In today’s briefing:
- FXI Rebalance Preview: New Listings, Potential Inclusions, H/A Premiums
- [Quiddity Index] Light & Wonder (LNW US/AU) US Delisting Event – Updating The Assumptions/Estimates
- Hynix L2 Flag Risk: Why Stuck Below ₩620k? Eyes on Nov 17 Pivot
- ChiNext/ChiNext50 Index Rebalance Preview: Maxing Out the Changes
- STAR Chip Index Rebalance Preview: One Change for December
- [Japan M&A] Paris Miki Is Indeed an MBO Target; Luxottica May Complain But Tough To Block
- Paris Miki (7455 JP): Chairman-Led MBO Likely Done Despite Luxottica’s Unclear Intentions
- Taiwan Top 50 ETF Rebalance Preview: Plenty of Big Overlapping Flows Coming Up
- Human Made Pre-IPO: A Bathing Ape, Reborn
- CSI Liquor/ Alcoholic Drink Index Rebalance Preview: One Delete & Some Big Capping Changes
FXI Rebalance Preview: New Listings, Potential Inclusions, H/A Premiums
- There could be 3 constituent changes for the iShares China Large-Cap (FXI) (FXI US) ETF in December. That could easily increase to 4.
- Two of the forecast inclusions will also have inflows from the FGlobal Index at the same time, increasing the impact. The third is a potential HSCEI INDEX add in December.
- The HA premiums for CATL (3750 HK) and Jiangsu Hengrui (1276 HK) have dropped ahead of lock-up expiry and there could be premium expansion closer to index/ETF inclusion.
[Quiddity Index] Light & Wonder (LNW US/AU) US Delisting Event – Updating The Assumptions/Estimates
- Light & Wonder (LNW US) will be delisted at the close of tomorrow US time (two trading days left) and shares converted to Australian CDIs.
- After studying the matter we have amended our assumptions on how flows work. More net selling than expected in November, irksome uncertainy in December, more buyback flows in the meantime.
- The stock was higher on earnings in Australia, skipped a day, then skipped another day, then jumped in the US yesterday.
Hynix L2 Flag Risk: Why Stuck Below ₩620k? Eyes on Nov 17 Pivot
- Hynix tagged L2: cash‑only, no margin. >40% two‑day rip triggers KRX halt. L2 caps distort tape; Square’s Oct 27–Nov 10 run showed the messy playbook.
- Hynix L2 review: five >200% YoY prints since Nov 4, but no fresh 15‑day high—₩620k from Nov 3 still the cap, yesterday stalled just below.
- Break above ₩620k likely triggers L2, leverage caps, volatile tape, Square outperformance; hold below into Monday kills L2 risk, keeps Hynix’s relative bid with retail still piling in.
ChiNext/ChiNext50 Index Rebalance Preview: Maxing Out the Changes
- With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
- The largest flows will be in 2 stocks that are forecast adds for both indices. There are 14 stocks with over 0.5x ADV to trade from passive trackers.
- The forecast adds outperformed the forecast deletes from June to August, but there has been significant underperformance since then. Outperformance could resume as positioning kicks in prior to announcement.
STAR Chip Index Rebalance Preview: One Change for December
- There could be 1 constituent change for the STAR Chip Index at the December rebalance. There will also be a few capping changes.
- Estimated one-way turnover is 2.3% resulting in a round-trip trade of CNY 2.5bn (US$352m). Passives need to trade between 0.3-0.4x ADV in the potential changes.
- The forecast add and delete will have same-way flows from passive trackers of other indices and that will increase the impact on the stocks.
[Japan M&A] Paris Miki Is Indeed an MBO Target; Luxottica May Complain But Tough To Block
- Today after the close, Paris Miki Holdings (7455 JP) announced the Tane family Holdco would buy out the company in an “MBO” at ¥581, or 4.8x current year EBITDA.
- World famous eyeglass/sunglass manufacturer Luxottica bought 13.8% of the company in the low ¥300s almost stopping about a year ago. They might complain, but Paris Miki is a big outlet.
- This looks like it gets done. The family+crossholders+ESOP+warrants have 65% of the expanded share count. Those who would complain would need to do so soon, and loudly.
Paris Miki (7455 JP): Chairman-Led MBO Likely Done Despite Luxottica’s Unclear Intentions
- Paris Miki Holdings (7455 JP) has recommended a Chairman-led MBO at JPY581, a 48.6% premium to the last close price.
- While the offer is arguably light as it is marginally below book value (P/B of 0.99x), it is above the midpoint of the IFA DCF valuation range.
- The offer represents a 10-year high. Luxottica Group (LUX IM), the second-largest shareholder, has not signalled whether it will tender, but it would struggle to derail the offer.
Taiwan Top 50 ETF Rebalance Preview: Plenty of Big Overlapping Flows Coming Up
- There could be 4 constituent changes for the Yuanta/P-Shares Taiwan Top 50 ETF in December as positioning for buying by one set of index trackers pushes stocks into other indices.
- There will be passive inflows in some of the forecast adds week after next and the flows from these index trackers will come a few weeks later.
- With large AUMs tracking the dividend indices, stocks that have moved up a lot now have low dividend yields and there could be opposite flows from those index trackers.
Human Made Pre-IPO: A Bathing Ape, Reborn
- Human Made (456A JP) aims to raise around US$116m in its Japan IPO.
- Human Made Inc. is a Japan-based apparel and lifestyle company. Its business model centers on producing high-value, limited-supply apparel and goods.
- In this note, we look at the company’s past performance.
CSI Liquor/ Alcoholic Drink Index Rebalance Preview: One Delete & Some Big Capping Changes
- The review period ended on 31 October, the changes should be announced on 28 November and will be effective after the close of trading on 12 December.
- There could be one delete each for the CSI Liquor Index and the CSI Alcoholic Drink Index. Plus capping changes for a bunch of stocks.
- The entire sector has been under pressure over the last few years with every rally being sold into.
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