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• Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) are high probability deletions in September, while Trip.com (9961 HK) is a high probability inclusion.
• The second add could be BeiGene Ltd (6160 HK) if it passes the velocity test. If not, Chow Tai Fook Jewellery (1929 HK) will be added.
• With the exception of Zhongsheng Group (881 HK), short interest has been rising on all the other stocks and could affect how the stocks trade close to implementation date.

• S.F. Holding (002352 CH) (SFH), China’s largest express delivery company, aims to raise around US$2-3bn in its H-share listing in Hong Kong.
• SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• Two thirds of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 10.1% at the December rebalance resulting in a one-way trade of CNY 6.75bn.
• The potential adds have outperformed the potential deletes and the CSI500 Index over the last six weeks. There could be more outperformance till nearer the end of the review period.

• We finally got to 80 Hang Seng Index constituents in June. Now comes the next step of moving up to 100 index constituents though there is no timeline for completion.
• The conclusions of the market consultation on the inclusion of foreign stocks in the Hang Seng Index should be announced soon though implementation could start only in December.
• We highlight 10 potential inclusions to the index with passive trading impact varying from 1.5-5.6 days of ADV. There are large shorts on some of the stocks.

• Costa Group Holdings (CGC AU) listed in 2015 when Paine & Partners sold 40% of its stake in the company.
• Paine Schwartz Partners bought a 13.84% stake last year, increased it in March, and has now made an offer to buy out the remaining shares at A$3.5/share in cash.
• Short interest was over nearly 11 days of ADV to cover and short covering could take the stock higher sooner. This is a buy here.

• Seven weeks ago, Marubeni Corp (8002 JP) and Secom Co Ltd (9735 JP) announced a joint deal to acquire the rest of ARTERIA Networks Corp (4423 JP). 
• As I wrote in the previous piece, the premium was good, but the price was not great. The Board rejected the price, then agreed when the bidders wouldn’t go further.  
• Now we have a deal and the Tender Offer starts 5 July. It was cheap to start. It’s still too cheap. But this one is tough to block.

• HDFC Limited (HDFC IN) will stop trading at the close on 12 July and will be deleted from all indices at the close on that day.
• As expected, LTIMindtree (LTIM IN) will be added to the NIFTY Index while Jindal Steel & Power (JSP IN) will be added to the NSE Nifty Next 50 Index.
• Importantly, HDFC Limited (HDFC IN)‘s foreign shareholding has dropped over the quarter ended 30 June and that has index implications for future passive flows to HDFC Bank (HDFCB IN). 

• The Nikkei has an article today with details of an interview with new Toyo Construction (1890 JP) Chairman Yoshida and President Obayashi. There will be a 2-3 month governance review.
• It will review decision-making process, “profit management” (利益管理), and business investment decisions (事業への投資判断).  Chairman Yoshida had a quote on neutrality on a YFO proposal. My wording there was carefully chosen.
• The President also said they expect ongoing synergies with Infroneer, and will maintain MTMP/Mitsui OSK Partnership management plans. Their words were chosen carefully too. 

• Rakuten Group (4755 JP), having experienced an 80% decline in value over the last 8 years, now emerges as an enticing prospect for value investors.
• The combined fair value of Rakuten’s Cards, Bank, and Mobile businesses now surpasses 100% of the company’s market capitalization.
• Rakuten Ichiba, valued at ¥600bn, appears significantly undervalued when compared to ZOZO Inc (3092 JP) and MonotaRO Co Ltd (3064 JP), which hold approximately 2.0x Rakuten Ichiba’s valuation.

• OVERSEAS. US out for Independence Day – not a lot to report; European Stocks gain, and volumes 1/3 of normal;  META to Launch “Thread”, to compete with Twitter
• JAPAN. NKY Futs -0.8% vs Cash; USDJPY 144.5; NKY -1% as JP succumbs to profit taking; Toyota to cut Solid State battery costs by 50%; Rakuten to list Securities biz
• NUGGET.  Lawson – if management can execute on their MTP, the stock is super cheap. Potential growth, Yield, Take out play ?

For our next Corporate Webinar we are glad to welcome IREIT Global’s CEO, Louis d’Estienne d’Orves.

In the upcoming webinar, Louis will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Jesus Rodriguez Aguilar. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 6 July 2023, 17:00 SGT.

About IREIT Global

IREIT Global, which was listed on 13 August 2014, is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets. IREIT Global’s current portfolio comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited. Tikehau Capital is global alternative asset management group listed in France, while City Developments Limited is a leading global real estate company listed in Singapore.

