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• With Toshiba giving up its deal premium on news that the JIP consortium was struggling to secure financing it is worth assessing how much downside risk there is. 
• Prospects are deteriorating rapidly and we believe valuations for Kioxia and the HDD business are likely to lead the way down. 
• We estimate that there is still a premium of about 20-25% being assessed for the possibility of a deal but that there is fundamental risk beyond this.

• Updated forward dividend estimates and price moves lead to changes in adds/deletes and to estimated flows at the December rebalance. We now see 26 adds and 5 deletes in December.
• The estimated one-way turnover due to adds, deletes, funding and capping is 46.6% and will result in a one-way trade of TWD 72.7bn (US$2.26bn).
• Passive trackers will need to buy over 5 days of ADV on 15 stocks and sell over 5 days of ADV on 14 stocks. There will be trading opportunities galore.

• With the review period complete, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
• Most of the potential changes are high probability ones, but there are some stocks that are very close to market cap and liquidity cutoffs.
• The impact of passive trading will be much higher on the potential deletes as compared to the potential inclusions, though trade notionals are higher for the potential adds.

• At the end of the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
• Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. The impact on the potential deletions is higher on average.
• The potential adds have outperformed the potential deletes over the last six months, though there has been a sharp narrowing of the gap over the last few weeks.

• Yashili International Holdings (1230 HK)‘s spread to China Mengniu Dairy Co (2319 HK)’s offer (HK$1.20) has widened to 10.1% due to doubts about the satisfaction of the remaining pre-condition.
• We think the delay in satisfying Dumex Key Condition is due to the glacial bureaucratic process. The pre-conditions long stop date is 31 July 2023, which provides sufficient time.
• Both Danone SA (BN FP) and Mengniu can waive conditions to satisfy the pre-condition. Both have the motivation to complete the transaction as it facilitates the unwinding of their partnership.

• Software outfit ReadyTech (RDY AU) has announced an indicative proposal from Pacific Equity Partners and affiliates, to acquire ReadyTech by way of a Scheme of Arrangement at $4.50/share.
• Pemba Capital, with 32.01% of shares out, are in discussion with PEP as to what appears to be the PE firm rolling over shares. 
• ReadyTech’s independent board has granted PEP non-exclusive due diligence to flesh out a firm Offer. According to media reports, Microequities, with ~13%, is not on board whatsoever.

• Betagro (BTG TB) raised about US$460m in its Thailand IPO. 
• Betagro is an integrated agro-industrial and food business in Thailand.
• In this note we will talk about the trading dynamics.

• Two-Thirds through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, 7 stocks moving from SmallCap to MidCap, 8 moving from MidCap to SmallCap.
• There have been changes to the list of stocks over the last couple of months and there could be more, especially on stocks that are close to the cutoff ranks.
• There is a big gap in the performance of the stocks moving upward versus migrating downward and there could be some mean reversion over the next couple of months.

• SK On announced that it recently received 1 trillion won in investment, valuing the company at 22 trillion won, 29% higher than SK Innovation’s market cap of 17 trillion won. 
• The recent investment of nearly 1 trillion won in SK On was in the form of convertible preferred stock (CPS), which guarantees a minimum return of 7.5%.
• Our SoTP valuation of SK Innovation suggests a target price of 254,396 won per share, which represents a 39% higher levels than current price.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
• The reference period for the trading data used for the index selection ended on 31st October 2022.
• There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.

• With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
• We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
• The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

• With Toshiba giving up its deal premium on news that the JIP consortium was struggling to secure financing it is worth assessing how much downside risk there is. 
• Prospects are deteriorating rapidly and we believe valuations for Kioxia and the HDD business are likely to lead the way down. 
• We estimate that there is still a premium of about 20-25% being assessed for the possibility of a deal but that there is fundamental risk beyond this.

• Following its planned section transfer, LX Semicon (108320 KS) will be deleted from the KOSDAQ 150 Index at the close on 2 November and replaced by Nextin (348210 KS).
• Passive trackers will need to buy over 4.5 days of ADV on Nextin (348210 KS) and sell over 1.5 days of ADV on LX Semicon (108320 KS). 
• Belonging to the Information Technology sector, there is zero chance of LX Semicon (108320 KS) being added to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX).

• The NOC of MSCI Korea Standard is 111, and the market cap of the 111th-ranked company is ₩2.44T on Day 1 and ₩2.40T on Day 2.
• In addition to Hyundai Mipo, Ecopro passed the screening. On the other hand, only Meritz Securities and CJ ENM managed to stay inside the safe zone among the deletion candidates.
• The recently increased price fluctuations likely resulted in delaying the entry timing of flow trading. So, we should set the expected return of our basket trade a bit more aggressively.

• S&P DJI announced late 27 October 2022 that Twitter Inc (TWTR US) would be deleted from the S&P500, replaced by Arch Capital (ACGL US). 
• RXO would be added to the MidCap400 while Bread Financial Holdings (BFH) would move from MidCap400 to SmallCap600 and Unifi Inc (UFI US) would get deleted from the 600.
• This insight presents the issues and the flows, which are not to be separated. 

• On the 28 October, Potentia announced an improved (and final) off-market Offer of A$1.80/share for Nitro (NTO AU), a 13.9% improvement over its initial proposal on the 30 August. 
• Nitro has now concluded the Potentia Takeover Bid undervalues Nitro. The Offer, however, is still proceeding, and will open in two weeks.
• Separately, KKR’s Alludo has pitched a non-binding – subject to due diligence – Offer by way of  a Scheme (or off-market takeover) at A$2.00/share. Nitro is supportive of this Offer.

• With the review period complete, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
• Most of the potential changes are high probability ones, but there are some stocks that are very close to market cap and liquidity cutoffs.
• The impact of passive trading will be much higher on the potential deletes as compared to the potential inclusions, though trade notionals are higher for the potential adds.

• We discuss end of the mandatory lock-up periods for 54 stocks in Korea in November 2022, among which 2 are in KOSPI and 52 are in KOSDAQ.
• These 54 stocks on average could be subject to further selling pressures in November and could underperform relative to the market. 
• Among these 54 stocks, the top 5 market cap stocks include Enchem, Sebit Chem, DearU, Sillajen, and Sampyo Cement. They could be exposed to greater selling pressures in November. 

