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

<ul>
<li>From December 2022, the minimum free float requirement to be a part of the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> increases from 15% to 20%.</li>
<li>This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.</li>
<li>The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.</li>
</ul>


From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.
The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.


PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Manila Electric Company / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jg-summit-holdings-inc" target="_blank" data-smartkarma-citation="entities:15747:1" rel="noopener">JG Summit Holdings (JGS PM)</a> aims to raise around US$185m via selling 2.5% of <a href="https://www.smartkarma.com/entities/manila-electric-company" target="_blank" data-smartkarma-citation="entities:3527:1" rel="noopener">Manila Electric Company (MER PM)</a> (Meralco) via a block trade.</li>
<li>This appears to be the first selldown by JG Summit and doesn’t appear to have been very well flagged either.</li>
<li>In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.</li>
</ul>



JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.
This appears to be the first selldown by JG Summit and doesn’t appear to have been very well flagged either.
In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.


Manila Electric Block - Selldown by One of the Largest Shareholders

<p>The Philippines Stock Exchange has announced the changes to the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> as part of the August rebalance.</p><p><a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> and <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> have been added to the index while <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> and <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> have been deleted.</p><p>There are minimal assets tracking the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a>. However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. The impact is clearly visible today with <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> and <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> lower by 9.5% and 5%, while <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> and <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> are up 4% and 13% respectively.</p><p>We had <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> as an inclusion and <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> as a deletion. <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> was a close delete. <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> was added following a rule change that was announced and implemented at the same time as the constituent changes and that resulted in the deletion of <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> as well.</p><p>There are also some rule changes related minimum free float, to Fast Entry for stocks, and to the inclusion/exclusion cutoff rankings at the regular rebalances.</p>

The Philippines Stock Exchange has announced the changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) as part of the August rebalance.AC Energy Corp (ACEN PM) and Converge ICT Solutions (CNVRG PM) have been added to the index while Emperador Inc (EMP PM) and DMCI Holdings (DMC PM) have been deleted.There are minimal assets tracking the Philippines Stock Exchange PSEi Index (PCOMP INDEX). However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. The impact is clearly visible today with Emperador Inc (EMP PM) and DMCI Holdings (DMC PM) lower by 9.5% and 5%, while AC Energy Corp (ACEN PM) and Converge ICT Solutions (CNVRG PM) are up 4% and 13% respectively.We had AC Energy Corp (ACEN PM) as an inclusion and Emperador Inc (EMP PM) as a deletion. DMCI Holdings (DMC PM) was a close delete. Converge ICT Solutions (CNVRG PM) was added following a rule change that was announced and implemented at the same time as the constituent changes and that resulted in the deletion of DMCI Holdings (DMC PM) as well.There are also some rule changes related minimum free float, to Fast Entry for stocks, and to the inclusion/exclusion cutoff rankings at the regular rebalances.

PCOMP Index Rebalance: ACEN, CNVRG Added; EMP, DMCI Deleted

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>This week in <strong>StubWorld </strong>...</p>
</div>
<div>
<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/jardine-matheson-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Hldgs (JM SP)</a>, currently at an MSCI-inclusion high relative to <a href="https://www.smartkarma.com/entities/jardine-strategic-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Hldgs (JS SP)</a>, reports flat growth in FY19 profit, and warns the 2020 performance of the group’s businesses in Greater China is being materially impacted by the ongoing coronavirus-related weakness.</p>
<p><a href="https://www.smartkarma.com/entities/ayala-corporation" target="_blank" data-smartkarma-citation="entities:1474:1" rel="noopener">Ayala Corporation (AC PM)</a> pivots off its all-time low - is the worst finally behind the company?</p>
</div>
<p>Preceding my comments on Jardines, Ayala and <a href="https://www.smartkarma.com/entities/asm-international-nv" target="_blank" data-smartkarma-citation="entities:21096:1" rel="noopener">Asm International Nv (ASM NA)</a>, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<div>
<div class="content-remarks">
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>
</div>
</div>


This week in StubWorld ...



