Event-Driven Archives | Page 37 of 187 | Smartkarma

Today post-close, activist/engagement investor Oasis Management filed a new LSR on Macromill, Inc (3978 JP) owning 7.12% of shares as of 13-Dec-2024. Reason: Defend shareholder value, propose measures to management.
That is 7.56-7.65% of effective voting/tender rights. It’s big enough to matter. Of course, the stock has not traded below terms once since full trading started post-announcement.
And this was warned in CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid. Shareholder structure REALLY matters.

A Passive Flow Trading Event that Sparked Wild Price Action in Korea Is Happening Again

This event drew significant attention, causing unusual price action. From Sept 20 to Nov 29, corrections in the deletions far outpaced the KOSPI, with the trend holding across key checkpoints.
We’re watching 4 stocks: Kumho Petro, Lotte Chemical, Posco DX, and EcoPro Materials. SK Bioscience and Enchem are close, with small price moves likely pushing them out.
Based on past rebalancing patterns, proactive positions on these names could trigger strong price action. All except Enchem have listed futures and solid volume, making trading conditions favorable.

TIP Customized Taiwan Select High Dividend Index Rebalance: US$3.2bn Trade with BIG Impact

There are 8 changes a side for the TIP Customized Taiwan Select High Dividend Index in December. The TIP Taiwan Select High Dividend ETF (00919TW) has an AUM of US$9.3bn.
Estimated one-way turnover is 17.2% and that will result in a round-trip trade of US$3.2bn. All adds and deletes have over 5x ADV to trade from passive trackers.
The rebalance will be implemented over 8 trading days and the ETF started trading some stocks late last week and the rest from 17 December.

Shin-Etsu Chemical (4063) – Small/Large Below-Market Tender Offer Buyback, Followed by Overhang

Today, Shin Etsu Chemical (4063 JP) announced a second buyback this year (first ¥100bn was announced in May, buying back 16.695mm shs (0.83%). This time, ~¥94bn via Own-Share Tender Offer.
Three non-life insurers and two banks who together hold 6+% will sell a total of ~1.01% at ~10% below last. They will then sell the rest of their shares later.
Cute, but not enough. Shin-Etsu is cash-rich, securities-rich, receivables and inventory-rich. And nearly ¥1trln of EBITDA. They are a key part of the tech infrastructure. They can borrow.

Goldlion Holdings (533 HK): Tsang Family’s Scheme

After Goldlion Holdings (533 HK), an apparel manufacturer/distributor, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, from the Tsang family (63.09% stakeholder).
And that it’s exactly what unfolded. The Cancellation Price is $1.5232/share (declared final), a 24.85% premium to last price, but a punchy 71% premium to undisturbed.
The long stop is the 30th September 2025. This will probably be completed in less than half the time. There will be a question mark over the low price-to-book multiple.

Lotte Shopping and Potentially Others Are Shaping up as Fresh Picks for Dividend Arbitrage Plays

At today’s close, Lotte Shopping (023530 KS) shows solid contango for a basis trade, with LS Corp (006260 KS) next; the rest are too tight or dry.
Lotte Shopping surprised the market today, changing its dividend record date to a board-set day, wiping out the backwardation that matched its dividend yield until yesterday.
Lotte Shopping’s move could signal other stocks changing dividend dates, causing similar dislocations. With a 7% yield and solid SSF volume, it’s prime for aggressive dividend arbitrage.

EQD | S&P/ASX 200 Index Option Strategy -Combining Record Low Volatility with Buy-The-Dip

By Gaudenz Schneider

The S&P/ASX 200 (AS51 INDEX) has declined two weeks in a row. Quantitative analysis suggests that a trend reversal could occur soon.
This Insight provides an option strategy based on the resistance and support levels identified in the quantitative Insight EQD | ASX 200 Presents a High-Probability Buy-The-Dip Opportunity
Option liquidity and volatility analysis, including skew, term structure and put/call ratios are provided and used in strategy design.

[Quiddity Index] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2025.
We expect up to six ADDs and six DELs in the KOSPI 200 index during the June 2025 index rebal event based on the latest available data.

HK CEO & Director Dealings (17th Dec 2024): BeiGene, China Wantian, Super Hi Int’l/Haidilao

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight include: BeiGene (6160 HK), China Wantian Holdings (1854 HK), and Super Hi International Holding (9658 HK) / Haidilao International Holding (6862 HK).

Green Light from British Government

Approval and Safeguards: The UK government approved EP Group’s £5.3 billion acquisition of IDS, with legally binding commitments to retain Royal Mail’s headquarters, tax residence, and universal service obligations.
IDS faces declining mail volumes, delivery fines, and the need for operational reforms; EP Group aims to revitalize the company leveraging expertise in energy and logistics sectors.
A done deal, in my view. The acquisition is expected to close in Q1 2025.

