In today’s briefing:
- [Japan ECM] Koei Tecmo (3635 JP) Needs to Sell Shares To Stay in Prime ($280mm Offering)
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$7.4bn of Flows Post Capping (Sep 2025)
- Gold Miners ETF (GDX US): Capping Pushes Trade to Over US$10bn
- ZEEKR (ZK US): Widening Scrip Spread Ahead Of Geely EGM Vote
- Ashimori Industry (3526 JP): Murakami Outlines His Case
- Pacific Industrial (7250 JP): Effissimo Rears Its Head
- S&P500 September 2025 Final Forecast: HOOD, EME & 50/50 on MSTR/APP
- LS Cable – To Issue an EB Worth 400 Billion Won Using LS Marine Solution as Base Asset?
- Cutting After Pauses
- Kangji Medical (9997 HK): Precondition Satisfied for the Light Scheme Offer
[Japan ECM] Koei Tecmo (3635 JP) Needs to Sell Shares To Stay in Prime ($280mm Offering)
- In December 2021, Koei Tecmo Holdings (3635 JP) announced a complex but lower-impact move to increase float share count in order to stay listed on TSE Prime.
- Scheme: buyback from two holders plus CB issuance. Unfortunately, shares did not rise enough to convert the CBs so as of March 2025, the tradable share criteria was not met.
- So now the two main holders are selling more shares and the company is diluting holders with new issuance to get float/tradable shares up with a US$280mm offering.
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$7.4bn of Flows Post Capping (Sep 2025)
- The September rebalance of the Hang Seng family of indices will use today’s closing prices to cap the index constituent weights.
- The net round-trip trade across all stocks across the five indices is estimated at HK$57.55bn (US$7.4bn). There is size to trade in a lot of stocks.
- Alibaba (9988 HK) has flipped from a net buy to a net sell following its huge rally yesterday.
Gold Miners ETF (GDX US): Capping Pushes Trade to Over US$10bn
- The VanEck Gold Miners ETF/USA (GDX US) will change benchmark from the NYSE Arca Gold Miners Index to the MarketVector Global Gold Miners Index at the close on 19 September.
- The differences in the constituents between the two indices should result in 8 adds and 25 deletes. Estimated one-way turnover is 22.9% resulting in a round-trip trade of US$10.2bn.
- The forecast adds have underperformed the forecast deletes since the last Insight that highlighted the big valuation gap that had opened up since the announcement of the benchmark switch.
ZEEKR (ZK US): Widening Scrip Spread Ahead Of Geely EGM Vote
- On the 15th July, Geely Auto (175 HK), China’s second-largest carmaker, firmed a cash or scrip Offer for 62.8%-held ZEEKR (ZK US), a premium Chinese electric vehicle manufacturer
- ZEEKR has traded through the cash terms US$26.87/ADS from the onset; but at a discount to the scrip terms. The scrip spread has widened recently.
- The Offer is low-balled. However, Geely’s stake plus Li Shufu (founder)’s 10.61% holdings push the Offer through. Geely’s EGM is this Friday (7th July). Li (41.34%) is required to abstain.
Ashimori Industry (3526 JP): Murakami Outlines His Case
- Takateru Murakami, Yoshiaki Murakami’s son, has increased his Ashimori Industry (3526 JP) to an 18.36% ownership ratio at an average buy-in price of JPY4,154.28 vs. the JPY4,140 tender offer.
- Crucially, in today’s disclosure, Takateru Murakami outlines the rationale for his stake building, which centres on the book value being materially understated if certain land were revalued at market rates.
- Maintaining current terms is increasingly not a viable option. Toyoda Gosei (7282 JP) is likely to pursue a strategy of either increasing its offer or lowering the minimum acceptance condition.
Pacific Industrial (7250 JP): Effissimo Rears Its Head
- Effissimo reported a 5.87% ownership ratio in Pacific Industrial (7250 JP). The average buy-in price of JPY2,235.91 per share is 9.1% above the JPY2,050 MBO offer.
- Effissimo buying significantly above terms is justifiable as the offer implied a P/B of 0.71x. Effissimo is agitating for either a bump or an opportunity to participate in the back-end.
- With the offer closing on 8 September and shares trading 16.9% above terms, the Ogawas have little choice but to revise terms.
S&P500 September 2025 Final Forecast: HOOD, EME & 50/50 on MSTR/APP
- Robinhood Markets (HOOD US) and Emcor Group Inc (EME US) are the main candidates for addition due to consistently high eligibility scores.
- Microstrategy Inc Cl A (MSTR US) or AppLovin (APP US) is forecasted to be the third addition, with sector balance acting as the limiting factor.
- CRH (CRH US) recently regained eligibility following positive August earnings and could be a surprise addition if the tech sector is excluded.
LS Cable – To Issue an EB Worth 400 Billion Won Using LS Marine Solution as Base Asset?
- Major major local media including Maekyung Business Daily and Chosun Daily have reported that LS Cable & System is pushing forward with an EB worth 400 billion won.
- The target stock to be used in the EB is LS Cable’s shares in its subsidiary LS Marine Solution.
- LS Marine Solution is one of the largest marine engineering companies in Korea, specializing in the installation and maintenance of submarine cables, offshore wind infrastructure, and marine energy systems.
Cutting After Pauses
- The BoE and Fed rarely resume cutting cycles after a pause, yet the Fed seems set to break its hold with a cut just as the BoE and ECB enter their own pauses.
- 2002-03 is the best historical parallel for the Fed, which signals potential cuts should be shallow and are likely to be reversed. Politics is no match for the fundamental need.
- Persistently excessive UK pressures should prevent the BoE from cutting in November or beyond, with a quarterly pause historically unlikely to resolve in another rate cut.
Kangji Medical (9997 HK): Precondition Satisfied for the Light Scheme Offer
- The precondition for Hangzhou Kangji Medical Instrument Co., Ltd. (9997 HK)’s scheme privatisation from a consortium is satisfied. The offer, which has been declared final, is at HK$9.25 per share.
- The key condition will be approval by at least 75% disinterested shareholders (<10% of all disinterested shareholders rejection). Crucially, the blocking stake is below the substantial disclosure threshold.
- Despite the recent derating of peers, the vote risk remains medium-to-high due to a solid interim, the imminent surgical robot growth story, unfavourable AGM voting patterns, and emerging retail opposition.
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