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The review period for the HSI, HSCEI, HSTECH, HSCI, PCOMP and the FTSE All-World/All-Cap indices ended on 31 December. The changes will be announced in the next few weeks.
We expect an upweight for JD Health (6618 HK) at the MSCI Feb QIR, while there will be buying in Sea Ltd (SE US) due to the tranched inclusion.
Inflows continue into the Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) even as the markets head lower.

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.

STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro

The next FTSE Straits Times Index rebalance will use data from the close on 21 February. The changes will be announced on 3 March and become effective post 18 March.
Based on data from 7 January, we see Olam International (OLAM SP) replacing Comfortdelgro Corp (CD SP) in the index. The estimated impact on the stocks is quite high.
Olam International (OLAM SP)‘s market cap needs to stay ahead of City Developments (CIT SP) and Mapletree Commercial Trust (MCT SP) over the next six weeks for index inclusion.

Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications

When Wuthelam took control of Asia’s largest coatings business, Nippon Paint Holdings (4612 JP), in August 2020, I was bearish. It was great for the Goh family but minorities lost.
At the time, I said “Float is low”, and “There are cross-holders who don’t need to be there. This would be a very good sell for them. “
17 months later, 6 financial institutions will now sell their cross-holdings. There is float impact and some immediate index impact.

China Mobile (600941 CH): Potential Index Fast Entry

China Mobile (600941 CH) listed on 5 January after raising CNY 56bn in its A-share IPO. The stock could get Fast Entry to the CSI300, SSE50 and SSE180 indices.
Stocks will be deleted from these indices to maintain the number of index constituents. Jonjee High-Tech could be deleted from the CSI300 and Shandong Gold Mining from the SSE50.
China Mobile (600941 CH) trades at a 41.7% premium to China Mobile (941 HK), substantially lower than the 89% premium for China Telecom (601728 CH)/China Telecom (H) (728 HK).

Before it’s here, it’s on Smartkarma

Jan 09

Most Read: BHP Group, Nippon Paint Holdings, LG Chem Ltd, Mitsubishi Heavy Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March
Nippon Paint (4612 JP): Secondary Offering & Index Implications
LG Chem – Holdco Discount Narrowed Like a Charm… Time to Exit
MHI (7011 JP): Opportunity or Value Trap?
Cybersecurity/ Evergrande/ Covid/ Environment/ Hong Kong

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of Ausnet Services (AST AU) and Sydney Airport (SYD AU).
There will also be the large BHP Group (BHP AU) upweight and funding trade following unification, and possibly the Afterpay Touch (APT AU) acquisition by Square Inc (SQ US).
Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.

Nippon Paint (4612 JP): Secondary Offering & Index Implications

Nippon Paint Holdings (4612 JP) will offer up to 140.133m shares in a secondary offering. Six financial institutions will sell shares aimed at lowering ‘strategic holdings’ and improving stock liquidity.
There will also be an over-allotment option for 17.63m shares. In total, the offering size could reach JPY 198bn. There will be an increase in the stock free float.
We expect MSCI/FTSE to implement the changes at the time of the event. TOPIX is a wild card since they may not see a 5-6% increase in FFW as significant.

LG Chem – Holdco Discount Narrowed Like a Charm… Time to Exit

Our enthusiasm for the LG Energy Solutions IPO has been rather muted given a plethora of red flags and demanding valuations.
However, given market enthusiasm for the name, the underperformance of parent LG Chem created an opportunity.
A 16% move in four days has corrected most of the discrepancy though and it is time to leave in our view.

MHI (7011 JP): Opportunity or Value Trap?

By Scott Foster

MHI is selling at 9.9x EPS guidance and 0.7x book value, with a dividend yield of 3.0%. We see potential upside of at least 25% beyond the New Years bounce.
The shares have underperformed for several years due to serious managerial errors. But the mess is being cleaned up and new growth opportunities have emerged.
Risks include limited margins in the energy and aerospace & defense sectors and the possibility of renewed investment in the failed regional jet aircraft project.

