In today’s briefing:
- WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.3bn Round-Trip Trade
- Korea’s Mandatory Treasury Share Cancellation Situation Creates New Passive Flow Dynamics
- [Japan ECM] Kokusai Elec (6525) – Applied Materials $330mm Selldown
- The Oct 2025 TOPIX FFW Rebal – $35bn of Flows To Trade
- [Japan Event] Sony Financial (8729 JP) Moves On From ToSTNeT-3 Buybacks, Now In the Market
- Johns Lyng (JLG AU): 8th October Vote On PEP’s Offer
- Vietnam: Global Index Inclusion & Passive Flows
- [Quiddity Index] HUGE Rally Brings Advantest to Nikkei Capping Territory
- Kokusai Electric Placement – Unexpected Seller but Relatively Small Deal
- US Shutdown: A Means To An End
WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.3bn Round-Trip Trade
- The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
- The changes at the October rebalance were announced after market close on 6 October with implementation scheduled at the close on 15 October.
- There are 217 adds and 224 deletes for the index with an estimated round-trip trade of US$2.3bn. There are many stocks with over 2x ADV to trade.
Korea’s Mandatory Treasury Share Cancellation Situation Creates New Passive Flow Dynamics
- KRX may preemptively adjust KOSPI 200 screening, switching from full market cap to market cap excluding treasury shares for index inclusion.
- With treasury-share cancellation likely this quarter, KRX may act before June ’26. For December KOSPI 200, we should run both full-cap and ex-treasury screens; flows could behave unusually.
- Focusing on Hanssem (009240 KS) and Taekwang (003240 KS); borderline, high treasury shares, potential KOSPI 200 exclusion, making them key flow-sensitive setups for December reshuffle.
[Japan ECM] Kokusai Elec (6525) – Applied Materials $330mm Selldown
- Three weeks ago I wrote that KKR’s lockup would expire about now in [Japan ECM] Kokusai Elec (6525) – KKR’s Lock Up Expiry in 3 Weeks – $700mm Clean-Up Coming?
- Today post-close, Applied Materials (AMAT US) announced a 10.7mm share (4.5%) Accelerated Block Offering to be priced tomorrow morning, at an indicated 4.5-6.5% discount. This would put them at 10+%.
- This should be very well taken up. There is index demand on the follow. The question is more about the unwind of KKR’s last bit. Perhaps to come soon?
The Oct 2025 TOPIX FFW Rebal – $35bn of Flows To Trade
- Once every quarter the TSE reassesses free float weights for a set of companies whose fiscal years ended 7-10 months prior. Calendar Q1 is the biggie so October is too.
- This year, as companies have made dramatic changes in their shareholder registries through crossholder sales, activist acquisitions, and other, there are some big changes and big dollar changes.
- We see nearly 600 FFW changes up and down, and then nearly 1,100 stocks which see a significant (average 0.5x ADV) funding trade. $35bn in total.
[Japan Event] Sony Financial (8729 JP) Moves On From ToSTNeT-3 Buybacks, Now In the Market
- Sony Financial Group (8729 JP) started ToSTNeT-3 buybacks last week and did one this week to jumpstart the buyback, cushioning the Nikkei 225 deletion on 29 Sep and subsequent overhang.
- In three ToSTNeT-3 buybacks in 6 trading days spending ¥28.9bn, the company bought back 177.513mm shares or 2.5% of shares out, or about 6.2% of Max Real World Float (MRWF).
- With ¥71.1bn left, at last that’s 460mm shares, or 16.2% of MRWF. Over 10mos that is 1.62%/month. That will boost Mar26 DPS, Mar27 DPS projections, EPS, etc.
Johns Lyng (JLG AU): 8th October Vote On PEP’s Offer
- On the 11th July, PEP offered A$4/share for integrated building services provider Johns Lyng (JLG AU), a 77% premium to undisturbed. CEO Scott Didier, JLG’s largest shareholder (17.62%), was supportive.
- Pricing is okay. The absence of a final year fully franked dividend, which was teased at the onset, was ostensibly disappointing.
- The Scheme Booklet is now out, with a Scheme Meeting on the 8th October, and expected implementation on or before the 23rd October. The IE (Kroll) says “fair & reasonable“.
Vietnam: Global Index Inclusion & Passive Flows
- After years of being on the watchlist, Vietnam will be added to a global index in September 2026 as long as progress is made on one key issue.
- The final decision will be made in March 2026, and the implementation of the inclusion will take place in phases.
- We currently see 21 stocks meeting the inclusion criteria. There are others that are close to the inclusion thresholds, and the list will change over the next few months.
[Quiddity Index] HUGE Rally Brings Advantest to Nikkei Capping Territory
- Monday’s huge post-election move in Nikkei 225 and Advantest Corp (6857 JP) caused Advantest to clear 10.00% realtime at day-end. Assuming nothing changes til end-Jan-2026, Advantest gets capped at end-Mar-2026
- As of today, that would be roughly 1.6x ADV and US$2.75bn but it would be 10% of Max Real World Float.
- This is far off but should stay on the radar. Softbank Group (9984 JP) is close behind at 8.7%. 15+% outperformance would put it in capping territory too.
Kokusai Electric Placement – Unexpected Seller but Relatively Small Deal
- Applied Materials (AMAT US) is looking to raise approximately US$330m through an accelerated secondary offering for around 4.5% of Kokusai Electric (6525 JP) (KE) stock.
- KE had seen two selldown earlier, from KKR, with mixed results. KKR just came out of its last lockup.
- In this note, we will talk about the placement and run the deal through our ECM framework.
US Shutdown: A Means To An End
- The Democrats opted for a US government shutdown despite the Administration being well prepared for what it sees as an opportunity to promote its longer-term agenda.
- While they hold out, the president’s ‘grim reaper’, OMB Director Russell Vought, will have a free hand to cut the size of government and pursue his unitary executive vision.
- Some of his actions will undoubtedly be challenged in the courts, but the signs are that the Supreme Court will continue to side firmly with the Administration.
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