In today’s briefing:
- Nikkei 225 Index Rebalance Sep25: Performance of Potential Adds/Deletes & Positioning
- Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- [Japan M&A] Toyoda Gosei Buys Out Affiliate Ashimori Industry at 1.000x Mar25 Book
- Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Near-Term Flows to Watch on Mandatory Treasury Share Cancellation in Korea
- Taiwan Top 50 ETF Rebalance Preview: Hat Trick for Caliway Biopharma?
- Russia/Ukraine: What Now?
- Aux Electric IPO: Smallest Player but Superior Growth and Margins
- LHN’s Co-Living Spin-Off And HK Delisting
- Fast Retailing (9983 JP) Tactical Outlook: Turning OVERSOLD, Potential BUY Ahead of Sep-25 Rebalance
Nikkei 225 Index Rebalance Sep25: Performance of Potential Adds/Deletes & Positioning
- The changes to the Nikkei 225 (NKY INDEX) as part of the September rebalance should be announced in just over 2 weeks. We expect 2 changes at the review.
- BayCurrent Consulting‘s PAF will double, Fast Retailing‘s CPAF will stay the same, and Sony Financial Group will be deleted from the index following its spinoff from Sony Corp (6758 JP).
- Sanrio (8136 JP)‘s improved liquidity increases the probability of index inclusion, and the stock could be added to the index at the next rebalance if it misses in September.
Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- Dongfeng Motor (489 HK) has announced a privatisation; together with a concurrent listing of its EV arm.
- The same day as the dual proposals, Dongfeng announced an interim loss (1H25). Evidently, the way forward – from an investor standpoint – is electric, not internal combustion engines.
- The cash terms + scrip (into the EV listing) under the proposals are attractive. Even after this morning’s move (+53.6%) in Dongfeng’s share price.
[Japan M&A] Toyoda Gosei Buys Out Affiliate Ashimori Industry at 1.000x Mar25 Book
- Toyota Motor (7203 JP) subsidiary Toyoda Gosei (7282 JP) is buying out its own equity affiliate Ashimori Industry (3526 JP) at a near-all-time high price of ¥4,140/share.
- It’s not a great price, but it is just over 1x book after writedowns this past quarter. It basically requires cross-holders and half a retail to tender.
- But this autoparts business is a strong grower, and has no EV risk. And its non-autoparts business is more interesting. The “fair” multiples are low. But it’ll get done.
Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Last evening, Hang Seng announced a methodology change for the Hang Seng Internet & Information Technology Index (HSIII Index) with implementation in two phases.
- The capping methodology will be updated at the September rebalance and the turnover and sector requirements will be updated at the December rebalance.
- The updated capping scheme increases turnover and flow in September, while there could be one constituent change for the index at the December rebalance.
Near-Term Flows to Watch on Mandatory Treasury Share Cancellation in Korea
- Dems likely to push 3rd package in Q4; near-term flows chasing treasury stock cancellation theme, with locals screening >₩1tn mkt cap, >10% treasury shares of float.
- Little pushback on mandatory treasury cancellations; debate focused on timeline — grace period vs. immediate rollout — highlighting how much leeway government may grant differing governance structures.
- Too early for governance plays; near-term momentum flows likely in names with highest treasury stock relative to float, where cancellation is expected to hit flows hardest.
Taiwan Top 50 ETF Rebalance Preview: Hat Trick for Caliway Biopharma?
- There could be 2 changes for the Yuanta/P-Shares Taiwan Top 50 ETF in September – both changes are high probability.
- Caliway Biopharmaceuticals (6919 TT) and King Slide Works (2059 TT) are being added to a global index at the close today and are potential inclusions to the ETF in September.
- Caliway Biopharmaceuticals (6919 TT) will also be added to another global index at the close on 19 September, so more passive inflows for the stock. Reversion thereafter?
Russia/Ukraine: What Now?
- A week after the event, it is clear that the Trump/Putin summit presented the latter with a big win at little, if any, cost.
- Donald Trump is unlikely to come up with anything that will bring Mr Putin to the negotiating table in good faith once his latest two-week ‘deadline’ expires.
- Furthermore, Mr Trump remains philosophically inclined to favour Russia, a leaning that probably poses a greater risk to Kyiv than Mr Putin himself does.
Aux Electric IPO: Smallest Player but Superior Growth and Margins
- Aux Electric (2580 HK) is looking to raise up to US$460m in its upcoming Hong Kong IPO.
- It is one of the global top five air conditioner providers, with capabilities covering the design, R&D, production, sales and related services of household and central air conditioners.
- In this note, we examine the IPO dynamics, and look at the firm’s valuation.
LHN’s Co-Living Spin-Off And HK Delisting
- LHN Ltd (LHN SP) is delisting its secondary listing in Hong Kong and concurrently spinning off its co-living business.
- The Hong Kong-listing, which was illiquid from the onset, has received approval from the HK Listing Committee to delist. Shareholders will vote on the spin-off on the 9th September.
- LHN is up 95% since the spin-off announcement. The accretion from the new listing is well baked in. And then some.
Fast Retailing (9983 JP) Tactical Outlook: Turning OVERSOLD, Potential BUY Ahead of Sep-25 Rebalance
- In his recent insight, Brian Freitas stated that Fast Retailing (9983 JP)‘s CPAF will stay the same at the September 25 Nikkei 225 Index rebalance.
- The stock is turning oversold—not yet extreme, but notable. Historically, this short-term downtrend pattern often reversed after two weeks of declines; we are now in the second consecutive week lower.
- Monitor the 47150 support level: the stock is trading at 47810 at the moment of writing, if it goes at or below 47150 it will start to be clearly oversold.
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