Most Read

There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.

Samsung SDI Capital Raise: A Mega Deal Rarely Seen in the Local Market

The discount’s tight, but this near-2-trillion-won raise is a rare mega-deal in Korea, despite the issuance ratio below 20%.
Samsung Electronics is in for 150 billion won, but plenty of supply remains. A smooth clearance? Unlikely. This could drive stock rights costs lower as price discovery unfolds.
The optimal approach is to wait for a decline in rights prices and assess hedge costs through single stock futures (or TRS, if doable), given the shorting restrictions.

CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions

With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.

MarketVector Vietnam Local Index Rebalance: One Add, Capping & Float Changes

Nam A Commercial Joint Stock Bank (NAB VN) will be added to the MarketVector Vietnam Local Index at the close on 21 March.
Estimated one-way turnover is 3.1% and that results in a round-trip trade of US$26m. There are 3 stocks with more than 1x ADV to trade from passives.
Vietnam is on the watchlist of a global index provider for possible reclassification from Frontier to Secondary Emerging Market and that could lead to inflows to the stocks.

Plant-based Butadiene Emerges, Thanks To Zeon And Yokohama

By Vinod Nedumudy

Zeon will develop BR and Yokohama will make tires with it
Facility to be installed at Zeon’s Tokuyama Plant in Shunan City in Japan
Trial production scheduled for 2026 and mass production by 2030

EUDR: EC Mandates Due Diligence For All In Rubber Supply Chain Except SMEs

By Vinod Nedumudy

EC publishes 11 commodities’ scenarios including rubber
Non-SME operators, dealers tasked with due diligence onus
German Rubber Association criticism fails to make impact

DN Solutions IPO Preview

DN Solutions is getting ready to complete its IPO in Korea in May 2025. The IPO price range is from 65,000 won to 89,700 won.
The book building for the institutional investors will last from 22 to 28 April. The expected IPO offering amount is from 1.14 trillion won to 1.57 trillion won.
The IPO price range is based on DN Solutions’ net profit of 317.4 billion won, P/E of 25.2x, and IPO discount rates of 29.1% to 48.6%.

MV Australia A-REITs Index Rebalance: Waypoint REIT (WPR AU) Deleted

Waypoint REIT (WPR AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) next week. There are float changes and capping changes too.
Estimated one-way turnover is 4.3% and will result in a round-trip trade of A$49m. There are 3 stocks with over 0.5x ADV to trade from passive trackers.
We had Waypoint REIT (WPR AU) as a delete in December, but the stock was not deleted from the index. We had it as a close delete this time.

Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’

Nikkei Business reported Friday 14 March that Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) (“DHFG”) were in talks to integrate to create a Super-Regional Bank
Gunma and Daishi-Hokuetsu are part of the same multiple-regional bank alliances, including the Gunma-Daishi Hokuetsu Alliance since 2021, in order to collaborate regionally, build scale, and lower service provision cost.
As Gunma and Daishi Hokuetsu serve adjacent jurisdictions, and they are already exploring sharing branches, this makes sense. The World with Interest (rates above zero) may cause more integration talk.

Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (17 March 2025)

In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks starting 17 March.
Some of the top 10 Korean stock picks in the bi-weekly (starting 17 March) include Kepco Plant Service & Engineering, Hyundai Wia, Poongsan, and Doosan Enerbility.
The biggest near-term negative catalyst on the Korean stock market remains tariffs. The final legal outcome on President Yoon Seok-Yeol is expected to be made by the end of March.

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Mar 15

Most Read: Rio Tinto Ltd, Kuang-Chi Technologies , Nissan Tokyo Sales, Delta Electronics Thailand , Samsung SDI, CK Hutchison Holdings, Xiangtan Electric Manufacturing Co,Ltd., Tenma Corp, Bayerische Motoren Werke (BMW) (Pref) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Rio Tinto (RIO AU/RIO LN): Unification Index Flows
CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
[Activism Japan] Nissan Tokyo Sales (8291) Gets An ‘Outsourced Activist’ but the Value Prop Remains
SET50 Index: Market Moves Adjust for Consultation Proposal; DELTA in the Crosshairs (Again)
Samsung SDI Capital Raise: A Mega Deal Rarely Seen in the Local Market
CK Hutch (1 HK): Still Trading Cheap
CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions
HEW: Payback In Trade And Pricing
Tenma (7958 JP) MBO at ¥3,580 – Finally (Wipes Brow), An Exit. ATH But Not Yet PBR1.
BMW Shifts into High Gear: A 10% Share Buyback to Drive Value

Rio Tinto (RIO AU/RIO LN): Unification Index Flows

At the upcoming AGM, Rio Tinto Ltd and Rio Tinto PLC shareholders will vote on the company commencing a review on the benefits vs costs of Unification.
Palliser Capital has been pushing for Unification while the Rio Tinto Board has recommended that shareholders vote against Resolution 21/24 citing tax costs among other reasons.
If the Unification completes, S&P/ASX trackers will need to buy Rio Tinto Ltd (RIO AU) while UKX Index (UKX INDEX) trackers will sell Rio Tinto PLC (RIO LN). Net positive.

CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range

There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.

[Activism Japan] Nissan Tokyo Sales (8291) Gets An ‘Outsourced Activist’ but the Value Prop Remains

On 12 March 2025, a minor Twitter account @nanahoshiuk started in January announced a website shiftnissantokyo.com where they point out the value proposition in Nissan Tokyo Sales (8291 JP).
The writeup is by a UK company led by a young man with an equity-investing career, some experience at an activist shop, who now runs a “Shareholder Activism Outsourcing Service.”
The content sounds familiar to my piece in December, has a few unpolished edges, but clearly points out the value proposition. The stock deserves a re-visit. My comments are below.

SET50 Index: Market Moves Adjust for Consultation Proposal; DELTA in the Crosshairs (Again)

On 4 February, the SET floated a consultation paper on capping stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at 10%.
The move was aimed at Delta Electronics Thailand (DELTA TB) since it was the only stock with an index weight higher than 10%.
Delta Electronics Thailand (DELTA TB) has slid since then and at the current weight of 9.27% will not need to be capped. The market has adjusted for it.

Samsung SDI Capital Raise: A Mega Deal Rarely Seen in the Local Market

The discount’s tight, but this near-2-trillion-won raise is a rare mega-deal in Korea, despite the issuance ratio below 20%.
Samsung Electronics is in for 150 billion won, but plenty of supply remains. A smooth clearance? Unlikely. This could drive stock rights costs lower as price discovery unfolds.
The optimal approach is to wait for a decline in rights prices and assess hedge costs through single stock futures (or TRS, if doable), given the shorting restrictions.

CK Hutch (1 HK): Still Trading Cheap

To avoid a political landmine, on the 4th March CK Hutchison Holdings (1 HK) announced a deal with Blackrock to offload its entire port ops, including the contentious Panama ports.
It’s an astute deal selling to a buyer, ostensibly backed by the Trump administration, at the top of the market, knowing global trade could fall under a new tariff regime.
The risk to the transaction is one of timing. US/Panama approvals are a shoo-in. But it’s a complex deal, which will take time to work through the system.

CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions

With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.

HEW: Payback In Trade And Pricing

Equities are facing difficulties due to unpredictable trade policies and retaliations, which are affecting profit forecasts. Despite this, hard data remains strong, although low airfares are impacting the US CPI. There has been a decrease in optimism about Europe.
The Federal Reserve and the Bank of England are likely to maintain current interest rates in the coming week as there are no clear signs of a downturn. Two MPC members are expected to dissent for a 25bp cut to avoid acknowledging a previous error.
Other upcoming announcements include those from the Bank of Japan, the Swiss National Bank, and the Riksbank.

Tenma (7958 JP) MBO at ¥3,580 – Finally (Wipes Brow), An Exit. ATH But Not Yet PBR1.

Plastic household goods maker Tenma Corp (7958 JP) has been “undervalued” for decades. A variety of activish/activist holders have come and gone. Dalton went substantial in 2016, is 18% now.
The family has always controlled the company, and in the last decade, the company has bought back shares, raising the family stake. Now they are buying out minorities.
The deal is at 4.1x Adjusted EV/EBITDA for March 2026 (adjusted for securities sales, etc) and 0.82x book for the non-cash/securities portion of the business. But Dalton has thrown in.

BMW Shifts into High Gear: A 10% Share Buyback to Drive Value

By Jesus Rodriguez Aguilar

BMW plans to repurchase 10% of its share capital over five years, likely replacing the previous buy-back program to optimize capital efficiency.
The share buy-back is expected to boost EPS and support stock prices, with a stronger impact on preferred shares due to lower liquidity.
The Quandt family’s ownership stake could increase to approximately 54.36%, further solidifying their control over BMW.

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Mar 14

Most Read: Rio Tinto Ltd, JX Advanced Metals, Proto Corp, Nissan Tokyo Sales, Tencent, Bestechnic Shanghai , Seven & I Holdings, Recruit Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Rio Tinto (RIO AU/RIO LN): Unification Index Flows
JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry
Proto Corp (4298 JP) – Activists Getting More Activish, Watch for Position Changes?
[Activism Japan] Nissan Tokyo Sales (8291) Gets An ‘Outsourced Activist’ but the Value Prop Remains
Asian Equities: Valuation Mean Reversion – The Winners and Losers
CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade
US Lands Some Disinflation In Feb-25
Seven & I Holdings (3382 JP): Awaiting the Board’s Response as Couche-Tard Goes on a Charm Offensive
Recruit Holdings Placement – Relatively Small US$520m Deal but Momentum Is Weak
Rio Tinto (RIO LN/RIO AU): Thinking About Unification

Rio Tinto (RIO AU/RIO LN): Unification Index Flows

At the upcoming AGM, Rio Tinto Ltd and Rio Tinto PLC shareholders will vote on the company commencing a review on the benefits vs costs of Unification.
Palliser Capital has been pushing for Unification while the Rio Tinto Board has recommended that shareholders vote against Resolution 21/24 citing tax costs among other reasons.
If the Unification completes, S&P/ASX trackers will need to buy Rio Tinto Ltd (RIO AU) while UKX Index (UKX INDEX) trackers will sell Rio Tinto PLC (RIO LN). Net positive.

JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry

JX Advanced Metals (5016 JP) has priced its IPO at ¥820/share, at the top end of the IPO range but lower than the initial indication of ¥862/share.
With the bulk of the domestic offering going to retail investors, there is no chance of Fast Entry for the stock in global indices.
TOPIX INDEX inclusion will take place at the close on 28 April, while inclusion in major global indices is likely to take place in August and September.

Proto Corp (4298 JP) – Activists Getting More Activish, Watch for Position Changes?

The MBO for Proto Corp (4298 JP) where the founder/chair is buying out from minorities is being done at the wrong price. His reasons are good, but not for minorities.
One large foreign shareholder – the second largest shareholder of the firm – has offered substantial pushback in the form of a letter asking for discussions. That went nowhere.
So now they have come out harder. The solution here is a really big bump or a broken deal if investors keep the share price above the TOB price.

[Activism Japan] Nissan Tokyo Sales (8291) Gets An ‘Outsourced Activist’ but the Value Prop Remains

On 12 March 2025, a minor Twitter account @nanahoshiuk started in January announced a website shiftnissantokyo.com where they point out the value proposition in Nissan Tokyo Sales (8291 JP).
The writeup is by a UK company led by a young man with an equity-investing career, some experience at an activist shop, who now runs a “Shareholder Activism Outsourcing Service.”
The content sounds familiar to my piece in December, has a few unpolished edges, but clearly points out the value proposition. The stock deserves a re-visit. My comments are below.

Asian Equities: Valuation Mean Reversion – The Winners and Losers

By Manishi Raychaudhuri

Valuations across Asia are mean reverting – expensive markets derating and the cheap ones rerating. We think this is likely to continue somewhat longer.
We think HK/China could rerate more; India and Taiwan could derate slightly further. India looks interesting. Valuation range has structurally shifted upwards. But another 5-10% relative valuation correction is warranted.
Principal stock choices in HK/China, Korea and India pertain to themes of domestic consumption, AI resilience and unloved sectors. Some of the companies have mitigating strategies for the tariff war.

CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade

With 85% of the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index at the close on 13 June.
We estimate a one-way turnover of 10% at the rebalance resulting in a round-trip trade of CNY26.4bn (US$3.6bn). The Information Technology gains at the expense of Healthcare and Consumer Staples.
The forecast adds have outperformed the forecast deletes and the CSI Smallcap500 Index over the last 6 months. The best part is that the volatility of the trade is very low.

US Lands Some Disinflation In Feb-25

The upwards trend in monthly US inflation of the past several months broke in February with a surprisingly steep slowing to 0.2% m-o-m, although airfares drove the downside.
Drift in consensus expectations is not yet obviously broken, with this outcome 0.2pp above forecasts from a month ago. A rebound after Easter remains likely.
Disinflation is unlikely to dissuade the Fed from holding rates in March. We doubt soft surveys will translate to recessionary conditions, so we still see no more Fed cuts.

Seven & I Holdings (3382 JP): Awaiting the Board’s Response as Couche-Tard Goes on a Charm Offensive

On 13 March, Alimentation Couche-Tard (ATD CN)’s management held its first press conference in Japan since it disclosed its Seven & I Holdings (3382 JP) offer.
The Couche-Tard charm offensive was designed to pressure the Board to engage and facilitate a definite agreement. The press conference provided incremental new information.
The Board’s next move will likely provide limited due diligence, partly to avoid a protest vote at the May AGM. However, the prospect of a Board-recommended binding proposal remains low.

Recruit Holdings Placement – Relatively Small US$520m Deal but Momentum Is Weak

An undisclosed seller is looking to raise around US$520m via selling 0.5% of its stake in Recruit Holdings (6098 JP) .
We have covered a number of placements in the stock over the past few years, most of which have ended up doing well.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Rio Tinto (RIO LN/RIO AU): Thinking About Unification

Rio Tinto Ltd (RIO AU) shareholders will vote on Palliser’s AGM resolution to conduct an independent review on whether the potential unification is in the best interests of shareholders.
Palliser and the Board’s arguments for and against unification focus on five factors: tax costs, post-unification share price, lack of scrip M&A, wastage of franking credits, and shareholder support.
A Grant Thornton report supports unification. The board’s case is strong primarily on tax costs, while Palliser’s case is strong on post-unification share price, M&A, and franking credits.

