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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> stock has taken a beating recently following a lot of negative press about the Buy Now Pay Later (BNPL) industry. This included a Rebel Wilson ad pulled from Australian TV after complaints from consumer protection groups for playing down the risks of taking on debt. Here in New Zealand, there have been calls for greater regulation of BNPL with families struggling to afford basics while paying off the BNPL loans.</p><p>Now, <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> has announced that it plans to acquire <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> in an all-stock deal that values Afterpay at a 30% premium to its last close. <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> shareholders will receive 0.375 shares of <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> Class A common stock for each Afterpay share they hold on the record date. <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> may elect to pay 1% of total consideration in cash. The transaction values <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> at A$39bn.</p><p>The transaction is expected to close in the first quarter of 2022 subject to shareholder approval, receipt of regulatory approvals and no material adverse effect in relation to <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> or <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a>.</p><p><a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> intends to establish a secondary listing on the ASX to allow <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a> shareholders to trade <a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> shares via CHESS Depositary Interests (CDIs) on the ASX. We expect the Square CDIs to be included 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> replacing <a href="https://www.smartkarma.com/entities/afterpay-limited" target="_blank" data-smartkarma-citation="entities:26940:1" rel="noopener">Afterpay Touch (APT AU)</a>, though the free float on the CDIs will be lower. </p>

The Afterpay Touch (APT AU) stock has taken a beating recently following a lot of negative press about the Buy Now Pay Later (BNPL) industry. This included a Rebel Wilson ad pulled from Australian TV after complaints from consumer protection groups for playing down the risks of taking on debt. Here in New Zealand, there have been calls for greater regulation of BNPL with families struggling to afford basics while paying off the BNPL loans.Now, Square Inc (SQ US) has announced that it plans to acquire Afterpay Touch (APT AU) in an all-stock deal that values Afterpay at a 30% premium to its last close. Afterpay Touch (APT AU) shareholders will receive 0.375 shares of Square Inc (SQ US) Class A common stock for each Afterpay share they hold on the record date. Square Inc (SQ US) may elect to pay 1% of total consideration in cash. The transaction values Afterpay Touch (APT AU) at A$39bn.The transaction is expected to close in the first quarter of 2022 subject to shareholder approval, receipt of regulatory approvals and no material adverse effect in relation to Afterpay Touch (APT AU) or Square Inc (SQ US).Square Inc (SQ US) intends to establish a secondary listing on the ASX to allow Afterpay Touch (APT AU) shareholders to trade Square Inc (SQ US) shares via CHESS Depositary Interests (CDIs) on the ASX. We expect the Square CDIs to be included in the S&amp;P/ASX 200 (AS51 INDEX) replacing Afterpay Touch (APT AU), though the free float on the CDIs will be lower. 

Afterpay (APT AU) - Square Is Buying Now in an All Stock Deal

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p>Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.</p><p>A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.</p>

Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.

Index Rebalance

<div><p>S&amp;P Dow Jones Indices will announce changes to 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> as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p></div><div>We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - <a href="https://www.smartkarma.com/entities/centuria-capital-group" target="_blank" data-smartkarma-citation="entities:15546:1" rel="noopener">Centuria Capital (CNI AU)</a>, <a href="https://www.smartkarma.com/entities/pinnacle-investment-manageme" target="_blank" data-smartkarma-citation="entities:20624:1" rel="noopener">Wilson (PNI AU)</a> and <a href="https://www.smartkarma.com/entities/sealink-travel-group-ltd" target="_blank" data-smartkarma-citation="entities:6400:1" rel="noopener">Sealink Travel (SLK AU)</a> while the potential deletions are <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/nrw-holdings-ltd" target="_blank" data-smartkarma-citation="entities:9271:1" rel="noopener">NRW Holdings (NWH AU)</a> and <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a>.</div><div></div><div>
<a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> is a close add and the corresponding deletion is <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a>.</div><div></div><div>There is a large impact expected on the inclusions while the impact on the deletions is lower.</div><div></div><div>For <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a>, the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.</div>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.We are almost three quarters of the way through the review period. There are 3 potential inclusions at the review - Centuria Capital (CNI AU), Wilson (PNI AU) and Sealink Travel (SLK AU) while the potential deletions are Nuix Limited (NXL AU), NRW Holdings (NWH AU) and G8 Education (GEM AU).
Galaxy Resources (GXY AU) is placed in the inclusion zone but is unlikely to be added to the index given its pending merger with Orocobre Ltd (ORE AU).
De Grey Mining (DEG AU) is a close add and the corresponding deletion is Westgold Resources (WGX AU).There is a large impact expected on the inclusions while the impact on the deletions is lower.For G8 Education (GEM AU), the short interest is close to the estimated passive selling. For the other two deletes, short interest is a lot smaller than the estimated passive selling and there will be more shorts created from now to rebalance implementation day.

