Most Read

For Asia Pacific, there are 48 adds/76 deletes for the Standard Indices and 166 adds/147 deletes for the Small Cap Index that will be implemented at the close today.
The adds have outperformed the deletes on average over the last few weeks/months. A long adds/short deletes trade performed better for Small Caps as compared to the Standard index.
There are a lot of stocks that will have same-way flow from other index trackers over the next few weeks and there could be a higher impact on these names.

Mercari (4385 JP): Section Transfer Means TOPIX & FTSE Inclusion

Mercari Inc (4385 JP) was deleted from the MSCI Japan at the close today. Then the company announced that it would move to the Prime Market on 7 June.
Transfer to Prime Market will require passive TPX INDEX trackers to buy stock end July and FTSE All-World trackers to buy in September – around 19% of free float together.
Short interest is over 13% of free float. Some of the shorts would have covered against the passive MSCI selling today but the remaining shorts could look to cover.

Mercari (4385) TOPIX Inclusion, Finally… And It’s Bigger Than It Looks

4.5 months ago I wrote Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months and today it was announced Mercari would move from TSE Growth to Prime.
The move happens on 7 June, which means that the actual TOPIX inclusion will be at the close of 28 July.
This will change things near-term, and going forward. As always, we dig deeper below.

Nikkei 225 Index Rebalance Preview: Market Consultation & Potential Changes

The Nikkei 225 (NKY INDEX) market consultation released last week could lead to some tweaks to the index methodology and the stock selection process. Nothing really material enough though.
Potential index inclusions in September are Renesas Electronics, Oriental Land and Pan Pacific International Holdings, while Toyobo Co Ltd, Nippon Light Metal and Oki Electric Industry are potential index deletions.
Passive Nikkei 225 trackers will need to buy between 4-9% of the real float on the high/ medium probability names, while they need to buy between 2.5-14 days of ADV.

Short LG Corp on the Unsustainable Price Spike

By Sanghyun Park

The question now is whether this event can lead to a structural uptrend in LG Corp. I am skeptical about this.
LG Corp took a preemptive action to increase its attractiveness as a dividend stock to prevent a share price decline ahead of the listing of LG CNS.
However, this measure does not address the root cause of LG Corp’s massive NAV discount. So, I would consider a short position setup for LG Corp.

Before it’s here, it’s on Smartkarma

May 31

Most Read: NTT (Nippon Telegraph & Telephone), Orient Overseas International, Tsingtao Brewery Co Ltd H, AGL Energy Ltd, Seazen (Formerly Future Land) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TOPIX Rebalance: Flows at the Close
MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far
Tsingtao Placement – Ending the Selldowns with the Biggest One so Far
AGL Drops Demerger Proposal – Back To Square Two
CCASS: Why Large Moves Continue To Matter

TOPIX Rebalance: Flows at the Close

The second tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading today.
One way flow is ~JPY 745bn and will be spread across ~2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203).
The stocks with the largest inflows have outperformed the stocks with the largest outflows over the last month and the outperformance could continue going into the last tranche in June.

MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far

For Asia Pacific, there are 48 adds/76 deletes for the Standard Indices and 166 adds/147 deletes for the Small Cap Index that will be implemented at the close today.
The adds have outperformed the deletes on average over the last few weeks/months. A long adds/short deletes trade performed better for Small Caps as compared to the Standard index.
There are a lot of stocks that will have same-way flow from other index trackers over the next few weeks and there could be a higher impact on these names.

Tsingtao Placement – Ending the Selldowns with the Biggest One so Far

By Sumeet Singh

Fosun aims to raise around US$527m via selling a 3.5% stake in Tsingtao.
This is not the first selldown by Fosun, we have covered three prior deals in Dec 2020, Apr 2021 and Dec 2021.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

AGL Drops Demerger Proposal – Back To Square Two

After 14 months of Strategic Review and preparation for a Demerger of its generation and distribution businesses, the Board has dropped the Demerger Proposal in face of shareholder opposition.
While it isn’t clear exactly how much opposition there was, Michael Cannon-Brookes held 11+% and General Meetings have garnered 50-75% of investors for a vote which needed 75% approval.
CEO and Chair have announced their resignations, two other board members will leave, and now the Board will start another strategic review using preparation at hand.