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Mar 13

Most Read: Seven & I Holdings, Rio Tinto Ltd, JX Advanced Metals, Indusind Bank, Korea Stock Exchange Kospi Index, Proto Corp, Changyou.com, Bestechnic Shanghai , Korea Zinc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) Update – Couche-Tard Responds
Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification
JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry
IndusInd Bank (IIB IN): Stock Crashes on Derivatives Losses; Index Selling Next
Properly Interpreting Korea’s Stock Borrow Data for Short Selling
Proto Corp (4298 JP) – Activists Getting More Activish, Watch for Position Changes?
Rio Tinto (RIO AU/RIO LN): Unification Index Flows
Changyou (CYOU US): Short-Form Merger Dissent Now (Definitely) Permitted
CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade
Is Homeplus Debacle a Key Negative Tipping Point for MBK?

7&I (3382) Update – Couche-Tard Responds

On 10 March, Alimentation Couche-Tard (ATD CN) issued a release “UPDATE ON PROPOSAL FOR A COMBINATION WITH SEVEN & i“.
They felt obliged to be transparent in the wake of the 7&i Letter To Shareholders released yesterday. The content/nuance of the two letters differ significantly.
Two parties competing to get a truth which cannot be both could be problematic. We are still many months away from any kind of ACT/7-11 deal.

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.

JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry

JX Advanced Metals (5016 JP) has priced its IPO at ¥820/share, at the top end of the IPO range but lower than the initial indication of ¥862/share.
With the bulk of the domestic offering going to retail investors, there is no chance of Fast Entry for the stock in global indices.
TOPIX INDEX inclusion will take place at the close on 28 April, while inclusion in major global indices is likely to take place in August and September.

IndusInd Bank (IIB IN): Stock Crashes on Derivatives Losses; Index Selling Next

The Indusind Bank (IIB IN) stock was down 27% yesterday following the announcement of Derivatives Portfolio losses that have wiped out 2.35% of equity.
Foreign investors were big sellers in the last 3 months of 2024. That led to increased foreign room, leading to an index upweight in February and index inclusion in March.
The drop in market cap and free float market cap will see Indusind Bank (IIB IN) deleted from the S&P BSE SENSEX Index in June and the NIFTY Index in September.

Properly Interpreting Korea’s Stock Borrow Data for Short Selling

Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.

Proto Corp (4298 JP) – Activists Getting More Activish, Watch for Position Changes?

The MBO for Proto Corp (4298 JP) where the founder/chair is buying out from minorities is being done at the wrong price. His reasons are good, but not for minorities.
One large foreign shareholder – the second largest shareholder of the firm – has offered substantial pushback in the form of a letter asking for discussions. That went nowhere.
So now they have come out harder. The solution here is a really big bump or a broken deal if investors keep the share price above the TOB price.

Rio Tinto (RIO AU/RIO LN): Unification Index Flows

At the upcoming AGM, Rio Tinto Ltd and Rio Tinto PLC shareholders will vote on the company commencing a review on the benefits vs costs of Unification.
Palliser Capital has been pushing for Unification while the Rio Tinto Board has recommended that shareholders vote against Resolution 21/24 citing tax costs among other reasons.
If the Unification completes, S&P/ASX trackers will need to buy Rio Tinto Ltd (RIO AU) while UKX Index (UKX INDEX) trackers will sell Rio Tinto PLC (RIO LN). Net positive.

Changyou (CYOU US): Short-Form Merger Dissent Now (Definitely) Permitted

In a long-form merger for Cayman incorporated companies, dissenters can petition the Grand Court for determination of fair value. For short form merges, that avenue of dissent was not available.
But on the 28 January 2021, the Grand Court of the Cayman Islands concluded that shareholders of companies that undertake a ‘short-form’ merger were entitled to dissent.
Changyou.com (CYOU US) appealed this decision in the Court of Appeal, and was dismissed. Then appealed to the Privy Council. In a judgement handed down yesterday, this was also dismissed.

CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade

With 85% of the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index at the close on 13 June.
We estimate a one-way turnover of 10% at the rebalance resulting in a round-trip trade of CNY26.4bn (US$3.6bn). The Information Technology gains at the expense of Healthcare and Consumer Staples.
The forecast adds have outperformed the forecast deletes and the CSI Smallcap500 Index over the last 6 months. The best part is that the volatility of the trade is very low.

Is Homeplus Debacle a Key Negative Tipping Point for MBK?

In this insight, we discuss how the Homeplus debacle is causing a major negative sentiment on MBK Partners from both the Korean government and the media.
This negative sentiment has grown so much that it could have a legitimate negative impact in the upcoming proxy vote for the control of Korea Zinc.
The Korean government has targeted MBK for tax probe. Plus, a coalition of securities firms is expected to file a lawsuit against Homeplus and MBK.

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Mar 12

Most Read: Nikkei 225, Snt Corp, Seven & I Holdings, Kuang-Chi Technologies , JX Advanced Metals, Makino Milling Machine Co, Delta Electronics Thailand , ESR Group , Korea Stock Exchange Kospi Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%
7&I (3382) Update – Couche-Tard Responds
CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
SET50 Index: Market Moves Adjust for Consultation Proposal; DELTA in the Crosshairs (Again)
ESR (1821 HK) Chips Away At Pre-Cons
Properly Interpreting Korea’s Stock Borrow Data for Short Selling

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now

On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.

