Most Read

Haidilao (6862 HK) intends to spin-off its 90% holding in Super Hi International Holding (SHI HK) with an ex-date of 16 December.
Super Hi International Holding (SHI HK) will be deleted from the Hong Kong Hang Seng Index and Hang Seng China Enterprises Index at the close on listing day.
There could be nationality changes and selling from MSCI and FTSE trackers as well, though the timing is uncertain at this point.

HSCEI: Index Handling Changes for Secondary & Dual-Primary Listings

Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
The changes could lead to an increase in the index weighting for Li Auto (2015 HK) and the inclusion of XPeng (9868 HK) at the March rebalance.
The improved rankings for the Secondary and Dual Primary listings will lead to other changes to the index in March.

Acotec Scientific Holdings: Boston Scientific’s Partial Offer

Acotec Scientific Holdings (6669 HK), a Chinese medical technology company, has announced a Partial Offer from Boston Scientific (BSX US).
The Offer Price for up to 65% of shares out is HK20/share, a 31.6% premium to last close, but below last year’s IPO price of HK$23.80/share.
Irrevocables who intend to tender a total of up to 60.14% of shares out. This includes the CEO and the key pre-IPO investor.

Acotec Scientific (6669 HK)’s Partial Offer of HK$20 from Boston Scientific

Acotec Scientific Holdings (6669 HK) disclosed a partial offer from Boston Scientific (BSX US) to acquire a maximum of 203.7 million shares at HK$20 per share.
The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders. Irrevocables represent a minimum of 55.14% of outstanding shares.
Despite the recent share price pop on the back of FDA approval for Vericor, the partial offer represents an all-time share price high. Therefore, the offer will be declared unconditional.

Post Card from Dhaka – A Primer on the Bangladesh Market

By Pranav Bhavsar

Bangladesh is the eighth-most populous country in the world and is the second-largest economy in South Asia after India making it a consumer market that warrants close attention.
India – Bangladesh FTA promises to accelerate trade, but we find little excitement on the ground.
For an EM Investor, it may be a bit too adventurous to venture into this frontier market plagued with political dynamics and governance risks which are too large to ignore.

BILIBILI (BILI US): Can Achieving Breakeven Justify US$10bn Market Cap?

By Eric Chen

BILIBILI shares have rallied more than 200% since early November on prospects of China exiting zero-COVID, short covering, and accelerated breakeven timeline.
Yet simply achieving breakeven doesn’t justify its US$10 billion valuation. It has to be accompanied by decent profitable growth – an unlikely scenario given the aggressive downsizing needed for breakeven.
BILI’s businesses also entail structurally low margin. Stock could easily de-rate by 30% or more when growth euphoria recedes and disappointed profitability checks in during 2023.

HSTECH: Index Handling Changes & Flows in March

Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
The change could result in Tencent Music Entertainment Group (1698 HK) replacing Ming Yuan Cloud Group (909 HK) in the index.
There could be passive buying on Li Auto (2015 HK) and XPeng (9868 HK) due to an increase in the index shares with outflows on other index constituents.

Home Consortium (HMC AU) FTSE EPRA Index Deletion – Underperforming but STILL Expensive

Home Consortium Ltd (HMC AU) is a Super Stapled Security, having developed HomeCo Daily Needs REIT (HDN AU), overseen the Aventus Group (AVN AU) merger, IPOed HealthCo REIT (HCW AU).
The current market cap is 1.6x book and probably closer to 2x tangible book as a large “management and development capability premium” is baked in.
There is a FTSE EPRA Nareit index deletion on Friday. That could prompt further underperformance.

2023 IPOs Pipeline Worldwide (Top 100 Companies)

By Douglas Kim

This is our fourth annual edition of the IPOs Pipeline Worldwide (Top 100 Companies) report.
Among 100 companies in our list, those from the US, India, China/HK, and the UK account for 79% of total.
For those investors that closely monitor the global IPO opportunities, this is a good reference insight to check out the largest potential IPOs that could get completed next year.

IHI (7013) | Boeing Orders Take Off

Boeing’s stock price is recovering sharply as it benefits from recent multi-billion-dollar order wins
Japanese stocks (IHI, MHI, KHI & Subaru) are highly geared into the Boeing supply chain
We highlight IHI as a top pick on this thematic and believe aero-engine revenues will continue to recover, driving a stock re-rating

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 12

Most Read: Tietto Minerals Ltd, Liontown Resources, Softbank Group, Haidilao, TA Chen Stainless Pipe, Toshiba Corp, LG Energy Solution, VinFast, Acotec Scientific Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes
Can Son-San Take Over Softbank Group Through Buybacks?
Haidilao’s Spin-Off of Super Hi: Index Implications
Index Rebalance & ETF Flow Recap: ASX, HSTECH, TWDiv+, EPRA Nareit, HSCEI, PCOMP, STAR50, REMX, GDXJ
Good Morning Japan |+50bp Fed Hike in the Bag, but Watching Tuesday’s US CPI Print
Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong
LG Energy: ESOP Lockup Release (3.5% of SO) & Contrarian Approach Targeting NPS
VinFast Auto IPO: The Bear Case
Acotec Scientific Holdings (6669.HK) – A Game Changer with Solid Long-Term Logic

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes

Filo Mining (FIL CN) and Tietto Minerals (TIE AU) are adds while Fresnillo (FRES LN), Galiano Gold (GAU US), Jaguar Mining (JAG CN) and Novo Resources (NVO CN) are deletes.
One way turnover is estimated at 4.3% resulting in a one-way trade of US$163m. There is over 1 day of ADV to trade on 24 stocks.
Largest inflows are on Filo Mining (FIL CN) and Tietto Minerals Ltd (TIE AU) while largest outflows are on Fresnillo PLC (FRES LN) and Centerra Gold (CG CN).