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Dec 17

Daily Brief Event-Driven: KRX Value-Up Index Rebalance Results and Estimated Passive Impact and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KRX Value-Up Index Rebalance Results and Estimated Passive Impact
Select Sector Indices and S&P Equal Weight Rebalance: US$17.7bn Round-Trip Trade Post Capping Cutoff
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025
PCOMP Index Rebalance Preview: Two Changes Likely in February
EQD | Hong Kong Single Stock Options Weekly December 09 – 13
EQD | Nikkei Index Options Weekly – December 09 – 13
EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 09-13
EQD | ASX 200 Presents a High-Probability Buy-The-Dip Opportunity
EQD | Kospi Index Options Weekly – December 09 – 13

KRX Value-Up Index Rebalance Results and Estimated Passive Impact

KRX updated the Value-Up Index with five new names: KB Financial, Hana Financial, KT Corp, SK Telecom, and Hyundai Mobis, with Mobis replacing JB Financial, surprising the market.
This is the first rebalancing, packed into one day, so expect notable price action. Reverse moves could also follow Thursday as pre-positioned trades unwind, so monitor price action closely.
Even after Thursday’s rebalancing, half of the funds, especially from the National Pension Service, will flow into high-yield stocks, likely driving significant price moves through early next year.

Select Sector Indices and S&P Equal Weight Rebalance: US$17.7bn Round-Trip Trade Post Capping Cutoff

Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$17.7bn across the Select Sector indices and the S&P500 Equal Weight Index.
There is over US$500m to trade in Broadcom (AVGO US), Tesla (TSLA US), Apollo Global Management (APO US), Amazon.com Inc (AMZN US) and Workday Inc Class A (WDAY US).
Broadcom (AVGO US) swings from a small net buy to a large net sell following the rally in the stock last week.

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

PCOMP Index Rebalance Preview: Two Changes Likely in February

The review period for the February rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) ends in two weeks.
There could be two changes for the index with passive trackers needing to trade between 23-64x ADV in the stocks.
The passive buying is a lot larger than the passive selling, there will be funding outflows for the other index constituents; some stocks will have over 1x ADV to trade.

EQD | Hong Kong Single Stock Options Weekly December 09 – 13

Top Ten most active contracts for the week all traded on Monday. Most of the active contracts were Calls with December expiries.
Xiaomi Corp (1810 HK) makes the Top Ten non-Tencent most active contracts with both Puts and Call active – likely stock replacement and hedges following torrid run higher.
Tencent implied vols trading at their lowest levels of the past year.

EQD | Nikkei Index Options Weekly – December 09 – 13

A bid for out-of-the-money puts combined with positive change in Put open interest and Put volume totals argues that Puts and being bought.
70% of NKY open interest is below 38,000 with only 20% of the open interest above 40,000.
NKY nearing top of range while registering quiet historic volatility levels 4-5 points below implied vols.

EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 09-13

Both HSI and HSCEI show characteristics of being short gamma at higher strikes highlighted by Mondays pop in spot and vol in both markets.
Implied vol did a complete round-trip closing virtually unchanged from last week despite spot holding on to modest gains on the week and large high – low range.
Up-Strike Calls look to have been added in both markets which will help maintain the positive spot vol correlation.

EQD | ASX 200 Presents a High-Probability Buy-The-Dip Opportunity

By Nico Rosti

The S&P/ASX 200 INDEX it’s currently trending up quite well, since October 2023. The current rally picked up some steam from July 2024 and is quite steady.
The index started to pull back 2 weeks ago and has closed 2 consecutive weeks down and this week started with a Monday down Close.
Our models show a clear opportunity to buy this dip and ride the index uptrend back to >3% profit target, roughly a 3-weeks movement according to our forecast.

EQD | Kospi Index Options Weekly – December 09 – 13

Risk reward for owning implied vol has shifted to the long side here given spot/vol dynamics and limited vol upside since market peaked 17% higher.
Strong price action after a soggy start to the week sees a significant portion of open interest cleared out.
Largest open interest is at the 300 strike with ~ 42k Put contracts outstanding.

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Dec 16

Daily Brief Event-Driven: MVIS Australia Resources Index Rebalance: 3 Adds and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes
MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade
MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks
Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks
Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn
MV Australia A-REITs Index Rebalance: Only Float & Capping Changes
[Quiddity Index] MarketVector US Semiconductor Index Dec24 Rebal Results: Flow Expectations
[Quiddity Index] MVIS Junior Gold Miners Index Dec24 Rebalance Results: Flow Expectations
[Quiddity Index] MVIS Global Defense Index Dec24 Rebalance Results: Flow Expectations

MVIS Australia Resources Index Rebalance: 3 Adds, Capping & Float Changes

De Grey Mining (DEG AU), Perseus Mining (PRU AU) and Sandfire Resources Limited (SFR AU) will be added to the Vaneck Vectors Australian Resources ETF (MVR AU) in December.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 7.4% and in a round-trip trade of A$63m.
De Grey Mining will be acquired by Northern Star Resources in the first half of 2025. The passive buying could push De Grey Mining higher in the short-term.

MV Australia Equal Weight Index Rebalance: One Add & Capping Leads to A$290m Trade

Telix Pharmaceuticals (TLX AU) is the sole (and somewhat surprising) inclusion for the VanEck Vectors Australian Equal Weight ETF (MVW AU) in December.
The one inclusion, float changes and capping changes result in a one-way turnover of 5.5% leading to a round-trip trade of A$290m.
Shorts have increased in Telix Pharmaceuticals (TLX AU) this year but there has been some covering in the stock recently.

