In today’s briefing:
- Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
- BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
- AMFI Stock Reclassification Preview (Jun 2025): Plenty of Change With More Likely
- US Tariff Impact Estimates
- Mitsubishi Logisnext (7105) – Worth Buying The Dip On Likely Sale
- 20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil
- Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes
- Merger Arb Mondays (07 Apr) – Seven & I, Makino, HKBN, OneConnect, Dada, Insignia, Domain, Dropsuite
- (Mostly) Asia-Pac M&A: Topcon, Jinke Smart Services, Dropsuite, Domain, Jamco, Shin Kong, Dada Nexus
- Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA
Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated
- For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
- There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
- But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected.
BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
- BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
- Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
- With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.
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.
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.
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.
20 Korean Stocks That Could Outperform Next 2 Months Amid Tariff War and Local Political Turmoil
- In this insight, we discuss 20 Korean stocks that could outperform the market in the next two months amid global tariff war and local political turmoil.
- Going forward, we believe these 20 Korean stocks could continue to outperform the market in the next couple of months.
- As the market tries to digest further the uncertainties due to tariff war and the local Presidential election, these 20 stocks could provide sound defensive outperformance.
Treasury Wine Estates (TWE AU): Passive Selling Adds to Tariff Woes
- Given its portfolio mix, Treasury Wine Estates (TWE AU) does not expect a material impact on its business from the blanket 10% tariff on all goods imported from Australia/New Zealand.
- However, there is a high probability that Treasury Wine Estates (TWE AU) will be deleted from a global index in May and that will lead to large selling from passives.
- There has been an increase in short interest and an increase in other positioning. Trading will be volatile but there could be a downward bias over the next few weeks.
Merger Arb Mondays (07 Apr) – Seven & I, Makino, HKBN, OneConnect, Dada, Insignia, Domain, Dropsuite
- 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: Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), ENN Energy (2688 HK), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US), Soundwill Holdings (878 HK).
- Lowest spreads: Sinarmas Land (SML SP), Makino Milling Machine Co (6135 JP), Millennium & Copthorne Hotels Nz (MCK NZ), Shibaura Electronics (6957 JP), Tonami Holdings (9070 JP).
(Mostly) Asia-Pac M&A: Topcon, Jinke Smart Services, Dropsuite, Domain, Jamco, Shin Kong, Dada Nexus
- I tally 54 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
- Two news new deals discussed this week: Reject Shop (TRS AU) and Topcon Corp (7732 JP). Jinke Smart Services (9666 HK) also suspended pursuant to the Takeovers Code.
- Key updates/news took place on Dropsuite (DSE AU), AVJennings Ltd (AVJ AU), Domain Holdings (DHG AU), Jamco (7408 JP), Shin Kong Financial Holding (2888 TT), and Dada Nexus (DADA US).
Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA
- Abacus Storage King (ASK AU) was demerged from Abacus Property Group in 2023 and the stock has traded in a range since listing.
- Now, Ki Corp and Public Storage (PSA US) have made a conditional and non-binding proposal to take Abacus Storage King (ASK AU) private at A$1.47/share.
- The offer is a 27% premium to the last close of the stock and is higher than the price that the stock has traded at since listing.
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