Event-Driven Archives | Page 38 of 187 | Smartkarma

• 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.

• 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.

• 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.

• 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.

• 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.

• 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. 

• 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

• 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.

• 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.

• 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.

• 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). 

• 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.

• 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.

• 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. 

• 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.

• 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.

• 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) 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. 

• Private Equity Interest: Worldline has attracted early-stage interest from private equity firms, including Bain Capital, driven by its discounted valuation and extensive market presence in Europe.
• Market Challenges: Worldline’s stock declined over 50% in 2024, with Q3 revenues dropping 1.1% organically, reflecting struggles in Merchant and Financial Services and the need to stabilize growth.
• Valuation and Takeover Potential: Worldline’s current valuation at 4.61x EV/EBITDA offers upside potential, with a €9.00/share target implying an 18.4% return, though profitability recovery remains uncertain.

• Short-Date IVs reprice higher as active contract rolls over to 12.12.2024 expiry. Elevated risk-premia justified as contracts capture RBI rate decision & U.S. NFP event risks.
• Re-Pricing of front-end IVs has kicked Vol term-structure into Backwardation. Monthly & Quarterly IVs remain unchanged. Current Vol curve shape is at odds with improving sentiment in underlying Index.
• Strategic Implications: (1) Avoid Short Gamma exposure. (2) Continue allocation to Short Vega + Short Smile structures. (3) Look for Nifty50 trading range to stabilize as trigger for Skew harvesting.   

• Yang Ming Marine Transport (2609 TT) will replace Airtac International (1590 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 20 December.
• Yang Ming Marine Transport (2609 TT) will also be added to the Yuanta/P-shares Dividend Plus ETF in December, so there will be increased flow and impact from the passive buying.
• There has been an increase in cumulative excess volume in Yang Ming Marine Transport (2609 TT) but there is a similar trend in other stocks from the sector.

• Lifestyle China (2136 HK) disclosed a Cayman scheme privatisation offer from Mr Thomas Lau at HK$0.913 per share, a 21.7% premium to the last close price of HK$0.75. 
• The offer is unattractive compared to precedent transactions, peer multiples, and historical trading ranges. It has not been declared final. 
• While no shareholder holds a blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. Therefore, a bump is probable.

• Today, Rakuten (4755 JP) announced a new shareholder benefit (株主優待) program today, to reward shareholders as of end-December 2024. The stated goal? To “thank shareholders”… 
• …And provide more people with the opportunity to try out the benefits of Rakuten Mobile, with 1yr free of a 30GB/mo mobile plan. There are conditions, but it’s juicy.
• Last year’s 3mo plan was given with one day of notice. This year’s larger full-year govt gets 3+wks. They are juicing the sub numbers for 2025.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Kioxia Holdings (285A JP) IPO, Hulic Co Ltd (3003 JP) and Sanrio (8136 JP) placements.
• Event-Driven developments: ESR Group (1821 HK), HKBN Ltd (1310 HK), Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), De Grey Mining (DEG AU), Sg Fleet (SGF AU). 

• Mitsubishi Logisnext Co., Ltd. (7105 JP) shares rose 26% after the Nikkei reported that Mitsubishi Heavy Industries (7011 JP) is contemplating selling its 64.5% stake. 
• Logisnext confirmed the sale process. In a fair process, minorities should receive the tender offer price plus the proportionate share of Mitsubishi Heavy Industries’ TOB tax benefits. 
• Despite the rise in share price, Logisnext trades at a discount to peer multiples. At an offer of JPY2,000, Logisnext would trade in line with median peer multiples.

• The ADDs/DELs for the ASX index family for the December 2024 index rebal event were announced after market close on Friday 6th December 2024.
• There will be one ADD/DEL for both ASX 50 and ASX 200. All of these are perfectly in line with our final expectations.
• In this insight, we take a final look at the flow expectations for each of these index changes.

• Reportedly, Ito Junro’s MBO for Seven & I (3382 JP) includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.
• Starwood/Warburg Pincus’ firm Offer for ESR Group (1821 HK) secures support from 30.79% of the register.
• We may be wrong on Sanrio (8136 JP) by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.

• The Medical Insurance Bureau of Hubei Province issued two documents on the VBP of TCM patent medicines.Shineway’s core product Qing Kai Ling is included, which would bring pressure on performance.
• It’s time to be cautious about the outlook for GLP-1s. We may need to be mentally prepared in advance that the actual market size of GLP-1s is only US$100 billion.
• Recent changes at the top of CNPGC have left some investors hopeful that China TCM will resolve horizontal competition as scheduled next year,but current bet on shares reversal isn’t wise.