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

As expected, there are no adds or deletes for the MVIS Global Rare Earth/Strategic Metals Index at the December rebalance.
There are free float and capping changes that will be implemented at the close on 16 December.
One way turnover is estimated at 4.26% and will result in a one-way trade of US$31.5m.

Can Son-San Take Over Softbank Group Through Buybacks?

On Thursday 8 December, an article showed up in Bloomberg suggesting Son-san had “increased his stake” as the company bought back shares, giving him more rights, “edging towards a buyout.”
That is a stretch. He went from below one-third to above one-third, giving him an explicit veto on shareholder super-majority resolutions, but it’s minor. He now has 34.2%.
The suggestion: if he got two-thirds, he could squeeze out minorities without a Tender Offer. Technically true, but not easy. I dig deeper and propose how it could be done.

Haidilao’s Spin-Off of Super Hi: Index Implications

Haidilao (6862 HK) intends to spin-off its 90% holding in Super Hi International Holding (SHI HK) with an ex-date of 16 December.
Super Hi International Holding (SHI HK) will be deleted from the Hong Kong Hang Seng Index and Hang Seng China Enterprises Index at the close on listing day.
There could be nationality changes and selling from MSCI and FTSE trackers as well, though the timing is uncertain at this point.

Index Rebalance & ETF Flow Recap: ASX, HSTECH, TWDiv+, EPRA Nareit, HSCEI, PCOMP, STAR50, REMX, GDXJ

The rebalance implementation of the KOSPI2, KOSDQ150, CSI 300, CSI 500, STAR50 and other indices took place on 8/9 December. Plus MSCI/FTSE deletes due to Northbound Stock Connect changes.
Friday will see the implementation of the FTSE All-World/All-Cap, EPRA Nareit, S&P/ASX, KLCI, FTSE China and Sensex indices. The FTSE Taiwan Dividend+ Index will have the largest flows.
Big weekly redemptions from the Mirae Asset Tiger Top 10 ETF (292150 KS), ChinaAMC China 50 ETF (510050 CH) and IShares Core MSCI Asia Ex Japan ETF (3010 HK).

Good Morning Japan |+50bp Fed Hike in the Bag, but Watching Tuesday’s US CPI Print

Good Morning Japan: We strive to provide the best macro, stock and thematic overnight news that impacts your trading day in Japan. FOLLOW TO KEEP ABREAST.
OVERSEAS. US recession fears dominate, SPX -0.7%/-3.7%WoW; Nov PPI print higher vs Cons, Cements +50bp Fed hike; China stocks win WoW amid COVID loosening + Property rescue; Tech looks supported
JAPAN. NKY Futs -0.4% vs Cash, USDJPY ¥136.56; US asks JP to help curb China chip access; More Boeing orders, +ve JP related; FY23 Defense to rise by ¥1trn

Weekly Deals Digest (11 Dec) – Toshiba, Bigtincan, Nitro, Warrego, Xingda, VinFast, Weilong

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 – VinFast (1905332D VN) pre-markets a US$1bn IPO, I-Tail (ITC TB) and Sunshine Insurance (6963 HK) have tepid debuts, Weilong Delicious Global (WDG HK) launches a US$141m IPO.
Event-Driven developments – Bigtincan Holdings Ltd (BTH AU), Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Xingda International (1899 HK), Chip Eng Seng Corp (CHIP SP).

LG Energy: ESOP Lockup Release (3.5% of SO) & Contrarian Approach Targeting NPS

By Sanghyun Park

The ESOP’s 3.5% stake will be released on January 27. Considering the extremely tight flow situation, this is by no means small. 3.48% is 20 times the recent ADTV.
NPS will likely move toward a minimum stake of 6% again for LG Energy, irrespective of LG Energy’s current valuation, despite its recent selling.
We should consider the possibility that NPS will contrarily utilize this ESOP lockup release, and we should also design a contrarian position for this lockup release.

VinFast Auto IPO: The Bear Case

VinFast (1905332D VN), a Vietnamese EV manufacturer and a majority-owned affiliate of Vingroup Jsc (VIC VN), has filed for a US$1.0 billion IPO to list on Nasdaq.
In VinFast Auto 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 are a lack of brand recognition, questionable ability to generate profits, the precarious state of financing and liability exposure to ICE vehicles.

