In today’s briefing:
- POSCO: Reviewing a Potential M&A of HMM
- Taiwan Top 50 ETF Rebalance: Another Inclusion for Caliway Biopharma & King Slide
- KRX September Sector Index Review Finalized: Passive Impact Read
- S&P/ASX Index Rebalance (Sep 2025): New Methodology & The Many Changes
- Regarding the Six KRX Sector Names that Ran Ahead of Friday’s Official Review Drop
- Chery Automobile IPO: The Bull Case
- Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (8 Sep)
- Merger Arb Mondays (08 Sep) – Kangji, OneConnect, Ashimori, Pacific Ind, RPM, Santos, Zeekr
- Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks
- (Mostly) Asia-Pac M&A: Peak Rare Earths, Yutaka Giken, Shibaura, Johns Lyng, Ainsworth, Ashimori
POSCO: Reviewing a Potential M&A of HMM
- The biggest potential M&A event right now in Korea is the potential acquisition of HMM Co., Ltd. (011200 KS) by POSCO Holdings (005490 KS).
- Overall, we believe there is a higher probability of POSCO backing out of this potential acquisition of HMM, rather than POSCO completing this M&A deal.
- Although POSCO claims that it spends about 3 trillion won annually on logistics, the actual synergies among these three businesses (steel, rechargeable battery, and logistics) remain murky.
Taiwan Top 50 ETF Rebalance: Another Inclusion for Caliway Biopharma & King Slide
- Caliway Biopharmaceuticals (6919 TT) and King Slide Works (2059 TT) replace Taiwan Cement (1101 TT) and Pharmaessentia Corp (6446 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF in September.
- Caliway Biopharmaceuticals (6919 TT) and King Slide Works (2059 TT) were added to a global index in August and that resulted in a large percentage of float being bought.
- Caliway Biopharmaceuticals (6919 TT) will be added to another global index in September and that will further reduce the real float of the stock.
KRX September Sector Index Review Finalized: Passive Impact Read
- KRX dropped its September sector rejig post-close: only Semis (₩0.96T), Autos (₩0.51T), and Healthcare (₩0.31T) matter. Lineup below.
- AUM-Wise, Semis was key. September TMI reshuffle saw light additions, heavy deletions; otherwise, results largely matched earlier forecasts.
- TMI reshuffle flew under the radar with little pre-positioning; ETF rebalances next Thursday could trigger notable price moves — consider long/short baskets on high-impact names.
S&P/ASX Index Rebalance (Sep 2025): New Methodology & The Many Changes
- There is 1 change for the S&P/ASX50 Index, 3 changes for the S&P/ASX100 Index, 9 changes for the S&P/ASX200 (AS51 INDEX) and 17 adds/ 12 deletes for the S&P/ASX300 Index.
- Some of the index changes will also have same way flows from trackers of other global and sector indices on the same day.
- The adds have outperformed the deletes across all indices and performance has been especially strong for the S&P/ASX100 Index and S&P/ASX300 Index changes.
Regarding the Six KRX Sector Names that Ran Ahead of Friday’s Official Review Drop
- Six names stood out with simultaneous volume spikes and sharp pops last Friday; all Semis and Autos additions with big passive impact, while all others showed no tape action.
- Results likely leaked early, prompting front-running on Semis and Autos adds—high passive impact names—causing Friday’s sharp volume and price spikes.
- Early movers are mostly priced in; Thursday momentum plays still work, but Monday–Thursday morning requires caution. Focus on volume-driven flows before loading positions, long-short basket viable for other passive-impact names.
Chery Automobile IPO: The Bull Case
- Chery Automobile (CH3456 CH), a Chinese automobile manufacturer, has secured HKEx listing approval for a US$1.5-2.0 billion IPO.
- Chery is the second largest Chinese domestic brand passenger vehicle company, and the 11th largest passenger vehicle company globally.
- The bull case rests on market share gains, encouraging NEV segmental performance, good margin profile and cash generation.
Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (8 Sep)
- Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
- Highlights: Currently six pair trade opportunities across three markets and four sectors persist.
- Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.
Merger Arb Mondays (08 Sep) – Kangji, OneConnect, Ashimori, Pacific Ind, RPM, Santos, Zeekr
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Joy City Property (207 HK), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ainsworth Game Technology (AGI AU), Ashimori Industry (3526 JP), Toyota Industries (6201 JP).
Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks
- Context: The Kotak Mahindra Bank (KMB IN) vs. Bajaj Finance (BAF IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long Kotak Mahindra Bank (KMB IN) and short Bajaj Finance (BAF IN) targets a 9% return, with the long position supported by cheaper valuations.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
(Mostly) Asia-Pac M&A: Peak Rare Earths, Yutaka Giken, Shibaura, Johns Lyng, Ainsworth, Ashimori
- I tally 45 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
- Two new deals were discussed on Smartkarma this week: Peak Rare Earths (PEK AU) and Yutaka Giken (7229 JP).
- Key updates/news took place on Johns Lyng (JLG AU), Ainsworth Game Technology (AGI AU), Shibaura Electronics (6957 JP), Ashimori Industry (3526 JP), and Pacific Industrial (7250 JP).
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