Sparx Launches Another Offensively Underpriced Takeover at a Fat Premium – SNT (6319) +94%

Sparx on Friday announced a Tender Offer at 0.55x book and an EV of less than inventory (<20% of revenue) for Snt Corp (6319 JP) – another metal monozukuri company.
Last year they did it on IJTT Co., Ltd. (7315 JP). That one got bumped. This one could too, but cross-holders own nearly 60%.
This kind of company has skill-sets which may be portable but the product line is tied to old Japan. The takeover

7&I (3382) Update – Couche-Tard Responds

On 10 March, Alimentation Couche-Tard (ATD CN) issued a release “UPDATE ON PROPOSAL FOR A COMBINATION WITH SEVEN & i“.
They felt obliged to be transparent in the wake of the 7&i Letter To Shareholders released yesterday. The content/nuance of the two letters differ significantly.
Two parties competing to get a truth which cannot be both could be problematic. We are still many months away from any kind of ACT/7-11 deal.

CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range

There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.

JX Advanced Metals (5016 JP) IPO: Big Retail Allocation Means No Fast Entry

JX Advanced Metals (5016 JP) has priced its IPO at ¥820/share, at the top end of the IPO range but lower than the initial indication of ¥862/share.
With the bulk of the domestic offering going to retail investors, there is no chance of Fast Entry for the stock in global indices.
TOPIX INDEX inclusion will take place at the close on 28 April, while inclusion in major global indices is likely to take place in August and September.

Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.

SET50 Index: Market Moves Adjust for Consultation Proposal; DELTA in the Crosshairs (Again)

On 4 February, the SET floated a consultation paper on capping stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at 10%.
The move was aimed at Delta Electronics Thailand (DELTA TB) since it was the only stock with an index weight higher than 10%.
Delta Electronics Thailand (DELTA TB) has slid since then and at the current weight of 9.27% will not need to be capped. The market has adjusted for it.

ESR (1821 HK) Chips Away At Pre-Cons

When the Starwood/Warburg Pincus Consortium announced a firm offer on the 4th December, it was pre-conditional on a raft of regulatory approvals from no less than eight countries/jurisdictions.
We’re half way there, with four approvals now squared away, leaving Australia, China, Hong Kong and New Zealand still to give the go ahead.
Irrevocables comprising 34.26% of the register (and 57.01% of disinterested shares) are now in the bag. This is a done deal. It’s just a question of timing.

Properly Interpreting Korea’s Stock Borrow Data for Short Selling

Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.

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Mar 11

Most Read: Nikkei 225, Japan Post Bank, Sigma Healthcare, Seven & I Holdings, DoorDash , SK Innovation, TKO Group Holdings , BYD, Makino Milling Machine Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility
Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
Select Sector Indices and S&P Equal Weight Rebalance: US$16.3bn Trade; Big Impact for EXE, TKO
Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
ECM Weekly (10th Mar 2025) – BYD, Japan Post, Mixue, Sanhua, Chifeng, Nanshan, Goertek, Travel Food
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now

On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

Select Sector Indices and S&P Equal Weight Rebalance: US$16.3bn Trade; Big Impact for EXE, TKO

Constituent changes to the S&P500 INDEX and capping changes will result in a round-trip trade of US$16.3bn across the Select Sector indices and the S&P500 Equal Weight Index.
The Select Sector index trackers and S&P500 Equal Weight trackers will need to buy the adds to the S&P500 INDEX and sell the deletes, further increasing flow for the stocks.
The flows will change over the next week as stock prices move around, and final capping is done after the close on 14 March.

Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter

The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement.
The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals.
However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal.

ECM Weekly (10th Mar 2025) – BYD, Japan Post, Mixue, Sanhua, Chifeng, Nanshan, Goertek, Travel Food

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, Mixue Group (2097 HK) provided some much needed relief to the HK tea chains, Seoul Guarantee Insurance (031210 KS) might not do the same this week.
On the placements front, BYD (1211 HK)‘s jumbo offering has been doing well, while Japan Post Bank (7182 JP) hasn’t been correcting much.

Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging

Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.

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Mar 10

Most Read: Japan Post Bank, Nikkei 225, A2 Milk Co Ltd, Sigma Healthcare, SK Innovation, Mitsui O.S.K. Lines, Daihatsu Diesel Mfg, DoorDash , China Vanke (H) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia
S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)
S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices
Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade
Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week
The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors
Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity
S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility
A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

Index Rebalance Strategy YTD Performance: Not Many Places to Hide in Asia

We look at the performance of the index rebalance strategy over the year using weekly forecasts. In short, it has been a mixed bag for Asia.
India and China have been among the worst performing markets in the region while Australia and Korea have been among the better performers.
A lot of the outperformance appears to be front loaded, so getting the forecasts right early in the review period is of paramount importance.

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ).
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.