Cybersecurity/ Evergrande/ Covid/ Environment/ Hong Kong

By Diana Choyleva

The Cyberspace Administration of China set new rules requiring platform companies with data on more than one million users to undergo a security review before listing their shares overseas.
Evergrande, the world’s most indebted developer was last week ordered to demolish 39 buildings of its flagship property project on Ocean Islands, for breaching building approval procedures.
After a spike in Covid cases, China’s tough lockdown of the city of Xi’an has confined 13 million people to their homes and shuttered businesses.

Before it’s here, it’s on Smartkarma

Jan 08

Most Read: BHP Group, Nippon Building Fund, LG Energy Solution, Jinchuan Group International Resources, Toshiba Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March
Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers
LG Energy IPO – Peer Updates + Bull/Bear Scenarios
Jinchuan International (2362 HK): Thoughts On A Rumoured Offer
Toshiba – The 3D Dilemma

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of Ausnet Services (AST AU) and Sydney Airport (SYD AU).
There will also be the large BHP Group (BHP AU) upweight and funding trade following unification, and possibly the Afterpay Touch (APT AU) acquisition by Square Inc (SQ US).
Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.

Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers

Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
That is an occasion to look at how much of float is held by passive trackers.
A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.

LG Energy IPO – Peer Updates + Bull/Bear Scenarios

By Zhen Zhou, Toh

LG Energy Solution (LGENERGY KS) (LGES) is looking to raise up to US$10.8bn in its upcoming South Korea IPO.
LGES is the EV battery unit of LG Chem. It was spun off in December last year. The company is a major supplier to customers including Tesla and General Motors.
In this note, we discuss our blue sky and bear assumptions and take a look at how peers have traded since our previous note.

Jinchuan International (2362 HK): Thoughts On A Rumoured Offer

By David Blennerhassett

Shares have declined ~9% since copper/cobalt miner Jinchuan Group International Resources (2362 HK) said it was unaware Jinchuan Group, its largest shareholder, was proposing a privatisation plan.
As the world moves towards alternative energy sources, copper will remain in high demand. Jinchuan is also China’s third-largest cobalt refiner, whose output is used in lithium-ion batteries.
Jinchuan is not expensive. And taking the company private is not a significant outlay for Jinchuan Group. Especially ahead of the copper/cobalt Musonoi project coming online next year.

Toshiba – The 3D Dilemma

After a brief respite in their never-ending drama over the holiday period Toshiba is again in the news as 3D reiterates their demands for a “review of all options”.
We have lost count of the number of reviews which haven’t resulted in a PE sale.
The question is exactly why 3D appears to be so aggressive even relative to other less than bashful activists.

Before it’s here, it’s on Smartkarma

Jan 07

Most Read: Sea Ltd, BHP Group, Softbank Group, LG Energy Solution, Nippon Building Fund and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sea Ltd (SE US): Tencent’s Selldown and Upcoming MSCI Passive Inflow
ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March
TOPIX-Nikkei Skew Trade Looking Increasingly Juicy
Aequitas 2021 IPOs and Placements Performance Review – Busiest Year on Record
Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers

Sea Ltd (SE US): Tencent’s Selldown and Upcoming MSCI Passive Inflow

Sea Ltd (SE US) stock was down a lot since the announcement of its Q3 results. Tencent (700 HK) selling a 2.6% stake yesterday took the stock down even further.
Given the large drawdown and Tencent (700 HK) locking in its remaining Sea Ltd (SE US) holding for the next 6 months, the stock could rally in the short term.
There will be passive inflow from MSCI trackers in February as a part of the tranched inclusion and then more in May due to an increase in the FIF.

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of Ausnet Services (AST AU) and Sydney Airport (SYD AU).
There will also be the large BHP Group (BHP AU) upweight and funding trade following unification, and possibly the Afterpay Touch (APT AU) acquisition by Square Inc (SQ US).
Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.

