Daily BriefsEvent-Driven

Event-Driven: SITC International, Capitaland, Toshiba Corp, SK Bioscience, Intouch Holdings and more

In today’s briefing:

  • MSCI Aug 2021 Index Rebalance Preview: Changes After Day 1 in the Review Period
  • Capitaland (CAPL SP): Index Impact & Upside of the Restructuring
  • Toshiba Corp (6502 JP) Chapter 5:
  • KRX BBIG Rebalancing Complete Preview: SK Bioscience, SK IE Tech, Krafton, Kakao Games, & Kakao Pay
  • StubWorld: IFAs Say “Yea” For Intouch, “Nay” For AIS

MSCI Aug 2021 Index Rebalance Preview: Changes After Day 1 in the Review Period

By Brian Freitas

MSCI is scheduled to announce the results of the August 2021 Quarterly Index Review (QIR) on 11 August with the changes implemented after the close of trading on 31 August.

The review period for price cut-off began on 19 July and will run through to 30 July. For Asia, most of the changes are expected in China with a few changes for Hong Kong, Taiwan, Korea and Thailand.

MSCI generally picks a day from the first week to calculate the market cap on which it bases the list of inclusions and exclusions.

Post day 1 of the review period, we see SITC International (1308 HK), Huabao International Holdings (336 HK), Momo.Com Inc (8454 TT), Chinasoft International (354 HK), China United Network A (600050 CH), Ecopro BM Co Ltd (247540 KS), CRRC Corp Ltd A (601766 CH), SK IE Technology (361610 KS), Beijing Wantai Biological-A (603392 CH), Beijing Kingsoft Office Software-A (688111 CH), Beijing Roborock Technology-A (688169 CH), Imeik Technology Development (300896 CH), StarPower Semiconductor Ltd (603290 CH), Advanced Micro-Fabrication Equipment-A (688012 CH) and China Baoan (000009 CH) being added to the Standard index.

Likely deletions are Bank of East Asia (23 HK), Taiwan Business Bank (2834 TT), KMW Co Ltd (032500 KS), Perennial Energy Holdings Ltd (2798 HK), Bangkok Bank PCL (BBL/F TB) and Douyu International Holdings (DOYU US).

The August QIR will also implement tranche 2 of Sea Ltd (SE US)‘s inclusion in the MSCI indices and will result in the index inclusion factor increasing from 0.05 to 0.25.

Capitaland (CAPL SP): Index Impact & Upside of the Restructuring

By Brian Freitas

On 22 March, Capitaland (CAPL SP) announced a restructuring where the the Group’s investment management platforms and lodging business would be consolidated into ‘CapitaLand Investment’ (CLI) and listed by way of introduction on the SGX (SGX SP), while the real estate development business would be privatised and fully held by CLA Real Estate Holdings.

Capitaland (CAPL SP) shareholders will receive 1 share of CLI, 0.155 units in Capitaland Integrated Commercial Trust (CICT SP) per share of CAPL, and cash of S$0.951/share for a total consideration of around S$4.102.

The Capitaland EGM will be held on 10 August while the last expected trading day for Capitaland (CAPL SP) is 2 September. The CLI shares are expected to start trading on 17 September.

We expect CLI will be included in the MSCI Standard, FTSE All-World and FTSE Straits Times Index (STI) (STI INDEX). We also see upside in Capitaland (CAPL SP) from current levels based on the terms of the restructuring and the potential re-rating of CLI due to its move to an asset light and capital efficient model.

Toshiba Corp (6502 JP) Chapter 5:

By David Lepper

The Toshiba Corporation activist campaign appears at an inflexion point following the 2021 AGM. 

The current investment case for Toshiba is not based primarily on the fundamentals and valuation of the company as you would expect. As a result of the activist campaign, the current position of key stakeholders and the potential outcomes from their actions the investment case must now involve strategic consideration of all factors. 

We examine the position and likely strategic needs to be achieved for an amicable end to the current activist campaign.

We highlight why the 12th August, mid-September 2021 and Q4 2021 are key to the next key dates for this activist led campaign.

Our conclusion leaves investors with a list of key positive and negative flags.