S&P/ASX Index Rebalance (Mar 2025): SIG Is the BIG One; Changes Galore Across Indices

There are 2 changes for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, 7 changes for the S&P/ASX200 Index and 11 adds/ 7 deletes for the S&P/ASX300 Index.
There is a huge increase in the number of index shares for Sigma Healthcare (SIG AU), triggering passive buying of nearly A$1.4bn at the close on 21 March.
The adds have outperformed the deletes across all indices. Positioning varies across stocks and there could be some big movers over the next few days.

Quiddity ASX Mar25 Results: Multiple Surprises; High Short Buildup for DELs; Rare Successful Trade

By Janaghan Jeyakumar, CFA

The ADDs/DELs for the ASX index family for the March 2025 index rebal event were announced after market close on Friday 7th March 2025.
There are 22 ADDs and 18 DELs collectively for ASX 50, ASX 100, ASX 200, and ASX 300.
In this insight, we take a final look at the flow expectations for each of these index changes.

Got the BBIG Rebalancing Results: SK Innovation Is the Trade This Week

Real alpha? Tight basket means outsized passive flows. The play? SK Innovation, no contest.
Samsung SDI faces -0.54x ADTV outflows. Other movers: Netmarble 0.68x, Wemade Max 0.54x, NHN -0.46x ADTV.
Net-Net? SK Innovation is the trade. Long here, hedge short on Samsung SDI or the broader Battery space.

The USTR’s New “Proposed Actions” For Section 301 Investigation on China’s Maritime/Shipping Sectors

The USTR issued a Section 301 report in January 2025. The report suggests China has tried to achieve dominance in global shipping, to the detriment of US commerce.
The report is flawed, in data (it somehow manages to make up data which is otherwise available from MARAD), analytics, and conclusions, but the Trump administration has run with it.
In February, the USTR announced “Proposed Actions” – fees for Chinese liners and international liners with Chinese ships, and restrictions on future exports. US users lose. And there are loopholes.

Daihatsu Diesel (6023) Buyback Tender Results Signal Overhang and Opportunity

In late January, Daihatsu Diesel Mfg (6023 JP) announced its once/former parent would sell all its shares; in part to a private company in the industry and a 20% buyback.
The buyback – a below-market own-share tender offer – was priced low enough to be a big win. Accretion added to that.
Buyback Tender Results and External Changes signal overhang and opportunity. Either way, it’s cheap, but good governance could make it even cheaper.

S&P500/400/600 Index Rebalance: DASH In as Stability Trumps Volatility

There are 4 changes for the S&P 500 INDEX, 6 changes for the S&P Midcap400 Index and 14 changes for the S&P SmallCap600 Index at the March rebalance.
DoorDash (DASH US) was newly eligible after meeting the profitability criterion, while AppLovin (APP US), Coinbase Global (COIN US) and Interactive Brokers Group, Inc (IBKR US) were overlooked again.
There will be more same-way flow for the S&P 500 INDEX (SPX INDEX) adds and deletes from the Select Sector index trackers.

A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.

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Mar 09

Most Read: Xiamen Amoytop Biotech Co Ltd, BYD, Alibaba Group Holding , SUNeVision Holdings, Amazon.com Inc, A2 Milk Co Ltd, Japan Post Bank, Korea Zinc, Seven & I Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises
BYD (1211 HK) Placement: Continuing to Power Up
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)
Sunevision (1686 HK): Data Center Rally Brings Passive Flows
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)
Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings
M&A For Korea Zinc: Seoul Central District Court Makes Important Rulings
Seven & I Holdings: Mega Share Buyback Plan and IPO of North American CVS Unit to Boost Share Price

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

STAR50/STAR100 Index Rebalance: Methodology Changes & Some Surprises

There are 3 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the March rebalance that will be implemented at the close on 14 March.
The last-minute methodology change could lead to under/over positioning on some names and those stocks could move the most over the next few days.
Performance has been mixed in the changes to the STAR50 INDEX but the outright adds have continued to outperform the outright deletes for the STAR100 Index.

BYD (1211 HK) Placement: Continuing to Power Up

Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).
Meituan , JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.

Sunevision (1686 HK): Data Center Rally Brings Passive Flows

The huge rally in SUNeVision Holdings (1686 HK) will bring passive inflows to the stock after being added to a global sector index.
Estimated passive buying is 19.4m shares (US$22m; 0.55x ADV) with implementation scheduled for the close of trading on 21 March.
Shorts have risen sharply in the last couple of weeks and cumulative excess volume has jumped too. But we see a similar pattern in a close peer.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

S&P/NZX 10 Index Rebalance: A2 Milk (ATM NZ) Replaces Ryman Healthcare (RYM NZ)

A2 Milk Co Ltd (ATM NZ) will replace Ryman Healthcare (RYM NZ) in the S&P/NZX 10 Index at the close of trading on 21 March.
Passive trackers will need to buy 0.8x ADV in A2 Milk Co Ltd (ATM NZ) and will need to sell 1.2x ADV in Ryman Healthcare (RYM NZ).
Importantly, A2 Milk Co Ltd (ATM NZ) is a deletion from a global index at the close on 21 March and the selling from those passive trackers is far larger.

