Smartkarma Daily Briefs

Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.

Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition

By Travis Lundy

Mitsui & Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
Also like Q2, they announced a buyback – this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
This creates interesting index flows over the next several months, and other trading cos have live buybacks too.

Weekly Deals Digest (05 Feb) – Pertamina Geothermal, Hesai, Halcyon, Toshiba, Pushpay, O2Micro

By Shifara Samsudeen, ACMA, CGMA

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Pertamina Geothermal (0125738D IJ) launches a US$600 million IDX IPO and Hesai Group (HSAI US) launches a US$171 million Nasdaq IPO.
Event-Driven developments Halcyon Agri (HACL SP), Toshiba Corp (6502 JP), Nissin Electric (6641 JP), Techno Associe (8249 JP), Pushpay Holdings (PPH NZ), Nitro Software Ltd (NTO AU), O2Micro International (OIIM US).

Morning Views Asia: Adani Ports & Special Economic Zone, China Hongqiao

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Adani Ports & Special Economic Zone
China Hongqiao

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Feb 06

Daily Brief Health Care: JD Health, Alphamab Co Ltd, M3 Inc, Lotus Pharmaceutical and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate
Alphamab Co Ltd Placement (9966.HK) – Has No Potential to Be a Biopharma; Just Remain as a Biotech
M3: Slow Down in Pharma Marketing a Significant Downside Risk
Lotus Pharmaceutical (1795 TT): 2022 Ends with Mid-Teen Revenue Growth; Further Steam Still Left

Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the Hang Seng Index (HSI INDEX) in March 2023.
We believe Healthcare names could be given top priority when selecting additions for the upcoming rebalance.
The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

Alphamab Co Ltd Placement (9966.HK) – Has No Potential to Be a Biopharma; Just Remain as a Biotech

By Xinyao (Criss) Wang

Unlike ADC, there’re still doubts on the outlook of whole bispecific antibody mechanism. Alphamab Oncology doesn’t actively promote related head-to-head trials, which makes people doubt the competitiveness of its products.
Investors’ trust in Alphamab Oncology continues to decline, mainly because the Company often missed the guidance/milestones it announced before. This will greatly affect the credibility of Alphamab Oncology.
The current valuation is expensive and has basically priced in all the positive factors. The Company is more suitable for short-term trading to capture the rebound rather than long-term holding.

M3: Slow Down in Pharma Marketing a Significant Downside Risk

M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
Though m3 has made a large no. of M&A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.

Lotus Pharmaceutical (1795 TT): 2022 Ends with Mid-Teen Revenue Growth; Further Steam Still Left

By Tina Banerjee

Lotus Pharmaceutical (1795 TT) ended 2022 on a strong note. Full-year 2022 revenue grew 15.7% YoY to NT$14.6B. 2022 was the third consecutive year that Lotus achieved double-digit annual growth.
The export markets outside of Asia grew 28% YoY, largely contributed by the launch of multiple myeloma drug lenalidomide in a number of markets around the world, including the U.S.
In December, Lotus took over the Eli Lily’s Alimta business in Taiwan for $62M. Alimta is a first-line treatment for NSCLC with high brand loyalty.

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Feb 06

Daily Brief Consumer: Yashili International Holdings, Hesai Group, Luckin Coffee, Minor International, Zojirushi Corp and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe
Hesai Group IPO – Thoughts on Valuation
Hesai Group IPO: The Bear Case
Luckin(LKNCY.US) Initiation: Rising Challenger, Market and Business Model
Minor International (MINT): The Best Stock for Thai Tourism Recovery?
Unreasonable Company Opposition, but No Change in Outlook for Shareholder Proposals to Be Rejected

Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Origin Energy (ORG AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Toyo Construction (1890 JP).
Lowest spreads – Essential Metals (ESS AU), Tyro Payments (TYR AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Kanematsu Electronics (8096 JP), Elmo Software (ELO AU).

Hesai Group IPO – Thoughts on Valuation

By Sumeet Singh

Hesai Group (HSAI US) is looking to raise around US$170m in its upcoming US IPO.
HSAI is a manufacturer of three-dimensional light detection and ranging (Lidar) solutions. It has shipped over 103,000 Lidar units from 2017 to the end of 2022.
We have looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.