KRX BBIG Rebalancing Complete Preview: SK Bioscience, SK IE Tech, Krafton, Kakao Games, & Kakao Pay

By Sanghyun Park


The KRX BBIG K-New Deal Index contains 12 stocks, listed either on the KOSPI or KOSDAQ market, three leading companies in each of the four industries. Each of the four industries also has its own index containing 10 constituents. So, we have one mother index (BBIG) and four sub-indices representing each of the four industries.

  1. Secondary Battery
  2. Bio
  3. Internet
  4. Game

Rebalancing: The top-three largest full market cap stocks from the Secondary Battery, Bio, Internet, and Game are selected for rebalancing in March and September. It is biannually reconstituted. Rebalancing occurs on the trading day following the last trading day of the March and September delivery month for KOSPI 200 futures contracts.

Rebalancing schedule
Rebalancing cycleSemi-annually
Rebalancing month
March and September
Implementation date
The trading day following the last trading day for KOSPI 200 futures contracts
Next implementation date
September 10, 2021
Rebalancing trading
At the close on September 9, 2021
Screening base date
The last trading day of the month preceding the date of regular rebalancing
Screening period
The three months preceding the screening base date
Source: KRX & WISE Index

Index weight: The BBIG Index is an equal-weight index in which each index constituent is allocated the same weight (8.33%) at each rebalancing. As for the four sub-indices, the top-three largest full market cap stocks are given the weight of 75%, in which each stock is allocated the same weight of 25% at each rebalancing. In contrast, the remaining seven constituents are given the remaining weight of 25%, where their float-adjusted market cap weights them.

Index calculationsBBIG
Four sub-indices
Number of constituents1210
Index weight
Equal-weighted at 8.33%
Top 3 (by full market cap): Equal-weighted at 25%
The remaining 7: float-adjusted market cap-weighted totaling 25%
Source: KRX & WISE Index

The mother index and battery sub-index have an AUM that is not small considering the number of constituents. BBIG has an AUM of ₩520B as of today, and its battery is ₩760B. Bio is about ₩100B. However, Internet and Game do not have meaningful AUMs.

ETFs tracking BBIG indicesIndexTickerAUM
Mirae Asset TIGER KRX BBIG K-New Deal ETF
Hana Financial Investment Hana KRX BBIG K-New Deal ETN 3700003₩10.5B
– Total₩518.3B
Mirae Asset TIGER KRX Second Battery K-NewDeal ETFSecondary Battery364980₩759.7B
Mirae Asset TIGER KRX BIO K-New Deal ETFBio364970₩97.6B
Mirae Asset TIGER KRX Internet K-New Deal ETFInternet365000₩49.2B
Mirae Asset TIGER KRX Game K-New Deal ETFGame364990₩35.7B
Source: KRX

The screening period is the three months preceding the screening base date. So, the screening period this time is June 1 to August 31. Below is the daily average market cap from June 1 to July 19 and the index weight as of July 19.

