In today’s briefing:
- 7&I (3382) – In Limbo, Dipping, But Stories Coming Together
- Japan: Last Look at Potential Passive Selling in February
- SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer
- Australia: Last Look at Potential Passive Selling in February
- China/HK: Passive Activity Expected Later This Month
- EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension
- Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster
- Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March
- EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot
- HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs

7&I (3382) – In Limbo, Dipping, But Stories Coming Together
- In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
- We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
- York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.
Japan: Last Look at Potential Passive Selling in February
- There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
- Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
- The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.
SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer
- On Friday, SBI Sumishin Net Bank (7163 JP) fell 12.5% in the last 90 minutes of trading. This was not due to their Q3 earnings release (out 30 January).
- It seemed due to investor disappointment in the content of the NTT earnings call. As discussed in the forked insight, there had been speculation NTT would buy SBI Sumishin.
- Investors had thought NTT would pay more than 28x earnings and a ¥600bn premium to book to buy the business. At 23.7x Mar25e EPS and 4.1x book, it’s still expensive.
Australia: Last Look at Potential Passive Selling in February
- There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks.
- If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
- The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.
China/HK: Passive Activity Expected Later This Month
- There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
- The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
- Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.
EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension
- Japanese Prime Minister Shigeru Ishiba’s meeting with US President Trump shines the spotlight on potential US tariffs on Japanese cars. Toyota Motor’s (7203 JP) high implied volatility expresses elevated risk.
- Risk analysis suggests a range of option strategies. Implementation is challenging due to low liquidity in the Japanese market.
- Option liquidity is higher in the US traded Toyota Motor Corp Spon ADR (TM US) which is the preferred route of implementation.
Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster
- 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: Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), Dada Nexus (DADA US), Smart Share Global (EM US), ESR Group (1821 HK), Get Nice Financial.
- Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Macromill, Inc (3978 JP), Proto Corp (4298 JP).
Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March
- On the 10th December 2024, Fosun Tourism (1992 HK) announced a Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a chunky 95% premium to undisturbed.
- Assuming the Scheme gets up, Fosun International (656 HK) and concert parties would hold 100% in Fosun Tourism.
- The Scheme Doc is now out, with a Court Meeting on the 4th March, and expected settlement on the 26th March. The IFA (Altus Capital) says “fair and reasonable”.
EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot
- Nikkei down 2.66% on Monday with Implied vol very reactive to the move jumping almost 3 points.
- USD/JPY dropped 2.35% for the week, Nikkei fared better only losing 1.96%.
- Open interest in the Nikkei dominated by Puts with 2 outstanding for every 1 Call.
HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs
- In the post-CNY return, SOUTHBOUND gross trading activity was stronger per day than the previous several weeks, but SB Net Buying was not.
- Tech ended up being a big net buy, but Tencent (700 HK) a big net sell.
- Lower-Than-Expected tariff rates against China meant foreigners are back to buying Chinese stocks for the time being which may lower SB net buys near-term.