Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Kurita Water Industries / Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/light-wonder-inc" target="_blank" data-smartkarma-citation="entities:36929:1" rel="noopener">Light &amp; Wonder (LNW US)</a>/ <a href="https://www.smartkarma.com/entities/light-wonder-inc-7e7d040f-e811-4fb9-9710-796a39af299e" target="_blank" data-smartkarma-citation="entities:40171:1" rel="noopener">Light &amp; Wonder (LNW AU)</a> replaced <a href="https://www.smartkarma.com/entities/united-malt-group-ltd" target="_blank" data-smartkarma-citation="entities:29116:1" rel="noopener">United Malt Group Ltd (UMG AU)</a> in the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> last week.</li>
<li>
<a href="https://www.smartkarma.com/entities/newcrest-mining-ltd" target="_blank" data-smartkarma-citation="entities:691:1" rel="noopener">Newcrest Mining (NCM AU)</a> stops trading this week and should be replaced by <a href="https://www.smartkarma.com/entities/newmont-mining-corp" target="_blank" data-smartkarma-citation="entities:14503:1" rel="noopener">Newmont Mining (NEM US)</a> CDIs in the ASX indices.</li>
<li>Another week of ETF outflows for China with the largest outflows from trackers benchmarked to the CSI 1000 Index.</li>
</ul>



Light &amp; Wonder (LNW US)/ Light &amp; Wonder (LNW AU) replaced United Malt Group Ltd (UMG AU) in the S&amp;P/ASX 200 (AS51 INDEX) last week.

Newcrest Mining (NCM AU) stops trading this week and should be replaced by Newmont Mining (NEM US) CDIs in the ASX indices.
Another week of ETF outflows for China with the largest outflows from trackers benchmarked to the CSI 1000 Index.


Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank

Event-Driven

<ul>
<li>Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-September. There are a few companies with significant float changes from end-March and/or end-June.</li>
<li>The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.</li>
<li>We find 9 stocks where there could be inflows with passive trackers needing to buy over 1 day of ADV on most stocks.</li>
</ul>


Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-September. There are a few companies with significant float changes from end-March and/or end-June.
The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
We find 9 stocks where there could be inflows with passive trackers needing to buy over 1 day of ADV on most stocks.


India - Free Float Changes to Drive Passive Inflows

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> released its first results since its amalgamation. This can make comparatives difficult where historicals are not adjusted, except for some QoQ items. </li>
<li>We use Dupont Analysis to better understand how the newly amalgamated bank looks now compared with the past, which generally shows a more profitable bank at the core.  </li>
<li>Credit costs, tax expenses are also positives, with the former improving 27bps YoY and the latter improving 23bps YoY. Investment income is a major positive driver in Sep 23 quarter.</li>
</ul>



HDFC Bank (HDFCB IN) released its first results since its amalgamation. This can make comparatives difficult where historicals are not adjusted, except for some QoQ items. 
We use Dupont Analysis to better understand how the newly amalgamated bank looks now compared with the past, which generally shows a more profitable bank at the core.  
Credit costs, tax expenses are also positives, with the former improving 27bps YoY and the latter improving 23bps YoY. Investment income is a major positive driver in Sep 23 quarter.


HDFC Bank - 1st Results After Amalgamation | Dupont Analysis For Comparatives | Credit Cost Decline

<ul>
<li>Cost at PNB are high and rising, a major drag on its ROA and RORWA, which largely offsets better credit metrics. </li>
<li>There are many market positives in India banks, but relative to all large peers, <a href="https://www.smartkarma.com/entities/punjab-national-bank" target="_blank" data-smartkarma-citation="entities:542:1" rel="noopener">Punjab National Bank (PNB IN)</a><span>has the lowest</span> RORWA </li>
<li>There is no LDR expansion at PNB. NIM is languishing. Its high 20% govt loans/total loans is high, with 2 peers' even higher, but better returns. </li>
</ul>


Cost at PNB are high and rising, a major drag on its ROA and RORWA, which largely offsets better credit metrics. 
There are many market positives in India banks, but relative to all large peers, Punjab National Bank (PNB IN)has the lowest RORWA 
There is no LDR expansion at PNB. NIM is languishing. Its high 20% govt loans/total loans is high, with 2 peers' even higher, but better returns. 


Punjab National Bank - Weak Returns, High Costs, High Govt Loans, No LDR Expansion, NIM Down QoQ

<ul>
<li>Shriram Finance (formerly Shriram Transport Finance) now includes two major subsidiaries in its numbers, in the listed entity, driving up AUM, ROA and net profit. </li>
<li>There is strong latent demand in India for pre-owned commercial vehicles and passenger vehicles, where SHTF focuses, with a long track record of good profit, ROA, NIM. </li>
<li>Underwriting seems strong given stage 3 and stage 2 loan data, and with funding cost improvements, from distribution of liabilities, good scope for profit growth, ROA, NIM.</li>
</ul>


Shriram Finance (formerly Shriram Transport Finance) now includes two major subsidiaries in its numbers, in the listed entity, driving up AUM, ROA and net profit. 
There is strong latent demand in India for pre-owned commercial vehicles and passenger vehicles, where SHTF focuses, with a long track record of good profit, ROA, NIM. 
Underwriting seems strong given stage 3 and stage 2 loan data, and with funding cost improvements, from distribution of liabilities, good scope for profit growth, ROA, NIM.


Shriram Finance - Strong Latent Demand, ROA 3.08% from 2.70%, Stage 2 Loans -14%, +25% Profit 1Q24

India

REC Limited operates as a financial firm. The Company provides loan assistance to various state and central power utilities, private sector project developers, and state governments for investments in power generation, transmission, distribution, and other system improvement schemes. REC serves clients in India.

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REC (RECL IN)

Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

India - Free Float Changes to Drive Passive Inflows

Changes to shareholding patterns could lead to changes in float for some stocks in local/global indices. Passive trackers will need to trade over 3...

Brian Freitas

HDFC Bank - 1st Results After Amalgamation | Dupont Analysis For Comparatives | Credit Cost Decline

Fist earnings results since amalgamation and they are strong. Dupont Analysis may be best way to view how bank is changing, where historicals are...

Daniel Tabbush

Punjab National Bank - Weak Returns, High Costs, High Govt Loans, No LDR Expansion, NIM Down QoQ

PNB is seeing rising operating costs, languishing NIM, stagnant LDR. Its high government loans may be a key burden on returns. Credit cost decline...

Daniel Tabbush

Shriram Finance - Strong Latent Demand, ROA 3.08% from 2.70%, Stage 2 Loans -14%, +25% Profit 1Q24

Shriram Finance now includes 2 subsidiaries in earnings, and assets. Its ROA is up to 3.08% from 2.70% YoY in 1Q24. Stage 2 loans -14% YoY can mean...

Daniel Tabbush

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