BBIGWeight, as of July 19Average daily full market cap (June 1~July 19)30-day average daily trade value
Kakao Corp12.34%₩66,478.6B₩846.3B
Kakao Games Corp11.59%₩4,805.8B₩244.2B
Naver Corp8.96%₩65,954.1B₩388.6B
Samsung Biologics Co Ltd9.13%₩56,359.3B₩77.4B
Samsung SDI Co Ltd8.15%₩46,995.6B₩216.7B
Netmarble Corp8.18%₩11,730.2B₩52.7B
SK Biopharmaceuticals7.70%₩9,681.8B₩55.4B
SK Innovation Co Ltd7.38%₩25,451.8B₩256.9B
LG Chem Ltd7.11%₩58,759.0B₩197.2B
Celltrion, Inc.6.61%₩33,438.9B₩149.8B
Douzone Bizon Co Ltd6.22%₩2,600.1B₩21.1B
NCSoft Corp6.57%₩18,199.9B₩70.1B
Sub-indicesWeight, as of July 19Average daily full market cap (June 1~July 19Float-adjusted market cap30-day average daily trade value
LG Chem Ltd21.89%₩58,759.0B₩38,763.3B₩197.2B
Samsung SDI Co Ltd25.07%₩46,995.6B₩34,335.0B₩216.7B
SK Innovation Co Ltd22.75%₩25,451.8B₩14,161.4B₩256.9B
Posco Chemical Co Ltd8.25%₩9,112.5B₩3,413.5B₩63.8B
SKC Co Ltd6.00%₩5,640.2B₩3,014.7B₩57.0B
Ecopro BM Co Ltd5.13%₩4,604.0B₩3,037.2B₩71.4B
Iljin Materials Co Ltd2.93%₩3,269.7B₩1,518.1B₩24.5B
L&F Co., Ltd.3.52%₩2,639.3B₩1,564.8B₩75.3B
SoulBrain Co Ltd2.49%₩2,539.3B₩1,358.8B₩10.2B
Chunbo Co Ltd1.87%₩1,929.2B₩799.1B₩30.8B
Samsung Biologics Co Ltd29.94%₩56,359.3B₩13,954.6B₩77.4B
Celltrion, Inc.21.64%₩37,030.6B₩28,069.2B₩149.8B
Celltrion HealthCare Co Ltd10.06%₩18,089.2B₩10,956.6B₩91.0B
SK Biopharmaceuticals Co Ltd25.20%₩9,681.8B₩3,291.8B₩55.4B
Celltrion Pharm Inc2.35%₩5,629.5B₩2,512.4B₩76.2B
Hanmi Science Co Ltd1.56%₩5,073.4B₩1,610.3B₩34.6B
Yuhan Corp3.00%₩4,454.7B₩3,331.2B₩14.6B
Shinpoong Pharmaceutical Co Ltd2.07%₩3,919.5B₩2,390.5B₩395.7B
Green Cross Corp1.61%₩3,808.6B₩1,754.3B₩23.1B
Seegene Inc2.53%₩3,927.5B₩2,664.4B₩289.6B
Kakao Corp34.95%₩66,478.6B₩48,502.8B₩846.3B
Naver Corp25.47%₩65,954.1B₩53,106.2B₩388.6B
Douzone Bizon Co Ltd17.72%₩2,600.1B₩1,613.4B₩21.1B
KMW Co Ltd6.08%₩2,144.3B₩1,353.5B₩13.0B
NHN KCP Corp3.21%₩1,365.8B₩730.7B₩9.5B
AfreecaTV Co Ltd4.68%₩1,294.1B₩891.0B₩16.8B
Ace Technologies Corp.2.45%₩786.2B₩600.2B₩11.5B
Seojin System Co Ltd2.31%₩811.4B₩544.8B₩11.1B
Ahnlab Inc1.77%₩703.2B₩409.1B₩7.2B
Rsupport Co Ltd1.34%₩497.3B₩261.1B₩29.1B
NCSoft Corp18.73%₩18,199.9B₩7,753.2B₩70.1B
Netmarble Corp23.34%₩11,730.2B₩3,657.5B₩52.7B
PearlAbyss Corp9.46%₩4,587.3B₩3,755.6B₩45.2B
Kakao Games Corp33.10%₩4,805.8B₩2,047.3B₩244.2B
Com2uS Corp3.91%₩1,627.3B₩1,022.8B₩19.8B
NHN Corp3.08%₩1,552.2B₩708.1B₩9.6B
Doubleu Games Co Ltd2.06%₩1,160.4B₩567.4B₩7.6B
Webzen Inc2.48%₩1,094.4B₩641.6B₩9.5B
Wemade Co Ltd2.00%₩949.2B₩505.4B₩16.0B
Neptune Co1.76%₩815.4B₩420.4B₩6.5B

StubWorld: IFAs Say “Yea” For Intouch, “Nay” For AIS

By David Blennerhassett

This week in StubWorld …

Not surprisingly, Intouch Holdings (INTUCH TB)‘s IFA says the Offer from Gulf Energy Development Public Company (GULF TB) is “appropriate“. Equally unsurprising, Advanced Info Service (ADVANC TB)‘s IFA has the opinion that the shareholders should reject the Tender Offer from Gulf.

Preceding my comments on Intouch are the weekly setup/unwind tables for Asia-Pacific Holdcos.

These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent – of at least 20%.

As always, more below the fold.

Before it’s here, it’s on Smartkarma