Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The September 2022 index changes for the STOXX Benchmark Indices were announced yesterday. </li>
<li>There will be 16 ADDs/DELs for the STOXX Europe 600 Index and there will be 5 ADDs and 6 DELs for the EURO STOXX Index.</li>
<li>In this insight, we take a closer look at the index flow expectations and the historical performance of Rebal events.</li>
</ul>


The September 2022 index changes for the STOXX Benchmark Indices were announced yesterday. 
There will be 16 ADDs/DELs for the STOXX Europe 600 Index and there will be 5 ADDs and 6 DELs for the EURO STOXX Index.
In this insight, we take a closer look at the index flow expectations and the historical performance of Rebal events.


STOXX Europe 600 Sep 2022 Rebal: ADDs Could Outperform DELs for the Next Few Weeks

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The French Government works on the complete nationalisation of <a href="https://www.smartkarma.com/entities/electricite-de-france-sa" target="_blank" data-smartkarma-citation="entities:21441:1" rel="noopener">Electricite De France Sa (EDF FP)</a>. The Government currently owns 81%. The listing has not been a happy story for shareholders.</li>
<li>As private equity usually puts it, a "private" setting would be more convenient for EDF, considering the massive debt issuance required to build 14 nuclear plants.</li>
<li>A 40% premium (pre-PM speech) would still mean acquiring minorities at a lower multiple than that of Endesa (a close comparable) and would translate in an offer at €10.98/share.</li>
</ul>


The French Government works on the complete nationalisation of Electricite De France Sa (EDF FP). The Government currently owns 81%. The listing has not been a happy story for shareholders.
As private equity usually puts it, a "private" setting would be more convenient for EDF, considering the massive debt issuance required to build 14 nuclear plants.
A 40% premium (pre-PM speech) would still mean acquiring minorities at a lower multiple than that of Endesa (a close comparable) and would translate in an offer at €10.98/share.


République Française/EDF: Possible Offer for Minorities

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Today, the Victorian government rejected a A$250mn 300-metre floating gas terminal proposal at Mornington Peninsula. Planning Minister Richard Wynne said the Crib Point terminal would have had "<a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02358799-2A1289920?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">unacceptable environmental effects</a>" in Western Port.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/047/original/image_90576892521617071507869.png?1617071510" class="editor-image img-responsive" data-smartkarma-image-id="198047"></figure>
<div class="content-caption">Source: ABC. A protester in a wetsuit taking his concerns about the terminal to the Victorian Parliament in early March</div>
<a href="https://www.smartkarma.com/entities/agl-energy-ltd" target="_blank" data-smartkarma-citation="entities:554:1" rel="noopener">AGL Energy Ltd (AGL AU)</a>, which has already outlayed millions of dollars on the Crib Point project, <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02358799-2A1289920?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it was “considering its position” on the minister’s decision.
Concurrent with this rejection, AGL <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02358644-2A1289840?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it was splitting into two separate companies: a thermal coal generation business and a separate zero-carbon energy retailer. 
The split follows a raft of new initiatives/developments recently including an <a href="https://www.agl.com.au/about-agl/media-centre/asx-and-media-releases/2021/january/agl-announces-suppliers-for-grid-scale-battery-plans" target="_blank" rel="noopener">agreement</a> with suppliers for grid-scale battery plans, the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02355442-2A1288076?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">renewal</a> of the Portland smelter contract, and the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02353382-2A1286980?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">participation</a> in PowAR's acquisition of <a href="https://www.smartkarma.com/entities/tilt-renewables-ltd" target="_blank" data-smartkarma-citation="entities:24371:1" rel="noopener">Tilt Renewables Ltd (TLT NZ)</a> (<a href="https://skr.ma/i5ugg" target="_blank" rel="noopener">Tilt Renewables: Mercury/PowAr's Big Blow</a>).
Speculation of a demerger has been running hot since Australia's oldest energy unity grappled with softening power prices, and a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02340133-2A1279818?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">A$2.29bn</a> loss in the 1H21, exacerbated by A$2.7bn in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02337704-2A1278422?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">impairment charges</a>. 
The share price reaction to the split was largely muted. 
As always, more below the fold.