Hesai Group IPO: The Bear Case

Hesai Group (HSAI US) has launched a Nasdaq IPO to raise up to US$171 million at an indicative price range of US$17-19 per ADS.
In Hesai Group IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on continuing pricing pressure, declining contract liabilities, gross margin decline, ongoing losses, worsening cash conversion cycle and FCF burn.

Luckin(LKNCY.US) Initiation: Rising Challenger, Market and Business Model

By Shawn Yang

We initiated Luckin with a BUY with TP $40 because we believe Luckin is a rising challenger in a rising market, half way through a rising business model;
We see room for Luckin to expand transaction frequency and transacting customers before expanding ASP in order to drive same store sales;
In the long run, we see coffee + western bakery to gain market share over tea house + Chinese dim sum in the snack + breakfast market.

Minor International (MINT): The Best Stock for Thai Tourism Recovery?

By Henry Soediarko

Minor International (MINT TB) is trading at 2.4x PBR, slightly higher than during the pre-COVID level at 2x.
Most of its hotels are in Europe (77%) and only half of the food business is in Thailand.
Other Thai stocks have higher exposure to Thai tourism-related activities.

Unreasonable Company Opposition, but No Change in Outlook for Shareholder Proposals to Be Rejected

By Aki Matsumoto

Zojirushi’s low profitability and numerical targets are at the root of the problem with this shareholder proposal, which required disclosure of cost of capital to verify reasonableness of the targets.
To ensure transparency of BOD, it would have required individual disclosure of director compensation, divestment of policy shareholdings, and elimination of takeover defenses, which are issues of corporate governance practices.
When % foreign shareholders reaches 30% level, companies tend to eliminate takeover defense. Since Zojirushi’s % foreign shareholders is 20%, the shareholder proposal will be very likely to be rejected.

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Feb 06

Daily Brief Financials: Bangkok Bank Public, AIMS APAC REIT, Atour Lifestyle Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit
Smartkarma Corporate Webinar | AA REIT: Future Proofing for Sustainable Growth
Atour (ATAT.US) Preview: Expecting Weak 4Q22 and Strong 2023

BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit

Bangkok Bank (BBL TB) has outperformed Kasikornbank PCL (KBANK TB) by 33% over the last 11 months and the price ratio is nearing the high end of the historical range.
The number of NVDRs issued on Bangkok Bank Public (BBL TB) have continued to increase while decreasing on Kasikornbank PCL (KBANK TB).
Bangkok Bank Public (BBL TB) now trades at a higher forward PE as compared to Kasikornbank PCL (KBANK TB) and the gap in price to book has narrowed significantly.

Smartkarma Corporate Webinar | AA REIT: Future Proofing for Sustainable Growth

By Smartkarma Research

In the upcoming webinar, AIMS APAC REIT’s (“AA REIT”) CEO, Mr Russell Ng, will share a short company presentation. After which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 28 February 2023, 17:00 SGT.

Register for the Webinar here

About AIMS APAC REIT

AIMS APAC REIT (“AA REIT”) is a real estate investment trust listed on the Mainboard of the SGX-ST since 2007. The principal investment objective of AA REIT is to invest in a diversified portfolio of high quality income-producing logistics, business parks and industrial real estate throughout Asia Pacific. As at 30 September 2022, AA REIT’s portfolio consists of 29 properties, of which 26 properties are located throughout Singapore and 3 properties located in Australia (including a 49.0% interest in Optus Centre held through a joint venture), with assets under management of S$2.2 billion. AA REIT is also a constituent of the FTSE EPRA Nareit Global Developed Index and the MSCI Singapore Small Cap Index.

AA REIT is managed by AIMS APAC REIT Management Limited, which is wholly-owned by AIMS Financial Group (“AIMS”). Headquartered in Sydney, AIMS is a diversified financial services and investment group, active in the areas of fund management, mortgage lending, investment banking and property investment. AIMS is also the owner of the Sydney Stock Exchange.

