In today’s briefing:
- Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification
- Korea Short Selling: What Happened on Day 1?
- AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
- Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas
- US Tariff Impact Estimates
- Nidec Launches on Makino Milling (6135) – Others Presumably Wait In the Wings
- Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
- Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade
- Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
- Is This Chinese Biotech Going Out of Business?
Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification
- Palliser Capital, which reportedly holds ~$300mn in Rio Tinto Ltd (RIO AU/LN) shares across its dual-head structure, has campaigned for near-on a year to unify the primary listing in Australia.
- Palliser’s reasonings (and others) to unify make sense, such as access to stock-based mergers and eliminating franking wastage. A recent independent assessment from Grant Thornton is also supportive of unification.
- Shareholders will vote on the resolution on 3rd April for UK-listed shares and 1st May for Australian-listed shares. The UK line holds the key to the vote outcome.
Korea Short Selling: What Happened on Day 1?
- Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
- Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
- The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.
AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
- We currently forecast 10 stocks moving from MidCap to LargeCap, 10 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
- From the new listings, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
- There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in September.
Quiddity Leaderboard TDIV Jun25: US$2.1bn One-Way; 17% Turnover; Sector-Neutral Trade Ideas
- The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2025 index rebal event.
- We expect five changes for the TDIV index. On top of that, there will be capping flows too.
US Tariff Impact Estimates
- New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
- Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
- Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.
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 🍿🍿🍿 .
Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
- There was a Nikkei article in December about the Mitsubishi Heavy Industries (7011 JP) selling its interests in Mitsubishi Logisnext Co., Ltd. (7105 JP).
- The stock popped. Then popped some more. It was not expensive yet, but no longer dirt cheap. Now the stock is falling as Trump Tariffs threaten to throttle exports.
- The reasons why this takeout price could be “high” are unchanged. Tariffs meant to drive US-manufacturing don’t reduce need for forklifts. Logisnext is not badly placed.
Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade
- The Constitutional Court approved President Yoon’s impeachment. The PM steps in as interim president, with a new election expected by May 28, 2025, before June 3.
- The Democratic Party is the frontrunner, and if they win, expect a “regime change trade” with policy shifts toward green energy, welfare, public stimulus, and SME-focused initiatives.
- Big-Cap builders, nuclear stocks, and major financials may struggle if the new regime focuses on public housing, anti-nuclear policies, and pro-SME, labor-friendly initiatives.
Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
- Back on the 27th January, Dada Nexus (DADA US), a Chinese on-demand retail and delivery platform, announced a preliminary non-binding proposal from JD.com (9618 HK).
- JD.com, a 63.2% shareholder, was offering US$0.50/share (US$2.00/ADS), a 42% premium to last close. Those terms are now firm and a definitive agreement entered into.
- The merger is expected to close in the third quarter. Trading at 4.7%/15%, gross/annualised spread, assuming a four month off-ramp.
Is This Chinese Biotech Going Out of Business?
- This Nasdaq-listed, Hong Kong-based company hopes to apply Traditional Chinese Medicine (TCM) to significant illnesses like ADHD, but that seems unlikely. The company is a family affair, with all research provided by the CEO’s father, so one wonders how objective scientific assessment can be.
- The stock surged by more than 700% in a month without patent approval, a buyout offer, or other notable news. The CEO funded a share buyback, but rather than demonstrating faith in the company, the repurchase looked suspiciously like a way to inflate the short-term share price, possibly for an equity issue or insider self- enrichment since the CEO’s compensation is tied to market capitalization.
- This is a highly speculative business run by a family team from Hong Kong, thus little trusted in the U.S. and very volatile.
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