In today’s briefing:
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
- NIFTY200 Momentum30 Index Rebalance Preview: 69% One-Way Turnover & US$1.9bn Trade
- Henderson Land (12 HK): Large Passive Flow Coming Up as Shorts Cover
- FXI Rebalance: Pop Mart, SF Holding In; China Merchant Sec, China Railway Out
- STTF Index Rebalance: Keppel DC REIT Replaces Jardine Cycle & Carriage
- China A50 ETF Rebalance: One Set of Changes
- Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer. Still.
- HEW: Poorly Positioned Doves
- FnGuide Sector ETF Boom: Sniffing Out Uncrowded Flow Trades
- Great Eastern (GE SP): OCBC Bumps Terms – $30.15/Share Exit Offer
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
- The June rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
- The net round-trip trade across all stocks across the four indices is estimated at HK$63.55bn (US$8.1bn). There are 12 stocks with over 2x ADV to trade from passive trackers.
- The trade size is much bigger than usual due to the inclusion of BYD in the HSTECH Index and due to a change in the FAF methodology for Secondary Listings.
NIFTY200 Momentum30 Index Rebalance Preview: 69% One-Way Turnover & US$1.9bn Trade
- There could be 20 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
- If all changes are on expected lines, one-way turnover is estimated at 68.7% and that will result in a round-trip trade of INR 159bn (US$1.87bn).
- Financials are expected to gain 9 index spots and Materials are expected to gain 3 spots. Consumer Discretionary could lose 5 spots and Information Technology could lose 4 spots.
Henderson Land (12 HK): Large Passive Flow Coming Up as Shorts Cover
- Henderson Land Development (12 HK) will be added to a global sector index at the close on 20 June.
- Estimated passive buying in Henderson Land Development (12 HK) is 42m shares (US$131.5m; 7.5x ADV).
- The stock is up over the last 2 months as shorts have covered. Performance is in line with peers and positioning does not appear to be excessive.
FXI Rebalance: Pop Mart, SF Holding In; China Merchant Sec, China Railway Out
- Pop Mart (9992 HK) and S.F. Holding (6936 HK) will replace China Railway Group (390 HK) and China Merchants Securities (6099 HK) in the iShares China Large-Cap (FXI) (FXI US).
- Passive trackers will need to buy between 0.4-0.6x ADV in the adds and sell between 0.5-1.3x ADV in the deletes. There are some small capping flows too.
- There are a lot of shorts in Pop Mart (9992 HK), China Railway Group Ltd H (390 HK) and China China Merchants Securities Co Ltd (H) (6099 HK).
STTF Index Rebalance: Keppel DC REIT Replaces Jardine Cycle & Carriage
- Keppel DC REIT (KDCREIT SP) will replace Jardine Cycle & Carriage (JCNC SP) in the SPDR Straits Times Index ETF (STTF SP) at the close on 20 June.
- The SPDR Straits Times Index ETF (STTF SP) will need to trade between 3-5 days of ADV in the add and delete.
- The ETF trading could help Keppel DC REIT (KDCREIT SP) break out of its short-term downtrend and could add further pressure on Jardine Cycle & Carriage (JCNC SP).
China A50 ETF Rebalance: One Set of Changes
- The iShares A50 China (2823 HK) and CSOP China A50 (HKD) (2822 HK) ETFs will rebalance their holdings at the close on 20 June.
- Bank of Jiangsu (600919 CH) will replace Great Wall Motor (601633 CH) in the ETFs and passives will need to trade between 0.4-0.6x ADV in the stocks.
- This change is a surprise to us and there could be a short-term move in the stocks.
Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer. Still.
- On the 17th Feb, a specialty restaurant-operator Tam Jai (2217 HK) announced an Offer, by way of a Scheme, from TORIDOLL (3397 JP) at HK$1.58/share, a 75.56% premium to undisturbed.
- This should get up; but really, given the recent Soundwill Holdings (878 HK) and Goldlion Holdings (533 HK) failures, small, illiquid arbs are not the preferred haven for arb investors.
- The Scheme Doc is now out, with a Court Meeting on the 30th June, and payment on or before the 26 August. The IFA (Lego Corporate) says “fair & reasonable“.
HEW: Poorly Positioned Doves
- The ECB was even more hesitant to signal cuts than we expected, with the level after the unsurprising cut now deemed well-positioned. Cuts will require downside news.
- Disinflationary surprises across the Euro area in the May flash releases are already embedded in that assessment. Doves are poorly positioned for this reaction function.
- US inflation data may be the most crucial global release next week, although the signal may not be clear. Statistical issues affect the UK labour market and GDP data.
FnGuide Sector ETF Boom: Sniffing Out Uncrowded Flow Trades
- Korea’s ETF market just hit KRW 200T AUM — doubling in under 2 years. ETFs now make up ~10% of KOSPI’s cap and over half its daily trading volume.
- FnGuide dominates Korea’s sector theme ETF space, capturing ~KRW 9T of the KRW 14T market — far ahead of KRX — with momentum accelerating in early 2025.
- FnGuide’s rebalancing process is drawing more trader interest lately, with rising inquiries suggesting faster market learning — prompting earlier pre-positioning in sector ETF flow trades.
Great Eastern (GE SP): OCBC Bumps Terms – $30.15/Share Exit Offer
- The prior Offer for Great Eastern Holdings (GE SP) closed on the 12th July 2024, with OCBC holding 93.62%. Shares have been suspended ever since. Compulsory acquisition was not afforded.
- To break the deadlock, I mused in This Needs To Be Sorted: Great Eastern (GE SP)’s Protracted Suspension, that OCBC needed to come out with a improved Offer of ~S$30/share.
- That has now unfolded. Minorities have the option of a S$30.15/share Exit Offer; or voting for the resumption of trading, which will be possible via the issuance of bonus shares.
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