MV Global Junior Gold Miners Index Rebalance: Big Flow in Some Stocks

No constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December. But there are a lot of float and capping changes.
Estimated one-way turnover is 2.6% resulting in a round-trip trade of US$269m. There are 8 stocks with over 1x ADV to trade from passive trackers.
Stocks with the largest flows are Evolution Mining, Pan American Silver, Westgold Resources, B2Gold, Alamos Gold, Harmony Gold Mining, Eldorado Gold, K92 Mining, IAMGOLD, Endeavour Silver and Emerald Resources.

Merger Arb Mondays (16 Dec) – ESR, CPMC, Fosun Tourism, Seven & I, Fuji Soft, NEC Networks

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: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Nishimoto (9260 JP).

Korean Dems Push for Commercial Act Amendment by Year-End: Game-Changer for Value-Up Trade

The Dems are serious about the Commercial Act amendment, with Lee Jae-myung personally attending the policy forum to pitch the change directly to key business players.
Key takeaways: expanding directors’ fiduciary duties to all shareholders and mandatory cumulative voting, which could empower minority shareholders and reignite value-up policies in Korean companies.
The Dems plan to fast-track the Commercial Act amendment by year-end, with implementation likely by Q2 next year, boosting market moves and reigniting the value-up trade ahead of May’s election.

MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2.2bn

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in December but there are a lot of float and capping changes.
Estimated one-way turnover is 4.5% resulting in a one-way trade of US$1.1bn. Impact on the stocks is not big given they trade like water.
The selling in Broadcom and NVIDIA will be amplified by selling from the Technology Select Sector SPDR (XLK US) and Invesco S&P 500 Equal Weight E (RSP US) ETFs.

MV Australia A-REITs Index Rebalance: Only Float & Capping Changes

The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 20 December. There are no constituent changes, but there are float and capping changes.
Estimated one-way turnover at the rebalance is 2.9% resulting in a one-way trade of A$17m. There is limited impact on the index constituents.
The largest inflows are in Charter Hall, Gpt Group, Dexus Property and Region RE while the largest outflows will be from Goodman Group, Scentre Group and Vicinity Centres.

[Quiddity Index] MarketVector US Semiconductor Index Dec24 Rebal Results: Flow Expectations

The MV US Listed Semiconductor 25 index represents the performance of the biggest US-listed companies in the semiconductor industry.
There will be no index changes for the December 2024 rebal event.
We expect a one-way flow of US$1.3bn for December 2024, which translates to a turnover of 5.4%.

[Quiddity Index] MVIS Junior Gold Miners Index Dec24 Rebalance Results: Flow Expectations

The MV J-Gold Miners index represents the performance of small-cap and mid-cap gold and silver mining companies listed around the world.
There will be no index changes for the December 2024 rebal event.
We expect a one-way flow of US$168mm for December 2024, which translates to a turnover of 3.4%.

[Quiddity Index] MVIS Global Defense Index Dec24 Rebalance Results: Flow Expectations

The MV Global Defense Industry Index represents the performance of companies in national defense industries.
Amentum Holdings (AMTM US) is an ADD and Chemring Group PLC (CHG LN) is a DEL for the MV Global Defense Index in December 2024.
We expect a one-way flow of US$138mm for December 2024, which translates to a turnover of 8.6%.

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Dec 15

Daily Brief Event-Driven: Yoon’s Impeachment Passed: Upcoming Schedule and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact
HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying
A/H Premium Tracker (To 13 Dec 2024): Pairwise Intracorrelation and Vol Way Up, Premia Down
CPMC (906 HK): Not A Shadow Of Doubt (!) As Pre-Cons Fulfilled
MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes
China Healthcare Weekly (Dec.15) – 10th VBP Results, WuXi Shares Surge, Newjf Will Be Successful
Quiddity Leaderboard Hang Seng Internet & IT March 25: 4 Changes Likely, Some Names Have High Impact
A Review of Major Equity Indices in Korea in 2024
Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy
Quiddity Leaderboard HSCEI Mar 25: One Change Likely but More Names Lurking Close to the Border

Yoon’s Impeachment Passed: Upcoming Schedule, Procedures, and Market Impact

The impeachment motion against President Yoon passed in the South Korean National Assembly, clearing the two-thirds supermajority, and is now official.
For the impeachment to fail, four justices must oppose it—highly unlikely given the current setup. The odds are heavily in favor of the impeachment being upheld.
Corporate law reforms, driven by a likely Democratic Party takeover, could fuel value-up momentum and drive the local market, potentially sparking an unexpected rally through the May election.

HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying

SOUTHBOUND gross trading activity rebounded about 33% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK rebounded.
Alibaba Group Holding (9988 HK) was again the top buy and Tencent (700 HK) and Meituan (3690 HK) the top two sells. Tech is having a mixed outing now.
Gross SOUTHBOUND volumes back up this week to levels seen just off the autumn peak. An interesting week as stocks popped Monday, opened high Tuesday, then fell all week.