Today, the Victorian government rejected a A$250mn 300-metre floating gas terminal proposal at Mornington Peninsula. Planning Minister Richard Wynne said the Crib Point terminal would have had "unacceptable environmental effects" in Western Port.

Source: ABC. A protester in a wetsuit taking his concerns about the terminal to the Victorian Parliament in early March
AGL Energy Ltd (AGL AU), which has already outlayed millions of dollars on the Crib Point project, announced it was “considering its position” on the minister’s decision.
Concurrent with this rejection, AGL announced it was splitting into two separate companies: a thermal coal generation business and a separate zero-carbon energy retailer. 
The split follows a raft of new initiatives/developments recently including an agreement with suppliers for grid-scale battery plans, the renewal of the Portland smelter contract, and the participation in PowAR's acquisition of Tilt Renewables Ltd (TLT NZ) (Tilt Renewables: Mercury/PowAr's Big Blow).
Speculation of a demerger has been running hot since Australia's oldest energy unity grappled with softening power prices, and a A$2.29bn loss in the 1H21, exacerbated by A$2.7bn in impairment charges. 
The share price reaction to the split was largely muted. 
As always, more below the fold.

AGL Energy (AGL AU): Carbon/Zero-Carbon Split

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe  developed international (EAFE) will remain in a leadership position relative to EM (MSCI EM). In this report we highlight actionable set ups within Japan, Switzerland and Australia. Within Japanese Sectors, we focus on opportunities within Technology, Financials, Health Care, and Staples. We also highlight attractive setups within European/UK Sectors, including Health Care, Industrials, Staples and Utilities.

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe  developed international (EAFE) will remain in a leadership position relative to EM (MSCI EM). In this report we highlight actionable set ups within Japan, Switzerland and Australia. Within Japanese Sectors, we focus on opportunities within Technology, Financials, Health Care, and Staples. We also highlight attractive setups within European/UK Sectors, including Health Care, Industrials, Staples and Utilities.

At this point in time the major global indexes (MSCI ACWI, ACWI ex-US, EAFE, EM) have failed to break above their respective resistance levels, leaving us squarely in the neutral camp. We believe the aforementioned major global indexes are likely to remain below resistance or have limited upside unless and until we see more definitive signs of bottoming within cyclical value areas of the market. In this report we recap important technical levels for the major indexes and highlight actionable set-ups within the utilities, travel and leisure and consumer staples industries.

At this point in time the major global indexes (MSCI ACWI, ACWI ex-US, EAFE, EM) have failed to break above their respective resistance levels, leaving us squarely in the neutral camp. We believe the aforementioned major global indexes are likely to remain below resistance or have limited upside unless and until we see more definitive signs of bottoming within cyclical value areas of the market. In this report we recap important technical levels for the major indexes and highlight actionable set-ups within the utilities, travel and leisure and consumer staples industries.

Global Equity Strategy: Squarely in the Neutral Camp

Germany

Uniper SE operates as an international energy company. The Company owns and manages a portfolio of power plants located across Europe and Russia, as well as focuses on commodity trading business, such as power, emission certificates, natural gas, liquefied natural gas, coal, and freight. Uniper also operates power and gas storage facilities.

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Uniper (UN01 GR)

STOXX Europe 600 Sep 2022 Rebal: ADDs Could Outperform DELs for the Next Few Weeks

The impacts and flow sizes are not very significant but the conventional LONG ADDs-SHORT DELs trade has historically delivered positive returns in...

Janaghan Jeyakumar, CFA

République Française/EDF: Possible Offer for Minorities

A nationalisation would be more suitable for EDF considering the debt issuance to finance 14 nuclear power plants. A 40% premium would not be...

Jesus Rodriguez Aguilar

AGL Energy (AGL AU): Carbon/Zero-Carbon Split

The demerger announcement provides shareholders with a carbon exposure choice. Arguably, the split should be positive for forward growth for both...

David Blennerhassett

Developed Markets Opportunities

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe developed international (EAFE) will remain in a leadership...

Vermilion Research

Global Equity Strategy: Squarely in the Neutral Camp

At this point in time the major global indexes (MSCI ACWI, ACWI ex-US, EAFE, EM) have failed to break above their respective resistance levels,...

Vermilion Research

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