Japan Post Bank (7182 JP) – Not Cheap Enough Vs Others, or Holdings

The Offering of Japan Post Bank (7182 JP) is not taking place the way “the right pattern” would suggest, but last time was kind of special. This time is different.
Last time was a “second IPO” and coincided with a US regional bank crisis. This time the offering is smaller outright, and much smaller as a portion of float.
Pricing is Monday. It hasn’t moved much vs JPH. It needs to move more to be attractive. And there is still a bit of overhang to come.

M&A For Korea Zinc: Seoul Central District Court Makes Important Rulings

On 7 March, the Seoul Central District Court ruled that it is reasonable for Korea Zinc to maintain the concentrated voting system, which should favor Chairman Choi and his allies.
On the other hand, the court also ruled that Korea Zinc was wrong to restrict Young Poong’s voting rights which should be favorable to MBK/Young Poong alliance.
The fact that the court has allowed concentrated voting system would mean the M&A of Korea Zinc will continue.

Seven & I Holdings: Mega Share Buyback Plan and IPO of North American CVS Unit to Boost Share Price

If indeed the company proceeds with 2 trillion yen buyback over five years, this would represent buyback of about 7.3% of its shares per year (37% of market cap).
Seven & I Holdings’ plans to massively buyback shares and IPO its North American CVS business are major catalysts that should have positive impact both near and long term.
Certainly, the company’s action plan to sell its non-core assets (including supermarket, restaurant, and specialty stores) to Bain Capital for $5.5 billion is a step in the right direction.

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Mar 08

Most Read: Seven & I Holdings, Korea Zinc, Amazon.com Inc, Japan Post Bank, Korea Stock Exchange KOSPI 200, Coforge, Naigai Trans Line and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
Korea Zinc: Cross Shareholding Limitation System Loophole
Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
Japan Post Bank (7182 JP): The Current Playbook
DN Solutions IPO Might Skip OC—A Unique Trading Opportunity
ECB: Meaningfully Less Restrictive
Coforge’s $1.56 Billion Bet: A Game-Changer or a Risky Move?
Naigai Trans Line (9384 JP): IA Partners’ JPY4,065 Tender Offer
HEW: Political Blunderbuss

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

Korea Zinc: Cross Shareholding Limitation System Loophole

The proxy battle at the EGM for the control of Korea Zinc (010130 KS) is scheduled for 23 January.
One day prior to the EGM, Korea Zinc’s Chairman Choi is trying to capitalize on the “cross-shareholding limitation system” in order to retain control of the company.
In our view, it appears that the legal case regarding the cross shareholding limitation system is in favor of MBK/Young Poong alliance.

Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
We have looked at the deal dynamics in our previous notes. In this note, we talk about updates and look at discounts vs performance for past secondary deals.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

Japan Post Bank (7182 JP): The Current Playbook

Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have declined by 2.5%. On 3 March, JPB completed the ToSTNeT-3 buyback by acquiring 13.3 million shares for JPY20 billion.
To understand JPB’s trading pattern, it is instructive to examine its 2023 offering, Japan Post Insurance (7181 JP)/JPI’s 2019 offering, and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
JPB’s shares follow the trading pattern playbook of its 2023 and JPH’s 2021 offerings, in which investors buying the offer were rewarded with positive returns at the payment date.

DN Solutions IPO Might Skip OC—A Unique Trading Opportunity

With cautious foreign interest, DN Solutions’ big IPO deal might skip the OC and go full local for bookbuilding, setting a new trend in Korean IPOs.
If foreign anchor orders drop, local players gain more negotiating power, leading to aggressive bidding and potentially a way more conservative IPO price.
Offshore funds passing investment review without an OC could grab more volume, benefiting from local-led down-pricing without lock-up restrictions.

ECB: Meaningfully Less Restrictive

The ECB’s sixth 25bp deposit rate cut to 2.5% was unsurprising, and its characterisation of policy as meaningfully less restrictive leaned towards our relatively hawkish view.
Policy rates may already be close to neutral. Looser fiscal policy plans also pressure monetary policy to follow a tighter path than would otherwise have been necessary.
We still expect the ECB to hold rates in April, which is no longer a controversial call. A final 25bp ECB cut in June remains in our outlook (BoE cuts in May and Fed on hold).

Coforge’s $1.56 Billion Bet: A Game-Changer or a Risky Move?

By Nimish Maheshwari

Coforge (COFORGE IN)‘s $1.56 billion deal with Sabre positions it as a major player in travel technology, but concerns over Sabre’s financial stability create potential risks for long-term execution.
Acquisitions of Rythmos and TMLabs align with Coforge’s strategy to enhance cloud, data, and enterprise IT capabilities, strengthening its market position in airline and ServiceNow implementation services.
While analysts recognize strong revenue visibility, Sabre’s $5.1 billion debt and negative net worth raise cash flow concerns, leading to a divided outlook on Coforge’s future profitability and risk exposure.