Acotec Scientific Holdings (6669.HK) – A Game Changer with Solid Long-Term Logic

By Xinyao (Criss) Wang

The peripheral vascular interventional device market in China is mainly dominated by foreign companies, but leading domestic company such as Acotec is the one to break the current market pattern.
With more products getting CE/FDA approval in the future, Acotec Scientific Holdings (6669 HK) is able to enter more overseas markets. Acotec’s globalization process will diversify the revenue stream.
Acotec has turned loss into profit by relying on product revenue. The Company has entered a new stage of innovation and harvest. We think Acotec has solid long term logic.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 11

Most Read: TA Chen Stainless Pipe, SK REITs, Far Eastern New Century, DMCI Holdings, Beijing-Shanghai High Speed Railway-A, China Shenhua Energy Co H, Tongcheng-Elong Holdings Ltd, Tietto Minerals Ltd, Liontown Resources, Jardine Cycle & Carriage and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive
FTSE EPRA Nareit Index Rebalance: Now One Add for Korea
Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA
PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes
JCNC Is Still Overstretched Vs. Astra

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive

There are 26 inclusions and 5 deletions for the index resulting in a one-way turnover of 46.3% and a one-way trade of TWD 79.52bn (US$2.6bn). That is HUGE!
There at 14 stocks that have over 5 days of ADV to buy from passive funds while there are 20 stocks with more that 5 days of ADV to sell.
Over the last 2 weeks and 4 weeks, short interest has decreased on most of the adds while increasing on all the deletes and most of the stocks with outflows.

FTSE EPRA Nareit Index Rebalance: Now One Add for Korea

SK REITs (395400 KS) will now be added to the FTSE EPRA Nareit Global Real Estate Index Series after market close on 16 December.
Based on the passive assets estimated to track the FTSE EPRA Nareit Index, there could be around 3.11m shares (US$11.3m; 19.2x ADV) to buy on SK REITs (395400 KS).
SK REITs (395400 KS) trades expensive as compared to ESR Kendall Square REIT (365550 KS) and we’d use an index inclusion driven rally to pare positions in the stock.

Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA

It was a busy week with the implementation of the MSCI Nov SAIR and the Hang Seng December rebalance, plus a lot of announcements for the FTSE indices.
The coming week has the implementation of the December rebalance for the KOSPI2 INDEX, KOSDAQ 150 Index and a range of indices in China.
Inflows to iShares MSCI Emerging Markets (EEM) and iShares MSCI ACWI ETF (ACWI US) during the week as markets move higher on expectations of slower rate hikes from the Fed.

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
There are a few other potential changes to the index and the passive flow on the stocks will be material.

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

Nearing the end of the review period for the March rebalance, we see China Shenhua Energy Co H (1088 HK) replacing China Feihe (6186 HK) in the HSCEI INDEX.
Estimated one-way turnover is 1.64% resulting in a one-way trade of HK$1.02bn with passives needing to buy 1x ADV on China Shenhua Energy and selling 1.7x ADV on China Feihe.
The change will lead to an increase in the fair value of the HSCEI 2023 dividend futures by over 3 DIPS. Could be more if China Shenhua pays a special.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes

Filo Mining (FIL CN) and Tietto Minerals (TIE AU) are adds while Fresnillo (FRES LN), Galiano Gold (GAU US), Jaguar Mining (JAG CN) and Novo Resources (NVO CN) are deletes.
One way turnover is estimated at 4.3% resulting in a one-way trade of US$163m. There is over 1 day of ADV to trade on 24 stocks.
Largest inflows are on Filo Mining (FIL CN) and Tietto Minerals Ltd (TIE AU) while largest outflows are on Fresnillo PLC (FRES LN) and Centerra Gold (CG CN).

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

As expected, there are no adds or deletes for the MVIS Global Rare Earth/Strategic Metals Index at the December rebalance.
There are free float and capping changes that will be implemented at the close on 16 December.
One way turnover is estimated at 4.26% and will result in a one-way trade of US$31.5m.

JCNC Is Still Overstretched Vs. Astra

Jardine Cycle & Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
A key catalyst for the recent narrowing was JCNC’s inclusion in the SIMSCI Index at the end of last month.
JCNC is expensive here – relative to historical values – and from an implied stub perspective.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 10

Most Read: Beijing-Shanghai High Speed Railway-A, Trina Solar Co Ltd, Tongcheng-Elong Holdings Ltd, Infosys Ltd, Softbank Group, Ecopro Co Ltd, VinFast, Jardine Cycle & Carriage, Tietto Minerals Ltd, Liontown Resources and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
China Rebalances at the Close Today- BIG Flows
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
Infosys (INFY)’s US$1.1bn Buyback
Can Son-San Take Over Softbank Group Through Buybacks?
KODEX Battery Rebalancing Results Out: From Today to Next Tuesday
VinFast Auto Pre-IPO – The Negatives – … But Starting Low
JCNC Is Still Overstretched Vs. Astra
MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Float & Capping Changes

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

China Rebalances at the Close Today- BIG Flows

There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
The round-trip turnover at the close of trading today should be in excess of US$8bn.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

Infosys (INFY)’s US$1.1bn Buyback

Infosys Ltd (INFO IN) (Infosys Ltd Sp Adr (INFY US)) on 5-6 December announced an on-market buyback of more than US$1.1bn.
The company has done buybacks before, and it is worthwhile looking at the details.
The buy-back looks small, and may be impactful near-term in near-space.

Can Son-San Take Over Softbank Group Through Buybacks?

On Thursday 8 December, an article showed up in Bloomberg suggesting Son-san had “increased his stake” as the company bought back shares, giving him more rights, “edging towards a buyout.”
That is a stretch. He went from below one-third to above one-third, giving him an explicit veto on shareholder super-majority resolutions, but it’s minor. He now has 34.2%.
The suggestion: if he got two-thirds, he could squeeze out minorities without a Tender Offer. Technically true, but not easy. I dig deeper and propose how it could be done.

