In today’s briefing:
- S&P/ASX Indices: Proposed Methodology Changes & The BIG September Rebalance
- GMO Internet (4784) – GMO Internet Parent Has Been SELLING In The Market
- ADR Arb on Korean Divvy Names: A Side Play Riding the Policy-Driven Liquidity Wave
- WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- Denso (6902) Buys Large Rohm (6963 JP) Stake – Register Gets Squeezier
- Wuxi AppTec Placement – Momentum Is Very Strong, Though It Is a Bit Opportunistic
- China Citic Financial (2799 HK): Global Index Inclusion as Valuation Blows Out
- Hitachi Energy India (POWERIND IN): Powering into a Global Index in August
- Fujitec (6406 JP): EQT’s Takeunder Likely a Done Deal
- SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
S&P/ASX Indices: Proposed Methodology Changes & The BIG September Rebalance
- S&P DJI have proposed methodology changes to the S&P/ASX family of indices to enhance representativeness and more quickly reflecting changing market conditions.
- The main changes are lowering the minimum float threshold, shortening the market cap calculation period and the liquidity calculation period, and including buffers for additions and deletions.
- We currently forecast 47 changes to the S&P/ASX family of indices in September and the short market cap computation period could lead to more change over the next two months.
GMO Internet (4784) – GMO Internet Parent Has Been SELLING In The Market
- I have harped on the fact that GMO Internet Group (9449 JP) has to sell GMO Internet (4784 JP) shares with the goal to get 35% tradable shares by end-2025.
- I have written about it here, here, here, and here. The price needs to be lower so the parent can launch a HUGE block. The stock must be less squeeze-able.
- It turns out the parent started selling in the market the day after the Offering was cancelled. The setup is delicious now.
ADR Arb on Korean Divvy Names: A Side Play Riding the Policy-Driven Liquidity Wave
- ETF rebalancing’s key, but still too early to front-run — both use FnGuide screens based on FY1 DPS and prices from 20 days before November-end.
- Beyond the rebalance noise, ADR-local spreads have been widening — KB hit +6%, Shinhan’s also drifting. Likely tied to the recent liquidity surge in dividend names.
- ADR arb’s more doable with NXT tightening slippage. With proper FX hedging, it’s a clean side play riding the policy-driven liquidity wave.
WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- WuXi AppTec (2359 HK) is looking to raise US$650m at a price range of HK$104.16-106.4/share, a 5-7% discount from last close.
- There will be passive buying from global index trackers around the time of settlement of the placement shares. Then there will be some Hang Seng Index buying in August.
- Short interest in WuXi AppTec (2359 HK) has spiked and some shorts could cover into the placement. The AH premium could move higher following the placement.
Denso (6902) Buys Large Rohm (6963 JP) Stake – Register Gets Squeezier
- Today after the close, a Nikkei article said Denso Corp (6902 JP) had recently lifted its stake in ROHM Co Ltd (6963 JP) from “about 0.3%” to “just under 5%.”
- Given the recent buy of 28mm shares of Rohm into the Nikkei 225, that means ~11.5% or perhaps more has been taken out of the public’s hands.
- Some may have come from cross-holders, but it’s not clear there are that many. This renders the stock more squeeze-able going forward. Rohm reports next week.
Wuxi AppTec Placement – Momentum Is Very Strong, Though It Is a Bit Opportunistic
- WuXi AppTec (2359 HK) aims to raise around US$650m via its H-share placement.
- The stock has been on a roll this year and recently announced strong earnings as well. Although it’s now trading at its 52-week highs.
- In this note, we will talk about the placement and run the deal through our ECM framework.
China Citic Financial (2799 HK): Global Index Inclusion as Valuation Blows Out
- A doubling of the stock price over the last 4 months could lead to China Huarong Asset Management (2799 HK)‘s inclusion in a global index in August.
- China Huarong Asset Management (2799 HK) has outperformed its closest peer and trades at a much higher price to book.
- China Huarong Asset Management (2799 HK) was added to Southbound Stock Connect in March and investors have been buying the stock via the link.
Hitachi Energy India (POWERIND IN): Powering into a Global Index in August
- A big rally in Hitachi Energy India (POWERIND IN) this year could lead to the stock being added to a global index in August.
- Hitachi Energy India (POWERIND IN) has outperformed its peers and now trades at significantly higher valuations compared to its peer group.
- There is positioning in the stock and early entrants could be looking to unwind some of their holdings over the next couple of weeks.
Fujitec (6406 JP): EQT’s Takeunder Likely a Done Deal
- Fujitec Co Ltd (6406 JP) has recommended a preconditional tender offer from EQT (EQT SS) at JPY5,700, an 8.1% discount to the last close price of JPY6,205.
- The precondition relates to regulatory approvals in several countries. The tender offer is expected to commence in late January 2026.
- Although the offer is light, it is likely to succeed, as it resulted from an auction process and was supported by irrevocables from the two prominent activists on the register.
SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
- Facing tough fundraising, SK avoided a rights issue, opting for a complex deal to limit dilution and ease investor worries.
- It all hinges on how the market views SK On’s cleanup plus Enmove’s steady cash flow—SK Innovation looks oversold, making this a decent long setup.
- Enmove’s stable earnings boost SK On’s P&L, likely triggering a rerate for SK Innovation and setting up a classic NAV compression trade.
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