• China Vast Industrial Urban Development (6166 HK)‘s scheme document is out with the court meeting scheduled for 23 November. The IFA considers the offer to be fair and reasonable. 
• Key conditions include approval by at least 75% of independent shareholders (<10% rejection). Shareholders with blocking stakes either provided irrecovables or will likely support the offer.
• The offer is not great but headcount test is not applicable. At last close and for the 14 December payment, the gross and annualised spread is 0.8% and 6.7%, respectively.

• Metal recycler Chiho Environmental Group Limited (976 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• For more than a year, the controlling shareholder group has been implementing a potential restructuring. The ultimate controlling shareholder is Tu Jianhua, an executive director of Chiho.
• This long drawn-out reorganisation may finally result in an Offer for Chiho.

• Keyence reported record 2Q Sales and OP, thoroughly beating street expectations. The company recorded high double-digit growth in all regions – even in Europe. 
• Pricing power is on display 10-35% price hikes to shore up the dip in GPM to 81.3%, depressed on higher raw material costs.  Sets up for future earnings growth.
• The share price has underperformed the TOPIX -26%YTD. Valuations at the bottom of the recent range. We expect a share price recovery and are bullish.

• With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
• We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
• The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US), Shandong Fengxiang (9977 HK).
• Lowest spreads – Tyro Payments (TYR AU), Tassal (TGR AU), China Vast Industrial Urban Development (6166 HK), Singapore Medical (SMG SP), PTB Group Ltd (PTB AU), Nearmap Ltd (NEA AU).

• The review period for the MSCI Nov SAIR, Kospi 200 Index, KOSDAQ 150 Index, S&P BSE SENSEX Index and a bunch of mainland China indices ends on 31 October.
• The minor rebalancing of the IDX30, LQ45 and IDX80 indices takes place at the close on 31 October, while the KOSDAQ 150 Index ad hoc rebalance is on 2 November.
• There were outflows from IShares Core MSCI Asia Ex Japan ETF (3010 HK) and inflows to Tracker Fund (2800 HK) and Hang Seng H Share Index ETF (2828 HK).

• PAG Capital has won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK). 
• The acquisition remains subject to regulatory clearance (including SAMR). Once greenlit, PAG will be required to make an unconditional Offer for the H-shares at HK$1.5132/share.
• Separately, it is PAG’s intention to delist Fengxiang which involves Scheme-like delisting resolutions. 

• On the 14 September, Indonesian water treatment play Moya Holdings Asia (MHAL SP) announced a S$0.092/share Exit Offer from an Anthoni Salim-controlled entity. The Offer price will not be increased.
• The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.
• The Circular is now out. The EGM takes place on the 21 November. The IFA reckons the Offer is fair and reasonable. 

• Following its planned section transfer, LX Semicon (108320 KS) will be deleted from the KOSDAQ 150 Index at the close on 2 November and replaced by Nextin (348210 KS).
• Passive trackers will need to buy over 4.5 days of ADV on Nextin (348210 KS) and sell over 1.5 days of ADV on LX Semicon (108320 KS). 
• Belonging to the Information Technology sector, there is zero chance of LX Semicon (108320 KS) being added to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX).

• Church donor management tech play Pushpay (PPH NZ) has been fielding expressions of interest since April. Earlier this month,  Pushpay announced it had received another proposal, reportedly from BGH/Sixth Street.
• On the 28 October, Puspay announced it had entered into a Scheme Implementation Agreement at NZ$1.34/share with BGH/Sixth Street, which collectively hold 20.34%. This is  a 30.1% premium to undisturbed.
• The offer is subject to shareholder and regulatory approval, with a possible completion date in early 2Q23. 

• S&P DJI announced late 27 October 2022 that Twitter Inc (TWTR US) would be deleted from the S&P500, replaced by Arch Capital (ACGL US). 
• RXO would be added to the MidCap400 while Bread Financial Holdings (BFH) would move from MidCap400 to SmallCap600 and Unifi Inc (UFI US) would get deleted from the 600.
• This insight presents the issues and the flows, which are not to be separated. 

• LX Semicon (108320 KS) will be traded on KOSPI from November 3rd. This event has no trade suspension. So, it will be traded on KOSDAQ until November 2nd.
• Nextin (348210 KS) will replace LX Semicon for KOSDAQ 150. Again, the effective date is November 3rd. So, the index trackers will rebalance-trade at the close on November 2nd.
• LX Semicon will see an outflow of -1.91x ADTV, whereas Nextin will enjoy an inflow of 3.93x ADTV. This Special Change will likely save AptaBio Therapeutics (293780 KS) from deletion.

• Sembcorp Marine (SMM SP) will now acquire Keppel O&M from Keppel Corp (KEP SP) at an 8% lower consideration at a revised exchange ratio of 46:54 vs 44:56 earlier.
• The simplified transaction structure is expected to reduce consent and approval requirements and could reduce completion time by up to 2 months. Expected completion now is December or Jan.
• At a proforma market cap of S$7bn, there could be selling in Sembcorp Marine from MSCI Singapore and FTSE Straits Times Index (STI) (STI INDEX) trackers at the time of implementation.

• Semiconductor collapses like today’s are led by memory chips, which are a commodity
• The leading memory manufacturers: Samsung, SK hynix, Micron, and WDC, have announced their 3Q22 earnings, with only Kioxia remaining.  All have suffered substantial revenue declines.
• Memory prices are dropping to cost, and should remain at cost until demand catches back up with supply in late 2023

• PAG is the successful bidder for Shandong Fengxiang (9977 HK)‘s controlling shareholder’s 70.92% stake at HK$1.5132 per H Share (RMB1.3822 per domestic share).
• As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
• The share sale transfer requires SAMR approval which will be forthcoming. Our best guess is the MGO completes end-January 2023. At the last close, the gross spread is 14.6%.

• Softbank Group’s share price has been supported by the share buyback programme since late September, but 2Q FY2022 results are likely act as a negative catalyst for Softbank shares
• Alibaba and its core listed holdings in the Vision Funds have seen market values go lower in recent months; see the diverging market price chart trends in this report
• In addition, valuations among the unlisted holdings are also under pressure into October, so 2Q results may not capture the full extent of the down rounds

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-October 2022.

• Google, Temasek, and Bain&Co just released their much-anticipated eConomy SEA 2022 report outlining recent trends and future expectations for South-East Asia’s digital economy. 
• No doubt post-pandemic growth has been tapering but the long-term growth story remains intact. The key focus has switched to the path to profitability versus headline growth.
• Major digital players in South-East Asia will release 3Q results next month with all eyes focused on take rates, contribution margins, and Adjusted EBITDA margins rather than headline growth.