CCASS: Why Large Moves Continue To Matter

In this latest installment in a series dating back to March 2018, I’ve analysed 5,500 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks.
The data continues to bear out the overall underperformance of stocks that exhibit such moves.
Additionally, the movement of large blocks of shares may illustrate that the beneficial owner of those shares has pledged them as collateral for a loan.

Before it’s here, it’s on Smartkarma

May 30

Most Read: TBEA Co Ltd A, NTT (Nippon Telegraph & Telephone), Shanghai Pudong Development Bank Co., Beijing Tongrentang Co A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TOPIX May Rebalance – The BIG Flows at the Close MONDAY
CSI300 Index Rebalance: Big Sector Shift with 28 Changes
TOPIX Rebalance: Flows at the Close
SSE50 Index Rebalance: Some Large Impact Changes
SSE180/SSE380 Index Rebalance: Potential MSCI/FTSE Adds & Deletes

TOPIX May Rebalance – The BIG Flows at the Close MONDAY

The TSE Free Float Weight Rebalance to be executed at the close Monday (30 May) is about ¥729bn a side, so it will add ~¥1.5trln to volumes.
A sector-neutral basket of the 98 top upweights and 98 top downweights across the 33 TOPIX sectors saw the upweights UNDER-perform the downweights by about 0.3% since the April rebalance.
Monday again sees very large buy and sell flows at the close. This is a guide to taking advantage of those flows. Sector tables and a spreadsheet is attached.

CSI300 Index Rebalance: Big Sector Shift with 28 Changes

There are 28 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
We had forecast nearly all the changes, though the index committee seems to have used discretion in deciding not to add three Distillers to the index, leading to other changes.
There’s a large sector skew with Industrials, Information Technology and Materials stocks taking 17 more spots in the index, while Health Care and Financials lose 9 and 5 spots respectively.

TOPIX Rebalance: Flows at the Close

The second tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading today.
One way flow is ~JPY 745bn and will be spread across ~2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203).
The stocks with the largest inflows have outperformed the stocks with the largest outflows over the last month and the outperformance could continue going into the last tranche in June.

SSE50 Index Rebalance: Some Large Impact Changes

There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. The impact is pretty chunky on a few deletions.
Apart from the passive assets tracking the index, there are some liquid index futures and the impact on the stocks will be larger than just the headline numbers.
The adds underperformed the deletes in March and April but have come roaring back in May. Playing the trade via long/short pairs could provide better risk adjusted returns.

SSE180/SSE380 Index Rebalance: Potential MSCI/FTSE Adds & Deletes

There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 June.
There will be 9 deletions from the MSCI Standard Index and 22 deletions from the FTSE All-World/All-Cap indices at the close on 9 June.
Currently, 16 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 38 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.

Before it’s here, it’s on Smartkarma

May 29

Most Read: Jinko Solar, Shanghai Pudong Development Bank Co., Dabur India Ltd, TBEA Co Ltd A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Impact of DRGs Policy on China Medical System
STAR50 Index Rebalance: Dear Index Committee…
SSE50 Index Rebalance: Some Large Impact Changes
Dabur India Ltd (DABUR IN) | Some Things Never Change
CSI300 Index Rebalance: Big Sector Shift with 28 Changes

The Impact of DRGs Policy on China Medical System

By Xinyao (Criss) Wang

DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.
DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.
Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.

STAR50 Index Rebalance: Dear Index Committee…

The index committee has continued to use a 6 month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in June.
One way turnover is estimated at 8.56% and will result in a one-way trade of CNY 3,496m. Passive trackers will need to trade between 2-6 days ADV on the adds/deletes.
The inclusions have outperformed the deletions and the CSI500 Index since the end of the review period with all inclusions moving higher over the period.

SSE50 Index Rebalance: Some Large Impact Changes

There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. The impact is pretty chunky on a few deletions.
Apart from the passive assets tracking the index, there are some liquid index futures and the impact on the stocks will be larger than just the headline numbers.
The adds underperformed the deletes in March and April but have come roaring back in May. Playing the trade via long/short pairs could provide better risk adjusted returns.

Dabur India Ltd (DABUR IN) | Some Things Never Change

By Pranav Bhavsar

Dabur India Ltd (DABUR IN) is over-exposed to rural India where the recovery is uncertain and slow.
Channel feedback with regards to relationships with distributors and the company’s strategic direction has been poor.
A weak operating environment coupled with a weak on-ground execution suggests underperformance may continue.

