciprocal and China tariffs, affecting the significance of data releases such as low US inflation and surging UK GDP.
Next week, UK unemployment and inflation data may lean hawkishly due to resilient underlying trends and the delayed impact of Spring stock in clothing store price samples.
The European Central Bank (ECB) is also being pushed towards making another cut on Thursday due to market movements.

Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00

Shandong Fengxiang (9977 HK) has disclosed a preconditional privatisation offer from PAG, the controlling shareholder, at HK$2.00 per H share, a 33.3% premium to the undisturbed price.
The precondition relates to regulatory approvals. The key conditions for the privatisation will be approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection).
The shareholders with blocking stakes which have not provided irrevocables will likely be supportive as the offer is reasonable and there is a potential scrip alternative.

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Apr 12

Most Read: Shibaura Electronics, Tsuruha Holdings, Shanghai Shenzhen CSI 300 Index, Posco Future M, CJ Corp, Chagee Holdings, Samsung SDI and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)
Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
China ETF Inflows & Implications: Central Huijin’s Huge Buying
Korea Short Selling: Biggest Changes in Shorts & Trade Performance
Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election
Chagee Holdings IPO Valuation Analysis
Clearing Up the Confusion: Ex-Rights Trading in Korean Rights Offerings
Chagee Holdings Limited (CHA): Chinese Tea Company Moves Forward with IPO Despite Macro Risks
Chagee IPO: Trading at a Discount to Peers but with Geopolitical Overhang
UK: GDP Seasonal Surge Before Slowing

Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)

In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.

Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio

Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning “more than 50% but less than 51%” of Tsuruha.
The Price Ratio is now 4.24x. Trailing EPS ratios is >5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.
Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.

China ETF Inflows & Implications: Central Huijin’s Huge Buying

Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

Korea Short Selling: Biggest Changes in Shorts & Trade Performance

The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election

The word on the street is the Dems are banking on their candidate winning in June, then clearing the veto and pushing the Corporate Act amendment through immediately.
What seemed like a dead issue for the Corporate Act amendment has turned into a surprise, shifting market momentum and potentially impacting the Korean stock scene.
It could shift the Korean market’s focus to long-term governance improvements, targeting major holdcos like CJ, Hanwha, GS, Doosan, Mobis, SK, and Samsung C&T, with June’s election key.

Chagee Holdings IPO Valuation Analysis

Our base case valuation of Chagee Holdings is target price of $46.7 per share, representing 67% higher than the high end of the IPO price range ($28 per share).
Our base case valuation is based on a P/E of 21.4x on our estimated net profit of 2.9 billion RMB in 2025.
We used a very conservative valuation multiple, mainly due to the extremely high macro risks related to the ongoing tariff dispute between China and the United States.

Clearing Up the Confusion: Ex-Rights Trading in Korean Rights Offerings

Not much juice at ex-rights — price move’s small, and shorting’s risky with recall risk and having to compensate the lender for lost rights.
Some locals chase rights instead, but it’s not really a go-to trade with all the cost/efficiency uncertainty.
First round price pre–ex-rights sets the floor for arb margins and anchors rights pricing once they start trading — key level to keep in the playbook.

Chagee Holdings Limited (CHA): Chinese Tea Company Moves Forward with IPO Despite Macro Risks

By IPO Boutique

Chinese Tea Company is moving ahead with the IPO despite heavy Macro-Economic winds.
The company is seeking up to $412m with a high-end pricing and already includes $205m worth of buying on the cover of the prospectus.
There are. more questions than answers regarding this IPO due to the current uncertainty in the market.

Chagee IPO: Trading at a Discount to Peers but with Geopolitical Overhang

By Nicholas Tan

Chagee Holdings (CHA US) is looking to raise up to US$411m in its upcoming US IPO.
It is a leading premium tea drinks brand, serving healthy and delicious freshly-made tea drinks.
We have looked at the company’s past performance and provided our initial thoughts on valuations. In this note, we talk about the IPO pricing.

UK: GDP Seasonal Surge Before Slowing

Fundamental causes should not be assigned to UK GDP surging far beyond consensus expectations again in February, despite the notability of Q1 growth tracking 0.7% q-o-q.
Residual seasonality has dominated the post-pandemic growth profile, and the recent resilience merely matches it. Stagnation for the rest of the year is the consequence.
Disruptive and volatile US trade policy will also depress the underlying economic trend beneath the spurious seasonals. We now bake both more fully into our modal forecasts.