• On 28 October, Hyundai Elevator Co (017800 KS) announced a major share buyback program worth 2.1 million shares, representing 5.1% of outstanding shares or about 50 billion won.
• Hyundai Elevator Co Ltd makes excellent elevators and it is the number one player in the elevator industry in Korea with a 41% market share as of 2Q 2022.
• Despite the company’s valuations trading at lower levels than its recent historical levels, the negative factors impacting the company are much bigger in scale than the share buyback program.

• We continue to believe that a bearish intermediate-term outlook is appropriate as long as the YTD downtrends remain intact on MSCI ACWI (ACWI-US), MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
• We would turn bullish only on reversals of those downtrends. With that said, a bear market rally has officially begun, something that we have discussed since our Sept.29 Int’l Compass
• We expect to see rallies to their respective YTD downtrends (ACWX, EFA, etc.). We highlight buys that are likely to outperform on this bear market rally.

• The review period for the MSCI Nov SAIR, Kospi 200 Index, KOSDAQ 150 Index, S&P BSE SENSEX Index and a bunch of mainland China indices ends on 31 October.
• The minor rebalancing of the IDX30, LQ45 and IDX80 indices takes place at the close on 31 October, while the KOSDAQ 150 Index ad hoc rebalance is on 2 November.
• There were outflows from IShares Core MSCI Asia Ex Japan ETF (3010 HK) and inflows to Tracker Fund (2800 HK) and Hang Seng H Share Index ETF (2828 HK).

• Maruti Suzuki reported above Consensus 2Q driven by strong volumes and improved margins
• Earnings bode well for Suzuki’s 2Q earnings on Nov 8. Also, Maruti indicated significant easing of semi-driven supply constraints. Positive readacross for Suzuki. 
• Suzuki’s ex-Maruti operations are now cheaper than ever at under 2.5x PER. We see upside to earnings vs. Consensus and keep our bullish stance on the stock.

• The FTSE Taiwan Dividend+ Index is a fabulously interesting index from an index prediction trading standpoint. Because it works off negative momentum, the bias risk is different from normal indices.
• And there is a turn. That turn is where what had been bad becomes good, becomes very good, then turns bad again. 
• This insight proposes a basket to buy, and a basket to short, and if the basket to buy ends up not going in, it is a high quality problem.

• Sembcorp Marine (SMM SP) will now acquire Keppel O&M from Keppel Corp (KEP SP) at an 8% lower consideration at a revised exchange ratio of 46:54 vs 44:56 earlier.
• The simplified transaction structure is expected to reduce consent and approval requirements and could reduce completion time by up to 2 months. Expected completion now is December or Jan.
• At a proforma market cap of S$7bn, there could be selling in Sembcorp Marine from MSCI Singapore and FTSE Straits Times Index (STI) (STI INDEX) trackers at the time of implementation.

• The KKR deal for Hitachi Transport System (9086 JP) is here. 
• Some were worried KKR would walk. That was never a worry. Some worried Russia wouldn’t approve. There was always a way. 
• This deal should trade tight. New money might be better allocated elsewhere. Arbitrageurs and investors should be wary of the index effects of the TOPIX FFW adjustment tomorrow at close.

• Today, Keppel Corp (KEP SP) and Sembcorp Marine (SMM SP) made an announcement of revised structure and revised terms.
• Under revised terms, Sembcorp will issue fewer shares to Keppel, and it will be a takeover rather than Scheme of Arrangement. Keppel will deliver more shares to shareholders, keeping less. 
• Just like the first announcement, there is a little here for everyone. Keppel doesn’t do a great job of selling it but it is still win-win. 

• The 2nd screening only deals with those who have passed the 1st screening. The 2nd screening does NOT include the first company to cross the threshold.
• Lotte Confectionery will be the only addition to the KOSPI 200. Samyang Holdings or Hyundai Home Shopping Network will leave the index.
• There will be ten changes in the KOSDAQ 150: eight regular & two special entries. WCP’s special entry still seems uncertain due to the GICS classification issue.

• Hang Lung Group (10 HK) is currently trading at a miserly 0.15x P/B, its lowest level since records began.
• It has also been somewhat of a forgetful week for 59.5%-held Hang Lung Properties (101 HK), down 12%, following Wednesday’s 7% decline.
• HLG’s discount to NAV has retraced back to levels last seen during the 2020 Covid lows. 

• KRX proposes three new rules: 1. trader pre-registration, 2. brokerages’ risk management measures, and 3. traders’ risk management tools
• KRX plans to implement it in January next year with a grace period of three months for the pre-registration after the effective date.
• The key is to what extent KRX will flexibly monitor and supervise this. If not, market liquidity will be significantly reduced, resulting in a distortion that widens the market spread.

• We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 28th based on HKEx daily reports.
• In the past 7 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Great Wall Motor (2333 HK), Wuxi Biologics (2269 HK).
• In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Wuxi Biologics (2269 HK).

• Lygend Resources & Technology (LR HK) is looking to raise about US$800m in its Hong Kong IPO.
• Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
• With the Obi Project expanding the firm’s capacity into the higher margin production segment, Lygend expects sales and profitability to pick up. 

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-October 2022.

• The FTSE Taiwan Dividend+ Index is a fabulously interesting index from an index prediction trading standpoint. Because it works off negative momentum, the bias risk is different from normal indices.
• And there is a turn. That turn is where what had been bad becomes good, becomes very good, then turns bad again. 
• This insight proposes a basket to buy, and a basket to short, and if the basket to buy ends up not going in, it is a high quality problem.

• The KKR deal for Hitachi Transport System (9086 JP) is here. 
• Some were worried KKR would walk. That was never a worry. Some worried Russia wouldn’t approve. There was always a way. 
• This deal should trade tight. New money might be better allocated elsewhere. Arbitrageurs and investors should be wary of the index effects of the TOPIX FFW adjustment tomorrow at close.

• PCCW Ltd (8 HK) is coming up “cheap” on my monitor, both from a discount to NAV and implied stub angle. 
• Preceding my comments PCCW / HKT Ltd (6823 HK) and Bank of Kyoto (8369 JP) 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%.

