In today’s briefing:
- Samsung Group ETF Rebalancing Event to Watch for in June
- [Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs
- HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- [Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- A/H Premium Tracker (To 16 May 2025): AH Premia Contract Small Again. BYD and CMB Go Negative.
- Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- [Quiddity Index] Six Hang Seng Index Family Indices: Flows for June 6 Rebal
- TechnoPro (6028 JP): A Good Privatisation Candidate
- Merger Arb Mondays (19 May) – Seven & I, Nissin, Welcia/Tsuruha, Mayne, ESR, OneConnect, Frasers
Samsung Group ETF Rebalancing Event to Watch for in June
- With Samsung finalizing the call option on Rainbow Robotics in February, the FTC will add it to Samsung Group in March, ensuring its inclusion in the ETF by June.
- With the market cap boost from the call option, Rainbow Robotics is set to easily exceed 2% weight in the ETF by June.
- The rebalancing from June 2-9 will direct 30% of daily volume into Rainbow Robotics, likely enough to move the needle on price action, especially on the first day.
[Japan M&A] TechnoPro Holdings (6028) May Be Up For Grabs
- Technopro Holdings (6028 JP) is a temp/contract staffing platform which specialises in engineering staff (IT engineers far more than machinery, construction, chemicals). The company has been growing.
- Overnight, an article appeared in MergerMarket – a high-dollar M&A-related news service – saying the company was going through a sale process. The company confirmed it was one possibility.
- The stock went limit up. This quick writeup looks at the framework of the idea, and possibilities.
HSTECH Index Rebalance: BYD (1211 HK) To Replace China Literature (772 HK) As Trade Hits US$6bn
- As expected, BYD (1211 HK) will be added to the Hang Seng TECH Index (HSTECH INDEX) in June following the launch of God’s Eye, its Advanced Driver-Assistance System (ADAS).
- BYD (1211 HK)‘s inclusion results in China Literature (772 HK) being deleted from the index. China Literature stock should drop over the near-term.
- Estimated one-way turnover at the rebalance is 13% resulting in a round-trip trade of HK$46.5bn (US$5.95bn). There are 16 stocks that have at least 1x ADV to trade from passives.
[Japan Buybacks] ¥7.3trln of Buybacks Announced In the Last Month – Data on Each, Plus History
- Buybacks are a central part of Corporate Japan’s effort to improve corporate/capital governance. Lots of cross-holders want/need to sell. Lots of companies want to reduce excess equity.
- This earnings season has seen a LOT of new buybacks announced. ¥7.3trln in the last month and that doesn’t even include the biggest buybacks extant by March-end companies.
- We are experimenting with new ways of displaying data/analytics for buybacks in Japan. To that end, we have a new tool. We hope users find it useful. We invite feedback.
HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- We had Pop Mart International (9992 HK) at the cusp of index inclusion. An increase in Postal Savings Bank of China (1658 HK)‘s FAF led to Pop Mart missing out.
- Estimated one-way turnover at the rebalance is 3.18% leading to a round-trip trade of HK$3.8bn (US$489m).
- There are large inflows for NetEase (9999 HK), Trip.com Group (9961 HK) and Baidu (9888 HK) due to a FAF methodology change for Secondary Listings.
A/H Premium Tracker (To 16 May 2025): AH Premia Contract Small Again. BYD and CMB Go Negative.
- AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) AH is negative now, maybe on HSTECH inclusion expectations.
- I didn’t expect much out of Geneva last weekend. I was wrong in that there was a big announcement, but maybe not wrong because content was pretty slim.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
Hang Seng Index (HSI) Rebalance: Midea (300 HK) & ZTO Express (2057 HK) Added; Inching Towards a 100
- Midea Group (300 HK) and ZTO Express Cayman (2057 HK) will be added to the Hang Seng Index (HSI INDEX) in June to take us up to 85 index constituents.
- Estimated one-way turnover is 2.9% and the estimated round-trip trade is HK$11.3bn (US$1.44bn) with over 1x ADV to trade in the adds and in one stock with a FAF increase.
- There could be a short-term drop in the AH premium for Midea Group while this inclusion ensures ZTO Express Cayman is a member of all major indices where eligible.
[Quiddity Index] Six Hang Seng Index Family Indices: Flows for June 6 Rebal
- In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
- The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
- By Quiddity calculations based on the 16 May close, there is one-way flow across these six indices of HK$34,556,596,089.99 (approximately), to trade on 6 June.
TechnoPro (6028 JP): A Good Privatisation Candidate
- Technopro Holdings (6028 JP) shares were up 20.7% on Friday based on a Mergermarket report that is conducting a privatisation auction with bids due in six weeks.
- Technopro responded that it has been continuously exploring various strategic alternatives, including privatisation, to enhance shareholder value. TechnoPro has the characteristics to make a good privatisation target.
- The precedent is Bain’s privatisation of Outsourcing Inc (2427 JP) at a forward EV/EBITDA multiple of 13.5x. A similar multiple implies a JPY4,400 offer. TechnoPro can justify a higher multiple.
Merger Arb Mondays (19 May) – Seven & I, Nissin, Welcia/Tsuruha, Mayne, ESR, OneConnect, Frasers
- We 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: Insignia Financial (IFL AU), ENN Energy (2688 HK), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP), ZEEKR (ZK US), Mayne Pharma (MYX AU), Smart Share.
- Lowest spreads: Bright Smart Securities And (1428 HK), Dada Nexus (DADA US), Nissin Corp (9066 JP), Sinarmas Land (SML SP), Fujitsu General (6755 JP), Torii Pharmaceutical (4551 JP).
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