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Apr 11

Most Read: Seven & I Holdings, Canvest Environmental Protection Group, Shanghai Shenzhen CSI 300 Index, Shibaura Electronics, Jinhong Gas , HKBN Ltd, Posco Future M, CJ Corp, De Grey Mining and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
Canvest (1381 HK): Precondition Satisfied
China ETF Inflows & Implications: Central Huijin’s Huge Buying
Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)
STAR Chip Index Rebalance Preview: Potential Changes in June
HKBN (1310 HK): TPG Cashes In Early
Shibaura Electronics (6957 JP): Minebea Mitsumi’s (6479 JP) White Knight Tender Offer at JPY4,500
Korea Short Selling: Biggest Changes in Shorts & Trade Performance
Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election
Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations

7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback

Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1.
The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good.

Canvest (1381 HK): Precondition Satisfied

Grandblue Environment Co A (600323 CH) has satisfied the precondition related to its privatisation offer for Canvest Environmental Protection Group (1381 HK).
The offer remains attractive despite the re-rating of peers since announcing the deal. The vote risk is low as the two shareholders holding blocking stakes will be supportive.
This is a done deal. At the last close, the gross/annualised spread for a mid-June payment is 3.8%/13.0%.

China ETF Inflows & Implications: Central Huijin’s Huge Buying

Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)

In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.

STAR Chip Index Rebalance Preview: Potential Changes in June

There could be 1 constituent change for the STAR Chip Index at the June rebalance. There will also be a few capping changes.
Estimated one-way turnover is 2.1% resulting in a round-trip trade of CNY 1.04bn (US$141m). Passives need to trade between 0.65-1.65x ADV in the potential changes.
Jinhong Gas (688106 CH) is also a potential delete from the STAR100 Index and that will lead to increased passive selling in the stock.

HKBN (1310 HK): TPG Cashes In Early

Back in December, China Mobile (941 HK) made a pre-conditional HK$5.23/share voluntary Offer for HKBN (1310 HK). The wild card is whether I Squared launches a counter-proposal.
This transaction has no shortage of intriguing developments. Last month, MBK mysteriously converted its VLNs. Now TPG has entered into an SPA with Mobile to sell its 15.46% stake.
IF I Squared were to make a counter-proposal, I doubt it would secure the necessary regulatory approvals. Evidently TPG is not waiting around to find out.

Shibaura Electronics (6957 JP): Minebea Mitsumi’s (6479 JP) White Knight Tender Offer at JPY4,500

Shibaura Electronics (6957 JP) announced a preconditional tender offer from Minebea Mitsumi (6479 JP) at JPY4,500 per share, a 4.7% premium to Yageo Corporation (2327 TT)’s JPY4,300 hostile offer.
The offer is scheduled to start on 23 April, ahead of Yageo’s 7 May start. The Board intends to recommend the Minebea offer and oppose the Yageo offer.
Due to its low premium to the Yageo offer, at least another bidding round is highly probable, and the Minebea offer is below the midpoint of the IFA DCF valuation.

Korea Short Selling: Biggest Changes in Shorts & Trade Performance

The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election

The word on the street is the Dems are banking on their candidate winning in June, then clearing the veto and pushing the Corporate Act amendment through immediately.
What seemed like a dead issue for the Corporate Act amendment has turned into a surprise, shifting market momentum and potentially impacting the Korean stock scene.
It could shift the Korean market’s focus to long-term governance improvements, targeting major holdcos like CJ, Hanwha, GS, Doosan, Mobis, SK, and Samsung C&T, with June’s election key.

Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations

The MV Jr-Gold Miners index represents the performance of small-cap gold and silver mining companies listed around the world.
This index is reviewed semiannually in March and September. There will be no index changes for the June 2025 index rebal event but there will be capping flows.
We expect one-way flows of US$81mm for June 2025 which translates to a turnover of 1.4%.

