In today’s briefing:
- STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance
- Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
- Korea Short Selling: Biggest Changes in Shorts & Trade Performance
- Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations
- Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive
- Suzuki Motor (7269 JP): The Current Playbook
- [Quiddity Index Apr25] S&P500/600 Jun25 Rebal: Lots of Intraview Changes Possible
- Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 14 April 2025)
- HEW: Sipping ECB Dove-Juice
- Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00
STAR50/STAR100 Index Rebalance Preview: Central Huijin’s ETF Creations Skew Performance
- Nearing the end of the review period, we forecast 1 change for the SSE STAR50 (STAR50 INDEX) and 4 changes for the STAR100 Index in June.
- We estimate turnover of 1.9% for the SSE STAR50 (STAR50 INDEX) and 4.5% for the STAR100 Index. The estimated round-trip trade is CNY 7.5bn (US$1.02bn).
- Large ETF inflows could have led to the recent underperformance of a long add/ short delete trade. That could reverse once markets stabilize or when the passives trade the rebalance.
Mazagon Dock Shipbuilders (MAZDOCKS IN): OFS & Potential Global Index Inclusion
- Mazagon Dock Shipbuilders (MAZDOCKS IN) has announced an Offer for Sale of 4.01% of the Government holding in the stock. That is INR 41bn (US$481m) at the last close.
- The increase in float brings the stock very close to inclusion in a global index at the May rebalance. However, that is dependent on how the stock performs from here.
- Inclusion in the index will bring around US$222m/ 2x ADV of passive inflows and could help support the stock.
Korea Short Selling: Biggest Changes in Shorts & Trade Performance
- The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
- Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
- The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.
Quiddity Leaderboard MV Jr-Gold Miners Jun25: Flow Expectations
- The MV Jr-Gold Miners index represents the performance of small-cap gold and silver mining companies listed around the world.
- This index is reviewed semiannually in March and September. There will be no index changes for the June 2025 index rebal event but there will be capping flows.
- We expect one-way flows of US$81mm for June 2025 which translates to a turnover of 1.4%.
Tsuruha (3391 JP): Welcia (3141 JP) Share Exchange and Aeon (8267 JP) Partial Offer Unattractive
- Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) announced a merger through a share exchange followed by a partial tender offer by Aeon for a 50.90% stake of the merged entity.
- The share exchange terms favour Welcia over Tsuruha shareholders. The Tsuruha shareholder vote is high risk as Orbis, the second-largest shareholder, intends to vote NO.
- Aeon Co Ltd (8267 JP)’s follow-up partial offer for Tsuruha is unattractive compared to its previous offer for the Oasis stake, peer multiples and premium to the undisturbed price.
Suzuki Motor (7269 JP): The Current Playbook
- Since the announcement of the US$1.1 billion secondary offering, Suzuki Motor (7269 JP)’s shares have remained broadly unchanged at the undisturbed price of JPY1570.5 per share (7 April).
- It is instructive to look at recent large Japanese placements to understand the potential trading pattern. Suzuki’s share performance is the joint best among recent large placements.
- However, the shares have underperformed the Nikkei 225 index (up 7.9%). The offering will likely be priced on 14 April. The average large Japanese placement tends to generate positive returns.
[Quiddity Index Apr25] S&P500/600 Jun25 Rebal: Lots of Intraview Changes Possible
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- In this insight, we take a look at the upcoming constituent changes in the run up to the June 2025 index rebal event.
- We expect two regular changes in June 2025. BUT… there are multiple live spin-off and M&A events likely to trigger intra-review index changes. Three are likely!
Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (Starting 14 April 2025)
- In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks starting 14 April.
- Our top 10 picks in the most recent bi-weekly was down 2.5% on average, outperforming KOSPI which was down 4.9% in the same period.
- The top 10 picks in this bi-weekly include Binggrae, Hyundai Rotem, Krafton, Nongshim, SK Telecom, Hanwha Systems, APR, SK Inc, Korean Air, and Samsung Heavy Industries.
HEW: Sipping ECB Dove-Juice
- Market disruptions occurred over the past week due to volatility in reciprocal and China tariffs, affecting the significance of data releases such as low US inflation and surging UK GDP.
- Next week, UK unemployment and inflation data may lean hawkishly due to resilient underlying trends and the delayed impact of Spring stock in clothing store price samples.
- The European Central Bank (ECB) is also being pushed towards making another cut on Thursday due to market movements.
Fengxiang (9977 HK): PAG’s Preconditional Privatisation Offer at HK$2.00
- Shandong Fengxiang (9977 HK) has disclosed a preconditional privatisation offer from PAG, the controlling shareholder, at HK$2.00 per H share, a 33.3% premium to the undisturbed price.
- The precondition relates to regulatory approvals. The key conditions for the privatisation will be approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection).
- The shareholders with blocking stakes which have not provided irrevocables will likely be supportive as the offer is reasonable and there is a potential scrip alternative.
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