In today’s briefing:
- Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
- STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro
- Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications
- China Mobile (600941 CH): Potential Index Fast Entry
- DAX Index: Quiddity Leaderboard for March 2022
- MSCI Korea Feb IR: Screening Status, Passive Impact, & Trading Approach
- SK Square Is Victim of LG Energy IPO-Triggered Market Flow Imbalance, Then Rebound Timing?
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).
DAX Index: Quiddity Leaderboard for March 2022
- DAX is a blue-chip index that now tracks the 40 largest companies listed on the Regulated Market of the Frankfurt Stock Exchange.
- The DAX Index is reviewed on a quarterly basis in March, June, September, and December.
- In this insight, we take a look at the potential constituency changes that can happen in the March 2022 review.
MSCI Korea Feb IR: Screening Status, Passive Impact, & Trading Approach
- Meritz Financial (high possibility), Wemade (mid), and Hyundai Heavy (low) are likely candidates for inclusion. On the other hand, Shinpoong Pharma (high) is likely to be deleted.
- The passive impact of Meritz Financial Group is the most significant (7.70x ADTV). On the other hand, Wemade and Shinpoong are expected to have a passive impact below 1.0x ADTV.
- Meritz Financial Group should be our primary target. But we may want to wait until the announcement date in early February due to its 50% gain in the past month.
SK Square Is Victim of LG Energy IPO-Triggered Market Flow Imbalance, Then Rebound Timing?
- SK Square’s discount to NAV is reaching 68%, pretty close to the deepest end of the local peers.
- The cause of this price correction can be seen as the collapse of the overall market flow balance due to the LG Energy IPO.
- Entry timing for MSCI float-rate increase momentum is early February.
Before it’s here, it’s on Smartkarma