CSI300 Index Rebalance: Big Sector Shift with 28 Changes

There are 28 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
We had forecast nearly all the changes, though the index committee seems to have used discretion in deciding not to add three Distillers to the index, leading to other changes.
There’s a large sector skew with Industrials, Information Technology and Materials stocks taking 17 more spots in the index, while Health Care and Financials lose 9 and 5 spots respectively.

Before it’s here, it’s on Smartkarma

May 28

Most Read: Sony Corp, Centrica PLC, LG Energy Solution, Dongzheng Automotive Finance, CanSino Biologics Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sony – IR Day One and Kadokawa
FTSE100/FTSE250 Index Rebalance Preview: Changes and Migrations
LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility
SAIC’s Unconditional Offer For Dongzheng
Shanghai/Shenzhen Southbound Connect: Weekly Moves (27 May 2022)

Sony – IR Day One and Kadokawa

By Mio Kato

Sony held the first of their two investor days yesterday presenting on the Game & Network Services, Music and Pictures segments.
While there was nothing especially new for those paying attention to the broad flow of news conditions for the content businesses remain strong.
What was interesting to us was the degree of collaboration with Kadokawa.

FTSE100/FTSE250 Index Rebalance Preview: Changes and Migrations

At the June rebalance, Centrica PLC (CNA LN) and Unite Group (UTG LN) could replace Royal Mail PLC (RMG LN) and ITV PLC (ITV LN) in the UKX Index.
Apart from the migration between the FTSE 100 and FTSE 250 indices, there could be 5 adds and deletes to the FTSE 250 Index in June.
There are some close adds and the list could change from now to the review cutoff date on 31 May. These changes could be interesting from a trading perspective.

LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility

By Sanghyun Park

LG Energy Solution’s real-world free-float rate should be around 5%, or 12.3M shares. We will see two additional passive inflows with the real-world float this tight.
KOSPI 200 up-weight and FTSE June QIR New Entry’s combined inflow will be 0.6% of SO, enough for us to expect a short-term flow crunch.
Then, there will likely be a share let-go event (block deals) by LG Chem to lessen the tight float situation, just like what KSOE had done for HHI.

SAIC’s Unconditional Offer For Dongzheng

It’s now official – SAIC Motor (600104 CH) has made a possible unconditional mandatory cash Offer for Dongzheng Automotive Finance (2718 HK).
To recap: on the 19 May, SAIC acquired China Zhengtong Auto Services Hldg (1728 HK)‘s 71.04% stake in Dongzheng at a judicial auction. This triggers the mandatory Offer.
The new news from today’s announcement is that the Offer price was reduced to HK$1.243/share – presumably on account of moves in HKD vs. RMB. The Offer price is final.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (27 May 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$1.1bn, split evenly (roughly) between Shanghai and Shenzhen.
The largest inflows were into China Mobile (941 HK) and CNOOC Ltd (883 HK). The largest outflows were in Kuaishou Technology (1024 HK) and BYD (1211 HK).

Before it’s here, it’s on Smartkarma

May 27

Most Read: Tsuruha Holdings, Appen Ltd, SK Telecom Co Ltd (Adr), Renesas Electronics, Yancoal Australia and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
Appen (APX AU): Telus’ 48% Premium; 10% Short Interest; Potential ASX200 Deletion
SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room
Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough
Yancoal (YAL AU, 3668 HK): Potential Offer From Parent In H-Share CBs

MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day

There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there was large short buildup prior to announcement of the changes.
Shorts have continued to increase to increase over the last week and there could be a reversal over the next few days as shorts start to cover.
Buying the deletions in the next few days and hedging with Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) futures could provide superior risk adjusted returns.

Appen (APX AU): Telus’ 48% Premium; 10% Short Interest; Potential ASX200 Deletion

Telus International (TIXT US) has made an unsolicited, conditional and non-binding indicative proposal to acquire 100% of Appen Ltd (APX AU) at A$9.5/share, valuing the company at A$1.17bn.
The offer is a 48% premium to the last close but a discount to longer-term VWAPs. It should require a bump for the Appen Board to unanimously recommend to shareholders.
Appen Ltd (APX AU) is a potential deletion from the S&P/ASX 200 (AS51 INDEX) at the June rebalance. Short interest is 10% of shares out. There will be covering.

SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

By Sanghyun Park

The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn’t entirely burned.
The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.
This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review – twice a year rather than once.
More interestingly, they also change the “High Liquidity” definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.

Yancoal (YAL AU, 3668 HK): Potential Offer From Parent In H-Share CBs

Yankuang Energy Group Company (1171 HK) is considering an Offer for dual-listed coal-miner Yancoal Australia (YAL AU / 3668 HK) via the issuance of H-share convertible bonds.
The potential consideration of US$3.60 (~A$5.07/~HK$28.26) per Yancoal share, in the form of H-Share CBs, compares to the last close A$6.08 and HK$33.05. Perhaps an attractive yield will be dangled.
Yankuang Energy has 62.26%. Cinda, Glencore, and China Shandong collectively hold 27.7%. You need all three to support the Offer terms, and then some, to force compulsory acquisition.

Before it’s here, it’s on Smartkarma

May 26

Most Read: Tsuruha Holdings, Toyo Construction, Bank of Kyoto, Grab, Jiayuan Services Holdings Limited and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
Toyo Construction Comes Out Fighting Against YFO, But Sincerely.
Bank of Kyoto (8369) Surprises With a Cross-Holding Sale Plan (Albeit Small)
Grab IPO Lock-Up – Over 60% of the Stock Worth Nearly US$8bn Comes Free
Jinke & Jiayuan: Pledged Shares And Leveraged Property Developers

MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day

There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there was large short buildup prior to announcement of the changes.
Shorts have continued to increase to increase over the last week and there could be a reversal over the next few days as shorts start to cover.
Buying the deletions in the next few days and hedging with Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) futures could provide superior risk adjusted returns.

Toyo Construction Comes Out Fighting Against YFO, But Sincerely.

As discussed in the last insight, there was the possibility that YFO was jumping the gun. From the near 100+ pages released by Toyo Construction (1890 JP) today, they did.
TC accused YFO of being “dishonest” in its attitude and actions, from the “reasons” stated in its Large Shareholder Report and market purchases to YFO’s Murakami-san’s previous interactions.
What TC doesn’t yet understand is that when a company is in play, if a “market check” comes in, that’s OK. Investors are not hurt by a higher bid.

Bank of Kyoto (8369) Surprises With a Cross-Holding Sale Plan (Albeit Small)

Bank of Kyoto (8369 JP) has been the poster child for “deep value” Japan traders and occasional wannabe activists. It has a huge equity portfolio which dwarfs market cap.
Every year, twice a year (end of May and early December) Bank of Kyoto (8369 JP) releases a document for a meeting with analysts and press called Information Meeting.
This year’s is a little different in that it proposes sales of 10% of its equity portfolio. It’s “small” but worth thinking about.

Grab IPO Lock-Up – Over 60% of the Stock Worth Nearly US$8bn Comes Free

By Sumeet Singh

Grab raised around US$4.5bn in its de-SPAC listing in Dec 2021. The shares are now trading around 68% below the listing price.
At the time of listing, all of its top investors were locked up for six months. The lock-up expires on 30th May 2022.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Jinke & Jiayuan: Pledged Shares And Leveraged Property Developers

On the 21 May, Jinke Property (000656 CH) announced the forced sale of shares by its controlling shareholder. One day later, Jiayuan International (2768 HK) announced a similar event.
Jinke’s 52.3%-owned Jinke Smart (9666 HK) has now announced an agreement to acquire Jiayuan International’s 73.56% stake in property service play Jiayuan Services Holdings (1153 HK). No price was announced.
In the past month, Jinke Property is down 24%, Jinke Smart 23%, Jiayuan International 54% and Jiayuan Services 80%. Jiayuan International and Jiayuan Services remain suspended.

