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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.

Hang Seng TECH Index Rebalance: NIO (9866 HK) To Replace ASM Pacific (522 HK)

As expected, NIO Inc (9866 HK) will be added to the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 June replacing ASM Pacific Technology (522 HK).
We estimate passive trackers will need to buy over 9 days of ADV on NIO Inc (9866 HK) while selling 11 days of ADV on ASM Pacific Technology (522 HK).
NIO Inc (9866 HK)‘s inclusion in the Hang Seng Tech Index (HSTECH INDEX) could create significant arb opportunities versus NIO Inc (NIO US) on 10 June.

HSCEI Index Rebalance: Lenovo In, Hansoh Out; Sunac Survives (For Now)

As expected, Lenovo (992 HK) will replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) after the close of trading on 10 June.
Sunac China Holdings (1918 HK) has been kept in the index for now, though suspension till 30 June will see it deleted early July.
Changes to the stocks, number of shares, float and capping results in an estimated one-way turnover of 3.7% and will result in a one-way trade of HK$2,977m.

Price Comparisons of SK Telecom, KT, & LG Uplus When SK Telecom Reaches 99%+ Foreign Ownership

By Douglas Kim

We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.
From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.
Once KT’s foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again.

KOSPI 200 IT Sector Index Rebalancing Flow: Watch Kakao Pay & LG Corp

We should focus on the weight changes of the existing constituents. For this, two names really stand out: Kakao Pay (+0.44x ADTV) and LG Corp (+0.37x ADTV).
It is because Kakao Pay and LG Corp will undergo an increase in their float rate in the KOSPI 200 rebalancing, and these up-weights will also affect this sector index.
Their combined inflow size (KOSPI 200 & KOSPI 200 IT) will be 1.41x and 1.16x ADTVs. This will be the most substantial, except for Kakao Bank and the new additions.

Before it’s here, it’s on Smartkarma

May 21

Most Read: SK Telecom, Woodside Petroleum, Celltrion Inc, MyDeal.com.au Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SK Telecom (017670 KS): Implications of Zero Foreign Room
SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall
Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows
FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time
Woolies Moves On MyDeal (MYD AU)

SK Telecom (017670 KS): Implications of Zero Foreign Room

Foreign investors hold 106.51m shares of SK Telecom (017670 KS) versus a limit of 107.23m shares. There are only 723k more shares (1 day of ADV) available for foreign buying.
MSCI will delete SK Telecom (017670 KS) from its indices once the foreign room reaches zero, while FTSE will likely reduce the investability weight in two tranches of 5% each.
SK Telecom (017670 KS) could continue underperforming KT Corp (030200 KS) in the short-term due to passive selling and inability of foreign investors to buy the stock.

SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall

Looking at these past similar cases, the MSCI will likely announce SKT’s special deletion within 2-3 days of reaching zero foreign room and rebalancing within 2-3 days after the announcement.
We will see a passive outflow of about 2M shares or about ₩115B, equivalent to 2.7x ADTV, which will likely lead to an immediate price spike.
ETF funds tracking the MSCI have a large proportion of loaning SKT shares. So, when an MSCI down-weight occurs to SKT, an immediate recall will push up the price.

Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows

The EGM of Woodside Petroleum (WPL AU) today approved the BHP Petroleum merger in overwhelming fashion. 98.66% FOR.
They did not approve of the Climate Report the board submitted to vetting by shareholders for the first time. That got 51% “support.”
But now that’s done, people will talk about flows. So far the trade has worked but now time to think about how far to stretch it.

FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

Celltrion Inc (068270 KS)’s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.
Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).
In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.

Woolies Moves On MyDeal (MYD AU)

By David Blennerhassett

Woolworths Ltd (WOW AU) proposes to acquire all shares in MyDeal.com.au Ltd (MYD AU) other than those held by Sean Senvirtne and other key management personnel.
MyDeal shareholders will receive $1.05/share in cash, a punchy 62.8% premium to last close, but just 5% above its 2020 IPO price.
This proposal is being done by way of a Scheme with expected completion in Q3/Q4 2022.

