Category

Event-Driven and Index Rebalance

Weekly Top Ten Event-Driven and Index Rebalance – Feb 18, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. Outsourcing (2427) – Earnings Delay Causes Consternation

By Travis Lundy, Quiddity Advisors

  • Originally, the MBO for Outsourcing Inc (2427 JP) was expected to get launched end-January 2024. A late-ish filing with regard to the EU’s Foreign Subsidies Regulation regime prompted a delay.
  • Yesterday Outsourcing announced a delay its earnings release by 3 business days, the delay “procedures related to impairment losses are continuing.”
  • Outsourcing shares are down hard on this. -1.5% as I write. I examine.

2. Screen Holdings (7735 JP): Positioning & Potential Passive Buying

By Brian Freitas, Periscope Analytics

  • SCREEN Holdings (7735 JP) could be added to a global index at the end of the month and there will be a lot of buying in the stock.
  • There is a fair bit of positioning for the potential passive buying and there will be supply in the stock.
  • However, the stock trades cheaper than its peers and a correction could provide an opportunity for long-term investors to enter the stock.

3. JSR (4185) – Updated Information in SUNY Lawsuit, and Other Developments

By Travis Lundy, Quiddity Advisors

  • 12 days ago, JSR Corp (4185 JP) announced that former research collaboration partner Research Foundation of the State University of New York had sued in an intellectual property ownership dispute.
  • I wrote about it here to the extent I could. Since then, more information has become available, or available to me.  Some details on the case. Some on lawyers. 
  • Since then JSR has reported earnings with unchanged forecast, and major pure play comp Tokyo Ohka Kogyo (4186 JP) today reported earnings; the stock popped 10+% to an all-time high.

4. MVIS Australia Equal Weight Index Rebalance Preview: Should I Stay or Should IGO?

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance of the MVIS Australia Equal Weight Index ends on 29 February with results announced on 8 March and implemented on 15 March.
  • Lendlease Group (LLC AU), IDP Education (IEL AU) and IGO Ltd (IGO AU) are very close to deletion zone and price moves over the next couple of weeks are important.
  • IGO Ltd (IGO AU) is also a deletion from a global index in February and a lower stock price could lead to deletion from this index too.

5. Renesas (6723 JP) To Acquire Altium (ALU AU) In a A$9.1bn Deal

By Brian Freitas, Periscope Analytics

  • Renesas Electronics (6723 JP) has entered a Scheme Implementation Agreement to acquire Altium Ltd (ALU AU) at A$68.5/share implying an equity value of A$9.1bn and an Enterprise Value of A$8.8bn.
  • The offer price is a 33.6% premium to the last close and a larger premium to VWAPs ranging from 30 days to 180 days.
  • There will be ad hoc inclusions to the S&P/ASX 100 Index and the S&P/ASX 200 (AS51 INDEX) on Altium Ltd (ALU AU)‘s last trading day (expected second half of 2024).

6. Renesas’ Transformative Offer For Altium

By David Blennerhassett, Quiddity Advisors


7. S&P/​​​​​​​​​ASX Index Rebalance Preview: Newmont Still Has Nearly A$1bn to Sell

By Brian Freitas, Periscope Analytics

  • With two days left in the review period, there could be 28 adds/deletes across the S&P/ASX family of indices in March.
  • There is nearly A$1bn to sell in Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
  • There could be 2-41 days of ADV to buy in the index inclusions while the impact on the deletions will range between 0.7-24 days of ADV.

8. Outsourcing (2427) MBO Situation – Checking, and Thinking, and Noodling, and Speculating

By Travis Lundy, Quiddity Advisors

  • I got a bunch of questions about my Outsourcing comments yesterday in Outsourcing (2427) – Earnings Delay Causes Consternation
  • This piece is intended to clarify what I know (still limited), put parameters around what it might be, and draw lines in the sand which I might later erase.
  • This may be nothing. But it may not be. I will try to answer the questions I received in a kind of Q&A format, and I hope that helps.

9. MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
  • The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
  • With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.

10. SET50 Index Rebalance Preview: Three Potential Changes in June

By Brian Freitas, Periscope Analytics

  • Early days, but there could be three changes for the Stock Exchange of Thailand SET 50 Index at the June rebalance. Two names are reversals of the December changes.
  • Passive trackers will need to buy between 1.5-3.6 days of ADV on the inclusions and sell 1.1-1.4 days of ADV on the deletions.
  • There are a couple of stocks that are close to passing/failing the liquidity tests and a couple close to cutoff ranks. That could result in further changes to the index.