• There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
• We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
• There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.

• In April 2022, after long prep and considerable public comment as to desires and design, the TSE launched its new market segments designed to encourage governance and foreign investment.
• At the time, the TSE wanted to showcase Japan’s best blue chips. In March, JPX announced JPX Prime 150, designed to make visible
• In March 2023, JPX announced JPX Prime 150, to “make visible the leading Japanese companies that are estimated to create value.” Ambitious? Yes. Fated to fail? Probably. Badly constructed?  Definitely. 

• The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
• There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
• There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

• Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
• We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
• The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety. 
• Post the interim results, we provide short updates on each company and links to our latest work on them. 
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).

• Alibaba’s new chairman decides to provide logistics service to outside customers.
• We believe Alibaba is following JD Logistics, as both companies have large retailer bases.
• We suggest buying JD Logistics the role model instead of Alibaba the follower.

• Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) are high probability deletions in September, while Trip.com (9961 HK) is a high probability inclusion.
• The second add could be BeiGene Ltd (6160 HK) if it passes the velocity test. If not, Chow Tai Fook Jewellery (1929 HK) will be added.
• With the exception of Zhongsheng Group (881 HK), short interest has been rising on all the other stocks and could affect how the stocks trade close to implementation date.

• Back on the 28 March, United Malt Group Ltd (UMG AU) entered into a NBIO with Malteries Soufflet at an Offer Price of $5.00/share, a 45.3% premium to undisturbed.
• After a lengthy due diligence process, the two companies have now entered into a binding agreement of A$5.00/share, by way of a Scheme. UMG’s board has unanimously recommended the bid.
• The Offer is subject to FIRB and other regulatory approvals. Malteries Soufflet and UMG are the second and fourth-largest maltsters in the world.

• Fadu is getting ready to complete its IPO in Korea in August. Fadu is one of the most highly anticipated IPOs in Korea in 2023. 
• The expected market cap at the top end of the IPO price range is 1.6 trillion won. The IPO price range is from 26,000 won to 31,000 won.
• Fadu is a system semiconductor fabless company specializing in data centers.

For our next Corporate Webinar we are glad to welcome IREIT Global’s CEO, Louis d’Estienne d’Orves.

In the upcoming webinar, Louis will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Jesus Rodriguez Aguilar. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 6 July 2023, 17:00 SGT.

About IREIT Global

IREIT Global, which was listed on 13 August 2014, is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets. IREIT Global’s current portfolio comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited. Tikehau Capital is global alternative asset management group listed in France, while City Developments Limited is a leading global real estate company listed in Singapore.

• In April 2022, after long prep and considerable public comment as to desires and design, the TSE launched its new market segments designed to encourage governance and foreign investment.
• At the time, the TSE wanted to showcase Japan’s best blue chips. In March, JPX announced JPX Prime 150, designed to make visible
• In March 2023, JPX announced JPX Prime 150, to “make visible the leading Japanese companies that are estimated to create value.” Ambitious? Yes. Fated to fail? Probably. Badly constructed?  Definitely. 

• The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
• There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
• There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

• The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. 
• Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
• A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn’t mean much, but it’s an interesting artefact. 

• There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
• We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
• There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.

• In my piece Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO I said I thought YFO would lose, but it would be close.
• I thought it hinged on the shape of the register. It turns out it did. And it turns out they won, and it was close. Analysis is presented.
• What next? The new board takes its seats and may entertain a new takeover offer. I could see a buyout price a fair bit higher than here. 

• Rise into late June/early July cycle peak on track with scope to overshoot after the 4th of July break (then expect a more volatile mid-July period). Reducing on strength.
• SPX kissed our 4,500 target with an overshoot projection at 4,547. Recent long from 4,470.
• Top Asia longs: NKY, Taiwan and India. Top shorts have been HSI and Kospi 200 (heavy bias to add on upticks). July will usher in a more volatile phase.

• The latest update will feature the addition of 25 single stock futures, as well as five single stock options from KOSPI. Eight single stock futures will be removed.
• The selection will now take place twice a year, in March and September. Also, the selection requirement includes being included in the KOSPI 200 and KOSDAQ Global.
• The shortened selection cycle and the significant potential for the change range to vary based on index review results can indeed have a notable impact.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, Tryt Inc (9164 JP) will announce its price range in the coming week, while Kelun Biotech tries to break the US$100m+ deal silence in HK. 
• On the placement front, even Singapore joined in the placement action this week, with only HK deal remaining absent over the past month.

• Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
• We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
• The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.

• The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
• There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade. 
• There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

• There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY). 
• Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
• With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.

• Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
• The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
• The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

• An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
• Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
• The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.

• With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August. 
• However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
• Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.

• We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in July 2023, among which 6 are in KOSPI and 35 are in KOSDAQ.
• These 41 stocks on average could be subject to further selling pressures in June and could underperform relative to the market. 
• Among these 41 stocks, the top five market cap stocks include Lunit, Sungeel Hitech, KG Mobility, Enchem, and E&D Co. 

• New HDFC Bank appears to have far better returns and credit metrics that large Asian peers
• Pro-Forma amalgamation puts HDFC Bank as 2nd largest bank in Asia Pacific in market cap 
• Comparably large banks in Asia are concentrated in China, where credit metrics are opaque

• The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. 
• Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
• A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn’t mean much, but it’s an interesting artefact. 

• The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
• There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
• There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

• Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
• Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal. 

• Late last night (27 June), Dali Foods Group (3799 HK) a leading branded F&B play, announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.
• The cancellation price, which has been declared final, is HK$3.75/share, is a respectable 37.87% premium to undisturbed, but… 
• Xu and concert parties control 88.89%, with disinterested shareholders holding 11.11%, therefore a blocking stake at the Scheme meeting is just 1.11% of shares out. 

• Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
• Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
• Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).

• Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
• I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
• This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.

• We see 7 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
• The expected migrations from SmallCap to MidCap have outperformed the other migrations and some stocks have seen large price moves over the last couple of weeks.
• Active managers would have started realigning their portfolios and that could continue for a couple of weeks. Unwind long positions into strength.

For our next Corporate Webinar we are glad to welcome IREIT Global’s CEO, Louis d’Estienne d’Orves.

In the upcoming webinar, Louis will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Jesus Rodriguez Aguilar. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 6 July 2023, 17:00 SGT.

About IREIT Global

IREIT Global, which was listed on 13 August 2014, is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets. IREIT Global’s current portfolio comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited. Tikehau Capital is global alternative asset management group listed in France, while City Developments Limited is a leading global real estate company listed in Singapore.

• Redox (RDX AU), a chemical and ingredients distributor, raised around US$270m in its Australia IPO. The stock will begin to trade on 3rd July 2023.
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide
• We have looked at the company’s past performance in our previous note, in this note we will talk about the updates since then and the trading dynamics.

• We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in July 2023, among which 6 are in KOSPI and 35 are in KOSDAQ.
• These 41 stocks on average could be subject to further selling pressures in June and could underperform relative to the market. 
• Among these 41 stocks, the top five market cap stocks include Lunit, Sungeel Hitech, KG Mobility, Enchem, and E&D Co. 

• Tryt Inc (9164 JP) is looking to raise about US$460m in its Japan IPO.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• We have looked at the company’s past performance and track record against peers in our earlier notes. In this note, we will discuss our thoughts on valuation.

• The JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted (capped) market-value-weighted index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to be announced in early August 2023 based on trading data as of end-June 2023.

• In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
• In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
• In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue. 

• An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
• Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
• The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.

• NTT (Nippon Telegraph & Telephone) (9432 JP) is splitting its stock 25:1 on record date 30 June 2023. That means it goes ex- at the new price on 29 June.
• The day before, the stock is up nearly 5% on heavy volume. This is likely punters buying before it splits so one round lot will be <¥20,000 vs ~¥420,000 yesterday.
• But there is a new attraction for retail, somewhat un-noticed. 

• Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
• Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
• Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).

• Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
• I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
• This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.

• Swire Pacific (19 HK) has announced it is selling its US Coca-Cola ops to its parent for HK$30.4bn (US$3.9bn). That’s 40% of its market cap.
• Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Bangkok Bank Public (BBL TB) is trading very close to its historic highs versus Kasikornbank PCL (KBANK TB) and keeps hitting a wall at that level.
• The number of NVDRs issued on Bangkok Bank Public (BBL TB) has been rangebound while there has been a steady decrease for Kasikornbank PCL (KBANK TB). 
• At current level, the risk/reward looks favourable to a short Bangkok Bank Public (BBL TB) / long Kasikornbank PCL (KBANK TB) position for the near to medium term.

• Samsung Display still holds a 5.85% stake. Hankyung reported that this remaining stake would also be disposed of in the future.
• Then the key lies in timing. Considering the ongoing pattern of block deals being exposed during the pre-sounding phase, we may be able to capture clues for preemptive trading.
• As seen from the chart depicting SFA’s loan balance and the percentage of short-selling to daily TV, we can observe a significant increase in activity just before today’s sale event.

• Redox (RDX AU), a chemical and ingredients distributor, raised around US$270m in its Australia IPO. The stock will begin to trade on 3rd July 2023.
• In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide
• We have looked at the company’s past performance in our previous note, in this note we will talk about the updates since then and the trading dynamics.

• We see 7 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
• The expected migrations from SmallCap to MidCap have outperformed the other migrations and some stocks have seen large price moves over the last couple of weeks.
• Active managers would have started realigning their portfolios and that could continue for a couple of weeks. Unwind long positions into strength.

• In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
• In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
• In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue. 

• An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
• Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
• The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.

• NTT (Nippon Telegraph & Telephone) (9432 JP) is splitting its stock 25:1 on record date 30 June 2023. That means it goes ex- at the new price on 29 June.
• The day before, the stock is up nearly 5% on heavy volume. This is likely punters buying before it splits so one round lot will be <¥20,000 vs ~¥420,000 yesterday.
• But there is a new attraction for retail, somewhat un-noticed. 

• With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August. 
• However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
• Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.

• Late last night (27 June), Dali Foods Group (3799 HK) a leading branded F&B play, announced a privatisation Offer by way of a Scheme from its founder/chairman/CEO Xu Shihui.
• The cancellation price, which has been declared final, is HK$3.75/share, is a respectable 37.87% premium to undisturbed, but… 
• Xu and concert parties control 88.89%, with disinterested shareholders holding 11.11%, therefore a blocking stake at the Scheme meeting is just 1.11% of shares out. 

• NPS has expressed concerns about the wide risk range of the KOSDAQ 150 index, and there has been speculation about whether they will take advantage of the KOSDAQ Global Index.
• The launch of these ETFs should be closely watched as it could potentially be a turning point in the investment patterns of local pension funds in KOSDAQ.
• It may be worth considering the constituents included in this index where the NPS ownership stake does not reach 5%.

• Yesterday and today, there have been observed cases in Korea that are suspected to be caused by a sudden drop in stock prices due to CFD liquidation trading.
• Yesterday it was Celltrion with its two siblings, and today it is Posco DX. I have found candidates that may have similar stock price movements.
• These candidates experienced a notable increase in their stock prices from late March to mid-April, and they have a relatively high margin transaction ratio.

• After shares were suspended on the 20 June, art and culture play Poly Culture Group Corp H (3636 HK) has announced a pre-conditional privatisation at HK$8.88 per H-share.
• This Offer, from SOE Poly Group, is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
• The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average. 

• Napier (Temasek) is looking to raise around US$300m via its secondary selldown in Singapore Airlines (SIA SP).
• The deal isn’t very well flagged given that the investor hadn’t earlier given any explicit guidance of a selldown. 
• Post-Selldown, Temasek will still own over 50% of SIA’s shares outstanding, so the overhang will be a large one.

• Tryt Inc (9164 JP) is looking to raise about US$460m in its Japan IPO.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• We have looked at the company’s past performance in our earlier notes, in this note we will undertake a peer comparison.

• Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.  
• That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate. 
• Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.

• Chow Tai Fook (CTFE) has made a voluntary cash Offer for New World Development (17 HK)‘s (NWD) 60.88%-held NWS Holdings (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed. 
• CTFE and connected parties hold 45.24% of NWD, therefore the parent is effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
• The Offer is subject to regulatory approvals in Hong Kong and Bermuda. These will not be an issue given CTFE is NWD’s ultimate shareholder. 

• In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
• In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
• In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue. 

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
• The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

• We should seize the arbitrage trading opportunities between SSF and subscription rights during the rights trading window. SK Innovation’s SSF is highly liquid, being traded at nearly 0.5x spot.
• The key is to catch the timing of basis widening. SK Innovation traditionally experiences significant intraday basis fluctuations, making it a crucial factor in maximizing our profitability.
• The ex-date play, betting on the tendency for prices to close above the base price on the ex-date, may not hold significant appeal. This pattern has become less pronounced recently.

• Nws Holdings (659 HK) announced a pre-conditional voluntary general offer from the Cheng family at HK$9.15 or HK$9.47 per share (with a potential 2HFY2023 dividend of HK$0.32 per share).
• The pre-condition related to regulatory approval from the Insurance Authority of Hong Kong and the Bermuda Monetary Authority is a formality due to the Cheng family’s current sway over NWS.
• The key condition is approval by independent New World Development (17 HK) shareholders which is likely as the offer is attractive, reduces NWD’s gearing and results in a special dividend.  