• I tally 52 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Five new deals this week: De Grey Mining (DEG AU)‘s scrip merger; and cash Offers for ESR (1821 HK), HKBN (1310 HK), Lifestyle China (2136 HK), and Suntec (SUN SP).
• Key updates/news took place on: Latin Resources (LRS AU), Hotel Property Investments (HPI AU), Sg Fleet (SGF AU), Malaysia Airports (MAHB MK), Greatview Aseptic Packaging (468 HK), and MPHB (MPHB MK).

• Last week, the Hang Seng Index (HSI INDEX) gained 2.3% an increase while volatility slightly declined by 0.2%. The volatility surface provides the context for last week’s most popular strategies, 
• Low implied volatility and a flat term structure support long volatility strategies and Calendar Spreads. In a bullish sentiment shift, almost half the strategies reflect a bullish view.
• The largest volume trade, an Iron Condor, is a rare example of a strategy generating premium income. This insight provides both aggregate data analysis and drill-down into individual trade parameters.

• Back in August 2021, ESR Group (1821 HK) acquired unlisted ARA Asset Management for US$5.2bn. This was discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management. 
• Included in the transaction (completed early-2022) was ARA’s ~30.7% stake in office play Cromwell Property (CMW AU). 
• ESR has in the past said Cromwell was a non-core holding. With ESR now expected to be privatized by Warburg/Starwood, does this accelerate the narrative?

• A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP). 
• The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
• There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

• The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 6th December 2024.
• There will be one ADD/DEL for T50, five ADDs/DELs for T100, and 8 ADDs/7 DELs for TDIV. All of these are perfectly in line with our final expectations. 
• In this insight, we take a look at Quiddity’s final flow expectations for the December 2024 index rebal event and potential trade ideas based on the flow dynamics.

• Rio Tinto sold 30% of its Winu project to Sumitomo for $400 million, surprising many with the valuation
• Expecting a PFS in 2025 for a 10 million tonne per annum scenario for the Winu project
• The partnership with Sumitomo signifies the rise of Japan and South Korea in the mining industry and may benefit Rio Tinto in terms of capital allocation and project development.

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• Korea Zinc’s free float is dropping from 52% to 31%, a 21%p cut.
• Despite rising volume, retail still dominates. With this trend continuing, the 80,000-share sell volume is unlikely to get buried without triggering noticeable price moves.
• Ahead of big one-day flow events, shorts are loaded, causing a dip. On rebalance day, traders buy back, triggering a bounce. This event is likely to follow the same pattern.

• On Wednesday, after the close, the JSE released index changes scheduled for the December rebalance (Friday, 20 Dec).
• OUT will enter the Top 40, with NPH falling out. AMS will enter the RESI 10 and EXX will fall out.
• Naspers and Prosus released 1H results on Monday. The discounts have narrowed through the last 3 trading days, Naspers and Prosus are up 6% and 3.1%, respectively.

• Our previously posted view on an upcoming KOSPI 200‘s rally has not been changed by the attempted political coup. The market pulled back a bit, no big deal.
• The index is in the process of bottoming, as we will see from the analysis of our QUANTCHARTS / models.
• Even if the index suddenly crashes, we have identified an area for support in that event (keep reading).

• On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion. 
• The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
• The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer. 

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The rankings used for the December 2024 index rebal event will be based on yesterday’s (4th December 2024) opening prices. Announcement date will be 
• Inside we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review. 

• Two hours before China Mobile’s pre-conditional voluntary Offer announcement on the 2 December, HKBN Ltd (1310 HK)  flagged a possible separate Offer from I Squared Asia-backed HGC Global Communication (HGC). 
• No price was mentioned, although HKBN and I Squared “are in discussions on the terms of the proposal (including the price).” The media is reporting a HK$5-HK$6/share price range.
• Apart from anti-competition concerns via a HKBN/HGC tie-in; would HGC even get approval from the powers that be to proceed with a merger?

• Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
• We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
• There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.

• In Greatview Aseptic Packaging (468 HK) (GAPack)’s monthly update, there is no update.
• No further progress on the management Offer. Four months and counting. In the meantime, Shandong Xinjufeng Technology (301296 CH) (XJF) secured SAMR approval; and the appointment of two friendly directors.
• IF (and when) XJF’s Offer becomes open to acceptance and the IFA is supportive, management should back the Offer if their own Offer is unlikely to materialise. 