Weekly Top Ten Event-Driven and Index Rebalance – Feb 11, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria

By Travis Lundy, Quiddity Advisors

  • JSR Corp (4185 JP)  announced 2 February on its website that the Research Foundation for the State University of New York (“RF SUNY”) filed suit against JSR subsidiary Inpria 25 January.
  • JSR claims no wrongdoing. A court order from the US District Court for the Northern District of New York denied RF SUNY’s request for a hearing by 5 February.
  • This may put a short-term damper on sentiment in the name, and I expect the JICC people have been working on this for a week. 

2. JAPAN ACTIVISM:  Activist Elliott Takes on Mitsui Fudosan (8801)

By Travis Lundy, Quiddity Advisors

  • The FT carries an article this AM saying Elliott Management have built a stake in Mitsui Fudosan (8801 JP) and has asked it to undertake measures to increase ROE.
  • Measures requested apparently include a very large buyback and a demand the company sell down its stake in Oriental Land (4661 JP). The article is worth reading.  
  • Shares are up sharply on this news. The fund was in the news last year about this time regarding Dai Nippon Printing (7912 JP). I’d expect more noise to come. 

3. The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private

By Travis Lundy, Quiddity Advisors

  • Today, just before the close, the Nikkei sprung a headline saying KDDI Corp (9433 JP) would take over Lawson Inc (2651 JP). The stock immediately headed to limit up. 
  • Post-Close, details emerged. KDDI will buy the 50% that MitCorp does not own, this will become a 50/50 JV. TOB launch at ¥10,360 will be in April. Squeezeout in September.
  • This appears to be the Next Step in Lawson’s Big Boots Adventure. The premium is too light. The price is too low. And that is not counting the synergies.

4. Japan – Increasing Shorts on Some Interesting** Stocks

By Brian Freitas, Periscope Analytics

  • There are some Japanese stocks that have dropped in price even as the broader market has powered higher. That could lead to the stocks being deleted from global portfolios.
  • The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
  • BayCurrent Consulting (6532 JP) is a dark horse for inclusion in the Nikkei 225 (NKY INDEX) in March and this deletion could take the stock lower before the Nikkei 225 announcement.

5. NIFTY NEXT50 Index Rebalance Preview: Potential Adds Continue to Run

By Brian Freitas, Periscope Analytics

  • With the review period for the March rebalance complete, there could be 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
  • Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 28.6bn. Four inclusions will have over 1x ADV to buy; five deletions will have 2.5x+ ADV to sell.
  • The potential adds have outperformed the potential deletes by 28.6% over the last month. With positioning from a rebalance perspective mostly done, gradually unwind over the next few weeks.

6. China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up

By Brian Freitas, Periscope Analytics

  • Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
  • Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
  • While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.

7. Lawson (2651 JP): KDDI Corp (9433 JP) Pre-Conditional Tender Offer at JPY10,360

By Arun George, Global Equity Research Ltd

  • Lawson Inc (2651 JP) has recommended a pre-conditional tender offer from KDDI Corp (9433 JP) at JPY10,360 per share, an 18.8% premium to the undisturbed (5 February). 
  • The pre-conditions relate to regulatory approvals in Japan, China, South Korea, and the EU. The offer is expected to start in April, suggesting no significant issues, particularly with SAMR approval.
  • Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate, achievable as the offer represents an all-time high. 

8. India: Free Float Changes & Passive Flows in February

By Brian Freitas, Periscope Analytics

  • Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-December.
  • The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
  • There are 15 stocks that could have passive inflows from global trackers while 9 could see passive outflows in February.

9. STAR100 Index Rebalance Preview: High Risk/Return Trade Setup

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
  • There are 10 stocks in inclusion zone and 11 in deletion zone. There should be 10 changes since that is the cap for the maximum changes at a single rebalance.
  • The potential adds and deletes are down between 37-47% over the last 6 months and a long/short trade could provide superior risk-adjusted returns.

10. L’Occitane (973 HK): Blackstone Pondering an Offer

By Arun George, Global Equity Research Ltd

  • Bloomberg reports that L’Occitane (973 HK) draws takeover interest from Blackstone (BX US), which is considering partnering with Chairman and largest shareholder Reinold Geiger.
  • Blackstone needs an attractive takeover premium due to the presence of significant disinterested shareholders (Mr. Geiger and Acatis KVG).
  • Shareholders will be wary of the latest rumour due to Mr Geiger’s aborted offer on 4 September 2023. Nevertheless, the valuation is undemanding compared to peer multiples.

