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. NTT DC REIT IPO: Global Index Inclusions Later This Year + A Kicker
- NTT DC REIT (NTTDCR SP) could raise up to US$824m in its IPO if the overallotment option is exercised and the stock is expected to start trading on 14 July.
- Cornerstone investors will own 16.8% of shares out following the IPO but there is no lock-up on these shares. The sponsor will own 20%/25% depending on whether overallotment is exercised.
- NTT DC REIT (NTTDCR SP) should be added to the smallcap segment of global indices in November and December while inclusion in local indices will take a lot longer.
2. Kokusai Electric (6525 JP): Small Index Impact for Now, but Could Lead to Something Bigger
- KKR HKE Investment is offering 30m shares (12.86% of shares out) of Kokusai Electric (6525 JP) in a secondary offering that could raise up to JPY 91bn (US$620m).
- Applied Materials (AMAT US) will become the largest shareholder in Kokusai Electric (6525 JP) after the placement.
- There will not be a lot of buying from passive trackers following the placement, but it could ease the way for inclusion of the stock in the Nikkei 225 Index.
3. [Japan Buybacks] – Japan Bank Metrics, Cross-Holdings and Banks Part 1
- Japanese banks have been in a relative sweetspot for a couple of years. Higher rates, higher inflation, more FX volatility, better earnings, stronger buybacks. Cross-holding sales up but not spectacular.
- The BOJ may raise rates but Trump Tariff retaliation/mitigation is a question. Elections the next two weeks and earnings the 2-3 weeks after that may keep things a question.
- But buybacks should pick up. Lots announced in spring end at or before Q1 earnings. And I expect substantial new buybacks to be announced throughout the from Q1 results on.
4. Toyota Industries (6201 JP): Vocal Activism Gathering Pace
- Toyota Industries (6201 JP)’s preconditional tender offer from Toyota Fudosan is susceptible to a bump if there is enough vocal opposition from minorities.
- In July, two public pieces have sharply criticised the offer – the Asian Corporate Governance Association (ACGA) on 2 July and Sloane Robinson Investment Management on 8 July.
- Some of the criticism has merit, while others do not. Nevertheless, these letters are the first and right step to agitate for terms that are closer to TICO’s intrinsic value.
5. Great Eastern (GE SP): SGX The Winner As Shareholders Block Exit Offer
- After OCBC bumped terms for Great Eastern Holdings (GE SP) to $30.15/share via an Exit Offer, I wasn’t confident a 17.8% bump would dislodge Palliser. That appears the case.
- At today’s EGM, 63.49% of minority shareholders – OCBC abstained – were in favour on the Offer, falling short of the 75% condition. There was no blocking % condition.
- Shareholders voted for the resumption of shares via the issuance of shares (one-for-one bonus), satisfying the SGX free float requirement. The SGX, and dissenters, will be happy with the outcome.
6. Merger Arb Mondays (07 Jul) – Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang
- I 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:Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities And (1428 HK), Hainan Meilan International Airport (357 HK), New World Resources (NWC AU), Humm Group (HUM AU), Avjennings Ltd (AVJ AU).
7. [Japan LolWut?] Ikuyo (7273) Says “Iku Yo!” – Bitcoin, M&A, Weirdness, More
- Several Japanese companies jumped onto the OBaaBM/TABaaBM (Own/Talk-About-Bitcoin-as-a-Business Model) last fall to this spring as Microstrategy Inc Cl A (MSTR US) shares went up and bitcoin did too.
- Yesterday, resin coating/injection molding product maker Ikuyo Co Ltd (7273 JP) announced an M&A Policy, and a Shareholder Benefits Program where shareholders will “win” amounts of bitcoin by lottery.
- Ikuyo expects revenues +955% this year. Details are sparse. The shareholder structure has red flags. The CEO sold himself half the company in Feb for peanuts. Forewarned. But it’s interesting.
8. Korea’s Next Policy Trade: Locals’ Screens for Dividend Tax Reform Plays
- With the governance trade fading, local desks are rotating into dividend tax reform—bipartisan tailwinds and rising political chatter are driving early positioning ahead of potential rerating.
- Local desks are screening for names with 35%+ payout and 30%+ individual ownership, key thresholds tied to the ruling party’s dividend tax reform bill gaining traction in policy circles.
- The real trade is in names with individual top holders—direct beneficiaries of the tax reform—most exposed to theme flows and likely to lead on dividend hikes if the bill passes.
9. Meituan Possible US$4bn Selldown – Will End up Being Well-Flagged but Sentiment Isn’t Great
- As per news reports, Prosus NV (PRX NA) could look to sell some/all of its Meituan (3690 HK) stake, worth around US$4bn
- Prosus has held its stake for a few years, owing to the dividend payout by Tencent, but Meituan appears to be planning to take on one of its subsidiaries.
- In this note, we will talk about the possible selldown and other deal dynamics.
10. A/H Premium Tracker (To 4 July 2025): “Beautiful Skew” Continues as SB Buys Wide Spread Hs
- AH premia flat among liquid names but “beautiful skew” of wide premia converging more than narrow premia continues bigly. It has paid well to be long wide H discounts.
- Last week I said, “It has paid to be long the H on those H/A pairs with the biggest H discounts. I would continue to ride that trend.” Ride on.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers. Technical issue delayed this week’s Monitor.