Before it’s here, it’s on Smartkarma

May 20

Most Read: Core Lithium Ltd, SK Telecom, Woodside Petroleum, HKBN Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance Preview: Tabcorp, Crown & Potential Changes in June
SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall
Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows
SK Telecom (017670 KS): Implications of Zero Foreign Room
HKBN (1310 HK): KKR & PAG’s Pipe Dreams

S&P/ASX Index Rebalance Preview: Tabcorp, Crown & Potential Changes in June

The Crown Resorts Scheme Meeting is scheduled for 20 May and the last trading day could be 24 May, while The Lottery Corp is expected to start trading 24 May.
The changes for the S&P/ASX 50 Index and S&P/ASX 100 Index will depend on the market cap of The Lottery Corp (TLC AU) and new Tabcorp Ltd (TAH AU).
The potential adds have outperformed the potential deletes over the last week and couple of months so there will be some pre-positions in there already.

SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall

Looking at these past similar cases, the MSCI will likely announce SKT’s special deletion within 2-3 days of reaching zero foreign room and rebalancing within 2-3 days after the announcement.
We will see a passive outflow of about 2M shares or about ₩115B, equivalent to 2.7x ADTV, which will likely lead to an immediate price spike.
ETF funds tracking the MSCI have a large proportion of loaning SKT shares. So, when an MSCI down-weight occurs to SKT, an immediate recall will push up the price.

Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows

The EGM of Woodside Petroleum (WPL AU) today approved the BHP Petroleum merger in overwhelming fashion. 98.66% FOR.
They did not approve of the Climate Report the board submitted to vetting by shareholders for the first time. That got 51% “support.”
But now that’s done, people will talk about flows. So far the trade has worked but now time to think about how far to stretch it.

SK Telecom (017670 KS): Implications of Zero Foreign Room

Foreign investors hold 106.51m shares of SK Telecom (017670 KS) versus a limit of 107.23m shares. There are only 723k more shares (1 day of ADV) available for foreign buying.
MSCI will delete SK Telecom (017670 KS) from its indices once the foreign room reaches zero, while FTSE will likely reduce the investability weight in two tranches of 5% each.
SK Telecom (017670 KS) could continue underperforming KT Corp (030200 KS) in the short-term due to passive selling and inability of foreign investors to buy the stock.

HKBN (1310 HK): KKR & PAG’s Pipe Dreams

By David Blennerhassett

According to Bloomberg, KKR and PAG are considering bids for Hong Kong broadband play HKBN Ltd (1310 HK).
Private equity firms, possibly including Stonepeak, are understood to be conducting due diligence on HKBN, which has a current market cap of ~US$1.6bn.
Increased broadband usage became a Covid trend. That looks set to continue. This is a steady business, with an attractive yield.

Before it’s here, it’s on Smartkarma

May 19

Most Read: Ryohin Keikaku, JD.com Inc (ADR), GoTo, Semirara Mining And Power Corp, Woori Financial Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?
PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes
Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup

There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.

JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now

On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
In this note, we talk about the shareholding pattern and increase in shares held in CCASS.

GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?

GoTo (GOTO IJ) completes 20 trading days today. Based on the average price over the period and the last close, the stock meets the Fast Entry criteria for IDX30/LQ45/IDX80 inclusion.
Using a free float of 66%, we estimate passive trackers buying 5.42bn shares (US$74m) of GoTo (GOTO IJ). Announcement could come in a few days with implementation at month-end.
With the real float close to 4%, passive trackers will need to buy 11.6% of the real float and the stock could move higher in the short-term.

PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes

With just over a month to go in the review period for the August rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX), we expect one potential change.
Security Bank (SECB PM) is a potential deletion. Semirara Mining And Power Corp (SCC PM) has a higher inclusion probability as compared to UnionBank of the Philippines (UBP PM).
Passive funds will need to trade quite a few days of ADV on the stocks. Historically, the adds have outperformed the deletes in the last leg of the review period.

Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying

The KDIC sold a 2.33% stake in Woori Financial through an after-hours block sale. From a passive flow perspective, this is quite similar to KSOE’s HHI block deals yesterday.
Woori is likely to show a similar share price movement as HHI. Expectations for the passive inflow effect must have dissipated, and a short-term share price correction is now inevitable.
However, the passive inflow sizes are still too substantial. With this in mind, we need to consider a strategy that approaches this price correction as a re-entry opportunity.

Before it’s here, it’s on Smartkarma

May 18

Most Read: Ryohin Keikaku, Kito Corporation, Tabcorp Ltd, Faith Inc, Woori Financial Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register
Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment
Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co
Woori Financials Placement – Almost a Clean-Up Although past Deals Haven’t Done Much

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup

There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.

Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register

Kito Corporation (6409 JP) was taken private in 2003. It was re-IPOed by Carlyle in 2007 but Konecranes stayed an investor until 2016. Then it unwound.
Today, Kito announced the best results since pre-covid and forecasts for growth. They also announced KKR unit Crosby would launch a Tender to buy them out at a 62% premium.
Shareholder structure is highly unusual, and interesting to boot, especially looking at the most recent arrival in the top two. The fact there is a break fee is… telling.

Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment

Tabcorp Ltd (TAH AU) will soon spin out its Lottery and Keno business, to be called The Lottery Corp (TLC AU). TAH shares go ex-TLC on 24 May.
The question is where do they trade. What is in the price? What is not? What are the potential index implications?
This insight provides a grid of index implications and pro-forma valuations (EV/EBITDA, PER, Dividend Yield) for each and both and the combined entity.

Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co

Faith Inc (4295 JP) is a very smallcap contents management and platform business. As a business, one could give it a miss forever, but it is cash-rich.
The company is doing a very large buyback, and for someone who decided they’d be interested, there is a large block for sale.
The thing is… one would have to act quickly and aggressively.

Woori Financials Placement – Almost a Clean-Up Although past Deals Haven’t Done Much

KDIC is looking to sell around half of its remaining stake in Woori Financial Group (WFG).
This is almost a clean-up trade considering that KDIC had a stake of nearly 18% at the start of 2021 and will now be reduced to a less than 2%.
In this note, we will run the deal through our ECM framework.

Before it’s here, it’s on Smartkarma

May 17

Most Read: Kito Corporation, Hyundai Heavy Industries, Bharat Electronics, Brambles Ltd, KT Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register
Block Deal Sale of Hyundai Heavy Industries
NIFTY100 Index Rebalance Preview: Five Potential Changes in September
Brambles (BXB AU): Where Could CVC’s Bid Come In?
SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp

Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register

Kito Corporation (6409 JP) was taken private in 2003. It was re-IPOed by Carlyle in 2007 but Konecranes stayed an investor until 2016. Then it unwound.
Today, Kito announced the best results since pre-covid and forecasts for growth. They also announced KKR unit Crosby would launch a Tender to buy them out at a 62% premium.
Shareholder structure is highly unusual, and interesting to boot, especially looking at the most recent arrival in the top two. The fact there is a break fee is… telling.

Block Deal Sale of Hyundai Heavy Industries

By Douglas Kim

After the market close today, Korea Shipbuilding & Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai Heavy Industries in a block deal.
The block deal sale is expected to take place on the morning of 17 May. The block deal price is expected to be 120,650 won.
We would take this deal as we believe this sale is likely to have a short term positive impact on HHI and increase the free float of HHI.

NIFTY100 Index Rebalance Preview: Five Potential Changes in September

We are past the halfway mark in the review period for the September rebalance of the NIFTY100 Index. We see five potential changes which should be announced end August.
There is a high probability of Tata Power (TPWR IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN) and Mphasis Ltd (MPHL IN) being added to the index.
High probability deletions are Lupin Ltd (LPC IN), Jubilant Foodworks (JUBI IN), Zydus Lifesciences Ltd (ZYDUSLIF IN), Punjab National Bank (PNB IN) and Steel Authority of India (SAIL IN).

Brambles (BXB AU): Where Could CVC’s Bid Come In?

Brambles Ltd (BXB AU) is in preliminary discussions for CVC to acquire all shares in the company. Media speculation indicates the bid would be at an Enterprise Value > A$20bn.
Brambles Ltd (BXB AU) trades cheaper than its peers and a bid at an EV/EBITDA of 9x would imply a buyout price of A$12.84/share, a 23.1% premium to last close.
At the last traded price of A$11.58/share, there is upside. Especially if other private equity investors enter the fray. Buy on weakness; hedge market risk with ASX200 futures.

SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp

What immediate impact will SKT’s zero foreign room have? The recent trading theme that the local market is paying attention to is the alternative purchase of KT instead of SKT.
The recent driving force behind SKT’s foreign buying is the growing market preference for defensive stocks with high dividend yields. And KT also meets this condition.
However, SKT’s foreign room may turn around temporarily: 1. SKT’s deletion possibility from the MSCI through a special change and 2. the FTSE investability down-weight at the June QIR.

