In today’s briefing:
- What if China ADRs Are Delisted from US Exchanges?
- De Grey Mining/Northern Star Resources: The Passive Flows
- Nidec Launches on Makino Milling (6135) – Others Presumably Wait In the Wings
- TSMC. Full Steam Ahead Despite Tariff Threats & China Bans. For Now.
- *NEW* USTR Section 301 Proposed Actions on China Maritime Dominance
- NIFTY 50 Tactical Outlook (Post-Easter Targets)
- Tryt (9164 JP): Take Profits as Takeover Speculation Swirls
- Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling
- CSI All Share Semiconductor Index Rebalance Preview: Multiple Index Flows for Some Stocks
- Ohayo Japan | Fed Speeches Take Center Stage
What if China ADRs Are Delisted from US Exchanges?
- We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
- If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
- PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.
De Grey Mining/Northern Star Resources: The Passive Flows
- With De Grey Mining (DEG AU) shareholders approving the acquisition by Northern Star Resources (NST AU), we move to the phase of passive index flows.
- As expected, Generation Development Group (GDG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 23 April to replace De Grey Mining (DEG AU).
- There will be passive inflows for Northern Star Resources (NST AU) from some local and global index trackers due to the increase in the number of shares outstanding.
Nidec Launches on Makino Milling (6135) – Others Presumably Wait In the Wings
- Nidec Corp (6594 JP) bid ¥11,000 for Makino Milling Machine Co (6135 JP) in December, saying it expected to launch on 4-April. It launched its ¥11,000 bid on 4-April.
- A Nikkei article in March suggested Makino had found multiple competing bidders, some who had put in “legally binding bids.” No news on those yet, but we have a month.
- Earnings are 9-May. Strategy on timing for Makino differs according to its desired outcome. It has to opine on Nidec’s bid by about 18 April. Be long. Carry 🍿🍿🍿 .
TSMC. Full Steam Ahead Despite Tariff Threats & China Bans. For Now.
- TSMC offered a surprisingly robust outlook for the current quarter with revenues expected to rise 13% QoQ to $28.8 billion at the midpoint, their highest ever quarterly revenue.
- No change to the previous full year 2025 guidance of mid-20% growth in US$ terms
- It’s likely too early to see the full impact of tariffs and further China restrictions in TSMC’s outlook, but the second half will likely be a different story
*NEW* USTR Section 301 Proposed Actions on China Maritime Dominance
- Biden’s USTR came out with a flawed Section 301 report on Chinese maritime “dominance” in January. It is not that China shipbuilding is not dominant, but the report was flawed.
- In February/March (flawed) measures were proposed. Then mostly minimally-insightful hearings were held. Then Trump came out with an Executive Order “Restoring America’s Maritime Dominance” (that requires looking back 80yrs).
- Now we have new USTR Proposed Measures which water down the old ones quite considerably.
NIFTY 50 Tactical Outlook (Post-Easter Targets)
- The strong rebound from the crash low signals resilience in the NIFTY Index, and notably, the index appears to be staging a short-term breakout from its recent downtrend.
- Is this the start of a rally? It’s hard to say, given the current economic uncertainty—however, our model suggests the index could extend its gains for another week.
- The rally should be limited, a good profit target according to our model is between 24039 and 24496.
Tryt (9164 JP): Take Profits as Takeover Speculation Swirls
- TRYT (9164 JP) shares were up 38.5% over the last two days based on a report that EQT, the controlling shareholder, had made progress in identifying bidders for its stake.
- The exploration of the privatisation process is unsurprising, as Tryt was pre-rumour trading 69% below its JPY1,200 IPO price.
- The upside is limited, as the last close already reflects a significant takeover premium, and a binding proposal that satisfies EQT’s price aspirations will be challenging.
Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling
- Zomato (ZOMATO IN), now Eternal, listed in July 2021 with a Foreign Ownership Limit (FOL) of 100%. Since listing, foreign ownership has dropped from over 70% to just under 45%.
- Eternal is looking to cap foreign ownership at 49.5% to continue qualifying as an Indian-Owned-and-Controlled Company. That will give the company greater operational flexibility, especially for inventory ownership.
- The FOL decrease will result in selling from passive global index trackers. With the stock 23.5% off its highs and a steady increase in futures open interest, covering could ensue.
CSI All Share Semiconductor Index Rebalance Preview: Multiple Index Flows for Some Stocks
- The review period for the June rebalance of the CSI All Share Semiconductor Index ends 30 April. The changes should be announced on 30 May and implemented on 13 June.
- We forecast 4/5 adds and 8 deletes for the index with a one-way turnover of 2.4% and a round-trip trade of CNY 990m (US$136m).
- There are many forecast adds and deletes that will have same side flows from trackers of the CES China Semiconductor Chips Index and the CNI Semiconductor Chips Index.
Ohayo Japan | Fed Speeches Take Center Stage
- The Federal Reserve will feature prominently this week, with speeches from Fed Chair Jerome Powell and other officials amid rising political pressure from President Trump.
- The market is set for significant swings as key earnings announcements from major companies expected. FANUC, Nidec, and KEYENCE will announce their fiscal year 2025 results
- Nintendo will start accepting reservations for its new Switch 2 game console in the US on the 24th, after postponing from the 9th to assess the impact of tariffs.
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