Most Read

The word floating around late Friday as books closed was that foreigners had bid strongly. More than the entire Japan Post Bank (7182 JP) offering size in fact.
The offering is an interesting problem, as discussed before. Different people are going to buy it for different reasons.
This insight looks at the breakdown of ratios and the resultant foreign ownership, along with post-offer supply/demand balance.

HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer

On 12 March, HYBE (352820 KS) announced that it is no longer pursuing S.M.Entertainment Co (041510 KS) in an M&A battle with Kakao Corp (035720 KS).
This will result in a very high probability of Kakao winning the M&A battle of SM Entertainment.
Many institutional investors are likely to have pushed back on HYBE’s capital raising efforts, which seems to have been the clincher of HYBE backing out of this M&A for SM.

Japan Post Bank Placement – Still Misbehaving – Post-Pricing Performance of Some More Deals

Japan Post Holdings (6178 JP) aims to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our previous notes, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback and Japan Post Bank Placement – Misbehaving.
In this note, we talk about the updates since our last note and have a look at the post pricing performance of a few more deals.

Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up

Japan Post Bank (7182 JP) has announced that the offering price has been set at JPY 1131/share, a 2.08% discount to the closing price. Settlement is on 20 March.
The buyback will run from 22 March to 12 May and at last prices will mop up 1.85% of shares outstanding or 4.62% of post-offering float.
In the short-term, we expect buying from Topix (TPX INDEX), MSCI and other global trackers to support the stock price.

STAR50 Index Rebalance Preview: Two Changes in June (Possibly)

The review period for the June rebalance ends 30 April. We expect the changes to be announced 26 May with the implementation taking place after the close on 9 June.
We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 1,442m. The impact on the deletions will be larger than that on the inclusions.

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.

ThaiBev To Take Oishi Group Private

Thai Beverage (THBEV SP) is proposing to take 79.66%-held Oishi Group PCL (OISHI TB) private by a voluntary Delisting Offer.
The Offer price is THB 59/share, a 26.9% premium to last close.
This Delisting Offer requires a shareholder vote. Payment may occur sometime in August.

Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook

Japan Post Bank (7182 JP) priced its offer at JPY1,131, a discount of 2.1% to the last close. JPB’s on-market buyback period runs from 22 March to 12 May.
Japan Post Holdings (6178 JP)/ JPH’s 2021 offering suggests that the share price will have support to trade above the offer price at delivery date and the on-market buyback period.
The offer price’s forward P/B of 0.45x and yield of 4.42% are attractive vs peers. JPB’s price ratio at the offer price is undemanding vs TOPIX Banks ETF and JPH.

SBI Sumishin Net Bank IPO – It Was All Good, till Friday

SBI Sumishin Net Bank (7163 JP) (SSNB) is looking to raise around US$390m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about implied valuations in the IPO price range

Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept

Halcyon Agri (HACL SP) has issued the circular in response to China Hainan Rubber Industry (601118 CH)‘s conditional MGO.
The IFA reckons the Offer is fair and reasonable. The Independent Directors recommend that shareholders accept the Offer.
The first close is the 24 March. Hainan Rubber is under no obligation to extend the Offer beyond this date.

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Mar 13

Most Read: Japan Post Bank, Harvey Norman Holdings, Douzone Bizon, Harmony Gold Mining Co Ltd, Sayona Mining, HomeCo Daily Needs REIT, KLA-Tencor Corp, S.M.Entertainment Co, Jiangsu Cnano Technology Co Ltd-A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank – Estimating Foreign Ownership and Deal Flowback
MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes
Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL
MVIS Global Junior Gold Miners Index Rebalance: Three Deletions & Float Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes on Friday
MVIS Australia A-REITs Index Rebalance: Float/Capping Changes
MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact
Japan Post Bank Placement – Still Misbehaving – Post-Pricing Performance of Some More Deals
HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer
STAR50 Index Rebalance Preview: Two Changes in June (Possibly)

Japan Post Bank – Estimating Foreign Ownership and Deal Flowback

The word floating around late Friday as books closed was that foreigners had bid strongly. More than the entire Japan Post Bank (7182 JP) offering size in fact.
The offering is an interesting problem, as discussed before. Different people are going to buy it for different reasons.
This insight looks at the breakdown of ratios and the resultant foreign ownership, along with post-offer supply/demand balance.

MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes

Harvey Norman Holdings (HVN AU) will be deleted from the MVIS Australia Equal Weight Index at the close of trading on 17 March.
One way turnover is 3.9% resulting in a one-way trade of A$68m. Only Harvey Norman Holdings (HVN AU) has more than 1 day of ADV to sell from passive trackers.
Harvey Norman Holdings (HVN AU) has underperformed Myer Holdings (MYR AU) significantly over the recent past and the index deletion could provide an entry point into a trade.

Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL

Some KOSPI indices rebalanced at the close on Thursday while the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) rebalanced at the close on Friday.
The S&P/ASX family, MVIS family and a bunch of other indices will rebalance at the close on coming Friday.
After seeing big inflows over the last couple of years, outflows from Samsung KODEX Secondary Battery ETF (305720) and Mirae Asset TIGER Secondary Cell ETF (305540) have started to pick up.

MVIS Global Junior Gold Miners Index Rebalance: Three Deletions & Float Changes

Dacian Gold Ltd (DCN AU), Gold Resource (GORO US) and Wallbridge Mining Co (WM CN) will be deleted from the index at the close on 17 March.
One way turnover is estimated at 2.8% resulting in a one-way trade of US$96m. There is over 1 day of ADV to trade on 22 stocks.
The largest inflows are on Triple Flag Precious Metals (TFPM US), Osisko Gold Royalties, Zhaojin Mining Industry, New Found Gold (NFG CN), Yamana Gold, IAMGOLD and First Majestic Silver.

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes on Friday

There are no constituent changes for the MVIS Global Rare Earth/Strategic Metals Index at the March rebalance. There are free float and capping changes though.
One way turnover is estimated at 3.1% and will result in a one-way trade of US$19m. Flows are relatively small with no impact over 1x ADV on any stock.
The June rebalance should have constituent changes with an increase in the number of stocks in the index universe.

MVIS Australia A-REITs Index Rebalance: Float/Capping Changes

The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 17 March. There are no constituent changes, but there are float and capping changes.
Estimated one-way turnover at the rebalance is 1.8% resulting in a one-way trade of A$11.1m. There is limited impact on the index constituents.
The largest inflows are on Stockland, HomeCo Daily Needs REIT, Gpt Group and Charter Hall, while the largest outflows are on Goodman Group, Vicinity Centres, Dexus Property and Scentre Group.

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.

Japan Post Bank Placement – Still Misbehaving – Post-Pricing Performance of Some More Deals

Japan Post Holdings (6178 JP) aims to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our previous notes, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback and Japan Post Bank Placement – Misbehaving.
In this note, we talk about the updates since our last note and have a look at the post pricing performance of a few more deals.

HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer

On 12 March, HYBE (352820 KS) announced that it is no longer pursuing S.M.Entertainment Co (041510 KS) in an M&A battle with Kakao Corp (035720 KS).
This will result in a very high probability of Kakao winning the M&A battle of SM Entertainment.
Many institutional investors are likely to have pushed back on HYBE’s capital raising efforts, which seems to have been the clincher of HYBE backing out of this M&A for SM.

STAR50 Index Rebalance Preview: Two Changes in June (Possibly)

The review period for the June rebalance ends 30 April. We expect the changes to be announced 26 May with the implementation taking place after the close on 9 June.
We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 1,442m. The impact on the deletions will be larger than that on the inclusions.

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Mar 12

Most Read: Mineral Resources, National Aluminium, Japan Airlines, Vingroup Jsc, ASM Pacific Technology, S&P 500, Oishi Group PCL, Swire Pacific (B), Douzone Bizon and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
MVIS Vietnam Index Rebalance: One Deletion; Float & Capping Changes
ASMPT (522 HK): PAG Potential Privatisation?
SPX Targets and Post NFP Surprises
Oishi Group (OISHI TB): ThaiBev’s Delisting Tender Offer at THB59.00
Swire Back To Buying Back – One-Third To Go
Collapse of Silicon Valley Bank (SVB) – Impact on Korean Banks
Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.

Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG

The MSCI Feb QCIR was implemented on Tuesday and there were a bunch of announcements for other indices from Wednesday to Friday.
The implementation of the March rebalance for the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) take place at the close on Friday.
Redemptions continue on IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) and KraneShares CSI China Internet ETF (KWEB US).

MVIS Vietnam Index Rebalance: One Deletion; Float & Capping Changes

Saigon Thuong Tin Commercial (STB VN) will be deleted from the MVIS Vietnam Index at the close of trading on 17 March.
One-Way turnover is 4.2% and the one-way trade is US$21m. There are two stocks where passive trackers need to buy over 1 day of ADV.
There have been big inflows to the Market Vectors Vietnam ETF (VNM US) over the last three months as the index has traded near its lows.

