In today’s briefing:
- HSTECH Index Rebalance Preview: Universe Expansion Could Lead to One Change
- NTT DC REIT IPO: Global Index Inclusions Later This Year + A Kicker
- [Japan Buybacks] – Japan Bank Metrics, Cross-Holdings and Banks Part 1
- Great Eastern (GE SP): OCBC Bumps Terms – $30.15/Share Exit Offer
- [Quiddity Index] TOPIX July 2025 FFW Rebalance – $3bn+ a Side to Trade
- Inconsistently Dovish Pricing
- Great Eastern (GE SP): SGX The Winner As Shareholders Block Exit Offer
- Samsung Electronics: Share Buyback of 3.9 Trillion Won
- Great Eastern Holdings (GE SP): Minorities Secure a Pyrrhic Victory
- [Japan LolWut?] Ikuyo (7273) Says “Iku Yo!” – Bitcoin, M&A, Weirdness, More
HSTECH Index Rebalance Preview: Universe Expansion Could Lead to One Change
- The review period for the September rebalance of the Hang Seng TECH Index ended on 30 June, the changes will be announced on 22 August and implemented on 5 September.
- No constituent changes will result in a one-way turnover of 4.1% and that will mean a round-trip trade of HK$15.2bn (US$1.94bn).
- An expansion of the index universe could lead to one constituent change and that increases the one-way turnover to 6.2% and the round-trip trade to HK$23.1bn (US$2.94bn).
NTT DC REIT IPO: Global Index Inclusions Later This Year + A Kicker
- NTT DC REIT (NTTDCR SP) could raise up to US$824m in its IPO if the overallotment option is exercised and the stock is expected to start trading on 14 July.
- Cornerstone investors will own 16.8% of shares out following the IPO but there is no lock-up on these shares. The sponsor will own 20%/25% depending on whether overallotment is exercised.
- NTT DC REIT (NTTDCR SP) should be added to the smallcap segment of global indices in November and December while inclusion in local indices will take a lot longer.
[Japan Buybacks] – Japan Bank Metrics, Cross-Holdings and Banks Part 1
- Japanese banks have been in a relative sweetspot for a couple of years. Higher rates, higher inflation, more FX volatility, better earnings, stronger buybacks. Cross-holding sales up but not spectacular.
- The BOJ may raise rates but Trump Tariff retaliation/mitigation is a question. Elections the next two weeks and earnings the 2-3 weeks after that may keep things a question.
- But buybacks should pick up. Lots announced in spring end at or before Q1 earnings. And I expect substantial new buybacks to be announced throughout the from Q1 results on.
Great Eastern (GE SP): OCBC Bumps Terms – $30.15/Share Exit Offer
- The prior Offer for Great Eastern Holdings (GE SP) closed on the 12th July 2024, with OCBC holding 93.62%. Shares have been suspended ever since. Compulsory acquisition was not afforded.
- To break the deadlock, I mused in This Needs To Be Sorted: Great Eastern (GE SP)’s Protracted Suspension, that OCBC needed to come out with a improved Offer of ~S$30/share.
- That has now unfolded. Minorities have the option of a S$30.15/share Exit Offer; or voting for the resumption of trading, which will be possible via the issuance of bonus shares.
[Quiddity Index] TOPIX July 2025 FFW Rebalance – $3bn+ a Side to Trade
- Four times a year, the TSE reassesses free float weights for listed stocks. Indices run by the TSE adjust their index shares (shares out x FFW x coefficient) in Jan/Apr/Jul/October.
- Yesterday, the TSE announced its changes for this quarter. Combined with other adjustments on 30 July at the close, we expect 190+ events.
- For now, we expect the trade is about US$3.3bn a side. At the top of the buy side, 16 names with more than $30mm to buy, averaging 5x ADV.
Inconsistently Dovish Pricing
- Dovish market fears from April have unwound for the Fed, yet deepened for the BoE, despite broadly resilient data and cautious guidance from policymakers reluctant to cut.
- Equity prices have relied on this resilience to recover, yet expectations for extended rate-cutting cycles imply it breaks. Payrolls only forced half of the gap to close.
- We expect ongoing resilience to keep rolling market pricing for rate cuts later, with the unnecessary easing ultimately never being delivered by the BoE, Fed, or ECB.
Great Eastern (GE SP): SGX The Winner As Shareholders Block Exit Offer
- After OCBC bumped terms for Great Eastern Holdings (GE SP) to $30.15/share via an Exit Offer, I wasn’t confident a 17.8% bump would dislodge Palliser. That appears the case.
- At today’s EGM, 63.49% of minority shareholders – OCBC abstained – were in favour on the Offer, falling short of the 75% condition. There was no blocking % condition.
- Shareholders voted for the resumption of shares via the issuance of shares (one-for-one bonus), satisfying the SGX free float requirement. The SGX, and dissenters, will be happy with the outcome.
Samsung Electronics: Share Buyback of 3.9 Trillion Won
- Samsung Electronics announced today that it plans to conduct a large scale buyback worth 3.9 trillion won, of which 2.8 trillion won will be cancelled.
- Samsung Electronics reported consolidated sales of 74 trillion won and operating profit of 4.6 trillion won in 2Q 2025, down 0.1% and 55.9% YoY, respectively.
- The average daily trading volume (ADTV) of Samsung Electronics (005930 KS) (common shares) is 15.43 million. Therefore, the share buyback of 56.89 million (common shares) represents 3.7x of ADTV.
Great Eastern Holdings (GE SP): Minorities Secure a Pyrrhic Victory
- The Great Eastern Holdings (GE SP) delisting resolution failed as it was not approved by at least 75% of disinterested shareholders.
- The resumption of trading resolutions to restore the 10% free float requirement was passed. Trading will resume once the 10% free float requirement is met.
- Minorities have secured a pyrrhic victory as the OCBC (OCBC SP) offer was light, but there is no obvious catalyst to re-rate the shares. Deal break price around S$21.49.
[Japan LolWut?] Ikuyo (7273) Says “Iku Yo!” – Bitcoin, M&A, Weirdness, More
- Several Japanese companies jumped onto the OBaaBM/TABaaBM (Own/Talk-About-Bitcoin-as-a-Business Model) last fall to this spring as Microstrategy Inc Cl A (MSTR US) shares went up and bitcoin did too.
- Yesterday, resin coating/injection molding product maker Ikuyo Co Ltd (7273 JP) announced an M&A Policy, and a Shareholder Benefits Program where shareholders will “win” amounts of bitcoin by lottery.
- Ikuyo expects revenues +955% this year. Details are sparse. The shareholder structure has red flags. The CEO sold himself half the company in Feb for peanuts. Forewarned. But it’s interesting.
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