KODEX Battery Rebalancing Results Out: From Today to Next Tuesday

By Sanghyun Park

As expected, Sungeel Hitech (365340) made it to the index. And C&I System (222080) and Wonik PNE (217820) were added, whereas Ecopro (086520) and Dongwha Enterprise (025900) were deleted.
Among the existing constituents, Samsung SDI (006400), Ecopro BM (247540), SK Innovation (096770), L&F (066970), and SKC (011790) are expected to have a relatively significant impact.
Looking at the last rebalancing, the impact/price correlation was most significant on Day 1. So, we should consider aiming for LONG/SHORT today for those with a high relative impact.

VinFast Auto Pre-IPO – The Negatives – … But Starting Low

By Sumeet Singh

VinFast (1905332D VN) is looking to raise up to US$1bn in its upcoming US IPO.
VinFast is a full-scale mobility platform focused primarily on designing and manufacturing premium EVs, electric scooters and electric buses.
In this note, we talk about the not-so-positive aspects of the deal.

JCNC Is Still Overstretched Vs. Astra

Jardine Cycle & Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
A key catalyst for the recent narrowing was JCNC’s inclusion in the SIMSCI Index at the end of last month.
JCNC is expensive here – relative to historical values – and from an implied stub perspective.

MVIS Global Junior Gold Miners Index Rebalance: Two Adds, Four Deletes, Float Changes

Filo Mining (FIL CN) and Tietto Minerals (TIE AU) are adds while Fresnillo (FRES LN), Galiano Gold (GAU US), Jaguar Mining (JAG CN) and Novo Resources (NVO CN) are deletes.
One way turnover is estimated at 4.3% resulting in a one-way trade of US$163m. There is over 1 day of ADV to trade on 24 stocks.
Largest inflows are on Filo Mining (FIL CN) and Tietto Minerals Ltd (TIE AU) while largest outflows are on Fresnillo PLC (FRES LN) and Centerra Gold (CG CN).

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

As expected, there are no adds or deletes for the MVIS Global Rare Earth/Strategic Metals Index at the December rebalance.
There are free float and capping changes that will be implemented at the close on 16 December.
One way turnover is estimated at 4.26% and will result in a one-way trade of US$31.5m.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 09

Most Read: Jafco Co Ltd, Tongcheng-Elong Holdings Ltd, Appier Group, Qingdao Haier Biomedical Co., Ltd.-A, Xingda International, Trina Solar Co Ltd, Nitro Software Ltd, Infosys Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
JAFCO (8595) Cancels Tender Offer – I Offer a Modest Proposal For Good Governance
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
TOPIX Inclusions: Who Is Ready (Dec 2022)
STAR50 Index Rebalance Preview: Another Five Potential Changes in March
Xingda Int’l (1899 HK): Partial MBO
China Rebalances at the Close Today- BIG Flows
Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up
Good Morning Japan |Equities Continue to Hold; China Stocks on Fire; Japan Major SQ
Infosys (INFY)’s US$1.1bn Buyback

Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?

On 17 Feb 2022, Janaghan Jeyakumar, CFA wrote about Appier Group (4180 JP) suggesting it was a TOPIX inclusion candidate in the not-distant future.
In mid-August 2022, he reiterated his opinion. Three days later, the company said they had applied for TSE Prime membership. We are coming up on the timing for an announcement.
It would mean buying, but the shareholder structure is interesting, and intentions are not easy to read. But if they announce imminently, the calendar makes the event even more interesting.

JAFCO (8595) Cancels Tender Offer – I Offer a Modest Proposal For Good Governance

Jafco Co Ltd (8595 JP) announced the reference period VWAP for the Tender Offer Buyback was ¥2,362.4136 vs target ¥2,525. Murakami-san refused to play, so the Tender Offer is cancelled.
This is good news and bad news. The announcement wording doesn’t make JAFCO look good, but they will continue discussions with City Index Eleventh. But there is potential.
I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection (Jonathan Swift, 1729)

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

TOPIX Inclusions: Who Is Ready (Dec 2022)

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.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Oct 2022)
At present, there are 60 names that satisfy all of these conditions and there are more names that are close to being in that group.

STAR50 Index Rebalance Preview: Another Five Potential Changes in March

Nearly 85% of the way through the review period, we see 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
Given the significantly higher market cap of the inclusions using a 6-month minimum listing history, we expect the index committee will continue to use the shorter listing history requirement.
With 5 changes a side, one-way turnover is estimated at 5.15% and will result in a one-way trade of CNY 3,994m. Impact on some deletions is quite high.

Xingda Int’l (1899 HK): Partial MBO

Late night Xingda (1899 HK) announced a partial Offer from a consortium comprising management – known as the Five parties – at HK$1.88/share – a 24.5% premium to last close.
The consortium – widely known as the Five Parties – currently holds 45.6%, and the intention of the Offer is to hold 50.01%, or a controlling stake.
There is a minimum/maximum number shares to be acquired under the Offer. I’d expect the minimum acceptance condition to be met.

China Rebalances at the Close Today- BIG Flows

There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
The round-trip turnover at the close of trading today should be in excess of US$8bn.

Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up

Nitro Software Ltd (NTO AU) has received a revised Potentia off-market takeover offer at A$2.00 per share, an 11.1% premium to its previous offer and in line with Alludo’s offer.
By bumping its offer, adding a scrip alternative and signalling a potentially higher price on due diligence access, Potentia has ramped up the pressure on the Board.
Potentia/Alludo offer remains at the low end of the IE’s valuation range. Alludo would have anticipated this move and likely will have factored in the need to raise its offer.