Weekly Top Ten Event-Driven and Index Rebalance – Feb 4, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Fast Retailing

By Brian Freitas, Periscope Analytics

  • The review period for the Nikkei 225 (NKY INDEX) March rebalance ends yesterday. There could be three changes at the rebalance with sector balance in focus.
  • Depending on the changes, passive trackers will need to buy between 1.3-19x ADV (7.1-24% of real float) on the inclusions and sell between 3.5-47x ADV on the deletions.
  • Fast Retailing (9983 JP) avoids capping in March, passives will buy Nitori Holdings (9843 JP), and 25 stocks have over 0.5x ADV to sell as part of the funding trade.

2. Aeon (8267) Wants To Buy a Bigger Stake in Tsuruha (3391); What Does Tsuruha Want?

By Travis Lundy, Quiddity Advisors

  • Aeon Co Ltd (8267 JP) owns 13% of Tsuruha Holdings (3391 JP). Oasis owns 13% too. Oasis ran a governance campaign but lost last summer’s AGM. Aeon supported Tsuruha.
  • Tsuruha shares popped in November when Tsuruha said it was looking at its strategic options. BBG reported PE firms were circling. Now Aeon wants to buy Oasis’ stake. 
  • That would put Aeon in a near-blocking position without consolidating. And it would mean minorities stayed minorities. The real question is whether this is what Tsuruha wants.

3. FINAL PREDICTIONS: March 2024 Nikkei 225 Rebal (Socionext, Disco, and 1 Consumer Goods Stock to ADD)

By Travis Lundy, Quiddity Advisors

  • The Nikkei 225 data for the March 2024 rebalance is a wrap. The names are the same as before but there is likely less DISCO Corp (6146 JP) to buy.
  • It’s still big, but smaller than before because of the difference between performance and the change in PAF required to be below 1%. A 4:1 share split would be optimal.
  • I recommend a few positioning changes from before, and the Fast Retailing trade loses one short-term option but the longer-term one stays in place.

4. Korea: Stocks with Near-Term Potential Passive Flows

By Brian Freitas, Periscope Analytics


5. STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact

By Brian Freitas, Periscope Analytics

  • The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
  • We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
  • The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.

6. Timing of Double Dividends Opportunities in Korea

By Douglas Kim

  • The change in the dividend payment system in Korea in 2024 is likely to result in some attractive “double dividends” opportunities.
  • According to the Korea Exchange, there are seven stocks that have changed their dividend record dates policy last year and also that pay quarterly dividends. 
  • Hyundai Motor (005380 KS) (common) provides a dividend yield of 5.8% and Hyundai Motor (005385 KS) (pref) provides a dividend yield of 9.6% at current prices.

7. NIFTY50 Index Rebalance Preview: One Change for Sure; Second One Is a Maybe

By Brian Freitas, Periscope Analytics


8. A/H Premium Tracker (To 26 Jan 2024):  AH Premia Still Near Multi-Yr Wides, SOEs May See New Action

By Travis Lundy, Quiddity Advisors

  • The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc. 
  • SOUTHBOUND flows were small positive and NORTHBOUND flows a decent buy. AH premia stopped rising. Chinese shares bounced. SOEs being bought. Tech being sold. Tencent seeing SB outflows, still. 
  • New article in China Securities Journal hints at new measures on SOEs. Watch this space. Wouldn’t be short SOEs vs Privates on H/A basis. 

9. UOL Group (UOL SP): At Risk of Passive Selling in February

By Brian Freitas, Periscope Analytics

  • UOL Group (UOL SP) has underperformed its Singapore peers and the drop in market cap could result in the stock being deleted from global passive portfolios in February.
  • UOL Group (UOL SP) has traded higher since end October and there has been a steady increase in cumulative excess volume on the stock since then.
  • UOL Group (UOL SP) trades richer than its closest peer, City Developments (CIT SP), on EV/Sales and EV/EBITDA. The recent outperformance presents a trading opportunity.

10. Benesse (9783) – Tender Offer To Launch; No Change in Terms (¥2,600/Share)

By Travis Lundy, Quiddity Advisors

  • The “MBO” for Benesse traded through terms from the 6th day post-announcement onwards. 37% total traded since announcement, 20% since that 6th day. 
  • The deal as announced 10 November was entirely too cheap. It was somewhat egregious if you look through the balance sheet. Plus there was a free museum on top.
  • But to no avail. There is no bump. There have been no activists peeping above the parapet (yet). It isn’t impossible to block, but if nobody shows their face…

Weekly Top Ten Event-Driven and Index Rebalance – Jan 28, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. JSR (4185) – Very Juicy Arb Return At Expected Timeline

By Travis Lundy, Quiddity Advisors

  • Five weeks ago, JIC announced a delay in the commencement of the Tender Offer to buy JSR Corp (4185 JP), originally scheduled to start by end-December 2023. 
  • In the announcement, they said they expected the deal to start by end-February. In the press conference afterwards, JIC CEO Yokoo said “no particular issues with the Chinese regulator.” 
  • He then added he expected the deal to be done by March-end. Language is vague. I expect that means to start by then, but even then, annualised is now 30%.

2. Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain

By Travis Lundy, Quiddity Advisors

  • The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
  • There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
  • 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.

3. Renesas Electronics (6723 JP): Passives Will Need to Buy a LOT This Year

By Brian Freitas, Periscope Analytics


4. Hong Kong: Where Could Shorts Be Covered?

By Brian Freitas, Periscope Analytics


5. Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

By Brian Freitas, Periscope Analytics


6. TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool

By Travis Lundy, Quiddity Advisors

  • A few days ago, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】
  • That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy. 
  • Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better. 

7. CSI500 Index Rebalance Preview: High Turnover & Big Flow

By Brian Freitas, Periscope Analytics

  • With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
  • There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
  • The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.

8. CSI300 Index Rebalance Preview: A Dozen Changes for June

By Brian Freitas, Periscope Analytics

  • With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
  • There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.

9. China: Sliding Market Leads to Passive Selling

By Brian Freitas, Periscope Analytics

  • The China equity markets have continued to slide and the lower market caps and free float market caps will see a lot of stocks deleted from passive portfolios in February.
  • We currently estimate selling of around US$1.66bn across 74 stocks listed on the mainland, in HK and the U.S., and that number could increase as markets continue to underperform.
  • The potential deletes have dropped a lot over the last 4 months and there has been a marked underperformance versus the headline indices over the last month.

10. KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F

By Brian Freitas, Periscope Analytics

  • L&F Co Ltd (066970 KS) will move from the KOSDAQ Market to the KOSPI Market on 29 January. That means KOSDAQ 150 Index deletion at the close on 26 January.
  • As the highest ranked non-constituent from the Information Technology sector at the December rebalance, Seronics Co Ltd (042600 KS) will be added to the index.
  • Short interest on L&F Co (066970 KS) is 1.8m shares (KRW 364bn; 4.98% of shares outstanding; 7.24% of float; 2.4x ADV). There could be recalls from passives and forced covering.

Weekly Top Ten Event-Driven and Index Rebalance – Jan 21, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. S&P/​​​​​​​​​ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

By Brian Freitas, Periscope Analytics

  • With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
  • The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
  • There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

2. Benefit One (2412): The Plot Thickens

By Travis Lundy, Quiddity Advisors

  • Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
  • Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
  • The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

3. KOSPI200 Index Rebalance Preview: Four Potential Changes in June

By Brian Freitas, Periscope Analytics

  • Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
  • The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
  • There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

4. Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang

By Brian Freitas, Periscope Analytics


5. KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

By Brian Freitas, Periscope Analytics


6. Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud

By Brian Freitas, Periscope Analytics


7. Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

By Brian Freitas, Periscope Analytics

  • Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
  • Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
  • There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

8. Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

By Arun George, Global Equity Research Ltd


9. Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

By Travis Lundy, Quiddity Advisors

  • After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation. 
  • The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
  • The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

10. Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

By Janaghan Jeyakumar, CFA, Quiddity Advisors

  • STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
  • In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
  • I currently expect three changes for the STAR 50 index in March 2024.

Weekly Top Ten Event-Driven and Index Rebalance – Jan 14, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

By Brian Freitas, Periscope Analytics

  • The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
  • 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.

2. March 2024 Nikkei 225 Rebal:  Socionext, Disco, and a Consumer Goods Stock, Still

By Travis Lundy, Quiddity Advisors

  • No changes in the rankings since last time. Socionext (6526), Disco (6146), and a Consumer Goods stock (Zozo (3092) top-ranked, Ryohin Keikaku (7453) a better choice) are ADDs.
  • The DELETEs are still Takara Holdings (2531), Pacific Metals (5541), Sumitomo Osaka Cement (5232) with a dark horse candidate in Hitachi Zosen (7004) to replace Takara.
  • There is the upweight to Nitori (9843) but now less funkiness with Fast Retailing (9983). But it will continue being an interesting Nikkei 225 influence (for years to come).

3. Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

By Brian Freitas, Periscope Analytics

  • At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
  • We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
  • The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

4. TOPIX Inclusions: Who Is Ready (Jan 2024)

By Janaghan Jeyakumar, CFA, Quiddity Advisors

  • Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
  • Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
  • There are couple of other pre-event names that we have been tracking for the past few months.

5. Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical

By Travis Lundy, Quiddity Advisors

  • On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering. 
  • Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain. 
  • This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.

6. Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

By Travis Lundy, Quiddity Advisors

  • Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
  • ¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
  • But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

7. A/H Premium Tracker (To 5 Jan 2024):  STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving

By Travis Lundy, Quiddity Advisors

  • The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • SOUTHBOUND flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
  • STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.

8. Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns

By Sanghyun Park, Clepsydra Capital

  • In the past year, four KOSPI transfer listings showed similar patterns, with pre-listing price increases and substantial corrections in the first five trading days post-listing.
  • ChatGPTAmid a sideways market and a 54.2% YoY growth in the local ETF market last year, the impact of passive flow imbalances may have been more significant than before.
  • A key factor is the short-selling ban. Posco DX’s SSFs showed significant backwardation pre-KOSPI listing, concentrating proactive short positions, requiring caution in adjusting pre-listing short position costs.

9. Offshore China ETFs Rebalance Preview: Two Changes Expected in March

By Brian Freitas, Periscope Analytics


10. T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain

By Travis Lundy, Quiddity Advisors

  • In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price. 
  • I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
  • It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.

Weekly Top Ten Event-Driven and Index Rebalance – Jan 7, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

By Brian Freitas, Periscope Analytics

  • We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
  • We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

2. Allkem + Livent = Arcadium : Updated Expected Index Flows

By Travis Lundy, Quiddity Advisors

  • Allkem Ltd (AKE AU) saw its last day of trading on 21 December. There was large volume at the close as one major index provider gave it the boot. 
  • Another delayed their treatment at the last minute, and eliminated a cross-flow.
  • But there is still a lot of net buy flow tomorrow (3 Jan) and the next day in the US. Perhaps more than I expected. 

3. Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

By Sanghyun Park, Clepsydra Capital

  • Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
  • Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
  • Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

4. KRX New Deal Index Rebalance Preview: Changes with Flow & Impact

By Brian Freitas, Periscope Analytics


5. HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

By Brian Freitas, Periscope Analytics

  • Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
  • With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion. 
  • Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

6. New Year New NISA Accounts – It’s BIG, But Not so Big

By Travis Lundy, Quiddity Advisors

  • The Kishida administration put out a Doubling Asset-Based Income Plan in 2022. The goal? To get cash savings (corporate/individual) into growth assets and increase asset-based return contribution to income.
  • The goal included doubling the number of NISA accounts, and the amount invested in the next five years. On 1 January 2024, NEW NISA account contribution totals were trebled.
  • If accounts double, and contribution totals treble, and exemptions are now permanent, investment doubling is a quasi-certainty. The question is how it turns into income-producing assets. That’s MUCH tougher.

7. NIFTY NEXT50 Index Rebalance Preview: Potential Adds Skyrocketing

By Brian Freitas, Periscope Analytics

  • Nearing the end of the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
  • Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 26.9bn. There will be more than 1.5x ADV to sell on nearly all deletes.
  • The potential adds have outperformed the potential deletes by 35% over the last two months and some stocks are looking extremely frothy.

8. Merger Arb Mondays (01 Jan) – Weiqiao Textile, IRC, IJTT, JSR, Shinko Electric, Hollysys, OreCorp

By Arun George, Global Equity Research Ltd


9. NIFTY50 Index Rebalance Preview: One Change, Maybe Two, Low Probability of Three

By Brian Freitas, Periscope Analytics


10. NIFTY Bank Index Rebalance Preview: Canara Bank Could Replace Bandhan Bank

By Brian Freitas, Periscope Analytics


Weekly Top Ten Event-Driven and Index Rebalance – Dec 31, 2023

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

By Travis Lundy, Quiddity Advisors

  • In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
  • In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
  • The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

2. Japan – Increasing Shorts on Some Interesting Stocks

By Brian Freitas, Periscope Analytics

  • There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
  • The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
  • Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

3. IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively

By Travis Lundy, Quiddity Advisors

  • IJTT Co., Ltd. (7315 JP) was perhaps one of the lower-priced parent takeovers (Isuzu remains central to the bidder post-buyout) at 0.46x book. Today, the last day, it got bumped.
  • The new price is ¥850/share vs ¥812/share. +4.7% and a whopping 0.48x book now. ¥850 is where the stock traded just before the announcement. It immediately jumped to ¥875/share.
  • It appears Isuzu is not getting any more money out of this, but they should be OK. They are buying back in at 0.48x book. With leverage. 

4. Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs

By Douglas Kim

  • On 27 December, Kum Yang announced that its shares will be listed on the US stock market in the form of DRs, resulting in its shares rising by 11.7%.
  • The listing of Kum Yang ADRs is likely to have a short-term positive impact on its share price as this is likely to reduce free float of local common shares.
  • Nonetheless, over the next 6-12 months, we expect Kum Yang’s share price to trade much lower (30% or more) as its shares are highly overvalued. 

5. SBI To Buy Gumi (3903) Shares To Up Stake to Near 30% (And Try To Avoid Impairment)

By Travis Lundy, Quiddity Advisors

  • Today after the close, SBI Holdings (8473 JP) made an announcement it would buy (up to) 3.0mm shares of Gumi Inc (3903 JP) shares between tomorrow and end-March 2024.
  • SBI already owns 8.8mm shares, and this would bring them close to 30.0%. 
  • SBI did not specifically say they would buy on market, but the next 400,000 shares would require a large shareholder filing amendment. 

6. Meldia DC (1739 JP) – Open House Group Cleans Up Sanei Architecture Sub in TOB.

By Travis Lundy, Quiddity Advisors

  • Open House (3288 JP) took over Sanei Architecture Planning (3228 JP) this past autumn when banks forced the issue over the former CEO/owner’s mafia ties discovered in an investigation.
  • Seedheiwa (1739 JP) now better known as Meldia DC, is ~60% held by Sanei Architecture Planning, and 3% by Mr Koike. It has debt. So it needs cleaning up too.
  • This is too light for minorities, and even lighter for whole co, but it’s a done deal. 

7. StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down

By David Blennerhassett, Quiddity Advisors

  • Swire Pacific (19 HK)‘s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
  • 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%.

8. Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea

By Sanghyun Park, Clepsydra Capital

  • The spot prices of the newly listed SSFs generally exhibited a notable upward trend. This trend was consistently more pronounced in KOSDAQ-listed stocks compared to KOSPI-listed ones.
  • Various factors, including actions by ETF operators, may contribute. Their SSF purchases could deepen contango, leading to temporary spot price increases through arb spread seekers anticipating this development.
  • We should focus on a potentially consistent price pattern persisting before a sufficient learning effect accumulates. The tight schedule after July increases the likelihood of similar opportunities next March.

9. IRC Limited (1029 HK): A Wide Spread as the Conditional Offer Opens

By Arun George, Global Equity Research Ltd

  • The Irc Ltd (1029 HK) IFA opines that a mandatory conditional offer from Nikolai Levitskii (Chairman and 30.61% shareholder) at HK$0.118 per share is fair and reasonable. 
  • The offer is open, with the first closing date of 12 January 2024. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights. 
  • While the offer is light, satisfying the minimum acceptance condition is possible. The risk/reward profile is favourable as the upside (25.5% spread) outweighs the downside (5.3% to the undistributed price). 

10. Merger Arb Mondays (25 Dec) – JSR, Benefit One, IRC, Adbri, Link, A2B, Probiotec, Lithium Power

By Arun George, Global Equity Research Ltd


Weekly Top Ten Event-Driven and Index Rebalance – Dec 24, 2023

By | Event-Driven and Index Rebalance

1. Allkem+Livent=Arcadium : Expected Index Flows

By Travis Lundy, Quiddity Advisors

  • Yesterday during the day, Allkem Ltd (AKE AU) shareholders approved the Scheme and Livent (LTHM US) shareholders approved the merger. The deal is done. Allkem last trades 21 Dec.
  • NEWCO starts trading 4 January in the US but the Arcadium Lithium CDIs start trading 22 Dec in Australia. S&P/ASX announced they will replace Allkem in the ASX200.
  • But I have been asked for a breakdown of flows and timing again, so I have put it into a handy table which I hope makes it less confusing.

2. Dai-Ichi Life “Decides” Tender Offer Price and Buyback Price at ¥2,123 and ¥1,491/Share

By Travis Lundy, Quiddity Advisors

  • Today, Dai Ichi Life Insurance (8750 JP) came out with a cover letter and an amended Announcement of Intention to Commence a Tender Offer on Benefit One Inc (2412 JP)
  • The cover letter says they have obtained information from Pasona Group (2168 JP) and Benefit One allowing them to calculate a Tender Offer of ¥2,123/share for minorities, and buyback at ¥1,491/share. 
  • Now we wait. Again. Dai-Ichi Life “intends” to start a tender in mid-Jan 2024 (19 Jan likely earliest start possible) but it is not clear timing will come that early.