A/H Premium Tracker (To 13 Dec 2024): Pairwise Intracorrelation and Vol Way Up, Premia Down

Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB volumes rebounded, tech saw limited net buying, BABA was bought but other major tech sold.
The first leg of China’s retaliatory acts against US trade measures appeared with export bans on gallium, germanium, antimony, graphite products, etc. These will not be lifted soon.
China is also retaliating against the Phils, Vietnam, Taiwan and changing tack in Europe. The next couple of years threatens to be “interesting times.

CPMC (906 HK): Not A Shadow Of Doubt (!) As Pre-Cons Fulfilled

My conversation with the FA earlier this week largely put to rest a number of concerns, specifically on regulatory approvals, surrounding the Offer for CPMC Holdings (906 HK).
As announced on the 13th December, the last pre-condition, SAFE, has been satisfied. All pre-cons have been fulfilled. The Offer Doc will be dispatched on or before the 20th December
This could turn unconditional before year-end, depending on whether Zhang Wei promptly tenders. Expect the share price to trade tight (er) to terms Monday morning.

MV Global Rare Earth/Strategic Metals Index Rebalance: One Add, One Delete & Other Changes

Vulcan Energy Resources (VUL AU) will be added to the VanEck Rare Earth/Strategic Me (REMX US) while Tianqi Lithium (9696 HK) will be deleted from the index.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 2.5% and in a round-trip trade of US$37m.
The largest inflows will be in Vulcan Energy Resources (VUL AU), Lynas Corp Ltd (LYC AU), Ganfeng Lithium (1772 HK) and Tronox Holdings (TROX US).

China Healthcare Weekly (Dec.15) – 10th VBP Results, WuXi Shares Surge, Newjf Will Be Successful

The 10th national VBP released results. The average price reduction was about 70%. CSPC, Kelun, Fosun Pharma, Sino Biopharmaceutical are the “main force” and their performance would be affected.
WuXi Shares surge due to the absence of BIOSECURE Act from the proposed amendments to US NDAA. However, the rally could be short-term as the Bill may return next year.
Pre-Conditions of Newjf have been smooth so far. We think investors can directly consider Newjf’s Offer. Based on the current situation, we are optimistic that Newjf will finally be successful.

Quiddity Leaderboard Hang Seng Internet & IT March 25: 4 Changes Likely, Some Names Have High Impact

The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
Based on the latest available data, we see four ADDs and four DELs for HSIII in March 2025.

A Review of Major Equity Indices in Korea in 2024

By Douglas Kim

In this insight, we review the major equity indices in Korea in 2024 including KOSPI 200 and Korea Value Up Index.
Some alpha generating performances continue in terms of adding stocks to be included in the KOSPI 200 and reducing stocks that could be excluded.
Korea Value Up Index has been heavily promoted by the Korean Exchange this year. Korea Exchange plans to make special changes to the Korea Value-Up Index constituents on 20 December.

Last Week in Event SPACE: NEC Network, SingPost, Seven & I, CPMC, Exedy

Nec Networks (1973 JP)‘s own FA didn’t include any measure of transaction synergies to be created about which NEC and NESIC were so sure. This is not being done right.
Singapore Post (SPOST SP)‘s muted price action after announcing the ~S$900mn FMH sale is illustrative. But expect more value to be unlocked from divesting non-core ops going forward.
The FTC’ blocking the giant grocery merger of Kroger Co (KR US) and Albertsons Cos (ACI US) spells trouble for ACT and Seven & I Holdings (3382 JP).

Quiddity Leaderboard HSCEI Mar 25: One Change Likely but More Names Lurking Close to the Border

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
At present, we see one change based on the 13th December 2024 data but the rankings can change until 31st December 2024.

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Dec 14

Daily Brief Event-Driven: [Japan Activism] Exedy (7278 JP) – Buying Back Bigly and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
Vesync (2148 HK): Expect The Yangs To Privatise
Blackstone Eyes Move On Dexus (DXS AU)
Delisting Offer for Alba at 79% Premium
CPMC Holdings (906 HK): Festive Cheer as Precondition Satisfied🎄
Macquarie’s £8.7/share Bid for Renewi Supported by Key Shareholders Amid 9% Spread and Due Diligence Completion
Aviva’s Acquisition of Direct Line: 9.5% Merger Arbitrage Opportunity Amid Regulatory Considerations and Shareholder Dynamics
Media Concierge’s Acquisition of National World: 9.5% Upside Amidst Complex Business Dynamics

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly

Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.

Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds

~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.

Vesync (2148 HK): Expect The Yangs To Privatise

Vesync (2148 HK), a manufacturer of small home appliance, is currently suspended pursuant to the Takeovers Code.
FY23 was Vesync’s best result since its December 2020 listing; and FY24E is on track to go one better. Yet the share price is 24% adrift of the IPO price.
The Yang family, led by chairman/CEO, control ~69.26% of Vesync. An Offer price around the IPO price may be enough to take Vesync private.