Jardine Matheson Hldgs (JM SP), currently at an MSCI-inclusion high relative to Jardine Strategic Hldgs (JS SP), reports flat growth in FY19 profit, and warns the 2020 performance of the group’s businesses in Greater China is being materially impacted by the ongoing coronavirus-related weakness.
Ayala Corporation (AC PM) pivots off its all-time low - is the worst finally behind the company?

Preceding my comments on Jardines, Ayala and Asm International Nv (ASM NA), are the weekly setup/unwind tables for Asia-Pacific Holdcos.




These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.




StubWorld: Matheson/Strategic FY19 Results; Ayala Ai-Ya

<p>Back on the 9 May last year, <a href="https://www.smartkarma.com/entities/san-miguel-corporation" target="_blank" data-smartkarma-citation="entities:22728:1" rel="noopener">San Miguel (SMC PM)</a> ​and <a href="https://www.smartkarma.com/entities/lafargeholcim-ltd" target="_blank" data-smartkarma-citation="entities:27916:1" rel="noopener">LafargeHolcim Ltd (LHN SW)</a> entered into a <a href="http://edge.pse.com.ph/downloadHtml.do?file_id=582973" target="_blank" rel="noopener">share purchase agreement</a> whereby SMC (via wholly-owned subsidiary First Stronghold) would acquire 85.73% in <a href="https://www.smartkarma.com/entities/holcim-philippines-inc" target="_blank" data-smartkarma-citation="entities:22702:1" rel="noopener">Holcim Philippines (HLCM PM)</a>. This followed Lafarge's divestment of Holcim Indonesia the previous year.</p>
<p>The key hurdle for this deal centred on competition concerns. This was validated with the <a href="https://phcc.gov.ph/wp-content/uploads/2019/09/SMC-Holcim_Statement-on-the-Opening-of-Phase-II_06Sept2019.pdf" target="_blank" rel="noopener">launch</a> of a Phase II review by the Philippine Competition Commission (PCC) on the 6 September.</p>
<div>
<p>The PCC flagged six areas where the transaction may affect competition: Northeast Luzon, Northwest Luzon , Central Luzon and National Capital Region, Southern Luzon, Northern Mindanao, and the Southern Mindanao Markets.</p>
<p>According to <a href="https://www.cemnet.com/News/story/166741/san-miguel-corp-and-holcim-philippines-face-opposition-to-merger-deal.html" target="_blank" rel="noopener">Cemnet</a>, there was/is considerable pushback to the merger from industry players. </p>
<p>In a statement of concerns released on the <a href="https://phcc.gov.ph/wp-content/uploads/2020/01/FINAL-PCC_ExecSummary_SMC-Holcim_Cement_31Jan2020.pdf" target="_blank" rel="noopener">31 January</a>, the PCC determined that the merger will lead to a monopoly in Northwest Luzon; imports are not sufficient to constrain this monopoly, and on account of high barriers to entry, neither can new entrants.</p>
<p>This conclusion was reached despite voluntary commitments proposed by Top Frontier, SMC's holding company. Such commitments were not made public.</p>
<p>This PCC announcement should not come as a surprise. As previously discussed here (<em><a href="https://skr.ma/JRfAm" target="_blank" rel="noopener">SMC Pursues A Ready-Mixed Fortune With Holcim</a></em>) from the onset, if this transaction was not taking place in the Philippines and not involving the Ang family, then anti-trust approval would (in my opinion) be unlikely. Evidently, the clout of the Ang family did not sway the regulator.</p>
<p>The merger is not dead, and PCC and San Miguel remain in discussions. Precedents would suggest a final decision is likely months away. </p>
<p>HLCM's shares are off 3% since the launch of Phase II, compared to +8% for peers, and -35% for listed Filipino peers. Bear in mind HLCM is up 119% since rumours of a deal first started doing the rounds in January last year.</p>
<p></p>
</div>

Back on the 9 May last year, San Miguel (SMC PM) ​and LafargeHolcim Ltd (LHN SW) entered into a share purchase agreement whereby SMC (via wholly-owned subsidiary First Stronghold) would acquire 85.73% in Holcim Philippines (HLCM PM). This followed Lafarge's divestment of Holcim Indonesia the previous year.
The key hurdle for this deal centred on competition concerns. This was validated with the launch of a Phase II review by the Philippine Competition Commission (PCC) on the 6 September.

