In today’s briefing:
- Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn
- Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?
- Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade
- 3D Launches Partial Tender Offer on NTT UD REIT (8956)
- Solactive Global Uranium & Nuclear Components Index Rebalance: DeepSeek Led Selloff & 1 Delete
- Event Driven: Vedanta Ltd: A Story of Wealth Creation Through Demerger
- Daihatsu Diesel’s (6023) Big Buyback and Quasi Change of Control
- Play the Timing Sweet Spot Between KOSPI 200 Rebal and Short Selling Coming Back into Play
- Sigma Healthcare (SIG AU): Shareholders Approve Merger; Passives Could Start Buying in Two Weeks
- Infinity Natural Resources (INR): Sector Sentiment Sours, Exercise Caution on IPO
Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn
- SigmaHealthcare and ChemistWarehouse shareholders meet on 29 January. If the merger resolutions are approved, Second Court Hearing is on 3 February and the merger will be effective on 4 February.
- Upward migration in one large global index could take place on 13 February while upweights and upward migrations in the S&P/ASX indices should be at the close on 21 March.
- Upward migration in the other global index could take place in March or June. Total passive buying estimate is A$2.76bn. This will be offset by positioning and CWG shareholders selling.
Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?
- Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.
- The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.
- The setup very near-term could be pretty interesting, and worth watching.
Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade
- With 3 days left in the review period, Fast Retailing (9983 JP) has a 11.29% weight in the Nikkei 225 (NKY INDEX). That means double capping in March.
- If Fast Retailing (9983 JP) underperforms the other index stocks by 1.8% from now to the close on 31 January, there will only be a single level of capping.
- Double capping will result in big selling on Fast Retailing (9983 JP) and big inflows into the other index constituents. Smaller impact for single level capping.
3D Launches Partial Tender Offer on NTT UD REIT (8956)
- Seemingly out of the blue, Singapore-based activist investment fund 3D Investment Partners has launched a partial tender offer at a small premium on NTT UD REIT Investment Corporation (8956 JP).
- 3DIP currently owns 2.2% and at maximum, will own 15.00% of the REIT units outstanding less treasury units. It intends to own the units for “pure investment purposes.”
- “Shareholder” structure is different for J-REITs vs companies. And this J-REIT has an interesting future possibility. But…
Solactive Global Uranium & Nuclear Components Index Rebalance: DeepSeek Led Selloff & 1 Delete
- Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There is only 1 delete with implementation at the close on 31 January.
- As expected, GoviEx Uranium (GXU CN) will be deleted from the index and there will be a bunch of capping changes, especially for non-pure play stocks.
- Estimated one-way turnover is 5.8% resulting in a round-trip trade of US$386m. There are many stocks with multiple days of ADV to trade.
Event Driven: Vedanta Ltd: A Story of Wealth Creation Through Demerger
- Vedanta Ltd (VEDL IN) plans a multi-segment demerger to unlock value by separating its aluminum, zinc, oil and gas, steel, and other core operations into standalone entities.
- This restructuring aims to eliminate conglomerate discount, foster specialized leadership, and attract fresh capital, potentially enhancing overall valuations and fueling long-term growth across diversified segments.
- Despite governance concerns and cyclical commodity risks, pure-play listings could catalyze re-ratings, offering heightened returns but requiring vigilance on execution and corporate transparency.
Daihatsu Diesel’s (6023) Big Buyback and Quasi Change of Control
- Yesterday, Daihatsu Diesel Mfg (6023 JP) announced that it would buy back shares in a Tender Offer and that its controlling “parent” would also sell shares to a private company.
- The accretion is significant, and the shareholder structure changes significantly. It is not quite an Exedy-like situation though. The register changes but it doesn’t clear.
- But the backdrop is considerably different than the MTMP, and that means this smallcap is worth a closer look.
Play the Timing Sweet Spot Between KOSPI 200 Rebal and Short Selling Coming Back into Play
- Short selling returns March 31, after 85% of the KOSPI 200’s rebalancing. Stocks set for removal will be prime short targets.
- Stocks removed have solid liquidity, tight passive impact gaps between them, and with short selling restarting March 31, we could see intensified volume in the short basket.
- With rebalance ahead, price action may start early. Market exposure means aggressive moves could happen before the end of March, so consider building futures positions before short selling resumes.
Sigma Healthcare (SIG AU): Shareholders Approve Merger; Passives Could Start Buying in Two Weeks
- Sigma Healthcare (SIG AU) and Chemist Warehouse (CWG) shareholders have approved the merger with 99.86% and 100% of the votes cast in favour.
- The Second Court Hearing is on 3 February and the merger will be implemented on 12 February, which is when the passive buying could commence.
- Sigma Healthcare has continued to trade higher on a record margin and sales expansion for CWG and expected passive buying that could top A$3bn over the next few months.
Infinity Natural Resources (INR): Sector Sentiment Sours, Exercise Caution on IPO
- While this company is well-positioned in its sector and has a prudent growth strategy and balance-sheet flexibility, the short term “sector winds” are now blowing in a different direction.
- Venture Global (VG) debuted last Friday with a major price cut and a more disappointing debut.
- Our sources state that the official message regarding the deal is that the offering is multiple-times oversubscribed from long-only and energy-dedicated funds.
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