• Aruhi Corp (7198 JP) is under Tender Offer by SBI Holdings (8473 JP) which wants to buy back in and expand the offering through SBI and Shinsei Bank (8303 JP). 
• The Tender Offer was expected to close on Monday, and Aruhi earnings were expected on the 10th of November. Today Aruhi changed its forecasts, so SBI extended the tender. 
• This engenders a bit of 🧐👀 on my part, but we gotta go with the flow. Discussion ensues. And watch for trading opportunities.

• The 2nd screening only deals with those who have passed the 1st screening. The 2nd screening does NOT include the first company to cross the threshold.
• Lotte Confectionery will be the only addition to the KOSPI 200. Samyang Holdings or Hyundai Home Shopping Network will leave the index.
• There will be ten changes in the KOSDAQ 150: eight regular & two special entries. WCP’s special entry still seems uncertain due to the GICS classification issue.

• The review period nearly complete, we see 7 potential adds and 9 potential deletes at the December rebalance. However, there can be a maximum of 5 changes at a rebalance.
• We estimate a one-way turnover of 4.28% at the December rebalance leading to a one-way trade of CNY 3.42bn. Index arb activity could add to the impact on the stocks.
• The potential adds have dropped over the last month while the potential deletes have moved higher over the last couple of weeks.

• Sembcorp Marine (SMM SP) will now acquire Keppel O&M from Keppel Corp (KEP SP) at an 8% lower consideration at a revised exchange ratio of 46:54 vs 44:56 earlier.
• The simplified transaction structure is expected to reduce consent and approval requirements and could reduce completion time by up to 2 months. Expected completion now is December or Jan.
• At a proforma market cap of S$7bn, there could be selling in Sembcorp Marine from MSCI Singapore and FTSE Straits Times Index (STI) (STI INDEX) trackers at the time of implementation.

• Back on the 5 August, Thomas Yau, Lifestyle International Holdings (1212 HK)‘s controlling shareholder, tabled a Scheme at HK$5/share, a 62.3% premium to last close.  
• The Scheme Doc is now out with the Court Meeting on the 21st of November. The outcome of this transaction will pivot off the reassessed net asset value of HK$10.60/share.
• Trading at a gross spread of 9.6% using yesterday’s close, reflecting the perceived opportunistic nature of the Offer. Yet Hong Kong’s 2018 visitor glory days remain a long way off. 

• Today, Keppel Corp (KEP SP) and Sembcorp Marine (SMM SP) made an announcement of revised structure and revised terms.
• Under revised terms, Sembcorp will issue fewer shares to Keppel, and it will be a takeover rather than Scheme of Arrangement. Keppel will deliver more shares to shareholders, keeping less. 
• Just like the first announcement, there is a little here for everyone. Keppel doesn’t do a great job of selling it but it is still win-win. 

• Internet advertising revenue growth has come in below expectations for Google, Meta and CyberAgent as ad budgets appear to be shrinking
• There is an indirect read-across to Z Holdings which has almost always posted slower ad growth although it has some insulation from volatility with eCommerce and LINE official accounts
• Sill, management targets for ad revenue growth of 5-10% look increasingly challenging which is an issue when Media generates c. 80% of profitability. We remain cautious

• Despite the WATCH list’s confusion, LG Energy Solution replaced LG Chem. In addition, Solactive excluded Iljin Materials, evidently due to its float-adjusted market cap size.
• There are some somewhat elusive additions. The most prominent example is Japan Steel Works, which replaced LG Chem in the updated WATCH list at the last minute.
• There was confusion about LG Chem’s deletion until the last minute, so, likely, the market has not sufficiently reflected this rebalancing factor in LG Energy/LG Chem’s LONG/SHORT.

• The TOPIX October FFW rebalance is Friday at the close. 
• It is still ¥2trln+ to buy and ¥2trln+ to sell. And there are some big names. A spreadsheet is attached with all the flows. 
• Surprisingly, the top 40 Z-scores on each side have traded in a VERY tight range for the 6 weeks prior to the announcement and the two weeks post. Very weird.

In 1992, a TV series aired in Hong Kong on TVB called The Greed of Man. The series told the three-plus-decade story of Ting Hai, an “uneducated and pathologically self-righteous brute” (played by Canto pop singer and actor Adam Cheng (born 1947)) and Fong Chun-sun, “an honest, cultured and refined leader of the Asian Stock Exchange” (played by Damian Lau) who were childhood friends, split, and saw Ting kill Fong over a girl.

Ting Hai fled to Taiwan, was brutish again, spent a decade-plus in prison there. One of Ting Hai’s sons pursues a Fong daughter, is rebuffed, the son turns violent. Eventually the three Fong daughters are killed, and Fong’s only son (played by Sean Lau) flees to Taiwan and makes it rich through indirect gambling on stocks. In Hong Kong, the Tings have made it rich by being short in the 1987 crash. Ting has come back to Hong Kong, is charged with murder, then buys himself out of a sentence. Fong comes back to Hong Kong, and they duke it out in the stock market in true good guys vs bad guys epic knock-down drag-out drama. Ting and his sons are backed by the triads. Fong is backed by a few HK tycoons. Eventually, Ting is wiped out.

He responds by throwing his four sons off the top of the stock exchange building and following himself. Only Ting survives, now billions in debt, and spends the rest of his life in prison. 

The first episode of the show actually started with that final scene of Ting hurling his sons off the building. TVB got so many calls from disturbed viewers they altered the show, and moved its time slot. Apparently, the re-issues and re-airings of the show all show edited versions. The edited version was re-released on TV in 2015 and was well-received in HK by a younger generation. 

Most importantly to this insight however, is that when the series started in 1992, the Hang Seng Index fell 1200 points in one month – that was almost 20% at the time. It started falling part way through the series, then the index fell 1,000 points (16+%) in four days after the gruesome ending.

There were so many complaints about the ending that TVB revised the video release and subsequent re-releases.

Two years later, another TVB drama series starring Adam Cheng called ‘Instinct‘ was aired starting in November 1994. The index started falling a day or two before, after what had been an ugly year-to-date, and fell 20% in 7 weeks while the series aired.

1996 saw two series starring Adam Cheng air on TVB.

Cold Blood Warm Heart – a romantic crime thriller series of 65 episodes aired its first episode on 5 February and ended its run on 3 May. The market fell 700+ points or 6% in the period. 

In early September 1996, Adam Cheng starred in another TVB series called Once Upon A Time In Shanghai (a remake of a 1980s series called The Bund), which ran from 2 September through 25 October 1996. The Hang Seng Index fell sharply the next day, and this was blamed on the Ting Hai Effect, but the market did pretty well in the 7-week-long series.