Good Morning Japan |Equities Continue to Hold; China Stocks on Fire; Japan Major SQ

Good Morning Japan: We strive to provide the best macro, stock and thematic overnight news that impacts your trading day in Japan. FOLLOW TO KEEP ABREAST.
OVERSEAS: SPX continue to hold as Tech leads the rebound; FTC moves to block MSFT acquistion of Activision (good); China stocks continue to be bid; Broadcom strong; PPI on Friday
JAPAN: Major SQ futures point to +0.4% open on the NKY; Govt continues to push forward with Nuclear rebirth(postive MHI); Kishida outlines how to pay for massive defense spending rise

Infosys (INFY)’s US$1.1bn Buyback

Infosys Ltd (INFO IN) (Infosys Ltd Sp Adr (INFY US)) on 5-6 December announced an on-market buyback of more than US$1.1bn.
The company has done buybacks before, and it is worthwhile looking at the details.
The buy-back looks small, and may be impactful near-term in near-space.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 08

Most Read: DMCI Holdings, Beijing-Shanghai High Speed Railway-A, HDFC Asset Management Co Ltd, Xingda International, Tongcheng-Elong Holdings Ltd, Appier Group, Woori Financial Group , Qingdao Haier Biomedical Co., Ltd.-A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
HDFC AMC: Abrdn’s Potential Placement & Index Implications
Xingda Int’l (1899 HK): Kicking The Tyres
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
TOPIX Inclusions: Who Is Ready (Dec 2022)
Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate
STAR50 Index Rebalance Preview: Another Five Potential Changes in March
Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
Good Morning Japan | Directionless Equities; As China Normalizes; Carvana Bankruptcy Imminent

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
There are a few other potential changes to the index and the passive flow on the stocks will be material.

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

HDFC AMC: Abrdn’s Potential Placement & Index Implications

Abrdn PLC (ABDN LN) is looking to sell its entire 10.21% stake in HDFC Asset Management (HDFCAMC IN) following which it will no longer be a sponsor of HDFC MF.
Depending on who the stake is sold to, there could be an immediate increase in the investability weight in the FTSE All-World Index.
More importantly, the increased free float will result in an increase in the FIF for the MSCI Standard Index and index inclusion could take place in February.

Xingda Int’l (1899 HK): Kicking The Tyres

Xingda International (1899 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
The controlling shareholders – more commonly known as the Five Parties – hold 45.6% of shares out.
Two years ago, Xingda sought to spin-off its key operating vehicle. Perhaps the Five Parties are privatising Xingda, then IPOing Xingda Steel Tyre Cord. Or, cashing out their positions.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

TOPIX Inclusions: Who Is Ready (Dec 2022)

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.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Oct 2022)
At present, there are 60 names that satisfy all of these conditions and there are more names that are close to being in that group.

Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

By Sanghyun Park

We’d better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).

STAR50 Index Rebalance Preview: Another Five Potential Changes in March

Nearly 85% of the way through the review period, we see 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
Given the significantly higher market cap of the inclusions using a 6-month minimum listing history, we expect the index committee will continue to use the shorter listing history requirement.
With 5 changes a side, one-way turnover is estimated at 5.15% and will result in a one-way trade of CNY 3,994m. Impact on some deletions is quite high.

Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control

Xingda International (1899 HK) disclosed a partial offer from management to acquire a maximum of 80.0 million shares at HK$1.88 per share, a 24.50% premium to the undisturbed price.
The pre-condition is Executive approval. The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders on the acceptance form.
The partial offer is an opportunistic foray to seize statutory control as it would not be sufficiently enticing to overcome FIL’s 9.99% blocking stake in a privatisation scheme.

Good Morning Japan | Directionless Equities; As China Normalizes; Carvana Bankruptcy Imminent

Good Morning Japan: We strive to provide the best macro, stock and thematic overnight news that impacts your trading day in Japan. FOLLOW TO KEEP ABREAST.
OVERSEAS: SPX holding 100D; Trading in tight range at support; Focus on now recession risks; China continues to normalize around COVID; Microsoft tries to appease regulators; Carvana facing bankruptcy
JAPAN: NKY futs -0.4% vs cash; USDJPY ¥136.5; Quiet ahead of major SQ; ANA hiring again; KEPCO set to restart Genkai; Hitachi canxl treasury shares; Nintendo strikes deal with MSFT

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 07

Most Read: Monadelphous, SDIC Power Holdings, China Shenhua Energy Co H, DMCI Holdings, Country Garden Holdings Co, Toshiba Corp, Fujitsu Ltd, Jafco Co Ltd, Sohu.com, Beijing-Shanghai High Speed Railway-A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year
Stock Connect Changes and MSCI/FTSE Deletes on Friday
HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)
PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
Country Garden Placement – Hot on the Heels of the Last Deal, Momentum Has Shifted
Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
Fujitsu (6702) Buyback Just Getting Started
JAFCO (8595) Sells NRI Shares But VWAP Falling Short – Comes Down To Murakami-San
Negative EVs: JOYY & Sohu’s Steep Discount To Net Cash
FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year

Pilbara Minerals (PLS AU) will replace Lendlease Group (LLC AU) in the S&P/ASX 50 Index, while Monadelphous (MND AU) will replace St Barbara Ltd (SBM AU) in the S&P/ASX 200.
The largest impact from passive trading will be on Monadelphous (MND AU) while the largest flow will be on Pilbara Minerals (PLS AU).
There appears to be significant short positioning on Lendlease Group (LLC AU) as cumulative excess volume and short interest continue to rise.