Atour (ATAT.US) Preview: Expecting Weak 4Q22 and Strong 2023

By Shawn Yang

Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to stimulate hotel demands in 2023.
We expect Atour to report its 4Q22 revenue at RMB580mn and OPM at 8.2%, both in-line with consensus. We expect a strong revenue growth at 60% YoY in 2023.
We rate the stock as BUY and maintain the TP at US$35.

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Feb 05

Daily Brief Thematic (Sector/Industry): GEM Weekly (3 Feb 2023): China PMI and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

GEM Weekly (3 Feb 2023): China PMI, South Korean Trade and Inflation Data; Baidu

GEM Weekly (3 Feb 2023): China PMI, South Korean Trade and Inflation Data; Baidu

By Wium Malan, CFA

The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
Macro data points: Chinese PMI data, South Korean imports, exports, and inflation.
Companies mentioned:Baidu (9888 HK) (to launch ChatGPT bot, BlackRock ups its stake)

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Feb 05

Daily Brief Equity Bottom-Up: Indian Banks Screener to December-End 2022: Credit Risks Rising and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Indian Banks Screener to December-End 2022: Credit Risks Rising
China Healthcare Weekly (Feb.3)- CanSino, Blood Products Shortage, Don’t Be Greedy in Front of Rally
Caterpillar Inc: New Excavator Launch & Other Developments
McCormick & Co: Major Drivers
Mondelez International: Collaboration With HCL Technologies & Other Developments
Moody’s Corp: Acquisition Of SCRiesgo & Other Drivers

Indian Banks Screener to December-End 2022: Credit Risks Rising

By Victor Galliano

Our Indian bank profitability and credit quality screens, in terms of credit quality metrics to end-December 2022, continued in a constructive trend
This is reflected in NPA ratios and cost of risk trends; but Indian banks have to face increased NPA headwinds, especially if funding and liquidity tightens around Adani Group companies
We remain negative on State Bank of India, especially given the concerns around the Adani Group, and also ICICI Bank; we remain positive on higher quality HDFC Bank

China Healthcare Weekly (Feb.3)- CanSino, Blood Products Shortage, Don’t Be Greedy in Front of Rally

By Xinyao (Criss) Wang

Mismatch between blood products supply and demand is intensifying, but there’s little way to increase production capacity in short time, which offers a good time to invest blood products companies.
Investors should not be too greedy in front of every rally and rebound, but the proportion of medical expenditure and pension expenditure in China’s GDP would still increase.
CanSino Biologics Inc (688185 CH) intends to IPO in Swiss. We think share price of CanSino would bounce back. It’s time to keep an eye on CanSino again.

Caterpillar Inc: New Excavator Launch & Other Developments

Caterpillar delivered a mixed quarterly result as its revenues surpassed Wall Street expectations on account of a healthy demand over many end markets for the company’s products and services.
Sales rose better than expected, and the adjusted operating profit margins also increased but the company failed to meet the earnings expectations of analysts.
Despite the challenges of the supply chain, Caterpillar generated robust ME&T free cash flow and achieved double-digit top-line growth.

McCormick & Co: Major Drivers

McCormick delivered a disappointing result, failing to meet the analyst consensus with respect to revenues as well as earnings.
The management claims that it is seeing an improved momentum given the changing consumer consumption patterns, Flavor Solutions demand, and steady service levels and supply.
In Q4, their sales growth was decent in the Flavor Solutions area and kept up momentum across all geographies.

Mondelez International: Collaboration With HCL Technologies & Other Developments

Mondelez delivered a strong quarterly result and surpassed market expectations in terms of the revenues as well as earnings.
The strong top-line performance of the company was driven by continued volume strength and pricing execution.
Mondelez delivered robust top-line growth in both developed and emerging markets.

Moody’s Corp: Acquisition Of SCRiesgo & Other Drivers

Moody’s delivered a strong result in the quarter with an all-around beat and a major update with respect to the acquisition of SCRiesgo to expand its presence in Latin America.
This quarter demonstrates the resilience and positive momentum of Moody’s Analytics (MA) and also reflects the impact of the challenging market situations on Moody’s Investor Services (MIS).
Across MA, Moody’s enhanced several workflow offerings via analytics and data integration, creating new products to meet rising consumer needs.