In late 1997 he starred in a historical drama called Legend of Yung Ching for a Taiwanese production company, covering a period in the mid 18th century of the Kangxi Emperor, the Yongzheng Emperor (Adam Cheng’s role), and the Qianlong Emperor in the Qing Dynasty. Apparently, the market dropped the day it aired. 

In June 1999, he starred in a four-part series called Lord of Imprisonment (may have been a Taiwanese series) which started apparently late in the month. That apparently started a fall of 6+% in the Hang Seng Index.

In 2000, a series called Divine Retribution aired on ATV. It was a sequel to Greed of Man, and was originally called Greed of Man 2000 and actually took place in the near future, not the recent past as had been the case for the original series. It ran from 11 September through 3 November 2000. The Hang Seng Index fell 10% in 6 weeks before rallying in the last two days of the series.

In March 2004 – from 8 March through 24 April 2004 – a historical drama of 37 episodes (more for the international version) starring Adam Cheng called Blade Heart aired on TVB. The opening theme song was performed by Adam Cheng.

You guessed it. The Hang Seng was down more than 10% in 7 weeks.

Later that year, he was in The Conqueror’s Story from 25 October through 4 December – also on TVB. The market fell nearly 200 points the day the series started. 

Adam Cheng also starred in a period costume drama called The Prince’s Shadow from 14 March through 18 April 2005. The market fell on the first day, regained most of its loss, but that was the high price of the series. The market fell over the period of the series.

In 2007, Adam Cheng played a real estate CEO in a TV drama set in contemporary China. The series, named Return Home ran for 33 episodes starting 15 July 2007.

In 2009 he did a TVB series on Hong Kong TV, titled The King of Snooker. It was 20 episodes airing on TVB from 30 March 2009 through 24 April 2009. On the first day, the market fell 600+ points or 4.7% on the day. He had also filmed a series in 2008 called The Book and The Sword – a 40-episode period drama aired in China starting 20 March 2009. The HK market fell 2.3% that day.

On 21 May 2012, a 30-episode psychological thriller titled Master of Play starred Adam Cheng. It ran on TVB for 30 episodes through 29 June 2012. The market fell 10% in the 10 days running up to the launch of the new series.

A year later, the period drama movie Saving General Yang was released in Beijing on 4 April 2013 and the next day, the Hang Seng was down 610 points (-2.7%).

In April 2015, the original 1992 drama The Greed of Man which made the Ting Hai Effect was rerun. The first day of the re-run (20 April) the market fell 2% or 558 points. 

He was interviewed in the South China Morning Post 9 days later and the next morning the article came out (30 April). He said he wasn’t to blame for the stock market’s falls when his shows aired. 

The market fell five days straight. 

In classic fashion, there was a new series out in 2018 called Ever Night. It saw advertising the two weeks before and the Hang Seng fell about 1,000 points in the two weeks before the release. People joked days before that the market fall was due to the new show.

The show was popular in China, so the 60-episode Season 1 started in October 2018 was followed by a 43-episode Season 2 staring 13 January 2020 and running for 3 months and a week. The market fell 25% from the start of Season 2 before rebounding. 

Which brings us to the present day…

Earlier this month, the sequel to The Greed Of Man was released for streaming on Disney+. The market, which had rebounded that day, fell for the next 6 days. 

And today, 25 October, TVB starts re-runs of the 1988 series Behind Silk Curtains starring Adam Cheng, where he plays the role of the chairman of a bank, and drives a businessman’s company to bankruptcy so he can take it over.

Notes:

• This is a fun thing. But it appears to be taken somewhat seriously. It ALWAYS comes up. 
• Not EVERY movie or tv series appearance causes bad results. Bar Bender aired starting on 3 April 2006 on TVB Jade, and the market was up that day, fell back a little in the following days, but not seriously, and then rose 8% by 26 April. 
• However, enough do that it retains its name decades later. 

Sources:

• CLSA put out a Hong Kong Market Outlook piece in April 2004 about The Adam Cheng Effect. That is probably the first I heard of it. 
• The Ting Hai Effect wikipedia page is a place to start. 
• There was an article in Chinese on www.chinanews.com (original source: http://big5.chinanews.com.cn:89/gate/big5/www.chinanews.com/yl/ypkb/news/2009/04-02/1629867.shtml) in April 2009 just after the King of Snooker series started which talked about the Tin Hai Effect. It is likely the source of some of the later articles in English because one of the dates is wrong and most later English sources copy that date.
• Wikipedia has a list of most of the TVB series by year of production. 
• IMDB has a list of most of his appearances. Wikipedia does too.

• GoTo (GOTO IJ) listed on 11 April and closed at its lowest point since listing yesterday. The lock-up on pre-IPO shareholders expires on 30 November.
• GoTo (GOTO IJ) has confirmed that it is working with pre-IPO shareholders to explore a coordinated secondary offering.
• The lock-up expiry will result in a lot of shares hitting the market in December. The increased float could result in MSCI/FTSE inclusion early next year.

• With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
• This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
• Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

• With the review period nearly complete, there could be 4 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
• The market cap of potential adds using a 6-month minimum listing history is higher and there is a higher probability of a 6-month minimum listing history being used.
• The potential adds have outperformed the potential deletes and the index. Similar to the last few rebalances, we could see the adds outperform post the end of the review period.

• Near the end of the review period, we see 16 potential changes to the CSI 300 Index at the December rebalance. There are other stocks very close to the cutoffs.
• We estimate a one-way turnover of 3.04% at the December rebalance leading to a one-way trade of CNY 8.4bn.
• The potential adds have outperformed the potential deletes, though the gap has narrowed in the last few weeks. We’d position for outperformance post the end of the review period.

• The selloff in the broader market has led to the A/H premium on PingAn blowing out to levels not seen in the last few years and outpacing the HSASP Index.
• At a 24% premium, the risk/reward for a long Ping An Insurance (H) (2318 HK) / short Ping An Insurance Group (601318 CH) trade has never been better.
• The shift from A-shares to H-shares is already taking place – Southbound Stock Connect holdings have been increasing while the Northbound Stock Connect holdings have been decreasing.

• In this insight, we discuss a pair trade between LG Chem Ltd (051910 KS) (go long) and LG Energy Solution (373220 KS) (go short). 
• LG Chem’s shares are trading at nearly 66% discount to its NAV which we believe to be excessive. 
• Another major factor that could negatively impact LGES’ shares in the next several months is the end of the lock-up period for the company’s ESOA shares in about three months. 

