In today’s briefing:
- STAR50 Index Rebalance: Two Changes in June (As Expected)
- SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains
- SSE180 Index Rebalance: Small Impact but Not Widely Tracked
- CSI300 Index Rebalance: 9 Changes as Discretion Used
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings
- Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank
- Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post
STAR50 Index Rebalance: Two Changes in June (As Expected)
- The index committee has used a 6-month minimum listing history and that results in two changes. This is the first rebalance with less than 5 changes at a review.
- One way turnover is estimated at 1.03% and will result in a one-way trade of CNY 1,025m. Given the adds are new listings, there will be some reverse funding flow.
- There appears to be little pre-positioning on the adds while there is a bigger buildup on the deletes.
SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains
- There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. There is over 1x ADV to sell on a few deletions.
- We estimate a one-way turnover of 5.3% at the June rebalance leading to a one-way trade of CNY 3.84bn. Index arb activity could add to the impact on the stocks.
- The adds outperformed the deletes from February to April but have given up a lot of the outperformance over the last month.
SSE180 Index Rebalance: Small Impact but Not Widely Tracked
- There are 18 changes for the SSE180 Index that will be implemented at the close of trading on 9 June.
- The impact on the stocks is small but this is not a widely tracked index, so there could still be opportunities for some high risk/reward basket trades.
- With Northbound Stock Connect eligibility no longer drawing on the SSE180 Index constituents, the index could lose relevance over time.
CSI300 Index Rebalance: 9 Changes as Discretion Used
- There are 9 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.
- While nearly all the changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used discretion.
- The Energy sector is the biggest gainer in terms of index spots, while the Consumer Discretionary and Health Care sectors lose two index spots each.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings
- There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- There were no new deals were discussed on Smartkarma this week.
- Key updates took place for Toyo Construction (1890 JP), Silk Laser Australia (SLA AU), Sing Tao News Corp (1105 HK), and GK Goh Holdings (GKG SP).
Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank
- The announcement of the changes for the June rebalance of the local China indexes was made post market close on Friday.
- A busy week is coming up with rebalance implementations, review cutoffs and announcements.
- There were inflows to iShares MSCI Japan ETF (EWJ US), Wisdomtree Japan Hedged Eq (DXJ US) and Jpmorgan Betabuilders Japan (BBJP US) during the week.
Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post
- Rakuten Bank (5838 JP)‘s TOPIX inclusion is this week. And the Real World Float has gotten smaller since the offering. And some of those people aren’t going to sell near-term.
- Swire Pacific (A) (19 HK)‘s P/B is back down to 0.31x as Cathay Pacific Airways (293 HK) tackles alleged language bias by flight attendants.
- Understanding real money demand on the Rakuten (4755 JP) story is key. If there is any, that makes deal overhang smaller than it looks.
💡 Before it’s here, it’s on Smartkarma
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