In today’s briefing:
- Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
- Shinko Electric (6967 JP): JIC’s Tender Offer on the Home Stretch
- Korea Zinc: An Important Legal Decision to Disallow Appointment of Directors Using Cumulative Voting
- Taiwan: Potential Global Index Changes; Last Review Day Today
- MicroStrategy (MSTR US): A Monetary Good Or Emperor’s New Clothes?
- Quiddity Leaderboard BSE/SENSEX Jun 25: Two Sensex Changes Could Trigger US$440mn One-Way Flows
- Sanil Electric US$1.1bn Lockup Expiry – Tempting to Book 2x Gains in Six Months
- Omnicom and IPG Merger of $25.6B Combined Revenue: Market Reaction and Major US Index Implications
Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
- The lock-up on KKR HKE ends next week, Kokusai Electric (6525 JP) should be deleted from a global index end-February and could be added to the NKY INDEX in March.
- There has been a buildup of shorts in Kokusai Electric (6525 JP) as the stock has underperformed the Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) by a lot.
- The global index deletion in February could provide an entry point into a long position ahead of the announcement of the Nikkei 225 (NKY INDEX) changes in March.
Shinko Electric (6967 JP): JIC’s Tender Offer on the Home Stretch
- Shinko Electric Industries (6967 JP)’s tender offer from a JIC alliance is at JPY5,920. Today’s update notes that JIC has satisfied the regulatory precondition.
- The tender offer is expected to commence in mid-February. The Board will continue to recommend it because it remains attractive.
- Deal fatigue (announced in December 2023) and Ibiden’s derating will nudge shareholders to accept. At the last close and for an end-of-March payment, the gross/annualised spread was 0.7%/3.9%.
Korea Zinc: An Important Legal Decision to Disallow Appointment of Directors Using Cumulative Voting
- On 21 January, there was an important legal court decision to disallow the appointment of directors using the cumulative voting system at the Korea Zinc’s EGM on 23 January.
- This legal decision is likely to favor MBK/Young Poong alliance in the control of Korea Zinc. The market increasingly favors the likelihood of MBK/Young Poong alliance winning this proxy battle.
- Therefore, the chance of a further M&A battle has been reduced which is likely to further decline in the share price of Korea Zinc.
Taiwan: Potential Global Index Changes; Last Review Day Today
- There could be 2 adds and 2 deletes for Taiwan in a global index in February. Today is the last trading day ahead of the CNY holidays.
- Passive trackers will need to trade between US$76m to US$370m of the stocks and impact will vary between 3.2x-7x ADV to trade.
- Shorts are small in the potential adds and there has been short covering recently, while there has been a big increase in shorts for one of the potential deletes.
MicroStrategy (MSTR US): A Monetary Good Or Emperor’s New Clothes?
- Microstrategy Inc Cl A (MSTR US) has a market cap of US$97.7bn, an eye-watering 115% premium to its bitcoin holding of US$45.4bn. Before taking into account debt.
- Investors are effectively dolling out $2+ for a $1 investment. And that investment is fuelled by new equity (shares are up 743% yoy) and debt. Perpetual preferred shares are next.
- Sceptics are not in short supply. But neither are backers, such as Capital (7%), Vanguard (6.9%), Susquehanna, Norges and other, arguably, sophisticated players. Right now, the backers are winning.
Quiddity Leaderboard BSE/SENSEX Jun 25: Two Sensex Changes Could Trigger US$440mn One-Way Flows
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, BSE 100, and BSE 200 Indices in the June 2025 index rebal event.
- As things stand, there could be two index changes for the SENSEX index.
- There could be two ADDs/DELs for the BSE 100 Index and four ADDs/DELs for the BSE 200 Index.
Sanil Electric US$1.1bn Lockup Expiry – Tempting to Book 2x Gains in Six Months
- Sanil Electric (062040 KS) listed in Korea on 29th July 2024 after raising US$193m. Its six-month lockup will expire on 29th Jan 2025.
- Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Omnicom and IPG Merger of $25.6B Combined Revenue: Market Reaction and Major US Index Implications
- The merger between Omnicom Group (OMC US) and Interpublic Group Of Companies (IPG US) aims to create a marketing powerhouse with $25.6 billion in revenue and $750 million in annual synergies.
- Deal spread narrowed due to Omnicom’s price drop, signalling market caution over post-merger performance.
- The merger’s close, expected in 2025, will impact major US indices on an intra-quarter basis.
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