3. Allkem/Livent Merger Vote Tomorrow: Will Vote Get Past?

By Travis Lundy, Quiddity Advisors

  • The vote is tomorrow. It is slightly contested. Shareholder proxies have recommended approving. Some others say Allkem is going too cheap. 
  • It probably should get done because of scale benefits, and if it breaks, it might be good for Allkem, which is “good risk arb risk”
  • But the trade here is some combination of lithium rebound and index event, with index impact details here.

4. A/H Premium Tracker (To 15 Dec 23): Time To Go Long Hs Vs As.

By Travis Lundy, Quiddity Advisors

  • The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished. 
  • Time to go long Hs vs As for the new year at 52wk wide discounts. 3 Short H/A pairs now switched to long. 3 new pairs long this week. 

5. JSR (4185) – Deal Approval Unexpectedly Delayed, As Expected

By Travis Lundy, Quiddity Advisors

  • Today after the close, JSR Corp (4185 JP) announced that the expected “end-December” commencement of JIC’s Tender Offer to take the company private would be delayed. 
  • This was somewhat expected to widely expected based on initial FUD which then gave way to “specialised reporting” a couple of weeks ago which indicated as much.
  • Here I look at potential implications, spreads, and risks. And it still looks like one has to let it run (and buy a dip).

6. Kurabo (3106) – Bigly Buyback And Share Cancellation for A Valueful Value Trap With Hidden Value

By Travis Lundy, Quiddity Advisors

  • Kurabo announced a bigly buyback on Tuesday. At last price it is equivalent to 8+% of shares out. Most likely to target buybacks from cross-holders. 
  • The company is not cash-rich, but it is financial asset and real estate-rich. And it trades at cheap multiples without even thinking about those assets (themselves worth the market cap).
  • The TSE’s “PBR1 OR BUST” movement combined with starting low valuation, high payout, excess assets, mean this value trap has room to move. 

7. Arb Trading with Stock Rights in Korea: A Basic Guide Featuring LG Display Offering

By Sanghyun Park, Clepsydra Capital

  • Unlike typical Korean stock rights arbitrage, LG Display’s significant equity offering and active stock futures trading anticipate a spread opening, akin to the recent Hanwha Ocean scenario.
  • In contrast to Hanwha Ocean, the absence of major sellers, like KDB, sets this event apart. LG Electronics, the major shareholder with a 37.9% stake, intends to participate.
  • Despite differences from Hanwha Ocean, LG Display’s high retail shareholder presence implies a substantial likelihood of stock rights overhang, even without players like KDB.

8. Yuanta/​P-Shares Taiwan Div+ ETF: Day 1 Flows & Stock Moves

By Brian Freitas, Periscope Analytics

  • The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
  • Stocks with buy flows dropped 0.51% on average on Friday while the stocks with sell flows dropped 0.92%. On a flow weighted basis, the numbers were -0.21% vs -0.75%.
  • Since the start of November, the adds have outperformed the deletes and the TWSE INDEX. There has been significant outperformance in just the last week.

9. Toyo Construction (1890) – Everyone Hits Pause

By Travis Lundy, Quiddity Advisors

  • In September, YFO (Yamauchi Family Office) upped its Tender Offer proposal to ¥1,255/share. YFO presented. The Toyo Special Committee met, interviewed, examined, deliberated, then last week rejected YFO’s proposal. 
  • The rejection was a three-parter. First, they rejected YFO for not bringing management/ownership experience. Second, they said the proposal didn’t add enough value. Third, the price was too low.
  • There were no metrics against which to measure anything. And now Toyo has apparently decided to withdraw its Tender Offer Proposal.

10. Comprehensive List: 359 Companies on KOSPI & KOSDAQ Deferring Yearend Dividend Record Dates

By Sanghyun Park, Clepsydra Capital

  • The data is crucial for year-end dividend arbitrage. We can strategically target Single-stock futures’ spread basis widening due to information timeliness disparities, focusing on companies with high dividend yields.
  • Furthermore, it offers valuable insights into assessing the December-March spread levels, potentially leading to a rollover distortion in KOSPI 200 futures’ calendar spread trading.
  • Postponed yearend dividend record dates to March may clash with first-quarter dividends, offering a new trading opportunity. this unique situation could significantly impact spot and futures prices.