TOPIX-Nikkei Skew Trade Looking Increasingly Juicy

Our suggested TOPIX-Nikkei skew trade continues to grind out positive returns with relatively low volatility.
With Nikkei starting to noticeably underperform over the last few days we believe faster outperformance could be ahead.
In particular we believe two of the worst performing legs here could start to contribute.

Aequitas 2021 IPOs and Placements Performance Review – Busiest Year on Record

By Sumeet Singh

2021 marked our sixth year covering Equity Capital Markets (ECM) in Asia Pacific.
Most markets were in top gear on the ECM front and we ended the year covering the highest number of IPOs and the second highest number of placements since inception.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

Nippon Building Fund (8951) – Calculating Passive Tracking of J-REITs and Index Events Around Offers

Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
That is an occasion to look at how much of float is held by passive trackers.
A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.

Before it’s here, it’s on Smartkarma

Jan 05

Most Read: SD Biosensor, JD Health, LG Energy Solution, China Mobile, Shanghai Medicilon Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KOSPI200 June Index Rebalance Preview: High Probability Adds/Deletes
JD Health (6618 HK): Potential MSCI Upweight in February
LG Energy IPO – Valuation
China Mobile (941 HK) – Massive Buyback Announced on Eve of A-Share IPO
STAR50 Index Rebalance Preview (March 2022): What Will The Index Committee Do?

KOSPI200 June Index Rebalance Preview: High Probability Adds/Deletes

The review period for the June rebalance of the KOSPI2 INDEX ends 30 April. The KRX will announce the changes in May with implementation at the close on 9 June.
LG Energy Solution (LGENERGY KS) could get Fast Entry to the KOSPI200 Index in March. Hyundai Engineering Co Ltd (HEC KS) needs a price jump to get Fast Entry.
We see 6 potential changes to the KOSPI200 in June; most of these are high probability. The potential adds are already outperforming the potential deletes – there should be more.

JD Health (6618 HK): Potential MSCI Upweight in February

JD Health (6618 HK) is currently included in the MSCI China Index at a FIF of 11%. That could increase to 35% at the February QIR.
The increase in FIF to 35% will require passive MSCI trackers to buy around 6.4% of the real float of the stock at the close of trading on 28 February.
The stock has dropped a lot and underperformed most of its peers. The index upweight could lead to outperformance in the short term and is worth a buy on dips.

LG Energy IPO – Valuation

LG Energy is being benchmarked against CATL for its IPO valuation and we believe this is incorrect.
CATL’s position within China’s supply chain and LFP technology should drive a significant premium against other North Asian peers in our view.
If LG Energy were to simply be benchmarked against Samsung SDI it starts to look expensive and while a premium may be reasonable we do not consider it a given.

China Mobile (941 HK) – Massive Buyback Announced on Eve of A-Share IPO

The China Mobile (600941 CH) A-Share IPO at RMB 57.58/share starts trading tomorrow on 5 January. I thought this premium disappointing, and the dividend overly attractive.
At 800x over-subscribed, with substantial clawback, IPO allocations to mainland investors were limited. Cash should be back in investors’ hands and the yield is very attractive on A-shares and H-shares.
Today, China Mobile (941 HK) announced it would start executing on its buyback mandate (10% of H-shares out (2.047bn shares). This is potentially enormous. And absolutely praise-worthy.

STAR50 Index Rebalance Preview (March 2022): What Will The Index Committee Do?

The main question, for yet another rebalance, is whether the index committee chooses a 6 month minimum listing history or increases it to 12 months in line with the methodology.
That decision will result in either 4 or 5 changes at the rebalance. The deletions remain the same, while there is only 1 inclusion common across both lists.
There is a fair bit to trade on the potential inclusions and exclusions and we expect the inclusions to outperform the deletions over the next couple of months.

