In today’s briefing:
- Swiggy/Eternal: Free Float Increase & Foreign Room Decrease ‘Delivering’ BIG Passive Flows
- IDX30/LQ45/IDX80 Index Rebalance: Changes Across the Indices
- Korean Policy Tailwinds: Preferred Shares Rerating Play
- A/H Premium Tracker (To 25 July 2025): “Beautiful Skew” Raging Onward
- Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$1.4bn Trade
- [Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- [Japan M&A] – KKR Launches Still-Too-Light Topcon (7732) Deal
- My Take on Samsung’s Big Foundry Deal with Tesla
- Opec: Twist Or Stick?
- GF Securities (1776 HK): Global Index Inclusion as Sector Rallies
Swiggy/Eternal: Free Float Increase & Foreign Room Decrease ‘Delivering’ BIG Passive Flows
- Increased free float should result in passives buying Swiggy (SWIGGY IN) and lower foreign room should lead to passives selling Eternal (ETERNAL IN) at the end of August.
- The increased free float should also result in passive buying for Swiggy (SWIGGY IN) in September.
- Eternal has outperformed Swiggy last week following strong earnings. Swiggy announces earnings later this week and that could be a short-term catalyst for a narrowing of the spread.
IDX30/LQ45/IDX80 Index Rebalance: Changes Across the Indices
- There are 2 constituent changes each for the IDX30 Index and the LQ45 Index, and 3 constituent changes for IDX80 Index to be implemented at the close on 31 July.
- The largest passive flows are expected in Bank Central Asia, Bank Rakyat Indonesia, PT Adaro Andalan Indonesia, Mitra Adiperkasa, XLSMART Telecom Sejahtera, Indo Tambangraya Megah and Bank Mandiri Persero.
- With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.
Korean Policy Tailwinds: Preferred Shares Rerating Play
- Most expect prefs to be in policy crosshairs soon—watch for tighter rules on dividends, discounts, and liquidity, plus likely incentives for redemption or cancellation ahead of commons.
- If Korea rolls out a pref stock overhaul, long-biased rerate plays could pop—focus on liquid, high-yield large-cap prefs trading at 35%+, yield north of 3%, and solid daily turnover.
- Korea Inv, Kumho Petro, CJ Cheil, CJ Corp prefs already screen well; Doosan and Hanwha 3PB could join if dividend hikes materialize on back of strong sub earnings.
A/H Premium Tracker (To 25 July 2025): “Beautiful Skew” Raging Onward
- AH premia down again among liquid names but “beautiful skew” of wide premia converging more than narrow premia continues bigly. It still pays well to be long wide H discounts.
- This is the most significant 60-day AH pair average H outperformance in five years, maybe ever. Remarkable.
- 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.
Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$1.4bn Trade
- Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index with implementation at the close on 31 July.
- Nano Nuclear Energy (NNE US) and Atha Energy Corp (ATHA CN) will be added to the index. Estimated one-way turnover is 16.3% resulting in a round-trip trade of US$1.36bn.
- There are only 3 trading days to implementation of the changes and we’d watch out for big moves on stocks that have more than 2x ADV to trade.
[Japan M&A] Pacific Industrial (7250) MBO Officially Being Done Dirt Cheap
- The MBO for Pacific Industrial (7250 JP) starts with the father+son Chairman and CEO, – combined stake 2.92% – putting nothing in to buy this, with help from banks.
- The Takeover Price is priced at 0.7x book, and a Net Debt to EBITDA of 2x (when adjusted for securities+pension assets+DTLs) and 5-6x average 2026-2030 FCF.
- This is being done too cheap: Toyota is the main customer, one third of revenues comes from Japan, and the company is set for a transition to EVs.
[Japan M&A] – KKR Launches Still-Too-Light Topcon (7732) Deal
- In December-2024, this deal was mooted and it came out as expected. But the implied growth in management forecasts was higher than expected so the price came in quite light.
- In March when the deal was announced, it seemed like a tough call, but three weeks later Value Act decided they would tender, but would reinvest in the back end.
- The deal is now approved, and launches tomorrow. It gets done, I expect, but it is not a model deal other than being one showing the loopholes available to buyers.
My Take on Samsung’s Big Foundry Deal with Tesla
- The A16 chip Samsung fabs is mainly for real-time inference in Tesla’s FSD cars, not data-center training, which remains dominated by Dojo and NVIDIA hardware.
- If Tesla’s deal includes AI chips with HBM, it’s a major catalyst; if just A16, it’s not proof HBM yield issues are solved.
- Tesla’s deal isn’t a sure sign Samsung’s HBM4 passed NVIDIA’s qual tests, but it’s a key reference boosting market hype—time to consider a Samsung long, SK Hynix short setup.
Opec: Twist Or Stick?
- The further acceleration by ‘Opec+ eight’ in unwinding the second package of voluntary output cuts was a surprise, albeit one that left markets unmoved.
- The cartel now appears to be firmly on track to complete its unwinding in September, even though its stated justifications for increasing output remain highly questionable.
- Despite downside global growth risks, the Saudis in particular may press to start unwinding the first package, a move which may be announced as early as next week.
GF Securities (1776 HK): Global Index Inclusion as Sector Rallies
- Following a rally in the stock over the last 4 months, GF Securities (H) (1776 HK) could be added to a global index in August.
- GF Securities (H) (1776 HK)‘ peers have also rallied over the same time frame and the stock trades in line with its peers on various valuation metrics.
- Positioning in the stock is in line with its peers and shorts have continued to increase as the stock price has moved higher.
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