In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
- ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing
- J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional
- FSS’s Short Selling Guidelines: Breaking Down the Key Violation Cases and What They Mean
- CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?
- A/H Premium Tracker (To 17 Jan 2025): AH Premia Fall Further, Lowest Avg Premium in 5yrs
- Top 10 Korean Stock Picks Bi-Weekly (Starting 20 January 2025)
- Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer
Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
- The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
- Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
- The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.
ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.
- ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
- The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.
Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing
- Nidec Corp (6594 JP) in late December proposed an unsolicited takeover of Makino Milling Machine Co (6135 JP), with a 3-month delay before launching a Tender Offer.
- Makino has asked for an extension to the start. Nidec has said no. Makino is going about this the wrong way. Makino needs to assume Nidec thought this through.
- Makino needs to open up the process to other bidders, and investors can help.
J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- J&T Global Express (1519 HK) listed in October 2023 and was added to one global index in June 2024 and to the HSCEI INDEX in September 2024.
- J&T Global Express (1519 HK) could be added to a global index in February and there will be a big passive buying impact. The company is also buying back stock.
- J&T Global Express (1519 HK) has underperformed its peers over the past year and the index inclusion could help in closing some of that gap.
GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional
- Greatview Aseptic Packaging (468 HK)’s offer from Shandong Xinjufeng Technology Packaging (301296 CH) is HK$2.65 with a 50% minimum acceptance condition. The first closing date is 21 January.
- The Board has recommended that shareholders not accept. However, based on CCASS data, including acceptances, Shandong Xinjufeng’s shareholding was 46.41% of outstanding shares as of 17 January.
- Absent an unlikely competing offer, the offer is on the cusp of being declared unconditional. At the last close and 4 February payment, the gross/annualized spread is 3.1%/128%.
FSS’s Short Selling Guidelines: Breaking Down the Key Violation Cases and What They Mean
- The issue with borrowing agreements is that contracts with conditions set later or changeable terms don’t count, creating uncertainty on how this will play out in practice.
- Many borrowing agreements depend on recall timing for ownership recognition, even within the same day, creating confusion in practice.
- Repayment period limits don’t apply to internal desk-to-desk trades within the same firm. Other than those, no new updates today on reporting requirements, T+2 reporting window, or lending limits.
CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?
- On Friday 17 January, the closing date of the CVC Tender Offer for Macromill, Inc (3978 JP) at ¥1,150/share, the bidder announced an extension of the Tender Offer.
- They also announced a bump to ¥1,250/share, and that included a comment saying they resolved not to raise the price further.
- This happened during market hours, and the price jumped to just below ¥1,250/share. But one should not consider this a done deal. For reasons…
A/H Premium Tracker (To 17 Jan 2025): AH Premia Fall Further, Lowest Avg Premium in 5yrs
- AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on telcos, banks, brokers, insurers, tech, and airlines.
- The average AH Premium across all pairs is now the lowest it has been in five years.
- The VERY WIDE Tech spreads bifurcated. SMIC (981) and Shanghai Fudan Microelectric (1385) both continued strongly. China Rail Signal (3969) and Flat Glass (6865) widened again.
Top 10 Korean Stock Picks Bi-Weekly (Starting 20 January 2025)
- We are starting a new series of insights called “Top 10 Korean Stock Picks Bi-Weekly.”
- The main purpose of these insights is to pick top 10 stocks in Korea that could outperform KOSPI in the following two week period.
- The top 10 stock picks include Kia Corp, Kangwon Land, OCI Holdings, HD Hyundai, Doosan Bobcat, BNK Financial, Hyundai Mobis, HMM, Hyundai Glovis, and Korean Reinsurance.
Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer
- Millennium & Copthorne Hotels (MCK NZ) (MCK), a Kiwi hotel chain, has announced that City Developments (CIT SP), its major shareholder, has made an Offer for shares not held.
- City Dev is offering NZ$2.25/share, a 25% premium to last close. City holds 75.86% and the offer is conditional on a 90% holding, including shares currently held.
- Reg approvals include OIA, which should be rubber-stamped. Very illiquid company.
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