In today’s briefing:
- HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- [Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- Alibaba (BABA): 4Q25, Main Business Growth Recovered to 12% YoY, Buy
- Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- [Quiddity Index] Six Hang Seng Index Family Indices: Flows for June 6 Rebal
- Merger Arb Mondays (19 May) – Seven & I, Nissin, Welcia/Tsuruha, Mayne, ESR, OneConnect, Frasers
- Reject Shop (TRS AU): 23rd June Vote On Dollarama’s Offer
HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- As expected, BYD (1211 HK) will be added to the Hang Seng TECH Index (HSTECH INDEX) in June following the launch of God’s Eye, its Advanced Driver-Assistance System (ADAS).
- BYD (1211 HK)‘s inclusion results in China Literature (772 HK) being deleted from the index. China Literature stock should drop over the near-term.
- Estimated one-way turnover at the rebalance is 13% resulting in a round-trip trade of HK$46.5bn (US$5.95bn). There are 16 stocks that have at least 1x ADV to trade from passives.
[Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- Buybacks are a central part of Corporate Japan’s effort to improve corporate/capital governance. Lots of cross-holders want/need to sell. Lots of companies want to reduce excess equity.
- This earnings season has seen a LOT of new buybacks announced. ¥7.3trln in the last month and that doesn’t even include the biggest buybacks extant by March-end companies.
- We are experimenting with new ways of displaying data/analytics for buybacks in Japan. To that end, we have a new tool. We hope users find it useful. We invite feedback.
Alibaba (BABA): 4Q25, Main Business Growth Recovered to 12% YoY, Buy
- Management claimed 4Q25 total revenue should grow by 10% YoY excluding two sold subsidiaries.
- The growth rate of customer management revenue rose to two digits in 4Q25.
- The main business margin was stable and most of the minor business margins rose YoY in 4Q25.
Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- Midea Group (300 HK) and ZTO Express Cayman (2057 HK) will be added to the Hang Seng Index (HSI INDEX) in June to take us up to 85 index constituents.
- Estimated one-way turnover is 2.9% and the estimated round-trip trade is HK$11.3bn (US$1.44bn) with over 1x ADV to trade in the adds and in one stock with a FAF increase.
- There could be a short-term drop in the AH premium for Midea Group while this inclusion ensures ZTO Express Cayman is a member of all major indices where eligible.
[Quiddity Index] Six Hang Seng Index Family Indices: Flows for June 6 Rebal
- In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
- The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
- By Quiddity calculations based on the 16 May close, there is one-way flow across these six indices of HK$34,556,596,089.99 (approximately), to trade on 6 June.
Merger Arb Mondays (19 May) – Seven & I, Nissin, Welcia/Tsuruha, Mayne, ESR, OneConnect, Frasers
- 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: Insignia Financial (IFL AU), ENN Energy (2688 HK), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP), ZEEKR (ZK US), Mayne Pharma (MYX AU), Smart Share.
- Lowest spreads: Bright Smart Securities And (1428 HK), Dada Nexus (DADA US), Nissin Corp (9066 JP), Sinarmas Land (SML SP), Fujitsu General (6755 JP), Torii Pharmaceutical (4551 JP).
Reject Shop (TRS AU): 23rd June Vote On Dollarama’s Offer
- Back on the 27th March, Reject Shop (TRS AU), a discount variety store, has entered into a Scheme Implementation Deed with Canadian outfit Dollarama (DOL CN).
- Dollarama Offered A$6.68/share, a 112% premium to last close. The Offer does NOT require FIRB signing off. The Offer has the backing of TRS’ largest shareholder, Kin Group (20.8%).
- The Scheme Booklet is now out, with a Scheme Meeting on the 23 June, and expected payment on or before the 22nd July. The IE (Kroll) says “fair & reasonable“.
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