Before it’s here, it’s on Smartkarma

May 25

Most Read: Ichigo Inc, Sunny Optical, Mapletree Commercial Trust, Core Lithium Ltd, Hana Tour Service and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE EPRA Nareit Developed Asia Preview: Adds, Close Adds & Misses for June
FTSE China 50 Index Rebalance Preview: Adds, Deletes & Capping Changes
MCT and MNACT Unitholders Approve Merger To Become MPACT
Tabcorp Spinoff (TLC/TAH) & S&P/ASX: Where They Stay and Where They Go
KOSPI200 Index Rebalance: Se7en Changes

FTSE EPRA Nareit Developed Asia Preview: Adds, Close Adds & Misses for June

The FTSE EPRA Nareit Index June rebalance will use data from 23 May. The changes will be announced on 1 June and implemented at the close on 17 June.
Potential inclusions at the review include Ichigo Inc (2337 JP) and LOTTE Reit Co Ltd (330590 KS) while there is a possibility of Digital Core REIT (DCREIT SP) being added.
Mapletree North Asia Commercial Trust‘s NPI from Developed Markets is 72% making it ineligible for index inclusion, while Frasers Hospitality Trust‘s drop has taken it out of the inclusion list.

FTSE China 50 Index Rebalance Preview: Adds, Deletes & Capping Changes

We expect China Railway Group Ltd H (390 HK) and Yanzhou Coal Mining (1171 HK) to replace Smoore International (6969 HK) and Sunny Optical (2382 HK) in the FTSE China50 Index.
There are capping changes that have a reasonable large impact on a couple of stocks. One-way turnover is estimated at 3.97% and will result in a one-way trade of HK$1,912m.
FTSE has increased the investability weight for Li Auto (2015 HK) / Li Auto Inc. (LI US) and this leads to the stock failing the median liquidity test.

MCT and MNACT Unitholders Approve Merger To Become MPACT

The merger between Mapletree Commercial Trust (MCT SP) and Mapletree North Asia Commercial Trust (MAGIC SP) (a.k.a. “MNACT”) was approved by both sets of unitholders today.
MCT unitholders offered 85.7-92.1% approval rates for the four measures. MNACT unitholders offered 98-99% approval rates (but high 80s in terms of unitholder count).
Now we move forward, with the election of terms and

Tabcorp Spinoff (TLC/TAH) & S&P/ASX: Where They Stay and Where They Go

The Lottery Corp (TLC AU) and new Tabcorp Ltd (TAH AU) have commenced trading today as standalone entities following their demerger.
We expect Tabcorp Ltd (TAH AU) to be deleted from the S&P/ASX50 and S&P/ASX100 indices at the June rebalance, while it would remain in the S&P/ASX 200 (AS51 INDEX).
Given Crown Resorts (CWN AU) has delayed the second court hearing, there should be an extra deletion from the S&P/ASX 200 (AS51 INDEX) in June.

KOSPI200 Index Rebalance: Se7en Changes

There will be 7 additions and 7 deletions for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the June rebalance that will be implemented on 9 June.
We got all 7 inclusions right and 5 of the 7 deletions right. The adds have 3-6 days ADV to buy, while the deletes have 4-12 days ADV to sell.
Short interest on the deletions is a significant portion of the estimated passive selling and there could be short covering in the week leading up to implementation of the changes.

Before it’s here, it’s on Smartkarma

May 24

Most Read: LG Energy Solution, Orient Overseas International, Woodside Petroleum, HDFC Bank, Nufarm Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes
HSI Index Rebalance: Four Weddings & A Funeral
BHP Woodside Distribution – Could Be a Large Block (~US$1bn) In Early June
HDFC/HDFC Bank Mega Merger: Foreign Selling Now Could Lead to Foreign Buying Later
Nufarm Placement – Cleanup by Strategic Investor

FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes

For Asia Pacific, there are 8 inclusions each to the All-World Index and the All-Cap Index at the June QIR. Quite a few have over 3 days ADV to buy.
There are also changes to the NOS and investability weights that will require passive funds to buy/sell a lot of stocks. Some have a reasonably large impact/flow.
A lot of the IPOs are trading below their offering prices and investors could be looking to sell into any rallies that take the stocks close to their IPO prices.

HSI Index Rebalance: Four Weddings & A Funeral

The inclusion of Orient Overseas International, Zhongsheng Group, Semiconductor Manufacturing International Corp (SMIC) and China Hongqiao plus the deletion of AAC Technologies Holdings takes us to 69 index stocks.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover is 3.43% and will result in a one-way trade of HK$7,444m.
There is huge short interest on Zhongsheng Group (881 HK) and China Hongqiao (1378 HK) and there could be some short covering from now to implementation.