Stock Connect Changes and MSCI/FTSE Deletes on Friday

The SSE180, SSE380 and SZSE1000 indices rebalance at the close on Friday and that will lead to changes to the list of stocks eligible for Northbound Stock Connect.
Deletion from the Northbound Stock Connect Buy and Sell list will result in MSCI and FTSE deleting stocks from their indices. That selling will take place at the close Friday.
We expect 37 stocks to be deleted from the MSCI and FTSE indices at the close on 9 December – the announcements should be made later today or tomorrow.

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

Nearing the end of the review period for the March rebalance, we see China Shenhua Energy Co H (1088 HK) replacing China Feihe (6186 HK) in the HSCEI INDEX.
Estimated one-way turnover is 1.64% resulting in a one-way trade of HK$1.02bn with passives needing to buy 1x ADV on China Shenhua Energy and selling 1.7x ADV on China Feihe.
The change will lead to an increase in the fair value of the HSCEI 2023 dividend futures by over 3 DIPS. Could be more if China Shenhua pays a special.

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
There are a few other potential changes to the index and the passive flow on the stocks will be material.

Country Garden Placement – Hot on the Heels of the Last Deal, Momentum Has Shifted

By Sumeet Singh

Country Garden Holdings Co (2007 HK) aims to raise around US$500m via a primary placement
This will be the third placement by the company this year and the second one within a month’s time.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering

JIP, Toshiba Corp (6502 JP)‘s preferred bidder, is reported to be under pressure from co-investors to cut its offer price. Securing financing continues to be troublesome.
An offer valuing Toshiba less than JPY2.2 trillion would face pushback from the special committee, let alone shareholders. There are no signs of a JIC/Bain coming to the rescue.
While the Toshiba/peers price ratio remains undemanding compared to historical ratios, Toshiba looks expensive vs peers on multiples. With short-term newsflow likely to be incrementally negative, remain on the sidelines.

Fujitsu (6702) Buyback Just Getting Started

On 28 April 2022, with full-year earnings, Fujitsu Ltd (6702 JP) announced a buyback programme to buy back up to 12mm shares (6.11% of shares out) for up to ¥150bn
That was when the shares were ¥18,540. The shares popped 10% in 2 days. Then fell 25% into end-September. Yesterday, they announced they’d bought back 1.9mm shares in November.
Those were the first shares bought back under the Programme. And that leaves 4 months and a lot of stock to buy.

JAFCO (8595) Sells NRI Shares But VWAP Falling Short – Comes Down To Murakami-San

Late last month, JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback and set the large buyback from Murakami-san to occur through a Tender Offer.
The TOB price would be set at a 1% discount to the average 30 Nov – 7 Dec VWAP if VWAP was between ¥2,525 and ¥2,828/share. That’s not happening.
So now we read the fine print, look at waive-ability of conditions, and look at contingencies.

Negative EVs: JOYY & Sohu’s Steep Discount To Net Cash

Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names.
Of these companies, only two are expected to be EBITDA positive in FY22.
They are JOYY (YY US) and Sohu.com (SOHU US). This insight looks at both names.

FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change

Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 06

Most Read: TA Chen Stainless Pipe, SK REITs, Monadelphous, Nomura Research Institute, King’s Town Bank, Daiei Kankyo, Nikkei 225, Melco International Development, China Shenhua Energy Co H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive
FTSE EPRA Nareit Index Rebalance: Now One Add for Korea
S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year
NRI (4307) Likely Prices Today – Expect Weakness Then Strength
Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here
Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL
Daiei Kankyo (9336): TSE Prime IPO and Index Demand
Nikkei the First to Crack
Where Does Melco’s Discount To NAV Go From Here?
HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive

There are 26 inclusions and 5 deletions for the index resulting in a one-way turnover of 46.3% and a one-way trade of TWD 79.52bn (US$2.6bn). That is HUGE!
There at 14 stocks that have over 5 days of ADV to buy from passive funds while there are 20 stocks with more that 5 days of ADV to sell.
Over the last 2 weeks and 4 weeks, short interest has decreased on most of the adds while increasing on all the deletes and most of the stocks with outflows.

FTSE EPRA Nareit Index Rebalance: Now One Add for Korea

SK REITs (395400 KS) will now be added to the FTSE EPRA Nareit Global Real Estate Index Series after market close on 16 December.
Based on the passive assets estimated to track the FTSE EPRA Nareit Index, there could be around 3.11m shares (US$11.3m; 19.2x ADV) to buy on SK REITs (395400 KS).
SK REITs (395400 KS) trades expensive as compared to ESR Kendall Square REIT (365550 KS) and we’d use an index inclusion driven rally to pare positions in the stock.

S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year

Pilbara Minerals (PLS AU) will replace Lendlease Group (LLC AU) in the S&P/ASX 50 Index, while Monadelphous (MND AU) will replace St Barbara Ltd (SBM AU) in the S&P/ASX 200.
The largest impact from passive trading will be on Monadelphous (MND AU) while the largest flow will be on Pilbara Minerals (PLS AU).
There appears to be significant short positioning on Lendlease Group (LLC AU) as cumulative excess volume and short interest continue to rise.

