In today’s briefing:
- CSI Hong Kong Connect Internet Index Rebalance: Large Flows & Impact on Friday
- Read-Through on the Samsung/Hynix ADR-Listing Noise
- 2026 (“Year of the Horse”) Major IPOs Pipeline in Asia
- Makino Milling Machine (6135 JP): Tender Offer Risk/Reward
- AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- [Japan Activism/M&A] Activist Launches Partial Tender to Put Microcap Broadmedia (4347 JP) In Play
- A Potential Listing of ADRs for SK Hynix Using Its Treasury Shares?
- ANE Cayman (9956 HK): On S329 Reports And Letters Of Interest
- More Detailed Insight into Hynix’s Internal Situation Regarding the ADR Issue
- [Japan Offering] Significant Financial Crossholder Selldown in Okuma (6103)
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.
Read-Through on the Samsung/Hynix ADR-Listing Noise
- ADR odds are tiny. Both Samsung and Hynix have thin control stakes, making governance risk too high. Neither is willing to chase a valuation pop at the expense of stability.
- Still can’t ignore it, since the ADR chatter is meaningfully swinging the pair trades. Samsung pref spread and Hynix/Square are both getting pushed around.
- ADR noise cooled today, but it can easily resurface and skew the setup. Treat as noise, but be ready to hit aggressive reversion trades when it pops again.
2026 (“Year of the Horse”) Major IPOs Pipeline in Asia
- In this insight, we provide a list of 50 prominent companies in Asia that could complete their IPOs in Asia in 2026 (excluding Korea).
- This report is meant to serve as a comprehensive, REFERENCE GUIDE to help clients get a broad view of the major IPOs that could get completed next year in Asia.
- Some of the most prominent potential IPOs in Asia next year include Reliance Jio, Kunlunxin, Shein, Flipkart, and Canva.
Makino Milling Machine (6135 JP): Tender Offer Risk/Reward
- Makino Milling Machine Co (6135 JP)’s pre-conditional tender offer from MBK Partners is at JPY11,751 per share. The gross spread has increased to 9.9% due to several concerns.
- The wide gross spread reflects the risk in satisfying the precondition, the fallout from the Homeplus saga and breaching the long stop date (16 January 2026).
- While these concerns have merit, there are mitigating factors. The risk/reward is favourable as the upside (9.9% spread) exceeds the downside (6.3% to my estimated deal break price).
AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- AU Small Finance Bank Limited (AUBANK IN) has received approval from the Ministry of Finance to increase its Foreign Ownership Limit from 49% to 74% (the maximum permitted).
- The increased FOL will result in passive inflows from global index trackers in February and March. The inflows are multiple days of ADV.
- There has been little increase in positioning. The increased Foreign Ownership Limit and the passive flows to come could lead to the stock moving higher over the next few weeks.
[Japan Activism/M&A] Activist Launches Partial Tender to Put Microcap Broadmedia (4347 JP) In Play
- Today after the close, Broadmedia Corp (4347 JP) announced that UK-based Japan activist AVI and one of its funds would launch a tender offer for just over 10% of shares.
- The Tender Offer comes at a 29.5% premium, and it would take the activist to ~40% – close to board-spilling influence.
- This creates an interesting setup. One wonders whether this is meant to spill the Board post-tender, and whether the Company will seek alternate solutions.
A Potential Listing of ADRs for SK Hynix Using Its Treasury Shares?
- According to numerous local media, SK Hynix is considering on listing its treasury shares (2.4% of outstanding shares representing 17.4 million shares) as ADRs.
- SK Hynix could cancel its treasury shares or list them as ADRs. The bigger bang for the buck will likely be to list them as ADRs.
- By listing its shares as ADRs, the valuation gap between SK Hynix and other listed peers (such as MU and TSMC) could be reduced.
ANE Cayman (9956 HK): On S329 Reports And Letters Of Interest
- ANE Cayman Inc (9956 HK)‘s Offer, by way of a Scheme from Centurium Partners, a pre-IPO investor, in tandem with Temasek, has displayed some unique (unusual?) firsts.
- There is the 9%+ stake held by CDH – another pre-IPO investor – a shareholder that fails to appear in subsequent annual/interim reports; or even Hong Kong disclosure announcements.
- Then late last week, the Offeror opted not to raise the cap on the scrip option alternative, despite shareholders expressing interest.
More Detailed Insight into Hynix’s Internal Situation Regarding the ADR Issue
- They’re maxing out M15X ahead of schedule, facing a fab gap until ’27, and now need more capex than their KRW 28tn cash pile comfortably covers.
- SK doesn’t want an Hynix ADR; they’re focused on tapping the KRW 150tn Growth Fund to fill the capex gap while avoiding dilution and protecting their already-fragile control stack.
- ADR noise spiked because Hynix’s near-term capex needs exceed Growth Fund capacity, pushing them toward a 2.4% treasury dump—but I still don’t see SK pulling the ADR trigger.
[Japan Offering] Significant Financial Crossholder Selldown in Okuma (6103)
- Okuma Corp (6103 JP) today announced a secondary offering of 5.0mm shares (including greenshoe) from a relatively large number of financial crossholders.
- That takes out about a third of them and not quite a quarter of the crossholders. There’s more to go. And the register remains “blocked”.
- It looks headed to retail but this stock is very low volatility and is likely to remain that way. A large buyback to start in January offsets the overhang here.
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