Blackstone Eyes Move On Dexus (DXS AU)

Reportedly, Blackstone is running a ruler over Dexus Property (DXS AU), one of Australia’s leading fully integrated real estate groups.
The Australian article flips flops: “Blackstone is understood to have been back on the scene“; but “cooled on the opportunity for now“.
Almost exactly four year ago, Blackstone paid A$2.1bn for a 49% stake in the Dexus Australian Logistics Trust, a prime logistics portfolio managed and jointly owned by Dexus.

Delisting Offer for Alba at 79% Premium

Christmas came early for Corp Financiera Alba Sa (ALB SM)‘s shareholders as a 79% premium delisting offer for a holding that was last trading at a whoping 50.7% discount/NAV.
For a while I had been saying that Alba was very cheap. Although it is difficult to disagree with such a premium, controling shareholders are buying at a 11.5% discount.
They are value investors after all. Settlement should happen around April 4. Spread is 1.9%/6.4% (gross/annualised). Long Alba shares (not the holding spread).

CPMC Holdings (906 HK): Festive Cheer as Precondition Satisfied🎄

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has received SAFE approval. Therefore, the precondition is satisfied.
The offer and response document will be despatched by 20 December and 3 January 2025, respectively. The Board will recommend the offer.
The offer should be declared unconditional by the first closing date. At the last close and late-January 2025 payment, the gross/annualized spread was 7.3%/88.0%.

Macquarie’s £8.7/share Bid for Renewi Supported by Key Shareholders Amid 9% Spread and Due Diligence Completion

By Dalius Tauraitis

Macquarie Asset Management’s final bid for Renewi is £8.7/share, with a current spread of 9% and a downside risk of 25%.
Three shareholders holding 15.1% of Renewi have signed irrevocable support agreements; confirmatory due diligence is ongoing.
Macquarie’s offer values Renewi at 6.7x TTM adj. EBITDA, aligning with European peers’ valuations, considering the control premium.

Aviva’s Acquisition of Direct Line: 9.5% Merger Arbitrage Opportunity Amid Regulatory Considerations and Shareholder Dynamics

By Dalius Tauraitis

Aviva is acquiring Direct Line for £1.297 cash, 0.2867 AV shares, and £0.05 dividend, totaling £2.70/share.
Direct Line’s board is prepared to recommend the offer; Aviva is conducting due diligence with a PUSU date set for December 25.
The offer values Direct Line at 1.6x BV and 2.6x TBV, with potential regulatory scrutiny due to market share.

Media Concierge’s Acquisition of National World: 9.5% Upside Amidst Complex Business Dynamics

By Dalius Tauraitis

Media Concierge’s £0.23/share offer for National World represents a 9.5% upside, with shareholder approval likely guaranteed.
Antitrust risk is negligible due to Media Concierge’s focus on Irish newspapers and NWOR’s exclusive UK operations.
NWOR’s valuation is challenging due to lack of local peers and varying global newspaper company valuation ranges.

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Dec 13

Daily Brief Event-Driven: Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register
NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered
Vesync (2148 HK): The Yang Family to Launch a Privatisation Offer?
VCredit (2003 HK): Ma Makes His Move?
Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid
Lufax (6623 HK): On Ping An’s Stake Increases
FSS Puts a Break on Hyundai Motor Securities Rights Offering
Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
EQD | Global Option Implied Volatility – From Nifty 50 to Bitcoin, Plus BTC-Bond Special
Grifols: Activism and Debt Refinancing

Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register

Paper manufacturer Oji Holdings (3861 JP) has spent 25 years not going anywhere. Their current MTMP isn’t exciting. And it looks like they will fail worse than last time.
But an activist put their head above the parapet recently, and now the company has announced larger new cross-holding selldown targets, and a big 9% buyback, with a ToSTNeT-3 tomorrow.
The stock is at 0.47x book. They have nearly ¥400bn of financial assets which are non-core. They have land and property holdings. And they have lots of cross-holdings to repurchase.

NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered

Yesterday, NEC Corp (6701 JP) extended its Tender Offer to buy controlled subsidiary Nec Networks & System Integr (1973 JP) for another 10 days. It did not have enough shares.
As discussed here 4wks ago, then here yesterday, NEC might not get enough shares unless it offers a higher price. There’s a reason. It is not a high enough price.
METI Fair M&A Guidelines and Guidelines for Corporate Takeovers define fair. Guarantees of a floor price and a fair allocation of synergies. One is questionable. The other is not there.

Vesync (2148 HK): The Yang Family to Launch a Privatisation Offer?

Vesync (2148 HK) is in a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers which contains inside information of the Company.”
The Yang family is likely seeking to privatise Vesync through a Cayman scheme. The shares are trading 24% below the HK$5.52 IPO price.
We use several methods to triangulate the likely offer price, which suggests a price range of HK$5.09-10.30 per share, with an average of HK$6.71, a 59.8% premium to last close.

VCredit (2003 HK): Ma Makes His Move?

VCredit Holdings Ltd (2003 HK), a provider of consumer financial services in China, was listed on the 21st June 2018 at HK$20/share. Shares are currently down 90%.
Ma Ting Hung, VCredit’s chairman, held 35.6% at the time of listing, and currently holds 39.85%.
VCredit was suspended this morning pursuant to the Takeovers Code. Now might be the time for Ma to take VCredit back into the fold.

Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid

IOOF Holdings (IFL AU) shares rose 11% in the final minutes of trade, fueled by media reports suggesting that Bain was in the advanced stages of making a buyout offer.
The presence of several substantial shareholders necessitates an attractive takeover premium. Takeover interest is unsurprising as Insignia trades at a material discount to peers.
We use several methods to triangulate the likely offer, which suggests a price range of A$3.44-5.50 per share, with an average of A$4.67, a 37.4% premium to the last close.

Lufax (6623 HK): On Ping An’s Stake Increases

As discussed in PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It’s worth understanding how Ping An has taken its stake >50% and beyond.

FSS Puts a Break on Hyundai Motor Securities Rights Offering

By Douglas Kim

After the market close on 12 December, the Financial Supervisory Service (FSS) put a break on Hyundai Motor Securities’ rights offering worth 200 billion won.
The proposed rights offering included issuing 30.1 million new shares, representing 95% of its current outstanding shares (31.7 million).
We would try to capitalize on the short term bullish upside on its shares of Hyundai Motor Securities and sell into strength.

Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light

IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

EQD | Global Option Implied Volatility – From Nifty 50 to Bitcoin, Plus BTC-Bond Special

By Gaudenz Schneider

Cross-Market volatility snapshot highlighting option opportunities. Today’s opportunities are in the Nifty 50 and in Bitcoin
Nifty 50: The index crossed the 50-day moving average, signaling a bullish trend. Hedging gains is recommended due to expected macroeconomic uncertainty in Q1 2025.
Bitcoin: Surpassed $100,000, driven by positive sentiment towards the incoming US President’s crypto-friendly stance. Options strategies are suggested, plus how a synthetic Bitcoin bond compares to a corporate bond.

Grifols: Activism and Debt Refinancing

Debt Refinancing Achieved: Grifols issued €1.3 billion in bonds and extended its revolving credit facility, significantly improving liquidity to €1.7 billion proforma for Q3 2024 while addressing 2025 maturities.
Activist Shareholder Pressure: Hedge funds, including Flat Footed, continue to push for governance reforms, citing conflicts of interest and value destruction involving the Grifols family and board member Tomás Dagá.
Valuation Opportunity: Grifols trades at a high discount to peers, with upside potential based on its strong market position in plasma therapies, EBITDA recovery, and margin expansion post-COVID.

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Dec 12

Daily Brief Event-Driven: NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
Topcon (7732 JP): Privatisation Auction Underscores Underlying Value
Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels
Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer
Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
LG Electronics India: IPO Details & Index Entry Timing
CPMC Holdings (906.HK) Update – It’s Time to Prepare for Different Scenarios
REPT BATTERO Energy IPO Lockup – US$1.2bn Lockup Release

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump

By Michael Causton

Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

Topcon (7732 JP): Privatisation Auction Underscores Underlying Value

Topcon Corp (7732 JP) shares rose 51% over two days, confirming a Bloomberg report that is conducting a privatisation auction. The process is in the second round of bids.
Exploring the privatisation process is unsurprising, as Topcon has materially underperformed the Nikkei 225 since its last medium-term management term plan was announced on 12 May 2023.
Despite the share price pop, Topcon trades at a discount to median peer multiples. At an offer of JPY3,000, Topcon would trade in line with median peer multiples.

Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.

Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer

The battle for Fuji Soft Inc. (9749 JP) took an unexpected turn. Bain revised its offer to JPY9,600, a 1.6% premium to KKR’s JPY9,451 second tender offer.
Bain has introduced a minimum number of shares to be purchased criterion. Bain’s offer is structured to address most but not all of the special committee’s reasons for opposition.
The Board’s first reaction will be to ask KKR, its preferred bidder, to bump. Given the amount of time and effort KKR has put into this bid, it will bump.

Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention

By Dimitris Ioannidis

Palantir Technologies (PLTR US) is anticipated to be the largest addition following its eligibility, which was secured through a listing transfer from NYSE to Nasdaq just before the cut-off date.
Super Micro Computer (SMCI US) is projected to exit the index despite its recent entry in July 2024, as it has ranked above the exit threshold of 125.
ARM Holdings (ARM US) is not an expected deletion due to special ADR market cap treatment. Equinix Inc (EQIX US) is not an expected addition because it is a REIT.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

LG Electronics India: IPO Details & Index Entry Timing

LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

CPMC Holdings (906.HK) Update – It’s Time to Prepare for Different Scenarios

If ORG cannot obtain the SAFE approval by the end of December, this indicates something is wrong in the process. Then the success rate of this transaction is greatly reduced.
Acquiring CPMC is in line with Baosteel’s strategic goals and CPMC is important to Baosteel.So, the possibility of state-owned capital to agree to withdraw completely from CPMC is not high.
It’s unclear whether Zhang Wei will continue to side with ORG, or whether he still want to exit. This actually depends on the renegotiations between Baosteel/China Foods/COFCO and Zhang Wei.

REPT BATTERO Energy IPO Lockup – US$1.2bn Lockup Release

By Sumeet Singh

REPT BATTERO Energy raised around US$270m in its Hong Kong IPO in Dec 2023. Its pre-IPO investors holding around US$1.2bn worth of shares will be released from their lockup soon.
REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
In this note, we will talk about the lockup dynamics and possible placement.

