In today’s briefing:
- Soul Patts & Brickworks: Index Impact of A$14bn Merger
- KWEB Index Rebalance: HealthyWay In; East Buy Out
- ESR (1821 HK): A Shareholder Register Look-Through
- Soul Patts/Brickworks To Unwind Circularity
- [Japan Buybacks] – Buybacks Announced 26-30 May 2025 And Company Buyback History
- CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade
- [Japan Activism] Pasona Group (2168 JP) – Three New Things Of Mixed Importance
- TIP Customized Taiwan Select High Div Index Rebal Preview: Methodology Change Leads to US$9bn Trade
- HD Hyundai: Will It Increase Ownership Stake In HD Korea Shipbuilding & Offshore Engineering?
- FnGuide Top 10 & Equal Weight Index Rebalance Preview: Outperformance Continues
Soul Patts & Brickworks: Index Impact of A$14bn Merger
- Washington H. Soul Pattinson (SOL AU) and Brickworks Ltd (BKW AU) have executed a binding Combination Deed to implement an A$14bn merger that simplifies the company structure by eliminating crossholdings.
- The merger ratio is a good one for Brickworks Ltd (BKW AU) shareholders and the benefits to both sets of shareholders should see the merger approved.
- There will be large passive buying in Washington H. Soul Pattinson (SOL AU) from global and local index trackers and that could lead to short covering.
KWEB Index Rebalance: HealthyWay In; East Buy Out
- The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 June.
- HealthyWay (2587 HK) will be added to the ETF while East Buy Holding (1797 HK) will be deleted. The passive trading will offer an opportunity to exit positions.
- There is a huge lock-up expiry in HealthyWay (2587 HK) on 30 June and the stock could drop ahead of that. Then it could drop some more after lock-up expiry.
ESR (1821 HK): A Shareholder Register Look-Through
- Today, I was the first analyst to gain access to ESR (1821 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under s329 of the Securities and Futures Ordinance.
- This is the same register discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM and L’Occitane (973 HK): Who Owns What, And When
- It is also used by proxy solicitors. My takeaway, still, is that this Offer is a done deal. But yes; there are a few shareholder activists lurking in the register.
Soul Patts/Brickworks To Unwind Circularity
- The cross-shareholding between Washington H. Soul Pattinson (SOL AU) (Soul Patts) and Brickworks Ltd (BKW AU) was established in 1969 to defend the companies from corporate raiders.
- Perpetual pursued a case in the Federal Court of Australia, alleging that the cross-shareholding was oppressive to minority shareholders; however the claim was dismissed in 2017.
- Today, via inter-conditional Schemes, the circularity is set to be unwound through a merger. Soul Patts currently owns 43.3% in Brickworks, and Brickworks 26% in Soul Patts.
[Japan Buybacks] – Buybacks Announced 26-30 May 2025 And Company Buyback History
- Buybacks in Japan are becoming a much greater driver of shareholder return than in previous years. The total amount of buybacks announced just during the March-end earnings season cleared ¥7trln.
- Quiddity has developed a buyback tool which tracks Japanese buybacks and the buyback history for any given company. Isuzu Motors (7202 JP) announced a big post-Offering buyback this week.
- Want to see how Isuzu has executed buybacks the past decade? Daily data? % volume? You can check here for any of the 21 companies which announced buybacks this week.
CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade
- There are 7 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 June.
- There are 240 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$12bn.
- The adds have outperformed the deletes for the CSI 300 Index and the CSI 1000 Index but underperformed for the CSI 500 Index.
[Japan Activism] Pasona Group (2168 JP) – Three New Things Of Mixed Importance
- Pasona Group (2168 JP) is a “value stock.” It has loads of cash (but less than you think) and significant ongoing governance issues, but they are doing a TINY buyback.
- Several weeks ago we got an announcement which was odd. Not completely odd, just odd. Now in the past week we have market activity/announcements which make one wonder.
- This piece attempts to interpret some of the recent data/info points. One is odd. Another is odd but meaningful (but different than people think). A third is just technical.
TIP Customized Taiwan Select High Div Index Rebal Preview: Methodology Change Leads to US$9bn Trade
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 363bn (US$12.1bn).
- Following a change in methodology, there could be 16 adds and 6 deletes in June with an estimated one-way turnover of 39% and a round-trip trade of US$9bn.
- We expect the adds to outperform the deletes over the next few days, following which reversion could set in.
HD Hyundai: Will It Increase Ownership Stake In HD Korea Shipbuilding & Offshore Engineering?
- There has been an increasing speculation of HD Hyundai increasing its stake in HD Korea Shipbuilding & Offshore Engineering (HD KSOE) in 2025.
- There are two main reasons why HD Hyundai could increase its stake in HD KSOE.
- They include HD KSOE contributing higher percentage of dividend income and continued full-fledged recovery of the operating profits of the HD HHI and HD Hyundai Mipo.
FnGuide Top 10 & Equal Weight Index Rebalance Preview: Outperformance Continues
- There could be 2 changes for the FnGuide Top 10 Index and 1 change for the FnGuide Top 10 Equal Weight Index in June.
- There will be capping inflows for Samsung Electronics (005930 KS), capping outflows for SK Hynix (000660 KS) and funding outflows for the other index constituents.
- A long adds/ short deletes trade has performed well historically for the FnGuide Top 10 Index with positive performance till implementation followed by reversion post implementation in most cases.
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