In today’s briefing:
- Dian Swastatika Sentosa (DSSA IJ): Surprise, Surprise!
- Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Constituent, FAF & Capping Changes
- Gold Miners ETF (GDX US): Big Outperformance Driven by Benchmark Change; Valuation Gap Opens Up
- Hang Seng Biotech Index Rebalance Preview: Methodology Change Leads to 20 Deletions
- China A50 ETFs Rebalance Preview: Three Changes in September
- NIFTY MIDCAP150 Index Rebalance Preview: 11 Potential Changes in September
- JX Advanced Metals (5016 JP): Passive Buying in the Next 6 Weeks
- Taiwan Top 50 ETF Rebalance Preview: Another Inclusion for King Slide
- A/H Premium Tracker (To 15 Aug 2025): BIG Beautiful Skew Rampages Onward
- [Japan M&A] NTT Docomo and Dentsu Squeeze Out Minorities in Carta (3688 JP) Cheap. Tender Starts Now
Dian Swastatika Sentosa (DSSA IJ): Surprise, Surprise!
- Dian Swastatika Sentosa (DSSA IJ) will be added to a global index in August and that should come as a surprise to most of the market.
- The stock is up 10x over the last 18 months and liquidity has shown a marked improvement in the last year.
- Dian Swastatika Sentosa (DSSA IJ) trades at nosebleed valuations and there is the risk of a sell off following index inclusion.
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Constituent, FAF & Capping Changes
- There are 3 potential changes for the HSIII Index in September. There are couple of names that are close to the inclusion/ deletion thresholds.
- The largest inflows will go to Horizon Robotics (9660 HK) following lock-up expiry that increases the Free-Float Adjusted Factor (FAF) by a factor of 7-8x.
- There are large capping changes too and the estimated one-way turnover is 9.8% resulting in a round-trip trade of HK$5.65bn (US$720m).
Gold Miners ETF (GDX US): Big Outperformance Driven by Benchmark Change; Valuation Gap Opens Up
- The VanEck Gold Miners ETF/USA (GDX US) will change benchmark from the NYSE Arca Gold Miners Index to the MarketVector Global Gold Miners Index at the close on 19 September.
- We forecast 8 adds and 25 deletes for the ETF. Estimated one-way turnover is 15.77% resulting in a round-trip trade of US$6.18bn.
- The forecast adds have outperformed the forecast deletes since the announcement of the benchmark switch and over shorter time frames too. The valuation gap has opened up.
Hang Seng Biotech Index Rebalance Preview: Methodology Change Leads to 20 Deletions
- A methodology change for the Hang Seng Biotech Index (HSHKBIO Index) will result in 20 deletions at the close of trading on 5 September.
- Estimated one-way turnover at the rebalance is 9.5% resulting in a round-trip trade of HK$1.3bn (US$162m). Passive trackers need to sell between 0.05-1x ADV in the deletes.
- The forecast deletes have underperformed the other index constituents since the start of the year but there has been little movement since the announcement of the methodology change.
China A50 ETFs Rebalance Preview: Three Changes in September
- Nearing the end of the review period for the September rebalance, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK).
- WuXi AppTec, Zhongji Innolight and BeiGene could replace China United Network, NARI Technology and China National Nuclear Power in the ETF at the close on 19 September.
- Passives will need to trade 0.1-0.7x ADV in the forecast changes. The forecast adds have massively outperformed the forecast deletes over the last 4 months.
NIFTY MIDCAP150 Index Rebalance Preview: 11 Potential Changes in September
- With the review period now complete, there could be 11 changes for the NIFTY Midcap 150 Index at the September rebalance.
- Estimated one-way turnover is 7.7% resulting in a round-trip trade of INR 17.6bn (US$201m). With over US$43bn tracking the index actively, the impact on the stocks will be much larger.
- The outright forecast adds have outperformed the forecast deletes over the last 4 months and there has been a jump in the last week.
JX Advanced Metals (5016 JP): Passive Buying in the Next 6 Weeks
- JX Advanced Metals (5016 JP) listed in March and did not get Fast Entry to global indices since a large part of the IPO was allotted to domestic retail investors.
- JX Advanced Metals (5016 JP) will be added to one global index this month and could be added to the other global index in September.
- The stock is trading higher following the better than forecast results announced last week. The index inclusions could take the stock higher in the short-term.
Taiwan Top 50 ETF Rebalance Preview: Another Inclusion for King Slide
- There could be 2 changes for the Yuanta/P-Shares Taiwan Top 50 ETF in September – one is high probability and the other is right at the cusp.
- King Slide Works (2059 TT) is being added to a global index this month, so the ETF inclusion will come hot on the heels of that.
- The impact on the stocks is pretty big with passive trackers needing to buy between 1.3-5.5x ADV in the adds and sell between 3.4-6.4x ADV in the deletes.
A/H Premium Tracker (To 15 Aug 2025): BIG Beautiful Skew Rampages Onward
- HUGE, rampaging, “Beautiful Skew” continues. Enormous swings in H/A ratios in high AH premia names, materials, and non-bank finance.
- Last week’s short reco on China Merchants Bank H (3968 HK) fell 2.9% on the week, 2.2% from Monday close to Friday. AH premium fell a tick.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there free for SK readers.
[Japan M&A] NTT Docomo and Dentsu Squeeze Out Minorities in Carta (3688 JP) Cheap. Tender Starts Now
- On 16 June 2025, NTT (Nippon Telegraph & Telephone) (9432 JP) sub NTT Docomo and Dentsu Inc (4324 JP) announced Docomo would buy out minorities in Dentsu sub Carta Holdings.
- The price for minorities is OK, not great. The Board talks up synergies not included in fair value considerations, and Dentsu+Docomo are actually buying it 15% cheaper.
- That comes out to a net price below the bottom end of the DCF range. Aaargh. But Dentsu+irrevocables+ large individuals likely gets this over the line cleanly.
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