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Feb 05

Daily Brief ECM: Hesai Group IPO: The Bull Case and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Hesai Group IPO: The Bull Case
HESAI Group IPO Preview
ECM Weekly (5th Feb 2023) – Adani, Pertamina, Hesai, Ruipeng Pet, Concord, Oasis, Flight Centre
L3Harris Technologies Inc: Acquisition Of Aerojet Rocketdyne & Other Drivers

Hesai Group IPO: The Bull Case

Hesai Group (HSAI US) has launched a Nasdaq IPO to raise up to US$171 million at an indicative price range of US$17-19 per ADS.
Hesai is a global leader in LiDAR technology for autonomous driving and ADAS. In the ADAS market, Hesai is the global leader in terms of shipment volume in 2022.
The key elements of the bull case rest on a solid competitive positioning, large addressable markets, high growth and a strong balance sheet.

HESAI Group IPO Preview

By Douglas Kim

Hesai Group (HSAI US) is getting ready to complete its IPO in the next several weeks in the United States, planning to raise as much as $171 million.
The ADAS penetration rate in China is expected to surge from 4.6% in 2022 to 11.2% in 2024 and 87.9% in 2030.
The company is a leading maker of laser-based LiDAR sensors in China. The company’s major customers in the ADAS segment include Li Auto, Jidu, and Lotus.

ECM Weekly (5th Feb 2023) – Adani, Pertamina, Hesai, Ruipeng Pet, Concord, Oasis, Flight Centre

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Indonesia kicked-off bookbuild for what is likely to be one of its largest IPOs this year.
On the placement front, Adani’s FPO continued to keep everyone busy with its twists and turns.

L3Harris Technologies Inc: Acquisition Of Aerojet Rocketdyne & Other Drivers

L3Harris finished the year on a high note and delivered an all-around beat while continuing to build momentum going into 2023.
The RL10 is a high-end upper-stage engine that the ELA has ordered well over 100 of for the new Vulcan launch vehicle.
We remain optimistic about the company’s future growth and maintain our ‘Hold’ rating with a revised target price.

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Feb 05

Daily Brief Macro: The Risk of Transitory Disinflation and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

The Risk of Transitory Disinflation

The Risk of Transitory Disinflation

By Cam Hui

The main event last week for U.S. investors was the FOMC decision. As expected, the Fed raised rates by a quarter-point but Powell sounded like a dove in hawk’s clothing.
The markets responded with a risk-on reaction. The combination of excitement over China’s re-opening and the dovish pivot by the Fed is sparking a risk-on rally.
A successful China re-opening would translate into a surge in global demand and raise inflationary pressures, which could force the Fed to pivot to more rate hikes.

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Feb 05

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: MSCI and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO
Halcyon Agri: MGO Triggered. Currency Translation Cuts Offer Price
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Kanematsu Elect/Sustech, Toshiba, Pushpay, Sembcorp, O2Micro
Inter & Co (INTR US) – No More StoneCo Stake Overhang, but the Fundamental Outlook Remains Tough
Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.

Halcyon Agri: MGO Triggered. Currency Translation Cuts Offer Price

By David Blennerhassett

As expected, all conditions to the Sinochem/China Hainan Rubber (601118 CH) SPA have now been satisfied, triggering a mandatory Offer for Halcyon Agri (HACL SP), conditional on a 50% tendering.
Hainan Rubber holds 36%. Sinochem has provided an undertaking notto tender its remaining 29.2% stake. Hainan needs 14% out of 34.8% available – or ~40% to tender.
The takeaway disappointment is the Offer Price of S$0.413/share, down from S$0.435 at the time of the initial announcement last November, due to SGD weakness.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Kanematsu Elect/Sustech, Toshiba, Pushpay, Sembcorp, O2Micro

By David Blennerhassett

There are 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deal was discussed on Smartkarma this past week: tender offers for Kanematsu Electronics (8096 JP), Kanematsu Sustech (7961 JP), Nissin Electric (6641 JP), and Techno Associe (8249 JP).
Key updates took place for: Sembcorp Marine (SMM SP), Pushpay Holdings (PPH NZ), Nitro Software Ltd (NTO AU), Toshiba Corp (6502 JP), and O2Micro International (OIIM US).

