Daily BriefsEvent-Driven

Daily Brief Event-Driven: 7&I (3382) – In Limbo and more

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

By Travis Lundy

  • 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

By Brian Freitas

  • 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

By Travis Lundy

  • 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

By Brian Freitas

  • 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

By Brian Freitas

  • 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

By Gaudenz Schneider

  • 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

By Arun George


Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March

By David Blennerhassett

  • 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

By John Ley

  • 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

By Travis Lundy

  • 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.

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