• Janaghan Jeyakumar, CFA had predicted a series of changes in UK100 (a.k.a. F100) and UK250 (aka F250) and all predicted changes came to pass. F250 saw one extra change.
• There will be one more ad hoc announcement today. We think the replacement for Tritax Eurobox (EBOX LN) will be Mobico Group (MCG LN). 
• There were two ADDs in F250 which are VERY much worth looking at. Janaghan had addressed these in prior weeks as well. Those two names really stand out.

• Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
• Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
• Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.

• Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
• Charter Halls currently has 31.37%, including 6.66% via the acceptance facility.  That facility has now closed following this unconditional statement. 
• It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.

• Kronos Bio’s NAV is estimated at $1.39/share, 48% above current price, with strategic review ongoing for sale/reverse merger.
• Significant insider ownership includes 14.7% by ex-CEO Norbert Bischofberger and 5.8% by chairman Arie Belldegrun.
• Kronos Bio’s partnership with Genentech offers potential milestone payments, but no compounds identified for further development.

• A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
• The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
• But more directly, this leads us back to 7&I (3382) – What If…  A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.

• The key point is Saturday—watch if eight ruling party lawmakers defect. Hahn Dong-hoon may push for an early election, with 15 loyalists backing him, so it’s definitely possible.
• I’d bet on the ruling party leader pivoting, accepting impeachment, and pushing for an early election. Time to scout beneficiaries and set up an aggressive trading play.
• Short-Term, I’m eyeing Kakao affiliates, under-the-radar IT stocks, and those likely to benefit from corporate governance changes. Low birth rate-related sectors are also set for strong upside.

• ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
• The precondition relates to several regulatory approvals. The precondition satisfaction does not carry the same risk as the China Traditional Chinese Medicine (570 HK) deal break.   
• The irrevocable (31.03% of outstanding shares) ensure that shareholders with blocking or close to blocking stakes are supportive. This is a done deal, with timing the key risk. 

• Eight months after shareholders approved the transfer from the KOSDAQ to the KOSPI market, Ecopro BM (247540 KS) has submitted the application for section transfer to the KRX.
• Given historical precedent, the transfer could take place in February. Ecopro BM‘s deletion will mean an inclusion to the KOSDAQ150 Index to maintain the number of index constituents at 150.
• Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index leading to passive selling and some short covering. Then will come the inclusion to the KOSPI 200 Index.

• Nissan Tokyo Sales (8291 JP) is a network of 120 dealerships with revenue from sales and repairs of about US$1bn a year. Nissan owns 34%. P&C insurers own 21%.
• The P&C insurers will sell their 21%, to an offering and a ToSTNeT-3 buyback. Expect the net offering to be 10.5%, which is still 60+ days of ADV.
• But it has net cash, securities, more securities, and landholdings. It trades at <0.5x book and a very large part of book is finance-able. This looks like an MBO candidate.

• HK$13.00/Share (deemed final). That’s the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.
• Pre-Conditions are extensive, with a long stop date of the 4th September 2025.
• HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
• Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) could see index inflows during the December 2024 rebalance and March 2025 rebalance.

• Sg Fleet (SGF AU) has entered a scheme implementation deed with Pacific Equity Partners (PEP) at A$3.50 per share, a 31.1% premium to the undisturbed price. 
• The key conditions are shareholder and regulatory approvals (FIRB, OIO and UK FCA). Super Group (SPG SJ), the largest shareholder with a 53.58% stake, will support the offer. 
• The offer is attractive compared to peer multiples and represents an all-time high. At the last close and for a March 2025-end payment, the gross/annualised spread is 2.3%/7.6%.

• Deliveroo (ROO LN) and Oxford Nanopore Technologies (ONT LN) are newly eligible securities forecasted to be added to F250 due to the recent change of the FCA listing category framework.
• Ferrexpo Plc (FXPO LN) is the new forecasted addition-migration to F250 following its ~25% price jump over the last two days which made it surpass the entry threshold.
• Applied Nutrition Plc (APN LN) is a newly eligible, forecasted to be added to small-cap following its IPO listing on 24 October 2024.

• The KOSPI 200 is in a steady bear market with political turmoil further depressing the outlook. Volatility increased in the near term, leading to an inverted term structure.
• The Nifty 50 is approaching its 50-day average from below. Call options profit from low implied volatility and present an attractive opportunity to profit on the upside.
• The Hang Seng continues to stand out as the index with positive correlation between implied volatility and index performance. Interestingly, the relationship is not symmetric between up- and down moves.

• Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon.  Next day it fell sharply. 
• There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
• There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.

• Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
• The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
• Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.

• China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
• Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
• There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.