Inter & Co (INTR US) – No More StoneCo Stake Overhang, but the Fundamental Outlook Remains Tough

By Victor Galliano

StoneCo has disposed of its remaining 4.2% stake in Inter &Co, slamming the door shut on plans for a leading Brazilian neobank-paytech partnership originally announced in May 2021
Stone acquired 5% of Inter for BRL2.5bn in June 2021; the extent of the fintech market malaise means that currently BRL2.5bn (c USD500m) would buy close to 50% of Inter
This StoneCo stake disposal at least removes the Inter shares’ overhang risk; yet despite this technical relief, we reiterate that Inter’s fundamental outlook remains a challenging one

Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land

By David Blennerhassett

Stay away from Adani Enterprises (ADE IN). It has wrapped itself in a cloak of nationalistic righteous indignation. Do not buy the dip. Or even a larger one.
The timing of a Bendigo And Adelaide Bank (BEN AU) and Bank Of Queensland (BOQ AU) merger makes a lot of sense right now.
This Renault SA (RNO FP) / Nissan Motor (7201 JP)‘s press release and “agreement”, as-is, is a Nothingburger.

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Feb 05

Most Read: Surya Esa Perkasa, Douzone Bizon, Baycurrent Consulting, SenseTime Group, UnionBank of the Philippines, Biocon Ltd, Halcyon Agri, Korea Stock Exchange Kospi 200 Index, Hesai Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
KRX New Deal Index Rebalance Preview: Some Big Impact Names
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC
NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413
Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective
Hesai Group IPO: The Bull Case
HESAI Group IPO Preview

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation

There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

KRX New Deal Index Rebalance Preview: Some Big Impact Names

The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
We forecast one add/delete for the Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).

MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends

The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.

Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani

The review period for the upcoming rebalance of the MSCI, Nikkei 225, NIFTY, Nifty Next 50, SSE STAR50 and KRX New Deal Indices ends on 31 January.
The IDX30, LQ45, IDX80, Global X Uranium ETF (URA US) rebalances will be implemented on 31 January while the PSEi Index (PCOMP INDEX) rebalance will be implemented on 3 February.
There were inflows to Asian country ETFs and iShares MSCI Emerging Markets (EEM), and outflows from IShares MSCI Min Vol EM ETF (EEMV) and iShares MSCI Pacific ex Japan (EPP).

PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC

As forecast, DMCI Holdings (DMC) and UnionBank of the Philippines (UBP) will replace Megaworld Corp (MEG) and Robinsons Land Co (RLC) at the close on 3 February.
The PSE is using float higher than 20% for San Miguel (SMC PM), Emperador (EMP PM) and AC Energy Corp (ACEN) – there will be passive buying on the stocks.
Historically, the inclusions have outperformed the exclusions and there has been a big move in the stocks the day after announcement. Square off existing pre-positions by mid-week.

NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping

There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.

Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413

The conditions precedent for China Hainan Rubber Industry (601118 CH) to acquire 36.00% of Halcyon Agri (HACL SP)’s outstanding shares from Sinochem International Corporation A (600500 CH) at US$0.315 is fulfilled.
This will trigger an MGO at US$0.315 or S$0.413. On the assumption that the offer document is despatched by 17 February, the earliest close of the offer is 17 March.
The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate. We think that this is achievable as the offer is attractive.

Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective

By Sanghyun Park

The new rules allow investors to decide whether to hold the stock until the dividend record date after knowing the dividend amount in advance.
The new rules will be applied starting with the annual dividends for this fiscal year. We will know this year’s yearend dividend amount before deciding whether to receive it.
From a trading perspective, the yearend dividend arb targeting ex-date mispricing will no longer be effective, which will likely change the swing trading strategy at the beginning of the year.

Hesai Group IPO: The Bull Case