• In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
• Keppel DC REIT (KDCREIT SP) is currently the lowest ranked index constituent and could get kicked out when Sembcorp Marine (SMM SP) gets added.
• Olam Group (OLG SP) and SATS (SATS SP) are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.

• We see one potential change for the S&P/ASX 50 Index and two potential changes for the S&P/ASX 200 at the December rebalance, though some stocks are close to the cutoffs.
• The potential passive buying on the S&P/ASX 200 (AS51 INDEX) adds will exceed 11 days of ADV while the impact on the other stocks ranges from 1.5-4 days of ADV.
• Most stocks have been moving the right way and there will be pre-positions built up on some of the stocks. Shorts have been active on a few names too.

• Foreign investor selling has taken the foreign headroom on Kotak Mahindra Bank (KMB) to 22%. That should result in the stock being added to the FTSE All-World Index in March.
• The stock will initially be added to the index at an investability weight of 5%. Subject to >20% foreign headroom, the investability weight will increase by 5% at subsequent rebalances.
• Continued foreign selling could result in an MSCI weight increase if the headroom increases above 25%. That could still be some time away though.

• On the 27th of September, PRC-incorporated property management play Jinke Smart Services (9666 HK) announced a voluntary cash offer at HK$12/share, a 33.04% premium to last close.
• Boyu, the Offeror, together with concert parties, hold more than 60%. The Offer is contingent on regulatory approvals and 7.71% of shares out tendering. The tendering condition can be waived.
• The Composite Document has now been despatched. The first closing date is the 14 November.

• Despite the WATCH list’s confusion, LG Energy Solution replaced LG Chem. In addition, Solactive excluded Iljin Materials, evidently due to its float-adjusted market cap size.
• There are some somewhat elusive additions. The most prominent example is Japan Steel Works, which replaced LG Chem in the updated WATCH list at the last minute.
• There was confusion about LG Chem’s deletion until the last minute, so, likely, the market has not sufficiently reflected this rebalancing factor in LG Energy/LG Chem’s LONG/SHORT.

In 1992, a TV series aired in Hong Kong on TVB called The Greed of Man. The series told the three-plus-decade story of Ting Hai, an “uneducated and pathologically self-righteous brute” (played by Canto pop singer and actor Adam Cheng (born 1947)) and Fong Chun-sun, “an honest, cultured and refined leader of the Asian Stock Exchange” (played by Damian Lau) who were childhood friends, split, and saw Ting kill Fong over a girl.

Ting Hai fled to Taiwan, was brutish again, spent a decade-plus in prison there. One of Ting Hai’s sons pursues a Fong daughter, is rebuffed, the son turns violent. Eventually the three Fong daughters are killed, and Fong’s only son (played by Sean Lau) flees to Taiwan and makes it rich through indirect gambling on stocks. In Hong Kong, the Tings have made it rich by being short in the 1987 crash. Ting has come back to Hong Kong, is charged with murder, then buys himself out of a sentence. Fong comes back to Hong Kong, and they duke it out in the stock market in true good guys vs bad guys epic knock-down drag-out drama. Ting and his sons are backed by the triads. Fong is backed by a few HK tycoons. Eventually, Ting is wiped out.

He responds by throwing his four sons off the top of the stock exchange building and following himself. Only Ting survives, now billions in debt, and spends the rest of his life in prison. 

The first episode of the show actually started with that final scene of Ting hurling his sons off the building. TVB got so many calls from disturbed viewers they altered the show, and moved its time slot. Apparently, the re-issues and re-airings of the show all show edited versions. The edited version was re-released on TV in 2015 and was well-received in HK by a younger generation. 

Most importantly to this insight however, is that when the series started in 1992, the Hang Seng Index fell 1200 points in one month – that was almost 20% at the time. It started falling part way through the series, then the index fell 1,000 points (16+%) in four days after the gruesome ending.

There were so many complaints about the ending that TVB revised the video release and subsequent re-releases.

Two years later, another TVB drama series starring Adam Cheng called ‘Instinct‘ was aired starting in November 1994. The index started falling a day or two before, after what had been an ugly year-to-date, and fell 20% in 7 weeks while the series aired.

1996 saw two series starring Adam Cheng air on TVB.

Cold Blood Warm Heart – a romantic crime thriller series of 65 episodes aired its first episode on 5 February and ended its run on 3 May. The market fell 700+ points or 6% in the period. 

In early September 1996, Adam Cheng starred in another TVB series called Once Upon A Time In Shanghai (a remake of a 1980s series called The Bund), which ran from 2 September through 25 October 1996. The Hang Seng Index fell sharply the next day, and this was blamed on the Ting Hai Effect, but the market did pretty well in the 7-week-long series.

In late 1997 he starred in a historical drama called Legend of Yung Ching for a Taiwanese production company, covering a period in the mid 18th century of the Kangxi Emperor, the Yongzheng Emperor (Adam Cheng’s role), and the Qianlong Emperor in the Qing Dynasty. Apparently, the market dropped the day it aired. 

In June 1999, he starred in a four-part series called Lord of Imprisonment (may have been a Taiwanese series) which started apparently late in the month. That apparently started a fall of 6+% in the Hang Seng Index.

In 2000, a series called Divine Retribution aired on ATV. It was a sequel to Greed of Man, and was originally called Greed of Man 2000 and actually took place in the near future, not the recent past as had been the case for the original series. It ran from 11 September through 3 November 2000. The Hang Seng Index fell 10% in 6 weeks before rallying in the last two days of the series.

In March 2004 – from 8 March through 24 April 2004 – a historical drama of 37 episodes (more for the international version) starring Adam Cheng called Blade Heart aired on TVB. The opening theme song was performed by Adam Cheng.

You guessed it. The Hang Seng was down more than 10% in 7 weeks.

Later that year, he was in The Conqueror’s Story from 25 October through 4 December – also on TVB. The market fell nearly 200 points the day the series started. 

Adam Cheng also starred in a period costume drama called The Prince’s Shadow from 14 March through 18 April 2005. The market fell on the first day, regained most of its loss, but that was the high price of the series. The market fell over the period of the series.

In 2007, Adam Cheng played a real estate CEO in a TV drama set in contemporary China. The series, named Return Home ran for 33 episodes starting 15 July 2007.

