In today’s briefing:
- Hang Seng TECH Index Rebalance: NIO (9866 HK) To Replace ASM Pacific (522 HK)
- KOSPI 200 IT Sector Index Rebalancing Flow: Watch Kakao Pay & LG Corp
- TVS Motors- Forensic Analysis
- Index Rebalance & ETF Flow Recap: MSCI, ASX, NIFTY, KRX, PCOMP, HSI, HSCEI, HSTECH, SK Tel, GoTo
- Hero Motocorp (HMCL IN) | Structural Problems Persist
- ECM Weekly (22nd May 22) – JD, LIC, Delhivery, Leapmotor, Vista, Paradeep, Woori, Hyundai Heavy, NIO
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.
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.
TVS Motors- Forensic Analysis
- TVS Motor (TVSL IN) primary setback is in the form of poor capital allocation
- In TVS Motors: Analysis Of Various Investments , we had briefed on the investment policy of the company and how the non-core investments/subsidiaries are dragging the profits.
- This insight is an extension of the previous one; we update on the various investments the company has undergone and how it impacts the capital allocation.
Index Rebalance & ETF Flow Recap: MSCI, ASX, NIFTY, KRX, PCOMP, HSI, HSCEI, HSTECH, SK Tel, GoTo
- 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.
Hero Motocorp (HMCL IN) | Structural Problems Persist
- We anticipate the uptick in retail primarily aided by the wedding season to be short-lived for Hero Motocorp (HMCL IN).
- HMCL has not been able to keep pace with changing consumer preferences, the limited success in premium segment and scooters is likely to remain an overhang even on new launches.
- Inventory correction at the dealer’s end could aid wholesales supporting valuations, but the company remains structurally unattractive.
ECM Weekly (22nd May 22) – JD, LIC, Delhivery, Leapmotor, Vista, Paradeep, Woori, Hyundai Heavy, NIO
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- With LIC not delivering and Delhivery needing insurance, combined with the Korean cancellations and HK silence, it looks like its going to be a quiet few weeks for IPOs.
- On placements, both the Korean deals were a disappointment, despite being well-flagged.
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