In today’s briefing:
- BHP Unification – ASX Upweight in One Shot
- BHP Unification: It’s “Flowfront” Against Post-Merger Capital Structure Expectations
- FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March
- KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes
- TIGER Secondary Cell ETF Rebalancing Trading on January 13
BHP Unification – ASX Upweight in One Shot
- As expected, S&P DJI have announced that BHP Group (BHP AU)‘s weight in the S&P/ASX indices will be increased all at once at the close of trading on 28 January.
- We estimated passive S&P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.
- BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.
BHP Unification: It’s “Flowfront” Against Post-Merger Capital Structure Expectations
- The endgame approaches o the BHP Unification trade. S&P announced the S&P/ASX upweight would be one-shot, as expected. Regulatory approvals are in. SARB has set BHP SJ as “domestic.”
- Proxy advisors are FOR. Most large shareholders who have been vocal are for. Pendal Group is against saying it gives value to UK line shareholders (which I think weird)
- Some flows net out – MSCI/FTSE World holders of PLC receive the Limited line – but index and non-index flows will be large and the arb may be messy.
FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March
- We see five stocks failing the Median Liquidity test at the March SAIR and expect them to be deleted from the FTSE AW/AC index at the close on 18 March.
- The stocks are Hap Seng Consolidated (HAP MK), IOI Properties Group (IOIPG MK), Sime Darby Property Bhd (SDPR MK), SM Investments (SM PM) and Sundaram Finance (SUF IN).
- Impact ranges from 34-82 days of ADV. The largest outflows will be seen on SM Investments and Sundaram Finance, while the flows on the other stocks are smaller.
KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes
- The review period for the March rebalance ends on 31 January, the announcement of the changes will be end February/beginning March, implementation will be at the close on 10 March.
- LG Energy Solution (LGENERGY KS) will be included in the Battery index, and there will be other changes to the Bio, Internet, Game and BBIG indices.
- The largest selling is expected to be on Douzone Bizon (012510 KS) due to a potential downweight in the Internet index and a deletion from the BBIG index.
TIGER Secondary Cell ETF Rebalancing Trading on January 13
- The rebalancing trade of the WISE Secondary Cell ETF will take place tomorrow, January 13 (Thursday), supposedly at the close.
- Those names with a significant passive impact among the stocks with a daily trading amount of +US$10M are: SKIET +0.71x ADTV, POSCO Chemical +0.46x ADTV, & SoulBrain: -0.69x ADTV
- The most likely new addition is Enchem (348370) with a passive impact of 0.60x ADTV. So, I expect a significant level of price action tomorrow.
Before it’s here, it’s on Smartkarma
