Event-Driven and Index Rebalance

Weekly Top Ten Event-Driven and Index Rebalance – Feb 2, 2025

By February 2, 2025 No Comments
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Fast Retailing (9983) Capping Decision This Week – Single or Double Dose?

By Travis Lundy, Quiddity Advisors

  • Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.
  • The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.
  • The setup very near-term could be pretty interesting, and worth watching.

2. Guotai Junan/Haitong Sec Merger: The Many Index Flows Around the Corner

By Brian Freitas, Periscope Analytics


3. Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade

By Brian Freitas, Periscope Analytics


4. Sigma Healthcare (SIG AU): Shareholders Approve Merger; Passives Could Start Buying in Two Weeks

By Brian Freitas, Periscope Analytics

  • Sigma Healthcare (SIG AU) and Chemist Warehouse (CWG) shareholders have approved the merger with 99.86% and 100% of the votes cast in favour.
  • The Second Court Hearing is on 3 February and the merger will be implemented on 12 February, which is when the passive buying could commence.
  • Sigma Healthcare has continued to trade higher on a record margin and sales expansion for CWG and expected passive buying that could top A$3bn over the next few months.

5. 3D Launches Partial Tender Offer on NTT UD REIT (8956)

By Travis Lundy, Quiddity Advisors

  • Seemingly out of the blue, Singapore-based activist investment fund 3D Investment Partners has launched a partial tender offer at a small premium on NTT UD REIT Investment Corporation (8956 JP)
  • 3DIP currently owns 2.2% and at maximum, will own 15.00% of the REIT units outstanding less treasury units. It intends to own the units for “pure investment purposes.”
  • “Shareholder” structure is different for J-REITs vs companies. And this J-REIT has an interesting future possibility. But…

6. Solactive Global Uranium & Nuclear Components Index Rebalance: DeepSeek Led Selloff & 1 Delete

By Brian Freitas, Periscope Analytics

  • Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There is only 1 delete with implementation at the close on 31 January.
  • As expected, GoviEx Uranium (GXU CN) will be deleted from the index and there will be a bunch of capping changes, especially for non-pure play stocks.
  • Estimated one-way turnover is 5.8% resulting in a round-trip trade of US$386m. There are many stocks with multiple days of ADV to trade.

7. Indian Renewable Energy (IREDA IN) QIP: Index Implications

By Brian Freitas, Periscope Analytics

  • IREDA has announced a Qualified Institutional Placement (QIP) of a maximum of INR 50bn as long as the Government of India’s holding does not drop by more than 7%.
  • There will be passive buying at the time of settlement of the QIP shares while the increase in float will bring the stock closer to inclusion in another global index.
  • With the stock close to index inclusion level and down 37% from its peak, there could be positioning in the stock for passive inflows.

8. PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON

By Brian Freitas, Periscope Analytics


9. Global Foods Creators (7559) – Another Stupidly Cheap MBO With Rigged DCF

By Travis Lundy, Quiddity Advisors

  • Today after the close, Global Food Creators (7559 JP) announced that the CEO would sell his 1.23% of the company into an MBO by a company he set up. 
  • The family company which owns 27%, and he would fund the takeover of the other 73% with 1% equity taken from his share sale, and 99% bank loans. 
  • The TOB is at 0.65x book for a cash-rich company. Liquidate the cash and the rest is being taken over at 0.33x book. Aaaaargh. 

10. EQD | DeepSeek’s New AI: Price Supports and Broader Implications for META, NVDA, S&P 500, Nasdaq 100

By Nico Rosti, MRM Research

  • News that DeepSeek’s latest AI release appears to be superior to latest OpenAI’s ChatGPT in  most (if not all) of the benchmark tasks have apparently shaken markets today.
  • DeepSeek may be able to beat its competitors (including other AI developed by other US companies like Meta Platforms (META US) ), using lower cost chips and less data.
  • Tech companies like NVIDIA Corp (NVDA US) are falling hard (like -12%) in pre-market, and so are the US Indices. Let’s see where support for reversal rallies can be found.