ASMPT (522 HK): PAG Potential Privatisation?

Bloomberg reported that PAG and other parties have expressed interest in taking ASM Pacific Technology (522 HK) private. PAG also sounded out several lenders.
ASMPT has three substantial shareholders (Asm International Nv (ASM NA), FIL Limited and Schroders PLC (SDR LN)) which suggests a requirement for a reasonable takeover premium.
ASMPT previously denied a privatisation rumour in 2020. Nevertheless, peers and historical multiples imply a fair price range of HK$82-97 per share, 11-31% premium to the last close.

SPX Targets and Post NFP Surprises

By Thomas Schroeder

Bearish from SPX 4,060-80. Near resistance at 4,020 was used to add to shorts. Downside surprise due this week on break of 3.900.
Key support breaks amid systemic risk saw us raise our net short going into this more turbulent period that should wrap up near the 20th. Started shorting in Feb.
Added Japan to our short list being a laggard. Once laggards buckle we will be closer to a short term low.

Oishi Group (OISHI TB): ThaiBev’s Delisting Tender Offer at THB59.00

Oishi Group PCL (OISHI TB) has disclosed a delisting tender offer from Thai Beverage (THBEV SP) at THB59.00 per share, a 26.9% premium to the undisturbed price (10 March).
The offer is conditional on Oishi shareholder approval which requires 75% approval by total outstanding shares and <10% rejection by total outstanding shares. ThaiBev can vote at the EGM.
The offer price is reasonable and timing is the key risk. The delisting EGM will be held on 3 May. The offer must be open for 45 business days.

Swire Back To Buying Back – One-Third To Go

After two months of zero buybacks under their HK$4bn buyback programme, on Friday Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) again bought back shares.
Ostensibly, it was as Swire A shares fell below HK$60/share. They were 65% of B volume and 51% of A volume on Friday – not shy about their return.
Assuming participation patterns normalise and the shares don’t bounce back above the self-imposed limit, the buyback will probably last 6-7 weeks more. The div arb is real if you hold.

Collapse of Silicon Valley Bank (SVB) – Impact on Korean Banks

On Friday 10 March, Svb Financial (SIVB US) suddenly collapsed, becoming the largest bank to fail in the United States since the 2008 financial crisis.
In our view, the collapse of SVB Financial will likely have a negative near-term impact on the Korean banks.
Three ways that this will negatively impact Korean banks include risk-off investment sentiment, greater excuse to hold on to cash by Korean banks, and lower interest rate spreads.

Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL

Some KOSPI indices rebalanced at the close on Thursday while the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) rebalanced at the close on Friday.
The S&P/ASX family, MVIS family and a bunch of other indices will rebalance at the close on coming Friday.
After seeing big inflows over the last couple of years, outflows from Samsung KODEX Secondary Battery ETF (305720) and Mirae Asset TIGER Secondary Cell ETF (305540) have started to pick up.

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Mar 11

Most Read: Mineral Resources, Japan Post Bank, Hang Seng China Enterprises Index, Melco International Development, Dai Nippon Printing, Nippon Yusen Kk, Nippon Steel Trading Corporation, Sun Kwang and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms
Melco (200 HK) Takes More Money Off The Table
US Banks – Not Just Silicon Risk
Dai Nippon Printing – Gauging The Upside
Nippon Yusen – New MidTermPlan = New Shareholder Return Policy
Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts
Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On

Tomorrow is BOJ Governor Kuroda’s last Monetary Policy Meeting, capping a ten year run as one of the most dynamic central bankers in the world.
Tomorrow is also the day BEFORE the first day on which the Japan Post Bank (7182 JP) mega offering could price and the last day of bookbuild indications.
I am not saying this is not coincidence, but it is worth thinking about the interplay.

Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs

Elliott Management was noted several weeks ago to have bought near 5% of Dai Nippon Printing (7912 JP). The stock popped when people found out.
Then the stock popped when the company said they’d announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.
Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.

HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms

The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.

Melco (200 HK) Takes More Money Off The Table

Melco Resorts & Entertainment (MLCO US) has entered into a share repurchase agreement with a wholly-owned entity of Melco International Development (200 HK) to repurchase (and cancel) 40.37mn shares for US$169.8mn.
Melco’s effective holding will decline to 51.7% from 53.1% currently. This is the second parent/sub repurchase agreement in the last 7 months.
MLCO’s previously announced US$500mn share repurchase program remains unaffected by this privately negotiated transaction, with US$412mn still available for future repurchases under the program.