Before it’s here, it’s on Smartkarma

Jan 04

Most Read: Mitsui O.S.K. Lines, Emtek, Nongfu Spring, Monde Nissin Corp, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review
FTSE All-World/All-Cap Index Rebalance Preview: Asia Ex Japan Ex China
FTSE All-World/All-Cap Index Rebalance Preview: Plenty of Adds for China
PCOMP Index Rebalance Preview Feb22: Three Potential Changes & Large Impact
LG Energy Passive Flow from Overseas ETFs: Global X Lithium & Battery (LIT)

MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review

The review period runs from 18-31 January for the February QIR, the results will be announced on 10 February (Asia-time) with the changes implemented after the close on 28 February.
There are quite a few potential changes in China and Korea, with a couple in Japan and one in Indonesia. There are a few stocks close to the inclusion/exclusion thresholds.
Other big changes include a potential increase in the Foreign Inclusion Factor for SK Square (402340 KS) and an increase in the Index Inclusion Factor for Sea Ltd (SE US).

FTSE All-World/All-Cap Index Rebalance Preview: Asia Ex Japan Ex China

The price review period for the FTSE All-World/All-Cap March 2022 SAIR ended on 31 December. The changes are expected to be announced on 18 February and implemented on 18 March.
There are a few potential inclusions to the AW Index, a lot of inclusions to the AC Index, and a lot of migrations from the AC to the AW Index.
There are 20 stocks that have at least US$20m passive buying and over 2 days ADV to buy. That increases to 25 stocks that have at least US$10m to buy.

FTSE All-World/All-Cap Index Rebalance Preview: Plenty of Adds for China

The price review period for the FTSE All-World/All-Cap March 2022 SAIR ended on 31 December. The changes are expected to be announced on 18 February and implemented on 18 March.
There are loads of potential inclusions to the index for China – a lot of the changes are a result of stocks being included in Northbound Stock Connect.
There are stocks that are potential inclusions in other indices and will have additional passive inflows. Nongfu Spring could also be included in the FTSE China 50 and HSI indices.

PCOMP Index Rebalance Preview Feb22: Three Potential Changes & Large Impact

We see three potential changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the February rebalance. Two are higher probability changes, while one has a lower probability.
Typically, the inclusions rally and the deletions drop between announcement and implementation with a big jump immediately post announcement. Pre-positioning prior to announcement is important.
Bloomberry Resorts (BLOOM PM) and Robinsons Retail Holdings (RRHI PM) are reopening plays and investors that are looking to buy the stocks could wait for index deletion to get liquidity.

LG Energy Passive Flow from Overseas ETFs: Global X Lithium & Battery (LIT)

By Sanghyun Park

Given the AUM of the Global X Lithium Battery ETF (ticker: LIT), the potential passive impact on LG Energy and LG Chem should be worthy of our careful attention.
If LIT revises its methodology, the timing to include LG Energy is expected to be the April rebalancing.
LG Energy will have a 2-3% index weight, welcoming a passive inflow of ₩130-200B (0.2-0.3% of SO). In contrast, ₩232.1B from LIT will likely escape LG Chem, 0.5% of SO.

Before it’s here, it’s on Smartkarma

Jan 03

Most Read: Mitsui O.S.K. Lines, Mapletree Commercial Trust, Mapletree North Asia Commercial Trust, Nongfu Spring and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review
MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact
Mapletree Mega-Merger Means MCT Markup
Mapletree Commercial Trust’s Proposed Merger with Mapletree North Asia Commercial Trust
FTSE All-World/All-Cap Index Rebalance Preview: Plenty of Adds for China

MSCI Feb 2022 Index Rebalance Preview: Busy for a Quarterly Review

The review period runs from 18-31 January for the February QIR, the results will be announced on 10 February (Asia-time) with the changes implemented after the close on 28 February.
There are quite a few potential changes in China and Korea, with a couple in Japan and one in Indonesia. There are a few stocks close to the inclusion/exclusion thresholds.
Other big changes include a potential increase in the Foreign Inclusion Factor for SK Square (402340 KS) and an increase in the Index Inclusion Factor for Sea Ltd (SE US).

MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact

Mapletree Commercial Trust (MCT SP) is looking to merge with Mapletree North Asia Commercial Trust (MAGIC SP) to create one of the top 10 Commercial REITs in Asia.
MAGIC SP unitholders will receive a scheme consideration of S$1.1949/unit of MAGIC SP, and will have a scrip-only option and a cash and scrip option.
The increase in index shares for Mapletree Commercial Trust (MCT SP) will result in large buying from passive FTSE EPRA Nareit Developed Asia, Straits Times Index and MSCI Singapore trackers.

Mapletree Mega-Merger Means MCT Markup

Mapletree Commercial Trust (MCT SP) and Mapletree North Asia Commercial Trust (MAGIC SP) announced their prospective merger on Friday.
The merger ratio provides an uplift to already strong recent relative performance for MAGIC holders, and strong pro-forma NAV and DPU accretion for MCT holders.
And it means a lot of flow. Lots and lots of flow.

Mapletree Commercial Trust’s Proposed Merger with Mapletree North Asia Commercial Trust

By Arun George

Each Mapletree North Asia Commercial Trust (MAGIC SP)/MNACT unitholder will receive either a scrip-only or the cash-and-scrip offer worth S$1.1949 per MNACT unit, a 7.6% premium to the last close price.
The proposed merger provides Mapletree Commercial Trust (MCT SP) unitholders with meaningful geographic diversification through a DPU and NAV accretive transaction.
MNACT unitholders will receive an attractive consideration in terms of P/NAV and gross exchange ratio. Both unitholders will benefit from the enlarged REIT’s higher free float and growth potential.

FTSE All-World/All-Cap Index Rebalance Preview: Plenty of Adds for China

The price review period for the FTSE All-World/All-Cap March 2022 SAIR ended on 31 December. The changes are expected to be announced on 18 February and implemented on 18 March.
There are loads of potential inclusions to the index for China – a lot of the changes are a result of stocks being included in Northbound Stock Connect.
There are stocks that are potential inclusions in other indices and will have additional passive inflows. Nongfu Spring could also be included in the FTSE China 50 and HSI indices.

Before it’s here, it’s on Smartkarma

Jan 02

Most Read: Taste Gourmet Group Ltd, Mapletree North Asia Commercial Trust, Grab, Evergrande and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Taste Gourmet: Great Reopening Play
MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact
Grab (GRAB US) – After the Storm
StubWorld: Evergrande Trading “Cheap” But Still Uninvestable
China Housing Ministry Flags Key Tasks for Next Year

Taste Gourmet: Great Reopening Play

By Sameer Taneja

Taste Gourmet Group Ltd (8371 HK) represents a great opportunity to capture growth and value. With 8% net margins, the company outperformed its peers in a depressed environment.
Trading at a 5.8x FY22 PE with 29% of the market capitalization in cash, the company has a significant margin of safety. Reopening could easily result in the stock doubling.
The company paid 0.04 HKD/share of dividend for H1 2022, representing a 9% dividend yield annualized. With seasonally higher earnings, we believe dividends can be higher.

MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact

Mapletree Commercial Trust (MCT SP) is looking to merge with Mapletree North Asia Commercial Trust (MAGIC SP) to create one of the top 10 Commercial REITs in Asia.
MAGIC SP unitholders will receive a scheme consideration of S$1.1949/unit of MAGIC SP, and will have a scrip-only option and a cash and scrip option.
The increase in index shares for Mapletree Commercial Trust (MCT SP) will result in large buying from passive FTSE EPRA Nareit Developed Asia, Straits Times Index and MSCI Singapore trackers.

