In today’s briefing:
- CSI Hong Kong Connect Internet Index Rebalance: Large Flows & Impact on Friday
- [Japan M&A] CEO & Chairman Entice GS to Sponsor an MBO for Recently Lackluster Raksul (4384)
- NIFTY200 Momentum30 Index Rebalance: Huge Turnover and Flow in December
- Monetary Policy Tide Is Turning Up
- ANE Cayman (9956 HK): CDH Holds All The Cards
- A Tender Offer of 52.5% Stake in Rothwell International by Trillion Luck Group
- 2026 High Conviction Idea: Zijin Mining – Copper Scarcity Rerating to HK$48
- HEW: Packing Festive Presents
- Austal (ASB AU): Hanwha Cleared To Lift Stake To 19.9%
- SSI Newsletter Highlights: Merger Arbitrage Opportunities, Strategic Reviews and More
CSI Hong Kong Connect Internet Index Rebalance: Large Flows & Impact on Friday
- There are 2 constituent changes for the CSI Hong Kong Connect Internet Index in December. Plus there are large capping changes for some stocks.
- Estimated one-way turnover at the rebalance is 11.9% and the round-trip trade is HK$26.6bn (US$3.4bn). There are 16 stocks with more than 1x ADV to trade.
- The adds drifted lower vs the deletes in September and October but have started outperforming in December. There could be more outperformance following announcement of the index changes.
[Japan M&A] CEO & Chairman Entice GS to Sponsor an MBO for Recently Lackluster Raksul (4384)
- Raksul Inc (4384 JP) is a business roll-up business. They do printing, and advertising, and marketing, and supply. They want to be all things to all SMEs.
- They are pretty good at it. Revenues and EBIT have been growing at 20-30% a year for years, and are scheduled to grow 19% and 26% for several years ahead.
- The bid is up 40% from last, but that gets them to a 30-month high. The register is very open. Lots of active institutional shareholders who have to agree. Maybe.
NIFTY200 Momentum30 Index Rebalance: Huge Turnover and Flow in December
- There will be 19 constituent changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December.
- Estimated one-way turnover is 64.6% resulting in a round-trip trade of INR 161.3bn (US$1.8bn). There are 27 stocks with over 1x ADV to trade.
- Some stocks will have passive flows from other index trackers at the same time while others are potential adds/close adds to global indices over the next couple of months.
Monetary Policy Tide Is Turning Up
- Markets are already pricing the return of rate hikes in 2026 for Canada, Australia and New Zealand, while policymakers elsewhere are starting to warn of the possibility.
- Transitional support to structural adjustments needs unwinding, as Canada signals most prominently. Broader activity resilience and inflation reveal the risk of overstimulation.
- The BoE already committed a policy mistake by easing too early, and is split by those recognising the persistent danger. Market pricing remains too dovish for 2026.
ANE Cayman (9956 HK): CDH Holds All The Cards
- The feedback I get on this transaction canvasses comments such as: “it just doesn’t feel right“, or “there’s something funny going on“, or simply “weird“.
- With~20% of the shareholder register, involving opaque pre-IPO investors, none of whom have provided IUs, a Shanghai Henlius (2696 HK)-like situation unfolding is bandied around. The comparison is, however, tenuous.
- Further inquiries suggest CDH is likely in control of 18% of that 20%. This needs to be clarified.
A Tender Offer of 52.5% Stake in Rothwell International by Trillion Luck Group
- After the market close on 11 December, Trillion Luck Group announced a tender offer of a 52.5% stake in Rothwell International Co (900260 KS).
- The tender offer price is 1,580 won per share, which is 58% higher than current price.
- There has not been a meaningful positive impact of keeping Rothwell publicly listed in Korea. It makes more sense to take the company private.
2026 High Conviction Idea: Zijin Mining – Copper Scarcity Rerating to HK$48
- Structural copper tightness, strong gold cash flows, and rising silver prices position Zijin for multi-year earnings growth and a valuation re-rating in 2026.
- Leadership transition reduces founder dependence, strengthens governance credibility, and enables multiple expansion as Zijin aligns with global copper-scarcity peers.
- Base valuation is HK$40–41; spot and peer convergence support HK$48–50, implying 35–40% upside with clear catalysts across copper expansions and gold stability.
HEW: Packing Festive Presents
- Another hawkish repricing occurred, despite little support from the Fed, although the six members favouring higher rates reveal hawkish discomfort beyond current voters.
- Trade with China is still avoiding the trade war well enough to prevent a massive shock, and UK GDP data kept following its residual seasonality rather than fundamental stories.
- It’s all happening next week as central banks and statistical authorities ram releases in before Christmas. Bailey’s bias to pivot should deliver a BoE cut while the ECB holds.
Austal (ASB AU): Hanwha Cleared To Lift Stake To 19.9%
- After the US’ CFIUS permitted the Hanwha Group to acquire up to a 100% stake in Aussie-based shipbuilding and defense firm Austal Ltd (ASB AU), FIRB’s support appeared a lock.
- FIRB has now cleared Hanwha to lift its stake to 19.9% from 9.9%, “and cannot increase its shareholding above 19.9 per cent“. Andrew and Nicola Forrest’s Tattarang currently holds ~19.4%.
- This development should not come as a surprise. Fundamentally, Austal is not inexpensive.
SSI Newsletter Highlights: Merger Arbitrage Opportunities, Strategic Reviews and More
- Emeren Group’s merger arbitrage presents a 13% spread with a shareholder vote imminent, despite operational softness concerns.
- TrueCar’s buyout vote is set for December 22, with AutoNation potentially reducing required financing by joining.
- AUB Group’s merger discussions with EQT and CVC ended without a binding proposal, reflecting management’s confidence in fundamentals.
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