US Banks – Not Just Silicon Risk

By Daniel Tabbush

US banks face more than just Silicon Valley risk, namely with net interest income
Credit costs are also running substantially higher in January monthly data
Bank loan data suggests a strong economy, not overly positive for rates

Dai Nippon Printing – Gauging The Upside

By Mio Kato

Despite the strong performance from Dai Nippon Printing following the announcement of Elliott’s stake we feel upside remains.
Operating results should benefit from normalisation of the economy and light restructuring potential.
In addition, we do not see much evidence to suggest that valuations are particularly stretched.

Nippon Yusen – New MidTermPlan = New Shareholder Return Policy

Today at lunch, Nippon Yusen Kk (9101 JP) released a New Medium-Term Management Plan Presentation (FY2023 to 2026). “Sail Green, Drive Transformations 2026 – A Passion for Planetary Wellbeing.”
It has basic investment plans, including growing scale of ONE container shipping alliance, growing auto logistics, spending on fuel conversions, offshore wind, hydrogen/ammonia, and doing some logistics M&A
They also plan a new Shareholder Return Policy. That raises minimum dividend, expected payout ratio, and involves ¥200bn of buybacks the next two fiscal years. Read on.

Nippon Steel/Mitsui TOB for Nippon Steel Trading (9810) Starts

Today, Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) announced they would launch the TOB to take over Nippon Steel Trading Corporation (9810 JP) starting Monday.
I wrote about the deal and its parameters in December 2022 in Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium.
This gets done easily I expect. Boring, but decent very short-term carry on the bid side.

Long Short Setup on KOSDAQ 150 Ad Hoc Change with SK Oceanplant’s KOSPI Transfer Listing

SK Oceanplant will likely be listed on KOSPI in late May or early June. There are no clear reasons for KRX to oppose SK Ocean Plant’s move to KOSPI.
The top reserved issue in INDUSTRIALS, Sun Kwang (003100 KS), will replace it in KOSDAQ 150. The effective date is the delisting day.
The impact size on the delisting day alone may be well above 1x ADTV for both companies, so we will likely see a significant price movement.

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Mar 10

Most Read: Link REIT, Meituan, Japan Post Bank, Dai Nippon Printing, DGB Financial Group, Sosei Group, Cosmo AM&T, Hang Seng China Enterprises Index, Techtronic Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades
Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On
Japan Post Bank (7182 JP): The Current Playbook
Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs
Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial
Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally
MSCI Korea May Review: Two New Names Are Emerging for Inclusion
HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms
Techtronic’s Rebuttal: Some Clarifications Are Too Good to Be True

Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades

In early February, Link REIT (823 HK) announced it would do a 1 for 5 rights offering, with the Exercise Price well below TERP.
The REIT units dropped in price as the already unlevered REIT was not seen to be needing further deleverage and early debt repayment in a rising rate environment.
Units went ex-Rights on 24 February. The rights start trading tomorrow. That means flows. Of multiple kinds. Worth thinking about.

Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks

From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.

The March BOJ Meeting, April Handover, the Japan Post Bank (7182) Offering, and Follow-On

Tomorrow is BOJ Governor Kuroda’s last Monetary Policy Meeting, capping a ten year run as one of the most dynamic central bankers in the world.
Tomorrow is also the day BEFORE the first day on which the Japan Post Bank (7182 JP) mega offering could price and the last day of bookbuild indications.
I am not saying this is not coincidence, but it is worth thinking about the interplay.

Japan Post Bank (7182 JP): The Current Playbook

Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have risen by 4.4%. On 1 March, JPB completed the ToSTNeT-3 buyback by acquiring 59.5 million shares for JPY70 billion.
To understand JPB’s trading pattern, it is instructive to look at Japan Post Insurance (7181 JP)/JPI’s 2019 offering and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
JPB’s shares should follow the trading pattern playbook of JPI’s 2019 and JPH’s 2021 offerings and start trading below the pre-offer last trading price during the subscription period.

Dai Nippon Printing (7912) – Whoop There It Is! ¥100bn Buyback in a Year, ¥300bn in 3yrs

Elliott Management was noted several weeks ago to have bought near 5% of Dai Nippon Printing (7912 JP). The stock popped when people found out.
Then the stock popped when the company said they’d announce the outline for their new Mid-Term Management Plan on 9 March, and that would include more capital allocation measures.
Today we got the Outline. There are more capital allocation measures. The numbers look big. Nuance is required to understand the impacts over time.

Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial

K200 ad hoc change announcement date should be March 30 as the buyback ends on March 28, and rebalancing trading should occur on March 31.
From a juice-level perspective, the entry point and timing for JB Financial showed much better performance from EGM approval rather than the announcement.
We should consider gradually building up positions from this point until March 30 announcement or one day after (T-1 effective) while utilizing Kodex Banks ETF to hedge our long positions.

Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally

Sosei Group (4565 JP) is a Tokyo-based biopharma group which started small, got big and exciting, and hasn’t grown in market cap in years, while it has grown in ambition.
It has strategic relationships with AbbVie, Biohaven, Genentech, GSK, Takeda, Pfizer, AstraZeneca, and Takeda and a market cap near ¥200bn.
It has always had impressive shareholder support. Now after nearly 20 years on TSE Mothers/Growth (the limit was supposed to be 10yrs), it moves to TSE Prime and TOPIX.

MSCI Korea May Review: Two New Names Are Emerging for Inclusion

Two new names have emerged as likely candidates for inclusion in Korea: SM Entertainment and Cosmo Advanced Materials, whose YTD returns are approximately 104% and 83%, respectively.
For SM Entertainment, the float rate may be adjusted downward depending on the tender offer results. Still, even if modified to 50%, it will surpass the float market cap hurdle.
Cosmo still has a significant gap in the full market cap. However, we should note that the recent insane rally in Korea’s EV battery sector shows no signs of ending.

HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms

By Shifara Samsudeen, ACMA, CGMA

The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.

Techtronic’s Rebuttal: Some Clarifications Are Too Good to Be True

Following Jehoshaphat’s allegations that profits are inflated dramatically over a decade with manipulative accounting, Techtronic Industries (669 HK) has issued a rebuttal clarifying that the accusations are without any merit.
TTI’s beyond comparison performance is due to world class brands such as Milwaukee, Ryobi and Hoover which have helped top line grow at 13% CAGR over the past 13 years.
Nevertheless, we have assessed some of the company’s clarifications here which seemed too good to be true.

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Mar 09

Most Read: Rainbow Robotics, Link REIT, Meituan, XPeng, Sosei Group, Japan Post Bank, DGB Financial Group, HYBE and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades
Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com
Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks
Major Hang Seng Indices Capping Flows Decided (HSCEI, HSI, HSTECH)
Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally
Japan Post Bank (7182 JP): The Current Playbook
Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial
HYBE: May Be Seeking to Raise As Much as 1 Trillion Won (Will Investors Support This Plan)?

Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals

Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
In this note, we talk about the updates since our last note and have a look at some of the past deals.

KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!

Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.

Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades

In early February, Link REIT (823 HK) announced it would do a 1 for 5 rights offering, with the Exercise Price well below TERP.
The REIT units dropped in price as the already unlevered REIT was not seen to be needing further deleverage and early debt repayment in a rising rate environment.
Units went ex-Rights on 24 February. The rights start trading tomorrow. That means flows. Of multiple kinds. Worth thinking about.

Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com

On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.

Meituan (3690 HK): Tencent’s In-Specie Div Settles in Two Weeks

From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.

Major Hang Seng Indices Capping Flows Decided (HSCEI, HSI, HSTECH)

On 24 February 2023, the Hang Seng Indices released their changes for the March rebalance. No changes in HSI, which was unexpected, and small changes elsewhere.
Capping flows and the rule changes on treatment of Dual Primary Listed stocks are responsible for the interesting flows. Yesterday’s closing prices are used for final capping.
Li Auto (2015 HK) and XPeng (9868 HK) are the interesting trades. Still.

Sosei Group (4565 JP) TSE Prime Promotion and TOPIX Inclusion… Finally

Sosei Group (4565 JP) is a Tokyo-based biopharma group which started small, got big and exciting, and hasn’t grown in market cap in years, while it has grown in ambition.
It has strategic relationships with AbbVie, Biohaven, Genentech, GSK, Takeda, Pfizer, AstraZeneca, and Takeda and a market cap near ¥200bn.
It has always had impressive shareholder support. Now after nearly 20 years on TSE Mothers/Growth (the limit was supposed to be 10yrs), it moves to TSE Prime and TOPIX.

Japan Post Bank (7182 JP): The Current Playbook

Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have risen by 4.4%. On 1 March, JPB completed the ToSTNeT-3 buyback by acquiring 59.5 million shares for JPY70 billion.
To understand JPB’s trading pattern, it is instructive to look at Japan Post Insurance (7181 JP)/JPI’s 2019 offering and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
JPB’s shares should follow the trading pattern playbook of JPI’s 2019 and JPH’s 2021 offerings and start trading below the pre-offer last trading price during the subscription period.