• Dali Foods Group (3799 HK) disclosed a scheme privatisation offer from the founder at HK$3.75 per share, a 37.9% premium to the undisturbed price (HK$2.72 on 20 June).
• Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• The price is final. While the offer price is unattractive compared to peer multiples and historical share prices, this looks like a done deal. 

• Redox (RDX AU), a leading chemical and ingredients distributor, is looking to raise A$402m (US$268m) in its IPO and is expected to start trading on the ASX on 3 July.
• With the float expected to be over 30%, the stock is eligible for inclusion in the S&P/ASX indices but limited trading history could only mean S&P/ASX300 inclusion in March 2024.
• With 70% of the shares subject to lock-up arrangements, buying from ASX300 passive trackers will be small and there will be limited inclusion in other indices too.

• Tryt Inc (9164 JP) is looking to raise about US$460m in its Japan IPO.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• In this note, we will talk about the not so positive aspects of the deal.

• With a couple of trading days to the end of the review period, we do not forecast any changes for the Philippines Stock Exchange PSEi Index (PCOMP INDEX) in August. 
• However, there could be an ad hoc change if Metro Pacific Investments Co (MPI PM) is delisted. The stock now trades above the tender offer price.
• Bloomberry Resorts (BLOOM PM) is the highest ranked non-constituent and the stock has started to move higher again, likely driven in part by potential index inclusion.

• The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
• JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
• Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.

• The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
• There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade. 
• There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

• Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.  
• That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate. 
• Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.

• There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY). 
• Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
• With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.

• Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
• The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

• In Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket at the start of June I proposed a basket. 
• We are getting to the end of June. Time to unwind that short basket. The named ticker was -26%. The 70-name basket underperformed ASX200 by 4.4%.
• One can now go long the basket into end-June as historically it outperforms S&P-ASX200 over two months. If one did not short, one can still go long. Basket below.

• JSR Corp (4185 JP) has recommended JIC’s pre-conditional tender offer of JPY4,350 per share, a 34.5% and 10.6% premium to the undisturbed price and last close, respectively.
• The pre-conditions relate to various country approvals. China’s approval should be challenging due to Japan’s recent curbs on Chinese exports of chipmaking equipment.
• The offer is long-dated and opens in late December. The offer price is attractive compared to peer multiples and just a touch below the all-time share price high.

• The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
• Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
• The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

• Tryt Inc (9164 JP) is looking to raise about US$460m in its Japan IPO.
• Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
• In this note, we will talk about the positive aspects of the deal.

• Specialty mining driller DDH1 (DDH AU) has announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
• Under the proposed terms, DDH1 shareholders will receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium. 
• Directors and shareholders with a combined 38% of DDH1 shares have indicated an intention to vote in favour of the transaction. Scheme implementation is expected in early October 2023.

• The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
• There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade. 
• There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

• The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
• JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
• Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.

• Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
• JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
• Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.   

• Daniel Zhang stepped down from the Chair and CEO and moved to be the head of cloud intelligence.
• The retail focus will move from physical store and branded product to a platform for third-party retailers.
• We believe the strategy change is correct in the weak consumption market.

• There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY). 
• Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
• With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.

• RMB dual counter started trading. Great Wall Motor (2333 HK)‘s A-shares trade at 3x the multiple. THAT is a big discount to harvest. 
• China Feihe (6186 HK)‘s CFO exits an indirect stake of 6.38% around Feihe’s all-time low. 
• EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high

• 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 – 111 Inc (YI US), Silk Laser Australia (SLA AU), United Malt Group Ltd (UMG AU), ENM Holdings (128 HK), Chindata Group (CD US), Estia Health (EHE AU).
• Lowest spreads – Healius (HLS AU), Musgrave Minerals (MGV AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU), Lian Beng (LBG SP).

• Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
• The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH),  Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN) IPOs.
• Event-Driven developments – Invocare Ltd (IVC AU), Arcland Service (3085 JP), JSR Corp (4185 JP), SBI Shinsei Bank (8303 JP), Amara Holdings (AMA SP), Yashili International Holdings (1230 HK).       

• OVERSEAS. SPX -0.8% on Friday, -1.8%WoW as recession fears resurface post -ve EU PMI, amidst rate hikes to combat inflation; Carmax +10% on earnings beat, but used car px falling
• JAPAN. NKY Futs -0.6% disc to Cash; USDJPY 143.7 reflecting disparity between Japan rates vs Global; Yet JP inflation remains elevated; JIC ¥1trn bid for JSR(4183); Oriental Land hikes px-es
• NUGGET. Cosmo Energy(5021) – set back for Japan corporate governance. The Fourth Estate – Your turn.