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Apr 10

Most Read: Bestechnic Shanghai , De Grey Mining, ESR Group , Seven & I Holdings, CK Hutchison Holdings, Daihatsu Diesel Mfg, HKBN Ltd, Taiwan Semiconductor (TSMC) – ADR, YG Entertainment, Shanghai Shenzhen CSI 300 Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance
Aussie Arbs: Trump Tariffs And MACs
Hong Kong Arbs: (Largely) Immune From Trump Tariffs
7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
CK Hutch (1 HK): Back To Square One
USTR Hearings on Section 301 China Maritime Dominance – Fees on Chinese Ships
HKBN (1310 HK): China Mobile Agrees to Acquire TPG’s Stake
Taiwan Dual-Listings Monitor: TSMC Spread Near Short Level; ASE & ChipMOS Spreads Good Short Levels
June Value-Up Rebalance: Hype Fading, But Key Flags Remain
China ETF Inflows & Implications: Central Huijin’s Huge Buying

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.

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.

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.

7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback

Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1.
The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good.

CK Hutch (1 HK): Back To Square One

The irony is that CKH (1 HK)‘s Panama-port sale was probably prompted, at least in part, by a desire to get out of a situation which was becoming increasingly political.
Instead, it has thrust the company right into the heart of it. And the share price has now given up all of its initial gains. And then some.
After Panama’s Attorney General recently determined CK Hutchison’s concessions were unconstitutional, the Comptroller-General has now announced that an audit had found “many breaches” of the concession.

USTR Hearings on Section 301 China Maritime Dominance – Fees on Chinese Ships

The original issues were discussed in depth in The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors (now unpaywalled). Hearings took place 24-26 March 2025.
The hearings were long, and comments were predictable. Those supporting the measures offered evidence which was simply incorrect. Those against tried. Post-hearing comments were due 2 April.
We don’t yet know what will happen, but if they stay in place, starting 17 April, US exports of grain/pulses, coal, etc will suffer. Imports will see higher costs too.

HKBN (1310 HK): China Mobile Agrees to Acquire TPG’s Stake

China Mobile (941 HK) has entered a share purchase agreement to acquire TPG’s HKBN Ltd (1310 HK) shares and vendor loan note conversion shares by 28 November.
On completion, TPG will be released from its irrevocable, which has a competing offer clause. China Mobile’s agreement signals its expectation that I Squared will launch a competing proposal.
The agreement will not change I Squared’s approach as it would not negatively impact regulatory approvals (a key risk) or prevent it from meeting a 50% minimum tendering condition.

Taiwan Dual-Listings Monitor: TSMC Spread Near Short Level; ASE & ChipMOS Spreads Good Short Levels

By Vincent Fernando, CFA

TSMC: +18.9% Premium; Soon at a Good Level to Short the Spread
ASE: +6.5% Premium; Good Level to Short the Spread Given Trading Range Breakdown
ChipMOS: +6.6% Premium; 2% And Higher Good Level to Short the Spread

June Value-Up Rebalance: Hype Fading, But Key Flags Remain

June rebalance drops mid-May, goes live post-KOSPI 200 expiry. Back to 100 names—net outflow setup with more deletes than adds. ETFs rebalance into June 12 close.
KRX confirmed 10 special entries for June; results likely out in May with Value-Up rebalance. 12 protected names stay. Stocks over 10% weight, like Samsung and SK Hynix, remain.
Value-Up disclosure isn’t mandatory yet—rule starts June 2026. But compliant firms get a screening boost. Around 76 spots remain, filled via quant screen after excluding 24 protected names.

China ETF Inflows & Implications: Central Huijin’s Huge Buying

Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

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Apr 09

Most Read: ESR Group , Mitsubishi Corp, Suzuki Motor, Bestechnic Shanghai , Tokyo Metro, SK Inc, Hanwha Aerospace, Duality Biotherapeutics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HK Merger Arb: Opportunities Amidst the Market Selloff
Hong Kong Arbs: (Largely) Immune From Trump Tariffs
MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock
STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance
TOPIX Index Upweights: Great Hit Rate; Strong Trade Performance; A Rare Win!
UK: Spillover effects from US tariffs
Key Implications of SK Inc’s Disposal of SK Siltron
Hanwha Aerospace – Lowers Rights Offering Capital Raise Amount To 2.3 Trillion Won
Duality Biotherapeutics (映恩生物) IPO: Valuation Upside at Risk

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.

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!

By Janaghan Jeyakumar, CFA

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.

By Sumeet Singh

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

By Nico Rosti

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