BHP Woodside Distribution – Could Be a Large Block (~US$1bn) In Early June

By Sumeet Singh

BHP shareholders will receive US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger. Block, worth US$1.5bn, could be sold in early June.
As a part of the distribution, some shares belonging to ineligible and other small shareholders will have to be sold by the sales agent, JPM.
In this note, we will look at the possible deal dynamics and the overall background of the deal.

HDFC/HDFC Bank Mega Merger: Foreign Selling Now Could Lead to Foreign Buying Later

HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN)‘s stock prices have dropped and underperformed their peers since the announcement of the merger in April. Foreign investors have been selling.
As of 13 May, foreign investors hold 68.56% of HDFC Limited (HDFC IN) and 66.55% of HDFC Bank (HDFCB IN), down from 72.16% and 70.08% respectively as of December 2021.
The merged entity currently has foreign room of 16% now and this could lead to large buying from passive MSCI and FTSE trackers at the time of merger implementation.

Nufarm Placement – Cleanup by Strategic Investor

By Clarence Chu

Sumitomo Chemical (4005 JP) is looking to sell its entire stake in Nufarm Ltd (NUF AU) to raise A$338.3m (US$240.6m).
Sumitomo Chemical had been a strategic investor, where it purchased 20% stake via a tender offer at A$14/share. The former had also acquired Nufarm’s South American businesses in mid-2020.
While this would be a clean-up sale, the deal is a large one to process at 36 days ADV.

Before it’s here, it’s on Smartkarma

May 23

Most Read: LG Energy Solution, Orient Overseas International, SPH REIT, NIO Inc, Grab and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes
HSI Index Rebalance: Four Weddings & A Funeral
SPH Offer Open – Starts to Look Interesting
Index Rebalance & ETF Flow Recap: MSCI, ASX, NIFTY, KRX, PCOMP, HSI, HSCEI, HSTECH, SK Tel, GoTo
GoTo: A Private Placement Larger Than the IPO and a 10% Potential Dilution

FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes

For Asia Pacific, there are 8 inclusions each to the All-World Index and the All-Cap Index at the June QIR. Quite a few have over 3 days ADV to buy.
There are also changes to the NOS and investability weights that will require passive funds to buy/sell a lot of stocks. Some have a reasonably large impact/flow.
A lot of the IPOs are trading below their offering prices and investors could be looking to sell into any rallies that take the stocks close to their IPO prices.

HSI Index Rebalance: Four Weddings & A Funeral

The inclusion of Orient Overseas International, Zhongsheng Group, Semiconductor Manufacturing International Corp (SMIC) and China Hongqiao plus the deletion of AAC Technologies Holdings takes us to 69 index stocks.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover is 3.43% and will result in a one-way trade of HK$7,444m.
There is huge short interest on Zhongsheng Group (881 HK) and China Hongqiao (1378 HK) and there could be some short covering from now to implementation.

SPH Offer Open – Starts to Look Interesting

The SPH REIT (SPHREIT SP) Chain Offer was launched on Thursday 19 May.
The Chain Offer Price has been revised lower from the original level to be S$0.9372/unit, as discussed a few times in these pages.
The units have underperformed Peer Baskets for the last few months and have now fallen to the Chain Offer Price. That presents opportunities

Index Rebalance & ETF Flow Recap: MSCI, ASX, NIFTY, KRX, PCOMP, HSI, HSCEI, HSTECH, SK Tel, GoTo

By Shifara Samsudeen, ACMA, CGMA

Plenty of review announcements after the close on Friday – HSI, HSCEI, HSTECH, FTSE AW/AC, Sensex. Most changes were as expected.
There are a lot of review cutoffs on Monday and announcements expected later in the week (KOSPI200, KOSDAQ150, CSI300, STAR50).
There were inflows to Hong Kong, Taiwan, Korea and Australia focused ETFs during the week, while there were outflows from China, Japan and India focused ETFs.

GoTo: A Private Placement Larger Than the IPO and a 10% Potential Dilution

Superapp GoTo (GOTO IJ) on Friday announced that it plans to issue 118.4bn shares through a private placement subject to shareholder approval.
This fresh issue accounts for 9.9% of the total outstanding shares of the company and the announcement comes 2-months after the company’s US$1.1bn IPO in March this year.
GoTo’s shares are down 20.4% since its IPO and the shares are trading IDR304 a piece, well below its IPO price of IDR338 per share.

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