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Dec 11

Daily Brief Event-Driven: Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
CPMC (906 HK): Why This Is Still A Buy
Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)
TOPIX Inclusions: Who Is Ready (Dec 2024)
Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
EQD | The Nikkei’s Wavering Trend: LONG Investors Should Brace For A Pullback.
Vishal Mega Mart IPO: IPO Details & Index Entry Timing
StubWorld: Business As Usual As Prosus Sells, & Tencent Buys Back
CR Sanjiu (000999CH) To Acquire Tasly (600535CH) Update- The Deal Is Proceeding in an Orderly Manner

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.

CPMC (906 HK): Why This Is Still A Buy

Back on the 29th August 2024, CPMC Holdings (906 HK) announced ORG Technology Co., Ltd. A (002701 CH) had secured SAMR approval. Mofcom and NDRC approvals subsequently followed.
The pre-condition long stop date is the 6th January. SAFE is the outstanding pre-condition. Separately, Zhang Wei’s 22.01% irrevocable expired on the 5th December – with no HKEx announcement.
Quite a lot to pack in with 16 business days to the pre-con long stop. Sounding out people involved with the transaction would be ideal. So that’s what I did.

Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

Fosun Tourism (1992 HK) disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00.
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by <10% of disinterested shareholders).
The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.

TOPIX Inclusions: Who Is Ready (Dec 2024)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Reently-Listed Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), and Intermestic (262A JP) were added to the TOPIX index at the end of November 2024.
Our long-term pre-event candidate Japan Eyewear Holdings (5889 JP) has applied for a Section Transfer to the Prime Market which means there could be TOPIX Inclusion in the near future.

Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution

By Dimitris Ioannidis

Talabat Holding (TALABAT UH) is expected to be listed on 10 December 2024, on the Dubai Financial Market at a valuation of ~$10.3bn.
Fast-Entry is forecasted to be announced for the one Global Index at the close of 10 December and traded on 20 December in conjunction with the review.
Uncertainty regarding the Fast-Entry arises due to lack of shareholder information in the Institutional Offering which can result in the float market cap being determined as invalid.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

EQD | The Nikkei’s Wavering Trend: LONG Investors Should Brace For A Pullback.

By Nico Rosti

The Nikkei 225 Index continues its going nowhere trend: there is a pattern however in what it does and it’s quite repetitive as of lately.
While we don’t attribute predictive value to chart patterns, we do know that a flat trend sooner or later breaks out.
Our models see limited upside for the current range-bound mini rally (2 weeks in the making). Next we will have a pullback, and it could happen already after this week.

Vishal Mega Mart IPO: IPO Details & Index Entry Timing

Vishal Mega Mart (1620871D IN) is looking to list on the exchanges by selling INR 80bn (US$943m) of stock at a valuation of INR 352bn (US$4.15bn).
Anchor allocations were completed on 10 December, the IPO opens today, and the stock is expected to start trading on 18 December. Grey market premium is around 25%.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and June 2025.

StubWorld: Business As Usual As Prosus Sells, & Tencent Buys Back

For the first time in 2024, Prosus NV (PRX NA) lodges a substantial shareholder notice, as its stake in Tencent (700 HK) dips below 24%.
Preceding my comments on Prosus, Tencent and Naspers (NPN SJ), are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

CR Sanjiu (000999CH) To Acquire Tasly (600535CH) Update- The Deal Is Proceeding in an Orderly Manner

Based on the new announcement released by CR Sanjiu, due diligence, auditing, evaluation, valuation and verification of material assets reorganization are in progress. Approvals by the SASAC/SAMR haven’t been obtained.
Sanjiu is now facing performance headwinds due to VBP. So, Sanjiu needs new/stable performance increments to alleviate future performance pressure, and completing the acquisition of Tasly becomes even more urgent.
China Resources excels in M&As and has strong internal business integration capabilities.We’re optimistic about the future synergies after the merger. Valuation for Tasly is expected to reach P/E of 30.

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Dec 10

Daily Brief Event-Driven: Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY
CPMC Holdings (906 HK): Steady Nerves Required
S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out
Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
S&P500 Dec24 Rebalance: APO and WDAY IN; QRVO and AMTM Demoted
EQD | Nikkei Index Options Weekly – Dec 02 – 06
Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook
EQD | Hong Kong Single Stock Options Weekly Dec 02 – 06

Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY

Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.

CPMC Holdings (906 HK): Steady Nerves Required

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has one remaining precondition: SAFE approval.
Mr Wei’s irrevocable was terminated. Nevertheless, as a seller, he will accept the offer, as the shares trade below the offer price, and there is no competing offer.
The precondition long stop date is 6 January, sufficient time to satisfy the precondition. It would be highly unusual to secure MOFCOM and NDRC approval but not SAFE approval.

S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out

There are 2 changes for the S&P 500 INDEX, 2 changes for the S&P Midcap400 Index and 6 changes for the S&P SmallCap600 Index at the December rebalance.
Apollo Global and Workday will have large flows from S&P 500 INDEX trackers while AppLovin misses out. The SPX adds will have large inflows from the Select Sector index trackers too.
The outright adds are up a lot in the after-hours and there could be further upside over the next couple of weeks as positioning ramps up.

Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger

If stocks close above the appraisal prices on the 10th, NPS will support the merger; otherwise, they’ll abstain to secure their appraisal rights.
Due to cancellation risk hitting the ceiling, NPS will likely exercise half its position and start buybacks after the results.
With both stocks heavily weighted in KOSPI 200, NPS is likely to opt for a tight buyback window, boosting chances for upward price action on Doosan’s shares in that period.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%

China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
CNBM’s parent – the CNBM Parent Concert Group – will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently.
That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer.

S&P500 Dec24 Rebalance: APO and WDAY IN; QRVO and AMTM Demoted

On Friday post-close, S&PDJI announced the changes to the S&P500, S&P MidCap400, and S&P SmallCap600 Indices. The S&P500 names will get added to/deleted from the S&P500 Equal-Weight Index too.
Apollo Global Management (APO US) and Workday Inc Class A (WDAY US) are IN to the S&P500. Qorvo Inc (QRVO US) and Amentum Holdings (AMTM US) are demoted to SmallCap600.
There is a theoretical quantity to trade, and an expected quantity to trade

EQD | Nikkei Index Options Weekly – Dec 02 – 06

Price action has been mired in a sideways range since hitting these levels in Feb 2024. Implied’s have come full circle and are at the same levels they were in Feb.
Option volumes over the past week look to be playing for a break above the sideways range of the last two months or a break below it.
Skew is very steep with heavy Put volumes and open interest at levels under the current range.

Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook

Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.
Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun’s system.
If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.

EQD | Hong Kong Single Stock Options Weekly Dec 02 – 06

Strong price action across the market this week coupled with implied vols having caught down to historic vols has put a floor on implied vols.
Tencent sees strong call buying in December 410 and 420 Calls with month end 400 strike Put buying for December and January.
Cathay Pacific, +21% over past 3 weeks, HSBC, at 52-week high plus up 38% on the year and BABA, down 21% from Oct 02 high all active names.

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Dec 09

Daily Brief Event-Driven: Merger Arb Mondays (09 Dec) – HKBN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?
A/H Premium Tracker (To 6 Dec 2024): AH Premia Lower, Markets Up, Tech Weaker, Materials Up
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too
China National Building Material (3323 HK): H Share Buyback Short Changes Minorities
Potential Take Private of Worldline
EQD / NSE NIFTY50 Vol Update / Vol Term-Structure Inverts as Front-End IVs Jump to 15.0%

Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet

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: Lifestyle China (2136 HK), Arcadium Lithium (ALTM US), Shanghai Henlius Biotech (2696 HK), ESR Group (1821 HK), Get Nice Financial Group Ltd (1469 HK), Canvest.
Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Capitol Health (CAJ AU), Elematec Corp (2715 JP).

Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side

The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.

S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted

CAR Group (CAR AU) replaces Dexus Property (DXS AU) in the S&P/ASX50 Index and Clarity Pharmaceuticals Ltd (CU6 AU) replaces Spark New Zealand (SPK AU) in the S&P/ASX200 (AS51 INDEX).
Dexus Property and Spark New Zealand were deleted from a global index a couple of weeks ago, so this will heap further pressure and increase the real float of the stocks.
There has been an increase in cumulative excess volume for all changes, but positioning in some stocks may continue post the announcement.

Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?

Gordan Tang (& his wife Celine) acquired 2.14% in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
The Offer Price is $1.16/share against a recent close of $1.17. The Offer will be conditional on a 50% acceptance hurdle. That’s it. This is purely a technical Offer.
Share popped 7% on the news, and closed up ~5%. This appears unwarranted. Tang is not going to take Suntec private. But ESR Group (1821 HK) may be exiting.

A/H Premium Tracker (To 6 Dec 2024): AH Premia Lower, Markets Up, Tech Weaker, Materials Up

Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB volumes rebounded, tech saw limited net buying, BABA was bought but other major tech sold.
The first leg of China’s retaliatory acts against US trade measures appeared with export bans on gallium, germanium, antimony, graphite products, etc. These will not be lifted soon.
China is also retaliating against the Phils, Vietnam, Taiwan and changing tack in Europe. The next couple of years threatens to be “interesting times.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact

There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too

SOUTHBOUND gross trading activity rebounded about 20% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK remain weak.
Alibaba Group Holding (9988 HK) was again the top buy and EV names XPeng (9868 HK) and BYD (1211 HK) were bought, but tech as a whole was sold.
I continue to expect HK-listed tech to see ongoing buying. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US.

China National Building Material (3323 HK): H Share Buyback Short Changes Minorities

China National Building Material (3323 HK) has launched a conditional share buyback to acquire a maximum of 841.7 million H Shares (18.47% of H Shares) at HK$4.03.
The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts.
The buyback is unattractive and will leave minorities short-changed, weakening a stretched balance sheet. Nevertheless, while potentially tricky, the votes should pass.

Potential Take Private of Worldline