Before it’s here, it’s on Smartkarma

May 16

Most Read: Tata Elxsi Ltd, Japan Post Holdings, Adani Enterprises, Maxell Ltd, Life Insurance Corp of India (LIC) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI
Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers
Hitachi Maxell (6810 JP) – Very Big On-Market Buyback
ECM Weekly (15th May 22) – LIC, ThaiBev, Delhivery, One Store, Yunkang, VistaREIT, Ngern Tid Lor

Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI

MSCI announced the changes to the Standard and Small Cap Indexes, along with FIF/NOS changes as part of the May SAIR. Plenty of flows in Asia Pacific.
Announcement of changes to the FTSE AW/AC, HSI INDEX, HSCEI INDEX, HSTECH INDEX and SENSEX INDEX will be made after market close on Friday.
There were inflows into Taiwan, Australia and Hong Kong focused ETFs, while there were redemptions from China and Korea focused ETFs.

Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback

Japan Post Holdings (6178 JP) and its two main components Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) reported excellent earnings for the year to March 2022…
….but not so excellent forecasts for the year to March 2023. Some of that is conservative. Some is “finger-in-the-air”, and some of it is the vagaries of insurance sales accounting.
But they all pay high dividends and Japan Post Holdings announced a ¥200bn buyback. And remember, there will likely Never Be Another JPH Equity Offering, Ever Again. Ever.

NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers

We are past the halfway mark in the review period of the NIFTY Index (NIFTY INDEX) September rebalance. We see one potential change which should be announced end August.
There is a high probability of Adani Enterprises (ADE IN) being included in the index, while either Shree Cement (SRCM IN) or Hero Motocorp (HMCL IN) will be deleted.
The impact of passive fund trading on the stocks is high in terms of days of ADV, but very high in terms of delivery volume.

Hitachi Maxell (6810 JP) – Very Big On-Market Buyback

Maxell Ltd (6810 JP) has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.
But another (non-cash) write-off this past year has led to the third year of net losses in a row.
The company has, however, taken its actual cashflows and turned them into a large buyback

ECM Weekly (15th May 22) – LIC, ThaiBev, Delhivery, One Store, Yunkang, VistaREIT, Ngern Tid Lor

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPOs front, LIC’s lists tomorrow, while Delhivery’s bookbuild wasn’t great.
There were no major placements this week, with even Air New Zealand failing to hold its deal price.

Before it’s here, it’s on Smartkarma

May 15

Most Read: Toshiba Corp, Wacoal Holdings, Sakata Inx Corp, Infomedia Ltd, Maxell Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba (6502) – Iffy Earnings, Worse Projections, A Special Div, But Privatisation Process Proceeds
HUGE Wacoal (3591) Buyback – Buyback Structure Unknown But Interesting Possibilities Exist
Sakata Inx (4633) HUGE Buyback Makes Things Interesting
Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal
Hitachi Maxell (6810 JP) – Very Big On-Market Buyback

Toshiba (6502) – Iffy Earnings, Worse Projections, A Special Div, But Privatisation Process Proceeds

Toshiba announces meh-to-weak earnings and surprisingly conservative revenue guidance for next year given better order books and backlog and much higher USD/yen.
The company announced a slightly higher March 2022 dividend (giving money to past shareholders) and a big special dividend and higher March 2023 dividend.
The Privatisation Proposal Process continues. It may get a result, or not. New director choices will wait. Now we start a quiet period where privatisation news competes with analyst bearishness.

HUGE Wacoal (3591) Buyback – Buyback Structure Unknown But Interesting Possibilities Exist

On Friday, Wacoal Holdings (3591 JP) announced earnings, adoption of IFRS this year (US GAAP til now), dividends, a div hike and higher earnings this year, and a HUGE buyback.
The buyback is for up to 5.5mm share (8.95% of shares) spending up to ¥10bn.
Given the structure of the shareholder base, this opens up interesting possibilities.

Sakata Inx (4633) HUGE Buyback Makes Things Interesting

Sakata Inx Corp (4633 JP) and Toyo Ink Sc Holdings (4634 JP) are finally getting around to unwinding the rest of their cross-holdings from their decision 5yrs ago.
This is highly accretive. +10% on EPS this year on a weighted average basis and +16.8% on a spot basis.
The reason is good governance and capital efficiency. A side effect is it shifts the shareholder structure more in favor of economic investors.

Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal

By David Blennerhassett

Online auto parts and service provider Infomedia Ltd (IFM AU) has received a non-binding proposal – by way of a Scheme – from TA Associates and Viburnum Funds.
The Offer price is A$1.70/share, a 32.8% premium to last close.
Via a tie-in with Viburnum, TA disclosed a 14.46% interest. IFM said it is also in preliminary discussions with other interested parties.

Hitachi Maxell (6810 JP) – Very Big On-Market Buyback

Maxell Ltd (6810 JP) has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.
But another (non-cash) write-off this past year has led to the third year of net losses in a row.
The company has, however, taken its actual cashflows and turned them into a large buyback

Before it’s here, it’s on Smartkarma

May 14

Most Read: MR D.I.Y. Group, Tencent, Core Lithium Ltd, Cosmo Energy Holdings, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
MSCI May 2022 Index Rebalance: Small Cap Changes and Flow
Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks
Short-Term Reverse Flow Trading on SK Telecom

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

MSCI May 2022 Index Rebalance: Flow Due to FIF Changes

There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.

MSCI May 2022 Index Rebalance: Small Cap Changes and Flow

MSCI has announced changes to the Small Cap Index. For Asia Pacific, there are 220 adds and 160 deletes. Most adds are in India, most deletes are in Japan.
Flows are not huge, but there is a big impact on a lot of stocks. Some of the stocks have moved today and there could be more.
There are a lot of stocks that crossover with changes on other indices and there will be same way flow on a lot of stocks over the next few weeks.

Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks

Cosmo Energy Holdings (5021 JP), subject of a selldown by its major shareholder (discussed here), then a large stake purchase by activist Murakami-san (discussed here) announced earnings and a buyback.
The buyback is large enough to matter to other shareholders.
The shareholder structure is interesting enough that investors need to pay attention to the possibilities.

Short-Term Reverse Flow Trading on SK Telecom

Heavy shorts came out in a short trading window. Usually, this is likely to be strategic trading by a few institutional investors, which causes PBS to set up loan transactions.
We should then consider the possibility that short positions betting on MSCI deletion will be sold back to the market by PBS who set up loan transactions after short-covering
SKT is likely to undergo a share price correction due to a short-term overhang, and we need to consider setting up a position aimed at this.

Before it’s here, it’s on Smartkarma

May 13

Most Read: Thai Beverage, MR D.I.Y. Group, Ichigo Inc, SinoPac Holdings, Softbank Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ThaiBev BeerCo Pre-IPO – Back for Another Round
MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold
FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com
Softbank – Not Pretty

ThaiBev BeerCo Pre-IPO – Back for Another Round

On 5th May 2022, Thai Beverage announced that BeerCo will resume its Proposed Spin-off Listing. This time the company is aiming to raise less than US$1bn, as per media reports.
We have looked at various aspects of the deal earlier, as the company had tried to spin-off BeerCo in 2021 as well before finally calling it off in April 2021.
In this note, we talk about the recent updates for BeerCo.

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold

The next FTSE EPRA Nareit Index review 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 Frasers Hospitality Trust (FHT SP) and Ichigo Inc (2337 JP), though both are very close to the basis point threshold for inclusion.
Digital Core REIT (DCREIT SP) has still not published an audited annual report in English and is unlikely to be included in the index at the June rebalance.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com

The next FTSE TWSE Taiwan 50 Index review will use data from 23 May. The changes will be announced on 3 June and implemented at the close on 17 June.
Momo.Com Inc (8454 TT) is a potential deletion from the index, while SinoPac Holdings (2890 TT) should be included as the highest ranked non-index constituent.
SinoPac Holdings (2890 TT) has over 3.5 days of ADV to buy from passive funds and trades cheaper than its peers. The stock could outperform over the next few weeks.

Softbank – Not Pretty

By Mio Kato

Softbank results were about as ugly as expected and the only major new information in our view was that they took a small (too small) write-down on their private holdings.
Masayoshi Son did Masayoshi Son things regaling investor with tales of “To the moon bro!” but offered little of substance to suggest a turnaround was near.
Ultimately we keep coming back to the question of where margin calls might be struck.

Before it’s here, it’s on Smartkarma