Meritz Merger Approved: Let’s Now Discuss Key Dates & Entry Points For LONG DGB Financial

K200 ad hoc change announcement date should be March 30 as the buyback ends on March 28, and rebalancing trading should occur on March 31.
From a juice-level perspective, the entry point and timing for JB Financial showed much better performance from EGM approval rather than the announcement.
We should consider gradually building up positions from this point until March 30 announcement or one day after (T-1 effective) while utilizing Kodex Banks ETF to hedge our long positions.

HYBE: May Be Seeking to Raise As Much as 1 Trillion Won (Will Investors Support This Plan)?

In the last few days, there have been local media accounts that mentioned that HYBE may be seeking as much as 1 trillion won (US$760 million) from investors.
The more likely scenario is that HYBE encounters a greater backlash from the global investors in its attempts to raise nearly 1 trillion won.
We maintain our existing stance of Kakao eventually winning this M&A battle for the controlling stake in SM Entertainment.

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Mar 08

Most Read: Japan Post Bank, Rainbow Robotics, Yes Bank, Li Auto, Ana Holdings, CELSYS, S.M.Entertainment Co, Invocare Ltd, Meituan and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)
ANA and NYK to Trade NCA, So JAL/ANA GTG
TOPIX Inclusions: Who Is Ready (Mar 2023)
K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment
InvoCare (IVC AU): TPG’s A$12.65/Share NBIO
InvoCare (IVC AU): TPG’s Non-Binding Offer
Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com

Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals

Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
In this note, we talk about the updates since our last note and have a look at some of the past deals.

KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!

Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.

YES Bank Lock-Up Expiry: Forced Sellers, Overhang & Index Implications

The lock-up on nearly 9.4bn shares of Yes Bank (YES IN) expires on 13 March. Most of that is from the banks that helped in the recapitalisation in March 2020.
There will be forced sellers as soon as the lock-up ends, and there will be other sellers that will want to sell.
The forced and discretionary selling will be offset to a very small extent by inflows from passive trackers in May/June as the free float for the stock increases.

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)

The March rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK).
The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).

ANA and NYK to Trade NCA, So JAL/ANA GTG

ANA announced their FY23-25 Mid-Term Corporate Strategy last month. In it, a plan to increase cargo.
Today, Ana Holdings (9202 JP) and Nippon Yusen Kk (9101 JP) announced ANA would take over NYK sub Nippon Cargo Airlines 1 October 2023 – price and method TBD.
This would add ~45-50% to ANA’s cargo volume, and more to its capacity. But it means NYK sells cheap OR it means a chunk of ANA cash/stock. Overhang.

TOPIX Inclusions: Who Is Ready (Mar 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
In February, names which appeared in our “B” list such as Amvis Holdings Inc (7071 JP) and AXXZIA Inc (4936 JP) announced they would be moving to the Prime Market.
In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.

K-Pop Battle, Round 2: Kakao’s Tender Offer For S.M. Entertainment

Fresh after the courts rejected new share issuance, Kakao (035720 KS) has launched an Offer for S.M.Entertainment (041510 KS), less than a week after HYBE (352820 KS)‘s deal closed.
Kakao, holding 4.9%, is seeking to lift its stake to ~40% via a tender offer at ₩150,000/share, a 25% premium to HYBE’s offer price.
The key question is – will HYBE counter? I would not be so sure.

InvoCare (IVC AU): TPG’s A$12.65/Share NBIO

Invocare Ltd (IVC AU) has received an unsolicited, preliminary, non-binding indicative offer from TPG Global to acquire the company at A$12.65/share in cash.
TPG has also acquired 17.8% of the shares in Invocare Ltd (IVC AU) via a combination of stock and derivatives.
With the company now in play, there could be competing offers. Already owning 17.8% of the company, TPG is now invested in ensuring they gain control.

InvoCare (IVC AU): TPG’s Non-Binding Offer

PE outfit TPG has taken a 17.8% stake in InvoCare Ltd (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding indicative Offer via a Scheme.
The Indicative proposal is subject to the completion of satisfactory due diligence, and FIRB.
InvoCare, which has struggled to generate consistent profits in recent years, is mulling the proposal. Pricing is around the Covid cliff.

Tencent Meituan Dividend – The US$17bn Overhang Is Almost Here – Lesson from JD.com

On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.

