In today’s briefing:
- Nikkei 225 Index Rebalance Sep25: Performance of Potential Adds/Deletes & Positioning
- HMM: Tender Offer of 8% of Outstanding Shares and Cancellation
- Merger Arb Mondays (18 Aug) – Santos, Shibaura, ENN Energy, Kangji, OneConnect, Smart Share
- KOSPI Size Indices: Passive Flows for Many Active Changes
- FEFTA Classification Changes Summer 2025
- Smart Share Global (EM US): Hillhouse Crashes The Party. And Rightfully So
- Today’s HMM Tender Follow-Up Disclosure and Hedge Ratio Setup
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Sep25
- Mayne Pharma (MYX AU): Got to Know when to Hold ‘em, when to Fold ’em
- [Japan ECM/Index] Japan Business Systems (5036) Offering Triggers Move to TOPIX
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.
HMM: Tender Offer of 8% of Outstanding Shares and Cancellation
- After the market close on 14 August, HMM Co., Ltd. (011200 KS) announced a tender offer of 81.8 million treasury shares (8% of outstanding shares).
- An even bigger factor on HMM’s share price than this tender offer could be the continued decline in the global shipping rates which is negative on the company.
- Overall, we would be cautious on HMM over the next one year. HMM also reported worse than expected operating profit in 2Q 2025 due to weaker global shipping rates.
Merger Arb Mondays (18 Aug) – Santos, Shibaura, ENN Energy, Kangji, OneConnect, Smart Share
- 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: Smart Share Global (EM US), Mayne Pharma (MYX AU), ENN Energy (2688 HK), Santos Ltd (STO AU), Joy City Property (207 HK), Oneconnect Financial Technology (6638 HK).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Shibaura Electronics (6957 JP), Ci Medical (3540 JP), Soft99 Corp (4464 JP), Ainsworth Game Technology (AGI AU).
KOSPI Size Indices: Passive Flows for Many Active Changes
- The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
- Nearing the end of the review period, we forecast 49 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.
- There are a number of stocks that will have passive flow from global index trackers over the next few weeks, while some are potential changes to the KOSPI2 in December.
FEFTA Classification Changes Summer 2025
- The Ministry of Finance has published an updated “FEFTA List” of classifications of listed companies as of July 15, 2025.
- 50 names lowered their ranks from the most “core” Type 3 to Type 2(20), or Type 1(30). 104 names raised from Type 1(51) or Type 2(53) to Type 3.
- Smartkarma readers may want to peruse the lists and details to see if they think companies are trying to protect themselves (from threats as yet not known by the public).
Smart Share Global (EM US): Hillhouse Crashes The Party. And Rightfully So
- Nearly seven months after receiving a preliminary non-binding proposal, Smart Share Global (EM US) announced on the 1st August a firm Offer had been entered into.
- The Offeror consortium, led by Mars Guangyuan Cai, Chairman and CEO, made an Offer of US$1.25/ADS, a 74.8% premium to last close; but ~20% below net cash + short-term investments.
- Now Hillhouse has thrown its hat into the ring with a US$1.77/ADS NBIO. Smart Share’s special committee of independent directors should engage.
Today’s HMM Tender Follow-Up Disclosure and Hedge Ratio Setup
- KOBC’s core mission hinges on HMM; without it, no real mandate. Structural incentive to hold remains, so its active tender participation is still questionable.
- Still, max proration risk seems base case, with weak Q2, soft Q3 freight outlook, and post-tender skew pointing bearish for HMM.
- Spread >10% makes this too good to pass, but should also watch policy risk — better to lock futures hedge early as flows show players scrambling for cover.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for Sep25
- Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 5 September.
- We highlight 6 stocks that have a higher probability of being added to the index. With the index committee entitled to a lot of discretion, there will be differences.
- CATL completes 3 months of listing just prior to the review meeting date and is a dark horse candidate, though the committee could let the stock season for another quarter.
Mayne Pharma (MYX AU): Got to Know when to Hold ‘em, when to Fold ’em
- On 17 May, Cosette asserted that a material adverse change had occurred. Mayne Pharma (MYX AU) disputes the claim with court proceedings set to start on 22 September.
- Mayne’s FY25 results on 29 August should provide incremental clarity, but not a definite answer, on the MAC breach relating to maintainable EBITDA (decline by at least A$10.76 million).
- The outcome of the trial remains uncertain as both Mayne and Cosette have valid arguments. Risk/reward is attractive – upside (43.1% to offer) vs the downside (22.3% to deal-break price).
[Japan ECM/Index] Japan Business Systems (5036) Offering Triggers Move to TOPIX
- Japan Business Systems (5036 JP) today announced a couple of interesting things. First, admission to TOPIX (contingent on a successful secondary offering of shares, also announced today).
- Then a ¥5/share special commemorative dividend (0.4%) and a “gift” of 4% of the company to a J-ESOP Trust for employees, where the company gifts the shares.
- The latter looks aggressive/generous, but the modalities here are interesting.
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