In today’s briefing:
- IDX30/LQ45 Index Rebalance: Four Changes for Each Index
- ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow
- STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact
- Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45
- Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
- Where Are We In the Global Liquidity Cycle?
- China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
- Asics (7936) | Slow Out of the Blocks
- Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
- Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings
IDX30/LQ45 Index Rebalance: Four Changes for Each Index
- There are 4 changes each for the IDX30 Index and the LQ45 Index at the upcoming rebalance to be implemented at the close on 31 January.
- The largest passive inflows are expected in Indofood CBP Sukses (ICBP IJ), Merdeka Battery Materials (MBMA IJ), Indah Kiat Pulp & Paper (INKP IJ) and Pertamina Geothermal Energy (PGEO IJ).
- With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.
ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow
- Nearly halfway through the review period, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
- Some of the potential changes will also have passive flows from the CSI 500 Index trackers at the same time as the ChiNext Index rebalance.
- The potential inclusions and deletions have slipped over the last couple of months along with the ChiNext Index, but the potential inclusions have outperformed as the deletions have dropped more.
STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact
- The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
- We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
- The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.
Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45
- The review period for the NIFTY family of indices, Nikkei 225, STAR50, the KRX New Deal Index and a global index ends on 31 January.
- The January rebalance of the IDX30 and LQ45 indices will be implemented at the close of trading on 31 January.
- There have been huge inflows into the CSI 300 Index ETFs for another week. This will increase the impact on the index changes at the next rebalance.
Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
- The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
- Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
- The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).
Where Are We In the Global Liquidity Cycle?
- January 2024 another strong month for Global Liquidity which hits US$171.7 trillion
- US Fed and China’s PBoC are in the forefront of adding liquidity
- Global Liquidity Cycle trough in October 2022. Next peak late-2025
China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
- Both SMIC & Hua Hong reported Q423 earnings in line with expectations and both guided Q124 flat to slightly down. SMIC expects FY24 mid single digit growth YoY.
- The downturn has exposed inherent weakness in China’s Semi Foundry segment relative to peers as exemplified by the significant GM disparity
- China’s two leading semi foundries have ~80% domestic dependence. Right now, that’s a headwind
Asics (7936) | Slow Out of the Blocks
- Asics absolutely smashed the last MTP; this year they have a more measured approach
- Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
- Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
- There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
- The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
- There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.
Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings
- There are 167 companies of 1,784 companies in Metrical Universe (12/2023) with major shareholders holding over 50% stake, and 605 companies with major shareholders holding between 20% and 50% stake.
- TSE has requests listed parent companies, listed subsidiaries, and affiliates to disclose the significance of parent-subsidiary (affiliates) listings. This will further increase pressure for the dissolution of parent-subsidiary (affiliates) listings.
- Hitachi’s transformation into value-creating company, which once spawned numerous listed subsidiaries, has been a success story since it began full-fledged “selection and concentration” process through the dissolution of parent-subsidiary listings.
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