Weekly Top Ten Event-Driven and Index Rebalance

Receive this weekly newsletter keeping 45k+ investors in the loop




Weekly Top Ten Event-Driven and Index Rebalance – Dec 17, 2023

By | Event-Driven and Index Rebalance

1. JIC Consortium Possibly In Line to Win Shinko At “¥800bn”, Which Makes You Go 🤔…

By Travis Lundy, Quiddity Advisors

  • A Nikkei article today suggested that Fujitsu had granted preferential negotiating rights to buy Shinko Electric Industries (6967 JP) to a JIC-led consortium (including DNP and Mitsui Chem) for ~¥800bn.
  • This happened late in the afternoon session. Shares spiked 5+%, then were halted. A gray market ensued. 
  • A Bloomberg article provided more info, and the same info nuanced slightly differently. The wording in yet other articles was interesting enough that it is worth discussing. 

2. Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low

By Travis Lundy, Quiddity Advisors

  • On Friday 8 December, Bain announced an MBO with Outsourcing Inc (2427 JP) Chair Haruhiko Doi to take the company private at a 51% premium. Looks good at first glance.
  • It is, however, an offer at ~6.6x Management Forecast derived Dec 2024 EBITDA. This for a top player in a fast-growing market where Street/mgmt both see up-and-to-the-right results from here. 
  • This is a delayed start (late-Jan) for regulatory approvals. It is too cheap. It is blockable. But Doi-san is young at 64yrs old and he could come back years later.

3. MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell

By Brian Freitas, Periscope Analytics


4. Benefit One (2412): M3 Extends For a Full Month

By Travis Lundy, Quiddity Advisors

  • Today after the close, Benefit One Inc (2412 JP) amended its Tender Offer Target Opinion Statement to note that Dai Ichi Life had made a proposal to acquire 100%.
  • To allow the Board time to evaluate this proposal, the Company requested a Tender extension. Bidder M3 Inc (2413 JP) was obliged to extend 10 days. They extended 20 days.
  • This tells us a bunch of things. It is worth thinking about what happened to get here.

5. NASDAQ 100 Index Rebalance: 6 Regular Changes + 1 Adhoc Change; US$37bn to Trade

By Brian Freitas, Periscope Analytics

  • There were 6 inclusions and 6 exclusions for the Nasdaq-100 Stock Index (NDX INDEX) at the annual December reconstitution. Then another ad hoc change was added on top of that.
  • Impact on the inclusions ranges from 1-8 days of ADV to buy, while the impact on the deletions varies from 0.7-2.6 days of ADV to sell.
  • Apart from the constituent changes, there are expected to be inflows in Tesla Motors and Broadcom and outflows from Apple, Microsoft, Amazon.com and NVIDIA.

6. JIC Deal For Shinko Electric Is LIGHT, and There’s Room To Complain, But Will Trade Wide

By Travis Lundy, Quiddity Advisors

  • 29 minutes after I published a long, musing piece on the possibilities of structure and announcement later this week, JIC and Shinko Electric announced 5 minutes before midnight.
  • A warning for the future: The Nikkei and every other media outlet got the number wrong. It is NOT a total acquisition cost of “around ¥800bn”. It is under ¥700bn. 
  • It IS a split deal. And if JIC won with that price, it tells you something about the state of the market and future deals in the space.

7. Shinko Electric (6967 JP): JIC’s Pre-Conditional Tender Offer at JPY5,920

By Arun George, Global Equity Research Ltd

  • After months of speculation, Shinko Electric Industries (6967 JP) has recommended the JIC alliance’s preconditional tender offer of JPY5,920 per share, an 18.9% premium to the undisturbed price (31 May). 
  • The pre-condition relates to regulatory approvals in Japan, China, Korea, and possibly Vietnam. The offeror may waive the pre-condition. The offer is long-dated and expected to start in August 2024.
  • The minimum acceptance condition requires a 33.3% minority acceptance rate. Despite the low 7.1% premium to the last close, the offer resulted from a competing bidding process. 

8. Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains

By Sumeet Singh, Aequitas Research

  • On 28th Nov 2023, Toyota Motor (7203 JP) announced that it would sell around 9.4% of Denso Corp (6902 JP) in order to reduce its cross-shareholding.
  • The shares hadn’t corrected much till our last note on 7th Dec 2023, they have since corrected by 6% .
  • We have covered the deal background and deal dynamics in our earlier notes. In this note, we talk about the recent share price movement, as compared to prior deals.

9. HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

By Brian Freitas, Periscope Analytics


10. A Review of Tender Offers of Korean Companies in 2023

By Douglas Kim

  • We review the major tender offers of Korean companies in 2023. Some of the major M&A tender offers that have closed this year include Osstem Implant and SM Entertainment.
  • Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&A. 
  • There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.

Weekly Top Ten Event-Driven and Index Rebalance

Receive this weekly newsletter keeping 45k+ investors in the loop