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Mar 07

Most Read: Nitori Holdings, Beijing-Shanghai High Speed Railway-A, Sebang Co Ltd, National Aluminium, SK Innovation, Adani Enterprises, Mirae Asset Tiger Top 10 ETF, SBI Sumishin Net Bank, Rainbow Robotics, Japan Post Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
KOSPI Size Indices – Changes in March & Implications
CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities
Adani Family Sells Stakes To GQG
Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing
SBI Sumishin Net Bank Pre-IPO – Revised Forecast and Valuations – RoA or RoE?
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals

Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo

The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&S (7003), and Matsui Securities (8628).
Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba’s disposition changes in the interim.

Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May

HKEX (388 HK) has announced that the expansion of Northbound Stock Connect eligible stocks will take effect from the start of trading on 13 March.
598 stocks listed on the Shanghai Stock Exchange and 436 stocks listed on the Shenzhen Stock Exchange will be added to Northbound Stock Connect.
Currently, we see 43 stocks being added to the MSCI China Index in May (inflows of US$1.42bn), further increasing China’s weight in the MSCI Emerging Markets Index.

KOSPI Size Indices – Changes in March & Implications

There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.

CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.

K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities

Notable constituent changes are Posco Chemical (003670 KS), Douzone Bizon (012510 KS), Ecopro (086520 KS), Connectwave (119860 KS), SK Innovation (096770 KS), KMW (032500 KS), & Hanmi Science (008930 KS).
Among these, Douzone Bizon (012510 KS) and KMW (032500 KS) are expected to receive the most significant flow impact (x ADTV) at the close of March 9th.
Since the flow size is concentrated within a fairly right trading window, between 2 pm and the close on the 9th, the degree of price impact should be relatively higher.

Adani Family Sells Stakes To GQG

Late Thursday night, the Adani Group announced that the family entities had sold Rs 154bn or US$1.8bn+ of stock in four listed entities to Australian-listed GQG Partners (GQG AU).
GQG is a US$90bn AUM asset manager specialising in emerging markets. They bought stakes of 2.55-4.10% in each of four entities.
This “increases” float, but doesn’t. As of now, this will partially offset one MSCI downweight in May, and will likely cause three FIF uplifts.

Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing

Celltrion and Posco Holdings will switch places. Although there is still time until the screening period, the market capitalization gap between them has already widened significantly.
Posco Holdings will likely welcome a passive inflow of 0.44x ADTV, whereas Celltrion is expected to face outflows of around 0.69x ADTV.
Ecopro BM entered the Top 20 (preliminary screening table) with a YTD stock price increase of 130%, becoming the first KOSDAQ-listed company to do so.

SBI Sumishin Net Bank Pre-IPO – Revised Forecast and Valuations – RoA or RoE?

SBI Sumishin Net Bank (7163 JP) (SSNB) is now looking to raise around US$380m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about our updated earnigns forecast and thoughts on valuations

KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!

Two thirds of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
One-Way turnover is estimated at 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.

Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals

Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
In this note, we talk about the updates since our last note and have a look at some of the past deals.

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Mar 06

Most Read: Japan Airlines, Nitori Holdings, Life360 Inc, Beijing-Shanghai High Speed Railway-A, Japan Post Bank, Sebang Co Ltd, National Aluminium, Bellevue Gold, SK Innovation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
S&P/ASX Index Rebalance (Mar 2023): Big Impact Changes as Adds Outperform Deletes
Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
Last Week in Event SPACE: Japan Post/Japan Post Bank, Downer, HKBN, Golden Energy
KOSPI Size Indices – Changes in March & Implications
CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes
K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities

Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.

As expected, Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) IN, and Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) OUT.
The Nikkei implemented the “Tricky Twist” discussed. This lowers the total amount to buy on Oriental Land vs what many would have expected.
That’s “disappointing” BUT… the behavioural aspects here are really interesting, and the timetable for the event is worth thinking about.

Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo

The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&S (7003), and Matsui Securities (8628).
Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba’s disposition changes in the interim.

S&P/ASX Index Rebalance (Mar 2023): Big Impact Changes as Adds Outperform Deletes

There is one change for the ASX20, two for the ASX100, four for the S&P/ASX 200 INDEX and 12 adds/ 9 deletes for the ASX300 Index at the March rebalance.
There will be between 7-20 days of ADV to trade on the ASX100 and ASX200 adds while the impact on the deletions is between 1-11 days of ADV.
The adds have outperformed the deletes on all indices over the last few months. Short interest has jumped on a lot of the large deletes.

Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG

The MSCI Feb QCIR was implemented on Tuesday and there were a bunch of announcements for other indices from Wednesday to Friday.
The implementation of the March rebalance for the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) take place at the close on Friday.
Redemptions continue on IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) and KraneShares CSI China Internet ETF (KWEB US).

Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May

HKEX (388 HK) has announced that the expansion of Northbound Stock Connect eligible stocks will take effect from the start of trading on 13 March.
598 stocks listed on the Shanghai Stock Exchange and 436 stocks listed on the Shenzhen Stock Exchange will be added to Northbound Stock Connect.
Currently, we see 43 stocks being added to the MSCI China Index in May (inflows of US$1.42bn), further increasing China’s weight in the MSCI Emerging Markets Index.

Last Week in Event SPACE: Japan Post/Japan Post Bank, Downer, HKBN, Golden Energy

Big picture: Japan Post (6178 JP) selling 29% of Japan Post Bank (7182 JP) is a Very Big Offering at ¥1.236trln. 80/20 dom/international. A TOUGH sell. 1.089bn shares is 4x float.
Downer EDI (DOW AU)‘s CEO resigned ahead of announcing accounting irregularities last December. The CFO resigned this week after Downer announced another profit downgrade. Now the chairman is exiting.
Hong Kong broadband play HKBN Ltd (1310 HK)said it has been approached by I Squares’ HGC. No pricing announced, but talks continue.

KOSPI Size Indices – Changes in March & Implications

There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.

CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.

OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes

The OZ Minerals (OZL AU) Scheme Meeting for the acquisition by BHP Group (BHP AU) will be held 13 April. The stock could stop trading post close on 18 April.
OZ Minerals Ltd (OZL AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) so there will be replacements made at the close on 18 April.
Passive trackers will need to buy a fair amount of stock (with a decent impact) on the potential inclusions and the stocks could outperform over the next few weeks.

K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities

Notable constituent changes are Posco Chemical (003670 KS), Douzone Bizon (012510 KS), Ecopro (086520 KS), Connectwave (119860 KS), SK Innovation (096770 KS), KMW (032500 KS), & Hanmi Science (008930 KS).
Among these, Douzone Bizon (012510 KS) and KMW (032500 KS) are expected to receive the most significant flow impact (x ADTV) at the close of March 9th.
Since the flow size is concentrated within a fairly right trading window, between 2 pm and the close on the 9th, the degree of price impact should be relatively higher.

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Mar 05

Most Read: Mineral Resources, Li Auto, Posco Chemical Co Ltd, Swire Pacific (B), Kum Yang Co Ltd, XPeng, Adani Total Gas, Oriental Land, Japan Airlines and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
Adani Group: GQG Bets Big; MSCI Index Impacts
Nikkei 225 Index Rebalance: Oriental Land, Renesas, JAL IN; Toyobo, Nippon LightMetal, Toho Zinc OUT
Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng

Weibo Corp (9898 HK) replaces Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 8.92% and will result in a one-way trade of HK$7,078m at the close on 10 March.
There will be big buying on Li Auto (2015 HK) and XPeng (9868 HK) due to a change in the index handling methodology for Dual Primary listings.

KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
We forecast one add/delete for the Secondary Battery Index and 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).

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI

The changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) were announced post market close on Friday.
Busy start to the coming week with the MSCI implementation at the close on 28 February and a few announcements to other indices later in the week.
There were outflows from Tracker Fund of Hong Kong Ltd (2800 HK) during the week taking the YTD outflows to over US$1bn.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

Nikkei 225 Index Rebalance: Oriental Land, Renesas, JAL IN; Toyobo, Nippon LightMetal, Toho Zinc OUT

Oriental Land (4661), Renesas Electronics (6723) and Japan Airlines (9201) will replace Toyobo (3101), Nippon Light Metal (5703) and Toho Zinc (5707) in the Nikkei 225 (NKY INDEX).
Oriental Land (4661 JP) has been added at a post-split PAF of 1. This reduces the passive buying on the stock by around a third.
Passive trackers need to buy between 2.2-6.7 days of ADV on the adds while selling between 5-12 days of ADV on the deletes. There’s a big funding trade too.

Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.

As expected, Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) IN, and Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) OUT.
The Nikkei implemented the “Tricky Twist” discussed. This lowers the total amount to buy on Oriental Land vs what many would have expected.
That’s “disappointing” BUT… the behavioural aspects here are really interesting, and the timetable for the event is worth thinking about.

Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG