In today’s briefing:
- Tsuruha (3391 JP)/Welcia (3141 JP): Index Promotion & Passive Flows Likely Priced In
- Merger Arb Mondays (27 Oct) – Dongfeng, ENN, Joy City, Minmetals, Soft99, Ashimori, Pacific Ind
- Seres (9927 HK): Index Inclusion Timeline for a Max Offering of US$2.2bn; Big Discount to A-Shares
- Weekly Deals Digest (26 Oct) – Digital Holdings, Soft99, Joy City, Minmetals, Sany, Seres, Pony AI
- HSBC (5 HK) Earnings on 28 Oct, 12:00 HKT: Price Action and Option Insights
- Lenskart IPO: Earliest Index Inclusion in June
- HK Connect SOUTHBOUND Flows (2wks To 24 Oct 2025); Big Flows on Downdraft, Lower Flows on Rebound
- A/H Premium Tracker (2 Wks to 24 Oct 2025): Beautiful Skew Behaving Badly; High Div SOEs
Tsuruha (3391 JP)/Welcia (3141 JP): Index Promotion & Passive Flows Likely Priced In
- Tsuruha Holdings (3391 JP) acquires Welcia Holdings (3141 JP) in just over 4 weeks. Aeon Co Ltd (8267 JP)‘s tender offer for Tsuruha Holdings (3391 JP) could commence in December/January.
- The enlarged Tsuruha Holdings (3391 JP) could migrate upward in the MGlobal Index and that will bring in large passive flows. But there is one thing to watch out for.
- Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) have outperformed peers over the last 6 months and now trade at a higher forward PE.
Merger Arb Mondays (27 Oct) – Dongfeng, ENN, Joy City, Minmetals, Soft99, Ashimori, Pacific Ind
- I 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: Smart Share Global (EM US), Mayne Pharma (MYX AU), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Changhong Jiahua Holdings (3991 HK), Joy City Property (207 HK).
- Lowest spreads: Bright Smart Securities (1428 HK), Mandom Corp (4917 JP), Humm Group (HUM AU), Larvotto Resources (LRV AU), Seven West Media (SWM AU), Jinke Smart Services (9666 HK).
Seres (9927 HK): Index Inclusion Timeline for a Max Offering of US$2.2bn; Big Discount to A-Shares
- Seres Group (601127 CH) could raise up to HK$17.4bn (US$2.24bn) in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the already small possibility of Fast Entry inclusion to global indexes.
- Seres (9927 HK) should be added to Southbound Stock Connect from the open of trading on 1 December following the end of the Price Stabilisation period.
Weekly Deals Digest (26 Oct) – Digital Holdings, Soft99, Joy City, Minmetals, Sany, Seres, Pony AI
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Sany Heavy Industry (600031 CH), Seres Group (601127 CH) and Pony AI (PONY US) H Share listings.
- Event-Driven developments: Digital Holdings Inc (2389 JP), Pacific Industrial (7250 JP), Soft99 Corp (4464 JP), Joy City Property (207 HK), Minmetals Land (230 HK), Larvotto Resources (LRV AU).
HSBC (5 HK) Earnings on 28 Oct, 12:00 HKT: Price Action and Option Insights
- Context: Index heavyweight HSBC (5 HK) / HSBC (HSBA LN) is set to report results on 28 October at 12:00 HKT — during the Hong Kong trading lunch break.
- Timing & Trading: The 30 Oct and 31 Oct option expiries offer direct instruments to gauge HSBC’s post-earnings volatility — or to take targeted exposure to, or hedge, the event.
- Expected Move: Historical data reveals HSBC’s announcement-day moves are significantly larger than on average trading days, with options currently pricing in a remarkably aligned ± 3.1% implied move.
Lenskart IPO: Earliest Index Inclusion in June
- Lenskart Solutions (0370405Z IN) is looking to list on the exchanges by selling 181.05m shares via a primary and secondary offering to raise US$829m at a valuation of US$7.95bn.
- The price band has been set at INR 382-402/share, and the issue is likely to price at the top end of the range.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances will commence in June 2026 but flow will be small given the low float.
HK Connect SOUTHBOUND Flows (2wks To 24 Oct 2025); Big Flows on Downdraft, Lower Flows on Rebound
- Gross SOUTHBOUND volumes just over US$21bn a day two weeks ago as markets fell sharply. About two-thirds that this past week as indices rebounded. High-div SOEs seeing buying demand.
- The recommended name was short Fuyao Glass Industry Group (3606 HK). The stock was -4.9% over two weeks, but the H outperformed its A by 0.55%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.
A/H Premium Tracker (2 Wks to 24 Oct 2025): Beautiful Skew Behaving Badly; High Div SOEs
- The last two weeks have seen “Beautiful Skew” behave badly across the ten trading days. CNOOC Ltd (883 HK) is trading too wide for its div into year-end.
- The long reco on Guangzhou Automobile Group (2238 HK) two weeks ago saw the H-share rise 6.8% from the next day through Friday, and the H OUTperformed its A by 2.62%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.
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