In 2009 he did a TVB series on Hong Kong TV, titled The King of Snooker. It was 20 episodes airing on TVB from 30 March 2009 through 24 April 2009. On the first day, the market fell 600+ points or 4.7% on the day. He had also filmed a series in 2008 called The Book and The Sword – a 40-episode period drama aired in China starting 20 March 2009. The HK market fell 2.3% that day.

On 21 May 2012, a 30-episode psychological thriller titled Master of Play starred Adam Cheng. It ran on TVB for 30 episodes through 29 June 2012. The market fell 10% in the 10 days running up to the launch of the new series.

A year later, the period drama movie Saving General Yang was released in Beijing on 4 April 2013 and the next day, the Hang Seng was down 610 points (-2.7%).

In April 2015, the original 1992 drama The Greed of Man which made the Ting Hai Effect was rerun. The first day of the re-run (20 April) the market fell 2% or 558 points. 

He was interviewed in the South China Morning Post 9 days later and the next morning the article came out (30 April). He said he wasn’t to blame for the stock market’s falls when his shows aired. 

The market fell five days straight. 

In classic fashion, there was a new series out in 2018 called Ever Night. It saw advertising the two weeks before and the Hang Seng fell about 1,000 points in the two weeks before the release. People joked days before that the market fall was due to the new show.

The show was popular in China, so the 60-episode Season 1 started in October 2018 was followed by a 43-episode Season 2 staring 13 January 2020 and running for 3 months and a week. The market fell 25% from the start of Season 2 before rebounding. 

Which brings us to the present day…

Earlier this month, the sequel to The Greed Of Man was released for streaming on Disney+. The market, which had rebounded that day, fell for the next 6 days. 

And today, 25 October, TVB starts re-runs of the 1988 series Behind Silk Curtains starring Adam Cheng, where he plays the role of the chairman of a bank, and drives a businessman’s company to bankruptcy so he can take it over.

Notes:

• This is a fun thing. But it appears to be taken somewhat seriously. It ALWAYS comes up. 
• Not EVERY movie or tv series appearance causes bad results. Bar Bender aired starting on 3 April 2006 on TVB Jade, and the market was up that day, fell back a little in the following days, but not seriously, and then rose 8% by 26 April. 
• However, enough do that it retains its name decades later. 

Sources:

• CLSA put out a Hong Kong Market Outlook piece in April 2004 about The Adam Cheng Effect. That is probably the first I heard of it. 
• The Ting Hai Effect wikipedia page is a place to start. 
• There was an article in Chinese on www.chinanews.com (original source: http://big5.chinanews.com.cn:89/gate/big5/www.chinanews.com/yl/ypkb/news/2009/04-02/1629867.shtml) in April 2009 just after the King of Snooker series started which talked about the Tin Hai Effect. It is likely the source of some of the later articles in English because one of the dates is wrong and most later English sources copy that date.
• Wikipedia has a list of most of the TVB series by year of production. 
• IMDB has a list of most of his appearances. Wikipedia does too.

• To realize reunification of the motherland and great rejuvenation of the Chinese nation, China needs to have sufficient foundation- Some key industries would be prioritized in the great power game.
• The 20th National Congress raised the strategic capability to the highest level, which is to ensure security and emphasize bottom-line thinking. “Innovation” should serve the big goal of national strategic needs. 
• Every major shift and political guidance of the industry means opportunities and challenges on a large scale. Investors are advised to change the thinking mode and expectation on China healthcare.

• With growth fading in the domestic market, the Chinese e-commerce company, Pinduoduo (PDD US) has made its first overseas push with the launch of Temu.com in the US.
• However, the launch was less than impressive, especially considering that the company created a lot of excitement about its US expansion in the previous earnings call.
• Selling $10.00 earbuds at $3.70, Temu could eat a significant chunk off of Pinduoduo’s profitability in the next couple of quarters.

• Kingston Financial (1031 HK) announced a privatisation offer from Mrs Chu, the controlling shareholder, at HK$0.30 per share, a 47.8% premium to the undisturbed price. The offer price is final.
• Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection) and the headcount test. No shareholder holds a blocking stake.
• The offer is light and the offeror is betting that the grim market conditions will sway the headcount test in its favour. Scheme document despatched by 21 December. 

• Jinke Smart Services (9666 HK)’s VGO from Boyu Capital is now open at HK$12.00 per share. The first closing date is 14 November. The IFA says it’s fair and reasonable. 
• The offer is conditional on 7.71% valid acceptances and anti-trust approval. The conditions can be waived. The offeror has not received irrevocables.
• The offer is unattractive, but the low threshold and peer multiple derating suggest a high probability of success. At the current price, the spread to the offer is 3.4%. 

• Our base case target price of 276,567 won suggests a 37% upside from current levels for SK Inc. Our base case valuation assumes a 30% holdco discount.
• At DPS of 8,000 won, this would represent dividend yield of 4% at current price of 202,000 won.
• The three largest holdcos/quasi holdcos in Korea which include Samsung C&T, SK Inc, and LG Corp have strongly outperformed KOSPI this year. 

• LG Chem’s deletion is almost a done deal. The pouch-type pack goes to LG Energy, and the cathode business is not big enough to beat L&F.
• Chunbo is an additive field that this index has not included so far. So, Chunbo will be added as a new addition rather than replacing someone else.
• SK IE Tech is quite tricky. The key is to see separator and elecfoil as the same field. If so, SK IET is likely to replace Iljin Materials.

• Talk about timing… Friday before the close I wrote that I thought circumstances might merit a revised tilt at OZ Minerals Ltd (OZL AU) by BHP Group Ltd (BHP AU). 
• Earnings are Monday, copper is up in AUD terms, time is moving us forward into a supply squeeze. It all looks good to me.
• But an article this morning in the AFR says BHP CEO Mike Henry called OZ Minerals “nice to have” not a “must have” and talked “discipline.” Oops.

• Foreign investor selling has taken the foreign headroom on Kotak Mahindra Bank (KMB) to 22%. That should result in the stock being added to the FTSE All-World Index in March.
• The stock will initially be added to the index at an investability weight of 5%. Subject to >20% foreign headroom, the investability weight will increase by 5% at subsequent rebalances.
• Continued foreign selling could result in an MSCI weight increase if the headroom increases above 25%. That could still be some time away though.

