In today’s briefing:
- Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
- FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover
- TSE Announces Market Structure Revisions: Still Much Ado About Nothing
- BHP Unification – ASX Upweight in One Shot
- Softbank – The Credit Suisse Dispute
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.
FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover
- There could be 3 changes at the March rebalance with Nongfu Spring, Xpeng and China Overseas Land replacing China Tower, China Resources Beer and Geely Automobile.
- There will be large capping changes due to the price moves on the constituents, resulting in a one-way turnover estimated at 7.79% and in a one-way trade of HK$3,470m.
- There are a lot of current constituents bunched around the HK$200bn market cap and there could be some names changes among the deletions by the end of the review period.
TSE Announces Market Structure Revisions: Still Much Ado About Nothing
- Today the TSE announced its long-awaited segmentation of the 3,777 stocks listed on the five major venues, and where they will move on 4 April 2022.
- TSE1 represented just under 98% of Japan’s float market cap as of today’s close. As some TSE1 members will move to TSE Standard, TSE Prime will represent 97+%.
- There are tiny changes to TOPIX because of the moves – roughly 3bp of flow per quarter starting Oct 2022. The FFW Model Revision will be far more interesting.
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.
Softbank – The Credit Suisse Dispute
- The FT reports that Credit Suisse is increasingly aggressive in its dispute with Softbank over the lack of payment of funds to its clients related to Katerra and Greensill.
- Masayoshi Son apparently denies any knowledge of the Katerra deal which Credit Suisse is attempting to refute with documentation from Greensill.
- The flare up with one of its major previous financial partners is telling and the whole episode does not look good for Softbank’s governance image.
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