In today’s briefing:
- Korea: Short Selling Is Back in March; Trade Ideas
- The Japan March-End Rebal and Dividend Trade
- Maynilad Water (MYNLD PM): Index Inclusion Timing for a Large Philippines IPO
- Quiddity Leaderboard CSI 300/500 Jun25: US$6bn+ One-Way Flows; One Intra-Review Addition Soon
- ENN Energy (2688 HK): ENN Natural Gas to Launch a Privatisation Offer?
- Schedule Info for Front-Running Korea Sector ETF Rebalancing Trades
- POSCO Holdings Is Selling Nippon Steel Shares Worth 468 Billion Won
- SSE50 Index Rebalance Preview: Three Changes; Some Misses
- Makino Milling Machine (6135 JP): Proposes Countermeasures
- Judo Capital Placement – Clean up but past Deal Didn’t Do Well
Korea: Short Selling Is Back in March; Trade Ideas
- Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though.
- Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
- There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.
The Japan March-End Rebal and Dividend Trade
- Every year it’s the same trade. But sometimes it is not. This year it is Thursday and Friday. Or not.
- The month-end and quarter-end bring big flows, or not, depending on how things have gone.
- Over the past 10 years or so, the two-day return on the March trade is pretty good. This year? Well read on!
Maynilad Water (MYNLD PM): Index Inclusion Timing for a Large Philippines IPO
- Maynilad Water Services (MYNLD PH) is looking to raise up to US$860m by selling shares at ₱20/share, valuing the company at US$2.82bn.
- The market cap and free float will depend on the number of shares sold in the IPO and whether the shares in the upsize option are primary or secondary shares.
- Global index inclusions should take place in November and December, while Philippines Stock Exchange PSEi Index (PCOMP INDEX) inclusion could take place in August 2026.
Quiddity Leaderboard CSI 300/500 Jun25: US$6bn+ One-Way Flows; One Intra-Review Addition Soon
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500 names.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
- Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.
ENN Energy (2688 HK): ENN Natural Gas to Launch a Privatisation Offer?
- ENN Energy (2688 HK) is in a trading halt “pending the issuance of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers containing inside information of the Company.”
- ENN Natural Gas (600803 CH), also in a trading halt, is likely seeking to privatise ENN through a Cayman scheme. A high AGM minority participation necessitates an attractive offer.
- I use several methods to triangulate the likely offer price, which suggests a price range of HK$66.50-85.01, with an average of HK$76.04, a 28% premium to the last close.
Schedule Info for Front-Running Korea Sector ETF Rebalancing Trades
- Demand for less crowded rebalancing plays is rising, making off-the-radar flows more critical. A structured timeline is key to tracking and managing these setups efficiently.
- Key ETFs to watch are local sector names with solid AUM—about 20 names. But the trading approach isn’t one-size-fits-all.
- Stick to the schedule, track potential flow setups, and front-run by securing rebalance details early and positioning ahead of the crowd.
POSCO Holdings Is Selling Nippon Steel Shares Worth 468 Billion Won
- On 19 March, POSCO Holdings (005490 KS) announced that it is selling its stake in Nippon Steel Corporation (5401 JP) worth nearly 468 billion won (US$320 million).
- POSCO Holdings’ sale of nearly US$320 million worth of Nippon Steel would be about 1.3% of its market cap.
- POSCO Holdings’ sale of its stake in Nippon Steel is a positive move for POSCO Holdings as the company is continuing to execute its strategy of selling off non-core assets.
SSE50 Index Rebalance Preview: Three Changes; Some Misses
- With nearly 90% of the review period complete, 2 non-constituents are in inclusion zone and 3 constituents are in deletion zone.
- We estimate one-way turnover of 4.7% at the June rebalance leading to a round-trip trade of CNY 16.4bn (US$2.27bn). Index arb balances will increase the impact on the stocks.
- The forecast adds have outperformed the forecast deletes over the last 6 months but there has been a retracement in returns over the last month.
Makino Milling Machine (6135 JP): Proposes Countermeasures
- The Makino Milling Machine Co (6135 JP) Board has proposed introducing countermeasures to nudge Nidec Corp (6594 JP) to delay the start of the tender to 9 May.
- The countermeasure was likely needed to facilitate a competing offer rather than force Nidec to provide the required information and delay the start (Nidec is still evaluating the request).
- Nidec’s offer at current terms has a low chance of success, necessitating revised terms. The Board claims that there is a sufficient probability of a competing proposal.
Judo Capital Placement – Clean up but past Deal Didn’t Do Well
- Bain and GIC looking to raise US$130m by selling their remaining stake in Judo Capital (JDO AU).
- The deal will be a large one to digest at 30.8 days of the stock’s three month ADV, representing 9.2% of its shares outstanding.
- In this note, we will talk about the placement and run the deal through our ECM framework.
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