• Toshiba (6502 JP) investors should look at process and understand the difference between this one and others. Some news is not news, other than telling you the dance has started.
• United Tractors (UNTR IJ) is cheap. It appears to be running at 6x 2022 earnings. This is not abnormal for a cyclical at the end of the cycle.
• Westpac Banking (WBC AU) confirms its interest in Tyro Payments (TYR AU), but still nothing firm.

• We see one potential change for the S&P/ASX 50 Index and two potential changes for the S&P/ASX 200 at the December rebalance, though some stocks are close to the cutoffs.
• The potential passive buying on the S&P/ASX 200 (AS51 INDEX) adds will exceed 11 days of ADV while the impact on the other stocks ranges from 1.5-4 days of ADV.
• Most stocks have been moving the right way and there will be pre-positions built up on some of the stocks. Shorts have been active on a few names too.

• Two months ago I wrote about a possible “Sustained Flow Event” on Japan Excellent (8987 JP). Since then, the stock has outperformed every other Office REIT. It’s up since then.
• Outperformance within Office REITs has been a minimum of 5.9%, and a maximum of ~17% vs the biggest peer, with an average and median outperformance of 10.8% and 9.2% respectively.
• There is no reason to think it won’t continue, but the Japan Excellent story is idiosyncratic.

• System-On-Chip designer and IP purveyor Socionext (6526 JP) is a recent IPO in Japan, born from a spinout of Fujitsu and Panasonic system LSI operations 7+ years ago.
• Having listed on TSE Prime from the outset, that means it gets TOPIX inclusion at the close of trading 29 November. 
• Inclusion Float is a bit nebulous. There is a chance we get official company data prior to the TSE announcement, in which case we know more by cob 31 October.

• The review period for the MSCI November SAIR started during the week and will run till 31 October. The TPX INDEX October rebalance will be implemented close on 28 October.
• The HDFC/ HDFCB merger is progressing faster than expected. NSE Indices has started a market consultation on treatment of mergers and demergers in their indices.
• There have been big redemptions in iShares MSCI Emerging Markets (EEM US) and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week. Tracker Fund had big inflows.

• We remain bullish on the stock price ahead of Q3 earnings
• We expect the company to surprise the market given stronger volumes and pricing trends
• If Toyota is having problems securing a stable supply of chips, we believe that industry inventories are much leaner than most believe

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, is set to launch a US$500 million HKEx IPO.  
• We previously discussed the IPO in Giant Biogene IPO: The Bull Case and Giant Biogene IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at Giant Biogene’s potential valuation range. 

• LG Chem’s deletion is almost a done deal. The pouch-type pack goes to LG Energy, and the cathode business is not big enough to beat L&F.
• Chunbo is an additive field that this index has not included so far. So, Chunbo will be added as a new addition rather than replacing someone else.
• SK IE Tech is quite tricky. The key is to see separator and elecfoil as the same field. If so, SK IET is likely to replace Iljin Materials.

• Yesterday, a Kyodo News article suggested SBI was “planning to take Shinsei private.”
• This morning, near-identically-worded replies were proffered, belatedly, and SBI appears to have moved its earnings release date to match Shinsei’s.
• It helps to remember Communications mandated by Exchange Rules are worded so that they are not technically or legally incorrect. Shareholder transparency and good governance is not the goal.

• Talk about timing… Friday before the close I wrote that I thought circumstances might merit a revised tilt at OZ Minerals Ltd (OZL AU) by BHP Group Ltd (BHP AU). 
• Earnings are Monday, copper is up in AUD terms, time is moving us forward into a supply squeeze. It all looks good to me.
• But an article this morning in the AFR says BHP CEO Mike Henry called OZ Minerals “nice to have” not a “must have” and talked “discipline.” Oops.

• Key areas to pay attention in 3Q22: 1) Meituan Instashopping’s growth rate, 2) Meituan Select’s unit economics, 
• 3) 4Q guidance for food delivery and in-store, hotel and travel recovery.
• Valuation is entering an attractive territory with recent stock price correction.

• Foreign investor selling has taken the foreign headroom on Kotak Mahindra Bank (KMB) to 22%. That should result in the stock being added to the FTSE All-World Index in March.
• The stock will initially be added to the index at an investability weight of 5%. Subject to >20% foreign headroom, the investability weight will increase by 5% at subsequent rebalances.
• Continued foreign selling could result in an MSCI weight increase if the headroom increases above 25%. That could still be some time away though.

• “Common prosperity “ to replace GDP growth as development target. Development of the private economy to be guided by the government.
• Localization & substitution with Chinese software, hardware, chips, semiconductor & consumer companies, promote manufacturing along with autonomous control and real economy. Focus on domestic demand rather than being world factory.
• Energy independence through new energy facility, VPP, EV to increase, along with Chinese medicine and other Chinese consumer brands. A possible move to fortify Chinese economy against potential Western sanctions.

• Two months ago I wrote about a possible “Sustained Flow Event” on Japan Excellent (8987 JP). Since then, the stock has outperformed every other Office REIT. It’s up since then.
• Outperformance within Office REITs has been a minimum of 5.9%, and a maximum of ~17% vs the biggest peer, with an average and median outperformance of 10.8% and 9.2% respectively.
• There is no reason to think it won’t continue, but the Japan Excellent story is idiosyncratic.

• Strong safe-haven demand for dollars is contributing to currency strength, as well as the Fed’s domestically-focused policy stance. Previous dollar bull markets have enjoyed considerable longevity, thereby suggesting further appreciation.
• Further interest rate increases by the Fed will accelerate capital outflows from the Asia Pacific region. While large-scale devaluations are unlikely, Asian corporations with dollar-denominated debt face higher financial stress.  
• High imported energy and food prices have boosted European inflation. The weak euro has tightened European financial conditions due to the rise in dollar-denominated liabilities at banks and corporations. 

• The review period for the MSCI November SAIR started during the week and will run till 31 October. The TPX INDEX October rebalance will be implemented close on 28 October.
• The HDFC/ HDFCB merger is progressing faster than expected. NSE Indices has started a market consultation on treatment of mergers and demergers in their indices.
• There have been big redemptions in iShares MSCI Emerging Markets (EEM US) and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week. Tracker Fund had big inflows.

• Toshiba (6502 JP) investors should look at process and understand the difference between this one and others. Some news is not news, other than telling you the dance has started.
• United Tractors (UNTR IJ) is cheap. It appears to be running at 6x 2022 earnings. This is not abnormal for a cyclical at the end of the cycle.
• Westpac Banking (WBC AU) confirms its interest in Tyro Payments (TYR AU), but still nothing firm.