Grab (GRAB US) – After the Storm

By Angus Mackintosh

Grab (GRAB US) has faced a perfect storm of headwinds since its IPO with Omicron, US tapering fears, and a general tech sell down all contributing to share price weakness
The company continues to invest in broadening its product offering and recently acquired Jaya Grocer in Malaysia and a stake in mutual fund platform Bareksa in Indonesia.
Grab (GRAB US) looks to be on the cusp of a recovery in its mobility business with increasing scope and value-added in both online groceries and digital financial services.

StubWorld: Evergrande Trading “Cheap” But Still Uninvestable

By David Blennerhassett

Evergrande (3333 HK) resurfaces as “cheap” on my monitor versus Evergrande Auto (708 HK), but the equity is still best viewed from the sidelines.
Preceding my comments on Evergrande, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

China Housing Ministry Flags Key Tasks for Next Year

By Li Tang

Wang Menghui, Minister of MOHURD, gave an interview with Xinhua News .
As ministry did not release the report of their post-CEWC meeting, his words in the interview help set the tone for their work plans for next year.
He reiterated that “houses are for living in, not speculation” and “refrain from using real estate as a short-term means for stimulating the economy”.

Before it’s here, it’s on Smartkarma

Jan 01

Most Read: Money Forward, Mapletree North Asia Commercial Trust, LG Energy Solution, Grab, Razer Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE GEIS March 2022 Index Rebalance Preview: Japan
MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact
LG Energy: Sector ETFs Special Rule Change & Local Active Managers’ Preemptive Trading
Grab (GRAB US) – After the Storm
(Mostly) Asia M&A: December 2021 Roundup

FTSE GEIS March 2022 Index Rebalance Preview: Japan

For Japan, the FTSE Russell March 2022 SAIR will use today’s closing prices to calculate the market cap cut-offs to determine the inclusions and exclusions for the All-World/All-Cap indices.
For the All-World Index, we see 1 inclusion, 3 migrations higher and 8 migrations lower. For the All-Cap Index, we see a lot of inclusions and low double digit deletions.
There is a fair amount of short interest on quite a few potential inclusions/ exclusions/ migrations up and down and it we would pay more attention to these stocks.

MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact

Mapletree Commercial Trust (MCT SP) is looking to merge with Mapletree North Asia Commercial Trust (MAGIC SP) to create one of the top 10 Commercial REITs in Asia.
MAGIC SP unitholders will receive a scheme consideration of S$1.1949/unit of MAGIC SP, and will have a scrip-only option and a cash and scrip option.
The increase in index shares for Mapletree Commercial Trust (MCT SP) will result in large buying from passive FTSE EPRA Nareit Developed Asia, Straits Times Index and MSCI Singapore trackers.

LG Energy: Sector ETFs Special Rule Change & Local Active Managers’ Preemptive Trading

By Sanghyun Park

The ETF operators (KODEX and TIGER) applied to KRX for approval of a special change for an early swap between LG Chem and LG Energy.
KRX will likely approve this special change application, and the effective date should be immediately after listing. I will update when the exact implementation date of each index is released.
We also detect a trend spreading in the local industry that many local active managers decided to sell all other secondary battery stocks to raise funds to purchase LG Energy.

Grab (GRAB US) – After the Storm

By Angus Mackintosh

Grab (GRAB US) has faced a perfect storm of headwinds since its IPO with Omicron, US tapering fears, and a general tech sell down all contributing to share price weakness
The company continues to invest in broadening its product offering and recently acquired Jaya Grocer in Malaysia and a stake in mutual fund platform Bareksa in Indonesia.
Grab (GRAB US) looks to be on the cusp of a recovery in its mobility business with increasing scope and value-added in both online groceries and digital financial services.

(Mostly) Asia M&A: December 2021 Roundup

By David Blennerhassett

For the month of December, 12 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
The average premium for the new deals announced (or first discussed) in December was ~41%, with a year-to-date average of ~33% (165 deals & total deal size of US$282bn).
This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively.

Before it’s here, it’s on Smartkarma