• The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
• The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
• Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.

• Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
• The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
• There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.

• In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
• What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
• The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.

• Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
• Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
• Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next. 

• Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with Pilbara Minerals (PLS AU). PLS offered 0.07 new PLS shares for every LRS share.
• The Scheme Booklet was slightly delayed to reflect Pilbara’s recently adjusted FY25 guidance – nothing deal/project related.
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 16th Jan. Expected implementation on the 4th Feb. The IE (BDO) says fair & reasonable.

• Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers. 
• Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.  
• We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).

• Newjf’s Yuan Xunjun and Guo Xiaohong are both lawyers. They should be more familiar with the Pre-Condition requirements. Newjf has obtained SAMR clearance and we think Newjf will fulfill Pre-Conditions.
• Bi Hua and Hong Gang’s “new initiative” based on Nov.28 announcement may not necessarily succeed, since Newjf has a lot of room for rebuttal here and its Offer is attractive.
• Greatview’s chairman and Cloudview are in discussions with financial advisers to make a counterbid.Considering that this may be a “noise”,we recommend prioritizing Newjf’s Offer before any higher Offer from Greatview.

• HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
• The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.   
• An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray. 

• A Bloomberg article mid-day suggested Japan’s Ministry of Health, Labour and Welfare proposed a new “wage growth +1.9%” (vs 1.7% now) return bogey for the US$1.7trln Government Pension Investment Fund. 
• The GPIF is conducting its quinquennial review to assess markets, long-term prospects, correlations, etc, to set a CAPM asset allocation mix to meet the bogey.
• The combination of higher USDJPY, Japan inflation, wider valuation spreads, and the prospect of higher yen rates suggests the review might result in lower yen bond allocs, higher equity allocs.

• There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
• We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
• Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).

• There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
• Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH). 
• The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.

• De Grey Mining (DEG AU) entered a binding scheme with Northern Star Resources (NST AU) at 0.119 NST shares per DEG share, implying A$2.08, a 37.1% premium to the undisturbed price. 
• The scheme is conditional on DEG shareholder approval. Gold Road Resources (GOR AU), the largest shareholder, potentially holds a blocking stake and has not provided an irrevocable. 
• The offer is susceptible to a competing offer as it is all-scrip and unremarkable vs peer multiples. Barrick Gold (GOLD US) and Agnico Eagle Mines (AEM US) are potential suitors.

• The EGM for Korea Zinc (010130 KS) is expected to be held on 23 January 2025. Accordingly, the shareholder registry is expected to be closed around 19 – 23 December. 
• By better analyzing the timeline of the M&A of SM Entertainment, we may be able to get better clues to Korea Zinc’s price movement in the next several weeks. 
• Notice the double top share price formation of SM Entertainment in 2023 versus the potential double top formation of Korea Zinc in 2024. These trading formations look eerily similar.

• Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
• At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
• TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
• The base date for the December 2024 review was 25th November 2024. However, after the base date, the index selection methodology has been changed.
• As a result, we are revising our expectations for index changes and flow expectations.

• The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
• We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
• An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

• The review period for the December rebalance ended on 29 November. There could be one deletion, plus there will be capping changes.
• Waypoint REIT (WPR AU) is the lowest ranked current index constituent and is very close to the deletion threshold.
• We estimate the one deletion and capping changes could result in one-way turnover of 3.6% resulting in a one-way trade of A$23m.

• There is 1 add/ 2 deletions for the CSI Alcoholic Drink Index and no constituent changes for the CSI Liquor Index.
• The largest flows arise as a result of capping of constituents to 15% of the index weight. Impact on the stocks varies from 0.2-0.6 days of ADV.
• WeiLong Grape Wine outperformed the deletes in early October, but the deletes moved higher and closed the gap. The gap has started to open up again in the last week.

• The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
• I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
• This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness

• CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
• There are 3 changes for the index and we estimate passive buying of 0.3-0.65x ADV in the adds and selling of between 0.4-0.6x ADV in the deletes.
• On average, the adds to the index have outperformed the deletes over the last 5 weeks with the adds moving higher and the deletes trending lows.

• 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: WealthNavi (7342 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), Canvest.
• Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Elematec Corp (2715 JP), I-PEX (6640 JP). 

• TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
• 344 new CGRs were filed since 31 October. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
• The TSE Council for the Followup to Market Restructuring met a month ago. They want more progress and more fairness in fair takeovers. Worth reading the docs (here).

• CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
• There are 3 changes for the index, and we estimate one-way turnover of 1.7% resulting in a round-trip trade of CNY 570m (US$79m).
• Nexchip Semiconductor (688249 CH) and United Nova Technology (688469 CH) are adds to other indices as well and the impact on the stocks will be a lot higher.

• The December 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 29th November 2024.
• There will be zero changes for the STAR 50 index and four changes for the STAR 100 index.
• We expect one-way flows of approximately US$793mn and US$136mn for the STAR 50 and STAR 100 index rebal events respectively.

• Following a methodology change in mid-November for the CSI All Share Semiconductor Index, there are 7 adds and 29 deletes for the index in December.
• Estimated one-way turnover at the rebalance is 6% leading to a round-trip trade of CNY 3.15bn (US$435m).
• The adds outperformed the deletes bigly in the first 2 weeks of November. Some of those gains have been given back but a new uptrend seems to be taking shape.

• De Grey Mining (DEG AU), which boasts one of Australia’s largest undeveloped gold projects, has announced a merger, by way of  Scheme, with Northern Star Resources (NST AU).
• Northern Star is offering 0.119 new shares for every De Grey share, and will hold ~80.1% of the combined entity, with De Grey shareholders the remaining ~19.9%. 
• Terms back out an implied price of A$2.08/share, or a ~37% premium to last close. This Offer  has the unanimous backing of both boards. 

• The December 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 29th November 2024.
• There will be 4 changes for SSE 50 and 18 changes for SSE 180 during the December 2024 index rebal event.
• SSE 50 ADDs and DELs will see large index flows while the SSE 180 flow names have fairly insignificant flow expectations.

• As forecast, there are no changes for the SSE STAR50 (STAR50 INDEX) in December while there are 4 changes for the STAR100 Index.
• There will be big outflows for Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) due to SSE STAR50 (STAR50 INDEX) capping. There will be selling from other index trackers too.
• Hainan Jinpan Smart Technology (688676 CH) had been ignored by the index committee at the September rebalance, so this inclusion in the STAR100 Index could come as a surprise.

• In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
• The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
• By Quiddity calculations based on prices of 29 November’s close, there is one-way flow across these six indices of HK$15,894,690,433.49 to trade on 6 December. Roughly speaking.

• The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
• Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
• The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.

• The December 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 29th November 2024.
• There will be 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500.
• The CSI 300 and CSI 500 index rebal events could trigger US$4.5bn and US$3.8bn in one-way flows respectively.

• In response to a Nikkei article, WealthNavi (7342 JP) disclosed Mitsubishi UFJ Financial (MUFG) (8306 JP)’s tender offer at JPY1,950 per share, an 84.3% premium to the undisturbed price.
• The high premium reflects WealthNavi’s steep 46% YTD share price decline, i.e., the timing is opportunistic. The offer is below the Board’s requested price.
• While the irrevocable has a competing offer clause, a competing proposal is unlikely due to MUFG’s stake. However, a bump is possible if activist(s) take around a 15% stake. 

• SOUTHBOUND gross trading activity dropped sharply again to the lowest in a few months but net SOUTHBOUND buying remains very strong, with big flows on tech.
• Most of the top names were tech names – both in gross and net buys. Only 1 tech name in top five net sells.
• Last week I said I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US. Continue.

• There are 16 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 December.
• There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
• Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.

• There are 5 changes for the SSE50 Index (SSE50 INDEX) and 18 changes for the SSE180 Index that will be implemented at the close on 13 December.
• Seres Group (601127 CH) is an add to both indices, plus the CSI 300 Index, and passive trackers will need to buy over US$900m of the stock.
• The adds have outperformed the deletes with a lot of the outperformance coming in the last couple of months. Trim positions in the expected adds/deletes and build positions in surprises.

• MUFG (8306) bought 15.5% of WealthNavi (7342 JP) in February at ¥1,718/share – zero premium. The shares fell. Now they are bidding for the rest 13.5% higher.
• WealthNavi forecasts fantastic growth. Dec29 OP is specifically estimated at ¥13.822bn. Everyone agrees there are synergies, but they’re not “valued” because they “cannot be specifically estimated at this moment.” 
• I believe investors should start demanding Synergy CVRs of acquirors when synergies are not included in the fair value calculations. 

• Aster DM Healthcare Ltd (ASTERDM IN) and Quality Care India are merging to form India’s third-largest hospital chain with over 10,150 beds. 
• This merger combines two major players, generating significant scale, diversification, and financial strength. The merged entity will benefit from  synergies and plans to expand to over 13,000 beds by FY27.
• The merged entity is expected to be EPS accretive and expected to increase EBITDA by 10-15% through synergies