The PCC flagged six areas where the transaction may affect competition: Northeast Luzon, Northwest Luzon , Central Luzon and National Capital Region, Southern Luzon, Northern Mindanao, and the Southern Mindanao Markets.
According to Cemnet, there was/is considerable pushback to the merger from industry players. 
In a statement of concerns released on the 31 January, the PCC determined that the merger will lead to a monopoly in Northwest Luzon; imports are not sufficient to constrain this monopoly, and on account of high barriers to entry, neither can new entrants.
This conclusion was reached despite voluntary commitments proposed by Top Frontier, SMC's holding company. Such commitments were not made public.
This PCC announcement should not come as a surprise. As previously discussed here (SMC Pursues A Ready-Mixed Fortune With Holcim) from the onset, if this transaction was not taking place in the Philippines and not involving the Ang family, then anti-trust approval would (in my opinion) be unlikely. Evidently, the clout of the Ang family did not sway the regulator.
The merger is not dead, and PCC and San Miguel remain in discussions. Precedents would suggest a final decision is likely months away. 
HLCM's shares are off 3% since the launch of Phase II, compared to +8% for peers, and -35% for listed Filipino peers. Bear in mind HLCM is up 119% since rumours of a deal first started doing the rounds in January last year.



PCC Concludes Merger-To-Monopoly In Holcim/San Miguel Tie-Up

Philippines

San Miguel Corporation is a Philippine multinational conglomerate with diverse interests, operating in food and beverage, packaging, fuel and oil, energy, and infrastructure sectors. Its products include beer, spirits, non-alcoholic beverages, processed foods, and refined petroleum products. The company is headquartered in Mandaluyong, Metro Manila, Philippines, and was founded on September 29, 1890.

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San Miguel (SMC PM)

PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

A methodology change that increases the minimum free float from 15% to 20% could result in 3 changes to the index. The three constituents will need...

Brian Freitas

Manila Electric Block - Selldown by One of the Largest Shareholders

JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.

Sumeet Singh

PCOMP Index Rebalance: ACEN, CNVRG Added; EMP, DMCI Deleted

ACEN and CNVRG have been added to the index replacing EMP and DMC. Historically inclusions have outperformed the deletions. There are rule changes...

Brian Freitas

StubWorld: Matheson/Strategic FY19 Results; Ayala Ai-Ya

This week in StubWorld ... Jardine Matheson Hldgs (JM SP), currently at an MSCI-inclusion high relative to Jardine Strategic Hldgs (JS SP),...

David Blennerhassett

PCC Concludes Merger-To-Monopoly In Holcim/San Miguel Tie-Up

Back on the 9 May last year, San Miguel (SMC PM) and LafargeHolcim Ltd (LHN SW) entered into a share purchase agreement whereby SMC (via...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

A methodology change that increases the minimum free float from 15% to 20% could result in 3 changes to the index. The three constituents will need...

Brian Freitas

Manila Electric Block - Selldown by One of the Largest Shareholders

JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.

Sumeet Singh

PCOMP Index Rebalance: ACEN, CNVRG Added; EMP, DMCI Deleted

ACEN and CNVRG have been added to the index replacing EMP and DMC. Historically inclusions have outperformed the deletions. There are rule changes...

Brian Freitas

StubWorld: Matheson/Strategic FY19 Results; Ayala Ai-Ya

This week in StubWorld ... Jardine Matheson Hldgs (JM SP), currently at an MSCI-inclusion high relative to Jardine Strategic Hldgs (JS SP),...

David Blennerhassett

PCC Concludes Merger-To-Monopoly In Holcim/San Miguel Tie-Up

Back on the 9 May last year, San Miguel (SMC PM) ​and LafargeHolcim Ltd (LHN SW) entered into a share purchase agreement whereby SMC (via...

David Blennerhassett

Back on the 9 May last year, San Miguel (SMC PM) and LafargeHolcim Ltd (LHN SW) entered into a share purchase agreement whereby SMC (via...