In today’s briefing:
- Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
- CATL (300750 CH): Index Inclusion Post H-Share Listing
- KOSPI Size Indices: When Active Met Passive
- Quiddity Leaderboard NIFTY Mar 25: US$1.2bn Collective One-Way Flows but Momentum Is Negative
- Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
- Korea’s Financial Regs Drop New IPO Allocation and Delisting Rules: What It Means and What to Expect
- Shinko Electric (6967 JP): JIC’s Tender Offer on the Home Stretch
- HKEx Consultation Paper – What Matters for ECM Investors
- Korea Zinc: An Important Legal Decision to Disallow Appointment of Directors Using Cumulative Voting
- Taiwan: Potential Global Index Changes; Last Review Day Today
Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
- Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
- It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved.
- Lockup expiry is next week, and there is a likely large index event in ~10 weeks.
CATL (300750 CH): Index Inclusion Post H-Share Listing
- Contemporary Amperex Technology (CATL) (300750 CH) has announced plans for an H-share listing with media reports indicating a raise of at least US$5bn. Shareholders have approved the issuance.
- CATL (300750 CH) was designated as a Chinese Military Company earlier this year by the U.S. Department of Defense but is still not on the NS-CMIC list.
- The CATL (300750 CH) H-shares should get Fast Entry to the global indices and iShares China Large-Cap (FXI US) ETF. Inclusion in the HSCEI and HSI will take longer.
KOSPI Size Indices: When Active Met Passive
- The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
- Over halfway through the review period, we forecast 39 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
- Three potential downward migrations were deleted from a global index in November. Now, four more potential downward migrations could be deleted from the same global index in February.
Quiddity Leaderboard NIFTY Mar 25: US$1.2bn Collective One-Way Flows but Momentum Is Negative
- NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
- In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
- We see two changes for the NIFTY 50 index and five changes for the NIFTY 100 index.
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.
Korea’s Financial Regs Drop New IPO Allocation and Delisting Rules: What It Means and What to Expect
- We might see a liquidity crunch post-listing, with tighter regulations and mandatory holding drying up liquidity, causing more volatile price swings.
- Big local players with heavy lock-ups will take a large allocation, creating significant overhang risk at the six-month mark. Stronger IPO eligibility boosts costs, pushing funds toward riskier trades.
- Overall, this feels like a quick fix. Rather than focusing on long-term market improvements, we should focus on the new pricing patterns likely to emerge in the short term.
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%.
HKEx Consultation Paper – What Matters for ECM Investors
- Stock Exchange of Hong Kong issued a consultation paper titled Proposals to Optimise IPO Price Discovery and Open Market Requirements with new mechanisms proposed for the IPO in the future.
- In this note, we summarize key points for ECM investors and analyze the impact from a historical perspective the impact for ECM investors.
- We are of the view that overall the changes will benefit ECM investors by reallocating a portion of the profits from cornerstone investors.
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.
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