NRI (4307) Likely Prices Today – Expect Weakness Then Strength

On 25 November Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would conduct a Secondary Offering of NRI Shares.
The sale is 36.97mm shares plus a greenshoe. It’s a big deal ($1bn) including greenshoe after JPY has just strengthened, but underperformance both before and after announcement sets up well.
Expect weakness today, but the stock is now at a two-year low, and the PER multiple premium is now at the lowest 3mo average premium in 5yrs. Expect retail buying.

Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here

Monadelphous (MND AU) will be added to the S&P ASX 200 Index on 16 December 2022.
This is not a surprise. It has been the lead contender for a December ADD slot since the day after the September rebalance was completed (see here).
There is a fair bit of volume to buy, and there are pair trades to do.

Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL

This trade is based on historical patterns described in the FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades AND additional considerations.
Those additional considerations were discussed in Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk and subsequent insights. So far, the trade is +7.1% since 26 October.
The announcement of FTSE TWSE Dividend+ names described in FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations changes the basket slightly for the home stretch.

Daiei Kankyo (9336): TSE Prime IPO and Index Demand

Daiei Kankyo (9336 JP) – designer, builder, operator/maintainer of waste management/recycling, soil purification, waste-to-energy, and similar infrastructure – will IPO on the TSE Prime market on 14 December.
The business is somewhat unexciting, but likely a non-growing, non-shrinking business which could roll up others.
The TSE Prime listing will mean it will have a TOPIX Inclusion at the end of January.

Nikkei the First to Crack

By Thomas Schroeder

Japan has been a top long in Asia, the rising wedge had us reducing our long. Friday saw a pronounced RSI bear wedge break and price crack.
Japan faces rotation pressure into core Asia and will shift Japan into the bear camp on a muted recovery attempt.
Japan’s macro cycle remains trapped in a sideways range. Buy support near 26,000 and sell resistance near 29,000.

Where Does Melco’s Discount To NAV Go From Here?

On the 26 November, Macau’s government renewed the concession periods of the city’s six incumbent gambling concessionaires for another 10 years.
Genting Malaysia (GENM MK), a last-minute interloper, failed in its bid to secure a license. It scored lowest under the government’s bidding review. MGM China (2282 HK) topped the scoresheets.
As with all incumbents, Melco International (200 HK) and Melco Resorts & Entertainment (MLCO US) eked out strong gains following the renewal. Melco’s current discount to NAV is currently 20%.

HSCEI Index Rebalance Preview: Shenhua Energy (1088) Could Replace China Feihe (6186)

Nearing the end of the review period for the March rebalance, we see China Shenhua Energy Co H (1088 HK) replacing China Feihe (6186 HK) in the HSCEI INDEX.
Estimated one-way turnover is 1.64% resulting in a one-way trade of HK$1.02bn with passives needing to buy 1x ADV on China Shenhua Energy and selling 1.7x ADV on China Feihe.
The change will lead to an increase in the fair value of the HSCEI 2023 dividend futures by over 3 DIPS. Could be more if China Shenhua pays a special.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 05

Most Read: Toshiba Corp, TA Chen Stainless Pipe, Monadelphous, Far Eastern New Century, Nomura Research Institute, SK REITs, King’s Town Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT
Toshiba Privatisation In Trouble
FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive
S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year
FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations
Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA
NRI (4307) Likely Prices Today – Expect Weakness Then Strength
FTSE EPRA Nareit Index Rebalance: Now One Add for Korea
Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL
Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here

FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT

Far Eastern New Century (1402 TT) will replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index at the close on 16 December.
Passive trackers will need to buy 4.8 days of ADV on Far Eastern New Century (1402 TT) and sell 1.9 days of ADV on AU Optronics (2409 TT).
There will be same way flow from FTSE TWSE Taiwan Dividend+ Index trackers on both stocks and that will significantly add to the passive flow.

Toshiba Privatisation In Trouble

After a few successive rounds of Management and Board Proposals were shot down, last March Toshiba Corp (6502 JP) embarked on a process to generate a privatisation proposal.
The result has ended up with one, maybe two privatisation proposals in the offing. The “leading” candidate’s proposal will not fly as proposed. The other is MIA for the moment.
That leaves a complicated situation. Activists+active holders are stuck with Toshiba and vice versa. They want change, and out, and financiers do too. Change happens. The question is how.

FTSE TWSE Taiwan Dividend+ Index Rebalance: On Expected Lines; But the Flow Is Massive

There are 26 inclusions and 5 deletions for the index resulting in a one-way turnover of 46.3% and a one-way trade of TWD 79.52bn (US$2.6bn). That is HUGE!
There at 14 stocks that have over 5 days of ADV to buy from passive funds while there are 20 stocks with more that 5 days of ADV to sell.
Over the last 2 weeks and 4 weeks, short interest has decreased on most of the adds while increasing on all the deletes and most of the stocks with outflows.

S&P/ASX Index Rebalance (Dec 2022): Couple of Changes to Close Out the Year

Pilbara Minerals (PLS AU) will replace Lendlease Group (LLC AU) in the S&P/ASX 50 Index, while Monadelphous (MND AU) will replace St Barbara Ltd (SBM AU) in the S&P/ASX 200.
The largest impact from passive trading will be on Monadelphous (MND AU) while the largest flow will be on Pilbara Minerals (PLS AU).
There appears to be significant short positioning on Lendlease Group (LLC AU) as cumulative excess volume and short interest continue to rise.

FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations

The index changes for the FTSE TWSE Taiwan Dividend+ Index for the December 2022 index review were confirmed after market close on Friday 2nd December 2022.
There will be 26 ADDs and 5 DELs which are mostly in line with Quiddity’s expectations.
In this insight, we take a look at our revised expectations for capping flows taking into account the confirmed index changes for the December 2022 review

Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA

It was a busy week with the implementation of the MSCI Nov SAIR and the Hang Seng December rebalance, plus a lot of announcements for the FTSE indices.
The coming week has the implementation of the December rebalance for the KOSPI2 INDEX, KOSDAQ 150 Index and a range of indices in China.
Inflows to iShares MSCI Emerging Markets (EEM) and iShares MSCI ACWI ETF (ACWI US) during the week as markets move higher on expectations of slower rate hikes from the Fed.

NRI (4307) Likely Prices Today – Expect Weakness Then Strength

On 25 November Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would conduct a Secondary Offering of NRI Shares.
The sale is 36.97mm shares plus a greenshoe. It’s a big deal ($1bn) including greenshoe after JPY has just strengthened, but underperformance both before and after announcement sets up well.
Expect weakness today, but the stock is now at a two-year low, and the PER multiple premium is now at the lowest 3mo average premium in 5yrs. Expect retail buying.

FTSE EPRA Nareit Index Rebalance: Now One Add for Korea

SK REITs (395400 KS) will now be added to the FTSE EPRA Nareit Global Real Estate Index Series after market close on 16 December.
Based on the passive assets estimated to track the FTSE EPRA Nareit Index, there could be around 3.11m shares (US$11.3m; 19.2x ADV) to buy on SK REITs (395400 KS).
SK REITs (395400 KS) trades expensive as compared to ESR Kendall Square REIT (365550 KS) and we’d use an index inclusion driven rally to pare positions in the stock.

Taiwan Div+ Index Dec22 Rebal Trade – +7.1% Now; Amend and HODL

This trade is based on historical patterns described in the FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades AND additional considerations.
Those additional considerations were discussed in Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk and subsequent insights. So far, the trade is +7.1% since 26 October.
The announcement of FTSE TWSE Dividend+ names described in FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations changes the basket slightly for the home stretch.

Monadelphous (MND AU) Is The S&P ASX 200 ADD – There’s a Trade Here

Monadelphous (MND AU) will be added to the S&P ASX 200 Index on 16 December 2022.
This is not a surprise. It has been the lead contender for a December ADD slot since the day after the September rebalance was completed (see here).
There is a fair bit of volume to buy, and there are pair trades to do.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 04

Most Read: Zhejiang Longsheng Group Co.,, Yum China Holdings Inc, Home Consortium Ltd, Shanghai Fudan Microelectronics Group, Hunan Zhongke Electric Co,Ltd., Far Eastern New Century, Toshiba Corp, Monadelphous, TA Chen Stainless Pipe and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
CES China Semiconductor Chips Index Rebalance: Four Changes in December
ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care
FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT
Toshiba Privatisation In Trouble
S&P ASX Dec 22 Rebalance: MND Is the Top Pick
Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA
FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations

CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover

There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.

FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT

JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.

FTSE EPRA Nareit Index Rebalance: One Deletion for Australia

There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.

CES China Semiconductor Chips Index Rebalance: Four Changes in December

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.

ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care

There will be 10 changes for the Chinext Price Index and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 December.
One surprise is the inclusion of Hunan Zhongke Electric Co,Ltd. (300035 CH) in both indices. Four stocks are adds to both indices while two stocks are deletes from both indices.
The adds have outperformed the deletes over the last 8 months but have given up some of the gains over the last month. There is a big sector skew.

FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT

Far Eastern New Century (1402 TT) will replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index at the close on 16 December.
Passive trackers will need to buy 4.8 days of ADV on Far Eastern New Century (1402 TT) and sell 1.9 days of ADV on AU Optronics (2409 TT).
There will be same way flow from FTSE TWSE Taiwan Dividend+ Index trackers on both stocks and that will significantly add to the passive flow.

Toshiba Privatisation In Trouble

After a few successive rounds of Management and Board Proposals were shot down, last March Toshiba Corp (6502 JP) embarked on a process to generate a privatisation proposal.
The result has ended up with one, maybe two privatisation proposals in the offing. The “leading” candidate’s proposal will not fly as proposed. The other is MIA for the moment.
That leaves a complicated situation. Activists+active holders are stuck with Toshiba and vice versa. They want change, and out, and financiers do too. Change happens. The question is how.

S&P ASX Dec 22 Rebalance: MND Is the Top Pick

The index changes for the S&P ASX Index family for the December 2022 Rebalance were announced after the close on Friday 2nd December 2022.
There will be one ADD/DEL for the ASX 50 index and one ADD/DEL for the ASX 200 index.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

Index Rebalance & ETF Flow Recap: STAR50, CSI300/500, SSE50/180/380, ChiNext, SZSE1000, CH50, EPRA

It was a busy week with the implementation of the MSCI Nov SAIR and the Hang Seng December rebalance, plus a lot of announcements for the FTSE indices.
The coming week has the implementation of the December rebalance for the KOSPI2 INDEX, KOSDAQ 150 Index and a range of indices in China.
Inflows to iShares MSCI Emerging Markets (EEM) and iShares MSCI ACWI ETF (ACWI US) during the week as markets move higher on expectations of slower rate hikes from the Fed.

FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations