Waraporn Wiboonkanarak

Head of Research

Krungthai XSpring

A full service Thai brokerage

Thematic (Sector/Industry)

<ul><li>The SET Index is expected to move sideways up, with the resistance at 1,611/1,630 points and the support at 1,600/1,592 points.</li><li>We suggest trading buy on SAWAD, CBG and BGRIM.</li><li>Technically, the index is likely to move up to test the major resistance at 1,611 points, and surpassing this level would lead to more buy signs.</li></ul>

Brian Freitas

Pan-Asia Index Rebalances/Events/Delta One

Event-Driven

<p>In this weeks recap, we look at:</p><ul>
<li>the SSE180 &amp; SSE380 rebalances and the stocks that will be deleted from the MSCI &amp; FTSE indices</li>
<li>the changes to the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> at the June review</li>
<li>potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the June review</li>
<li>the changes to the <a href="https://www.smartkarma.com/entities/ftse-china-a50-index" target="_blank" data-smartkarma-citation="entities:22905:1" rel="noopener">FTSE China A50 Index (XIN9I INDEX)</a> at the June review</li>
<li>the changes to the FTSE China 50 index at the June review</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> at the September review</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> at the September review</li>
<li>the index implication of the <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> new issue and placement</li>
<li>the updated list of Chinese stocks that could be deleted from the MSCI &amp; FTSE indices due to President Biden's updated Executive Order</li>
<li>the changes to the FTSE TWSE Taiwan 50 Index at the June review</li>
</ul><div><div><h3>Events This Week</h3></div></div><div><div><table class="table table-striped"><tbody>
<tr>
<td style="width: 80px;"><h3>Date</h3></td>
<td style="width: 137px;"><h3>Index</h3></td>
<td style="width: 465px;"><h3>Detail</h3></td>
</tr>
<tr>
<td style="width: 80px;"><p>10 June</p></td>
<td style="width: 137px;">KOSPI2</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/kospi200-index-rebalance-spot-on" target="_blank" rel="noopener">Implementation day</a></td>
</tr>
<tr>
<td style="width: 80px;">10 June</td>
<td style="width: 137px;">KOSDAQ150</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/kosdaq150-index-rebalance-16-changes-large-turnover" target="_blank" rel="noopener">Implementation day </a></td>
</tr>
<tr>
<td style="width: 80px;">11 June</td>
<td style="width: 137px;">CSI300</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/csi300-index-rebalance-25-changes-as-long-short-trade-does-well" target="_blank" rel="noopener">Implementation day </a></td>
</tr>
<tr>
<td style="width: 80px;">11 June</td>
<td style="width: 137px;">STAR50</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/star-board-star50-index-rebalance-inclusions-outperform-exclusions-as-positioning-jumps" target="_blank" rel="noopener">Implementation day </a></td>
</tr>
<tr>
<td style="width: 80px;">11 June</td>
<td style="width: 137px;">SSE180 / SSE380</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/sse180-sse380-index-rebalance-stock-connect-entry-deletion-leads-to-msci-ftse-flows" target="_blank" rel="noopener">Implementation day </a></td>
</tr>
<tr>
<td style="width: 80px;">11 June</td>
<td style="width: 137px;">SSE 50</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/sse50-index-rebalance-5-changes-another-inclusion-for-cicc" target="_blank" rel="noopener">Implementation day </a></td>
</tr>
<tr>
<td style="width: 80px;">11 June</td>
<td style="width: 137px;">ASX200</td>
<td style="width: 465px;"><a href="https://www.smartkarma.com/insights/asx200-index-rebalance-preview-gold-miners-shining" target="_blank" rel="noopener">Review Announcement</a></td>
</tr>
</tbody></table></div></div>

<p><a href="https://www.smartkarma.com/entities/kasikornbank-pcl" target="_blank" data-smartkarma-citation="entities:293:1" rel="noopener">Kasikornbank PCL (KBANK TB)</a> is included in the MSCI Standard index through its foreign line <a href="https://www.smartkarma.com/entities/kasikornbank-pcl-fb4c10ce-1b13-4b39-bbd2-3403aa1f9a20" target="_blank" data-smartkarma-citation="entities:27604:1" rel="noopener">Kasikornbank PCL (KBANK/F TB)</a> and the NVDR <a href="https://www.smartkarma.com/entities/kasikornbank-pcl-1995daa5-10d2-4b27-b2cc-d18406762a42" target="_blank" data-smartkarma-citation="entities:27605:1" rel="noopener">Kasikornbank PCL (KBANK-R TB)</a>.</p><p>We see a high probability of the foreign line being deleted at the upcoming May SAIR since it fails the EM Minimum Liquidity Requirement. There is also a possibility of a reduction in the Foreign Inclusion Factor (FIF) on the Non Voting Depository Receipt (NVDR) line if the foreign room stays below 15% on the price cutoff date.</p><p>Deletion of the foreign line would require passive funds to sell 87m shares of <a href="https://www.smartkarma.com/entities/kasikornbank-pcl" target="_blank" data-smartkarma-citation="entities:293:1" rel="noopener">Kasikornbank PCL (KBANK TB)</a> while a reduction in the FIF on the NVDR line would necessitate selling of around 22m shares.</p><p>We expect the stock to remain under pressure relative to its peers over the next few weeks as active investors pre-positioning for the passive selling.</p><p>In this Insight, we look at the reasons for the index deletion/ weight reduction, the possible impact on the stock and the foreign premium, and trades that could perform well from now to implementation date.</p>

<div><p>The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> in mid-June and the changes will be effective after the close of trading on 30 June.</p></div><div>
<p>The review period for market cap calculations runs from 1 March to 31 May, while the liquidity calculations run from 1 June 2020 to 31 May 2021.</p>
<p>We see three potential changes at the current time with an estimated one-way turnover for the rebalance at 2.19%.</p>
<p>Potential inclusions are <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>.</p>
<p>Potential deletions are <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>, <a href="https://www.smartkarma.com/entities/com7-pcl" target="_blank" data-smartkarma-citation="entities:27411:1" rel="noopener">Com7 PCL (COM7 TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a>.</p>
<p><a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> will not completed six months of trading history by the end of the review period and will not be eligible for inclusion at the June rebalance.</p>
<p>There is a possibility that the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> methodology is changed to make it a free float weighted market cap index from a full market cap index. That will see a lot of passive flow on some stocks that have a low free float.</p>
</div>

<ul><li>The SET Index is expected to weaken, with the resistance at 1,610/1,630 points and the support at 1,593/1,586 points.</li><li>We recommend trading buy on KKP, KBANK, and SINGER.</li><li>Technically, the index may correct in the short term before moving up to test 1,610 points. </li></ul>

Thailand

The Thailand SET 50 Index is a capitalization-weighted index based on the top 50 stocks listed on the Bangkok SET index having high market capitalizatin and high liquidity. The index was developed with a base value of 100 as of August 16 1995

Stock Exchange of Thailand SET 50 Index - SET50 INDEX

Description