Event-Driven and Index Rebalance

Weekly Top Ten Event-Driven and Index Rebalance – Jan 26, 2025

By January 26, 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. ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion

By Brian Freitas, Periscope Analytics

  • With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.
  • ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
  • The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.

2. Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening

By Brian Freitas, Periscope Analytics


3. CATL (300750 CH): Index Inclusion Post H-Share Listing

By Brian Freitas, Periscope Analytics


4. Solactive Global Uranium & Nuclear Components Index Rebalance Preview: Potential Changes Next Week

By Brian Freitas, Periscope Analytics

  • Based on prices and turnover from 22 January, there could be one deletion from the index in January. Plus there will be capping and float changes.
  • There are four stocks that meet the inclusion criteria, but all are non-pure play companies, and the index is already at the limit of 15 non-pure play companies.
  • Estimated one-way turnover is 6.8% resulting in a round-trip trade of US$506m. There are many stocks with multiple days of ADV to trade.

5. Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?

By Travis Lundy, Quiddity Advisors

  • JIC gave an official statement yesteday about the expected start of its Shinko Electric Industries (6967 JP) Tender Offer. A later-than-expected start has people asking questions.
  • It has traded tighter since the SAMR approval news (I warned on 16 Dec it was coming and the next day it closed 6.6% gross).
  • Below I discuss the language of the Conditions Precedent which would allow a MAC. 

6. J&T Global Express (1519 HK): Global Index Inclusion Coming Up

By Brian Freitas, Periscope Analytics


7. NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March

By Brian Freitas, Periscope Analytics

  • With 10 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
  • Estimated one-way turnover is 15.9% resulting in a one-way trade of INR 52bn (US$600m). All forecast changes, bar one, have over 1.5x ADV to trade from passive trackers.
  • All the forecast deletes are F&O members while two adds are not. NSE Indices could revisit the index membership criteria especially given the launch of futures on the index.

8. Taiwan: Potential Global Index Changes; Last Review Day Today

By Brian Freitas, Periscope Analytics

  • There could be 2 adds and 2 deletes for Taiwan in a global index in February. Today is the last trading day ahead of the CNY holidays.
  • Passive trackers will need to trade between US$76m to US$370m of the stocks and impact will vary between 3.2x-7x ADV to trade.
  • Shorts are small in the potential adds and there has been short covering recently, while there has been a big increase in shorts for one of the potential deletes.

9. Henlius (2696)’s Fail Sets (Another) Bad Precedent

By David Blennerhassett, Quiddity Advisors

  • The question was asked in Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal? Well, now we have one as LVC inexplicably blocked.
  • It didn’t appear to make economic rationale for LVC to crash the party – knowing they would do so, and not bother to reduce their position accordingly.
  • In tandem with the TCM (570 HK) debacle, it sets another bad precedent for future/existing Hong Kong  events. Expect spreads for HK arbs to widen. And Henlius to crater.

10. Tsuruha (3391) – Welcia (3141) Future Merger Ratio – Pounding the Table

By Travis Lundy, Quiddity Advisors

  • In late December, a Jiji article said Tsuruha & Welcia would look to integrate by end-2025, now that they no longer need SEC approval. Odd language, but we’ll take it.
  • That means we look to what might happen between here and there. The companies will hire Legal and Financial Advisors, wait until both report FY, then start negotiating.
  • What has been the long-term trend and the trend of the last two years is different. It’s worthwhile looking at valuations and expectations to decide how to trade. It’s good.