In today’s briefing:
- STAR50 Index Rebalance Preview: Four High Impact Changes in March
- Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs
- Asics (7936) | Footwear Fallout as Nike’s Q2 Sends Sector Shockwaves
- EQD | The Nikkei Will Pullback Within 1-3 Weeks
- “Buy the Worst” HSI Strategy: A Tragic 2023 and What About 2024?
- HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu
- Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea
- Nihon Kohden (6849 JP): Apart from Apple Smartwatch Ban, Three More Reasons to Buy Shares
- EM by EM #36: What Goldman got wrong about China in 2023
STAR50 Index Rebalance Preview: Four High Impact Changes in March
- The review period for the March rebalance ends 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
- We expect the index committee to continue using a 6-month minimum listing history resulting in four changes to the index.
- One way turnover is estimated at 3.3% resulting in a one-way trade of CNY 4,717m. The impact on the deletions will be much larger than that on the inclusions.
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
- The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
- There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).
Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs
- On 27 December, Kum Yang announced that its shares will be listed on the US stock market in the form of DRs, resulting in its shares rising by 11.7%.
- The listing of Kum Yang ADRs is likely to have a short-term positive impact on its share price as this is likely to reduce free float of local common shares.
- Nonetheless, over the next 6-12 months, we expect Kum Yang’s share price to trade much lower (30% or more) as its shares are highly overvalued.
Asics (7936) | Footwear Fallout as Nike’s Q2 Sends Sector Shockwaves
- Nike’s Q2 results lead to a 12% drop in its shares, affecting sector peers Onon, Skechers, and Asics with significant declines.
- Challenging trading conditions in China and Europe, coupled with a subdued digital traffic outlook from Nike, raise broader concerns for the sector.
- Asics stock declines 20% post-Nike’s fall, presenting an attractive buying opportunity with an estimated 20% upside, positioning Asics as a cost-effective play in the global performance running market.
EQD | The Nikkei Will Pullback Within 1-3 Weeks
- The Nikkei 225 (NKY INDEX) is about to close up for the 3rd consecutive week (CC=+3), it’s towards the Q3 resistance level at 33984: it’s short-term overbought.
- There is a good chance that the index will pull back in the next 1-3 weeks, at the moment it looks like the rally has “stalled”.
- The pullback may be an opportunity to buy again, and ride a rebound to previous highs, we will discuss LONG levels in a separated insight.
“Buy the Worst” HSI Strategy: A Tragic 2023 and What About 2024?
- 2023 is the worst year for our “Buy the Worst” strategy as it returned -34.5% YTD, underperforming the HSI by 20.7pp. The two property names are the key drags.
- Despite a poor 2023, the strategy has still outperformed the HSI by 17.9pp for 2018-2023. It remains significantly better than buying the winners in the current year.
- For 2024, our strategy is to switch to Li Ning (2331 HK), Country Garden Services (6098 HK), Meituan (3690 HK), Wuxi Biologics (2269 HK), and Zhongsheng Group (881 HK).
HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight is Li Ning (2331 HK) and Meitu Inc (1357 HK).
Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea
- The spot prices of the newly listed SSFs generally exhibited a notable upward trend. This trend was consistently more pronounced in KOSDAQ-listed stocks compared to KOSPI-listed ones.
- Various factors, including actions by ETF operators, may contribute. Their SSF purchases could deepen contango, leading to temporary spot price increases through arb spread seekers anticipating this development.
- We should focus on a potentially consistent price pattern persisting before a sufficient learning effect accumulates. The tight schedule after July increases the likelihood of similar opportunities next March.
Nihon Kohden (6849 JP): Apart from Apple Smartwatch Ban, Three More Reasons to Buy Shares
- On December 26, Nihon Kohden (6849 JP) shares jumped ~15% as the company was a beneficiary of the ban on Apple (AAPL US)’s latest smartwatch models.
- Nihon Kohden reported better-than-expected result in H1FY24. The company raised FY24 revenue forecast to ¥221.5B (+7% YoY) from ¥215.0B. The company has also raised FY24 operating and net profit guidance.
- Currently consensus expects 2% YoY revenue growth for the company in FY25. With strong demand for existing products and new launches, the expectation seems to be conservative.
EM by EM #36: What Goldman got wrong about China in 2023
- Main conclusions up-front:It’s getting harder to disentangle politics from price movements in China, with the government becoming more involved in the equity market.
- In stark contrast to their U.S. counterparts, Chinese banks are grappling with the weight of growing savings from consumers and businesses.
- This surge is impacting their profitability, while the real estate sector’s challenges continue to linger.
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