Naigai Trans Line (9384 JP): IA Partners’ JPY4,065 Tender Offer

Naigai Trans Line (9384 JP) has recommended a tender offer from IA Partners at JPY4,065 per share, a 62.3% premium to the last close.
Despite being below the midpoint of the target IFA’s DCF valuation range, the offer is attractive compared to historical trading ranges and represents an all-time high.
Given that the offer is reasonable, the required minority acceptance rate is attainable. The offer is from 10 March to 21 April, with payment on 28 April.

HEW: Political Blunderbuss

Shot from Trump’s blunderbuss is hitting sentiment and risk appetite yet the hard data remain resilient. Europe waking up on defence punched markets more in hope than reality, but hawkish inflation and ECB news helped create room to close our bullish call.
Next week’s US inflation data are the scheduled global highlight, along with the Bank of Canada likely pausing its cutting cycle. We also await UK GDP data confirming resilience inconsistent with the dovish panic at February’s BoE meeting.
Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to [email protected]).

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Mar 07

Most Read: Seven & I Holdings, Alibaba Group Holding , SUNeVision Holdings, Amazon.com Inc, Japan Post Bank, BayCurrent Consulting and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) Possibility of YUUUUUGE Buyback?
7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly
Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec👎
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)
Sunevision (1686 HK): Data Center Rally Brings Passive Flows
Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure
Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA
Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade
Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis
Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before

7&I (3382) Possibility of YUUUUUGE Buyback?

Last Thurs the MBO died. Tuesday an article said the ACT deal had died. Then 7&i denied that. Yesterday an article said Bain’s York Holdings deal would be approved today.
That meant a Board meeting which would approve receipt of ~¥700bn of cash. What to do with it?
Just now, Bloomberg says Seven & I Holdings (3382 JP)‘s board will consider a massive buyback. THAT is the capital allocation news my last piece suggested necessary. It’s HUGE.

7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

Today, partway through the day, we got a Bloomberg article suggesting a large-scale buyback was to come. Post-close, we got the full details.
“Seven & i Holdings Announces Plan to Unlock Shareholder Value Through Leadership Changes and Transformational Capital and Business Initiatives”.
Sale of York. Management change. Update on Special Committee work with ACT. Commitment to return ¥2trln to shareholders via buybacks by FY2030. Higher divs. IPO of 7-Eleven Inc (US).

Nikkei 225 Index Rebalance: Baycurrent (6532) Replaces Mitsubishi Logistics (9301); Kokusai Elec👎

In a big surprise, there is only one change for the Nikkei 225 (NKY INDEX) in March with BayCurrent Consulting (6532 JP) replacing Mitsubishi Logistics (9301 JP).
The non-inclusion of Kokusai Electric (6525 JP) is a big surprise given that the stock was ranked among the top 75 stocks by liquidity. There could be selling near-term.
BayCurrent Consulting (6532 JP) has been added at a 0.5 PAF and that will increase to 1 in September. Fast Retailing (9983 JP) could be capped yet again in September.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).
Meituan , JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.

Sunevision (1686 HK): Data Center Rally Brings Passive Flows

The huge rally in SUNeVision Holdings (1686 HK) will bring passive inflows to the stock after being added to a global sector index.
Estimated passive buying is 19.4m shares (US$22m; 0.55x ADV) with implementation scheduled for the close of trading on 21 March.
Shorts have risen sharply in the last couple of weeks and cumulative excess volume has jumped too. But we see a similar pattern in a close peer.

Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure

The Seven & I Holdings (3382 JP) Board announced a plan to unlock and distribute significant value to shareholders.
The initial excitement focused on the positives of leadership changes, US Assets IPO, a higher-than-expected valuation for the Superstore Business and a considerable buyback.
The negatives of a long-dated buyback, inevitable rejection of the Couche-Tard offer, an uncertain US Assets IPO and ongoing HoldCo discount suggest the initial excitement will fizzle out.

Nikkei 225 Mar25 Rebal: BayCurrent (6532) IN, Mitsubishi Logi (9301) OUT (Re-IPO). Kokusai MIA

The March 2025 Nikkei 225 Average Review was announced last night. Something of a disaster for Team Quiddity. I had expected 2-3 ADDs and 2-3 DELETEs.
We got only one change, and that was my second choice ADD and second choice DELETE. Top 75 name Kokusai Electric (6525 JP) was missing in action. BIG Disappointment. 🤔
BayCurrent Consulting (6532 JP) is in at a PAF of 0.5, with an upweight end-Sep. Mitsubishi Logistics (9301 JP) is OUT. Fast Retailing (9983 JP) will see US$2.3bn of sells.

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Constituent changes to the S&P 500 INDEX (SPX INDEX), S&P Midcap400 Index and S&P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald’s Corp and Take Two Interactive.

Japan Post Bank US$4bn Deal Updates – Needs to Correct More. Discount Vs Deal Performance Analysis

Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
We have looked at the deal dynamics in our previous notes. In this note, we talk about updates and look at discounts vs performance for past secondary deals.

Nikkei 225 Sep25 Rebal: One ADD, One DELETE Probable – Less Interesting Than Before