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

<p><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> has been one of our top long bets in Asia and met our 7,300 projection target. ASX still looks constructive after a late June pullback cycle with wedge support in focus.</p><p>ASX is a market we like as a long pair and favor the macro cycle.</p><p>For those keen to short we outlined a ST top level (7,380) and pullback cycle. Our macro bias is to buy a late June correction near 7,050 pattern support.</p><p>ASX RSI bear divergence is the concern that warns of a harder pullback cycle.</p><p>AUD staying below 0.78 is a red flag for the risk cycle. SPX near term upside push into late this week and then a risk turn cycle is due next week.</p>

S&amp;P/ASX 200 (AS51 INDEX) has been one of our top long bets in Asia and met our 7,300 projection target. ASX still looks constructive after a late June pullback cycle with wedge support in focus.ASX is a market we like as a long pair and favor the macro cycle.For those keen to short we outlined a ST top level (7,380) and pullback cycle. Our macro bias is to buy a late June correction near 7,050 pattern support.ASX RSI bear divergence is the concern that warns of a harder pullback cycle.AUD staying below 0.78 is a red flag for the risk cycle. SPX near term upside push into late this week and then a risk turn cycle is due next week.

ASX Rally Stretched but Bullish on a Pullback

<p>Post market close today, S&amp;P Dow Jones Indices announced the list of changes to 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> as part of the June index review that will be effective after the close of trading on 18 June.</p><p>There are 3 sets of the changes to the index at the June review.</p><p>The inclusions are <a href="https://www.smartkarma.com/entities/chalice-gold-mines-ltd" target="_blank" data-smartkarma-citation="entities:20193:1" rel="noopener">Chalice Gold Mines (CHN AU)</a>, <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and <a href="https://www.smartkarma.com/entities/uniti-group-ltd" target="_blank" data-smartkarma-citation="entities:29042:1" rel="noopener">Uniti Group Ltd (UWL AU)</a>. </p><p>The deletions are <a href="https://www.smartkarma.com/entities/austal-ltd" target="_blank" data-smartkarma-citation="entities:14420:1" rel="noopener">Austal Ltd (ASB AU)</a>, <a href="https://www.smartkarma.com/entities/perenti-global-ltd" target="_blank" data-smartkarma-citation="entities:20505:1" rel="noopener">Perenti Global (PRN AU)</a> and <a href="https://www.smartkarma.com/entities/resolute-mining-ltd" target="_blank" data-smartkarma-citation="entities:1960:1" rel="noopener">Resolute Mining (RSG AU)</a>. </p><p>There are only 5 trading days to implementation of the changes and quite a lot to trade for passive funds. There are no real surprises and there will be pre-positioning in some of the names.</p><p>Short interest has been dropping on the inclusions and rising on the deletions, another sign of pre-positioning prior to the announcement of the changes. We estimate more than half the passive flow has already been positioned for.</p>

Post market close today, S&amp;P Dow Jones Indices announced the list of changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the June index review that will be effective after the close of trading on 18 June.There are 3 sets of the changes to the index at the June review.The inclusions are Chalice Gold Mines (CHN AU), Orocobre Ltd (ORE AU) and Uniti Group Ltd (UWL AU). The deletions are Austal Ltd (ASB AU), Perenti Global (PRN AU) and Resolute Mining (RSG AU). There are only 5 trading days to implementation of the changes and quite a lot to trade for passive funds. There are no real surprises and there will be pre-positioning in some of the names.Short interest has been dropping on the inclusions and rising on the deletions, another sign of pre-positioning prior to the announcement of the changes. We estimate more than half the passive flow has already been positioned for.

ASX200 Index Rebalance: A Lot of Pre-Positions Built Up

Australia

The S&P/ASX 200 measures the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalization. Representative liquid and tradable, it is widely considered Australia's preeminent benchmark index. The index is float-adjusted. The index was launched in April 2000.

S&P/ASX 200 (AS51 INDEX)

Afterpay (APT AU) - Square Is Buying Now in an All Stock Deal

Square is looking to acquire Afterpay in an all stock deal that values Afterpay at A$39bn, a 30% premium to its last close. The premium is the...

Brian Freitas

Asia Long/Short Trades

Asia market short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech....

Thomas Schroeder

ASX200 Sep21 Index Rebalance Preview: Large Impact Names

We see 3 potential changes to the ASX200 at the Sep rebalance with CNI, PNI and SLK being included and NXL, NRW and GEM being deleted. Passive...

Brian Freitas

ASX Rally Stretched but Bullish on a Pullback

S&P/ASX 200 (AS51 INDEX) has been one of our top long bets in Asia and met our 7,300 projection target. ASX still looks constructive after a late...

Thomas Schroeder

ASX200 Index Rebalance: A Lot of Pre-Positions Built Up

There are 2 sets of changes to the ASX200 with CHN, ORE and UWL replacing ASB, PRN and RSG. There are 5 trading days to implementation, significant...

Brian Freitas