Daily BriefsMost Read

Most Read: EDP – Energias de Portugal SA, Alibaba Group, Nanofilm Technologies International, Invesco Office J Reit and more

In today’s briefing:

  • Global Clean Energy Index: 52 Adds, 55% Index Turnover, US$12bn to Trade
  • BABA Long Entry Target
  • FTSE GEIS June Index Rebalance Preview: IPOs, J-REITs, India FOL
  • Starwood Targets Japan’s First Hostile REIT Full TOB for Invesco Office J-REIT
  • Singaporean SPACs: Democratizing Access To High Growth

Global Clean Energy Index: 52 Adds, 55% Index Turnover, US$12bn to Trade

By Brian Freitas

The changes to the S&P Global Clean Energy Index have been announced. There are 52 additions to the index to take the number of index constituents up to 82. The changes are effective after the close of trading on 16 April.

The 52 additions and capping changes will result in a one-way turnover of close to 55% and will require the ETFs tracking the index to trade US$12bn to rebalance their portfolios.

The largest buying impact in terms of ADV to trade will be on Edp – Energias De Portugal Sa (EDP PL), SSE PLC (SSE LN), Northland Power (NPI CN), Enel Americas SA (ENIA US), Drax Group PLC (DRX LN), Meyer Burger Technology Ag (MBTN SW) and Centrais Eletricas Br-Sp Adr (EBR US).

The largest selling impact will be on Meridian Energy (MEL NZ), Contact Energy (CEN NZ), Verbund AG (VER AV), Innergex Renewable Energy (INE CN), Cia Energetica De-Spon Adr (CIG US), Boralex Inc (BLX CN) and Scatec Solar ASA (SSO NO).

Among the current index constituents, there will be buying on Orsted A/S (ORSTED DC) and Vestas Wind Systems A/S (VWS DC).

We recommend buying the surprise inclusions and unwinding the positions by implementation date. A lot of the stocks that will have a reduction in index weight have been sold off over the last few months and the active positions will be covered leading up to implementation date – we recommend buying these stocks in the days leading up to implementation date since the stocks could rally once the overhang of passive selling has been removed.

BABA Long Entry Target

By Thomas Schroeder

Alibaba Group (BABA US) still has some basing work to complete before a fresh rally cycle can unfold. Current bearish flat sets a heavy tone to press below trendline support (a brief affair) and sets up a long with price and RSI buy levels aligning.

We outline a micro short trade if we tick up to 240 below the 245 pivot resistance.

The directional trade is to get long on a break below trendline support (220) near the 205 price level while aligning the RSI low target.

FTSE GEIS June Index Rebalance Preview: IPOs, J-REITs, India FOL

By Brian Freitas

FTSE Russell will announce the changes to the Global Equity Index Series (GEIS) as a part of the quarterly review on 21 May and the changes will be effective after the close of trading on 18 June.

The quarterly review is used to include IPOs which did not qualify as an immediate fast entrant to the indices at the time of listing and were not listed for at least 3 months by the following semi-annual review to be included in the indices.

There will be passive buying on the J-REIT’s as part of the tranched inclusion in the GEIS – the inclusion commenced at the September 2020 semi-annual index review and this will be the fourth and final tranche.

The June QIR will also continue with tranche 4 of the implementation of the India Foreign Ownership Limit (FOL) increase which commenced with the review in September 2020 and will conclude at this review.

Stocks that could be included in the FTSE All-World index are Evergrande Property Services (6666 HK), China Resources Mixc Lifestyle Services (1209 HK), Pop Mart International Group Limited (9992 HK), Blue Moon Group Holdings (6993 HK), Remegen Co Ltd (9995 HK), Jinke Smart Services (9666 HK), Shimao Services Holdings Limited (873 HK), PTT Oil and Retail (OR TB), Big Hit Entertainment (352820 KS), SCG Packaging Public Company Limited (SCGP TB), MR D.I.Y. Group (MRDIY MK), Gland Pharma Ltd (GLAND IN) and Indian Railway Finance Corporation (IRFC IN).

Stocks that could be included in the FTSE All-Country index are Yidu Tech Inc (2158 HK), Everest Medicines (1952 HK), Kerry Express Thailand (KEX TB), Converge ICT Solutions (CNVRG PM), Nanofilm Technologies International (NANO SP) and Roland Corp (7944 JP)

Starwood Targets Japan’s First Hostile REIT Full TOB for Invesco Office J-REIT

By Travis Lundy

Starwood Capital Group, a well-known real estate investor operating in half a dozen countries around the world, with current global AUM in excess of US$75bn. They manage private REITs globally and also manage the largest commercial real estate investment trust in the United States – Starwood Property Trust (STWD US) 

Together with affiliated investors, on Friday Starwood Capital Group filed that it owned just over 5% of Invesco Office J Reit (3298 JP) (filing attached below) and announced its intention to conduct a Tender Offer to buy out minorities. 

Invesco Office J-REIT, for its part, this morning announced that this was made “unilaterally and with no prior notification.” This classifies the action as hostile.

The Tender Offer Price is to be set at JPY 20,000/unit, which is s 13.3% premium to Friday’s close, and a premium of 14.68% and 23.71% to the 1mo and 3mo closing price averages. 

This appears to have been put together somewhat hastily as the starwood website outlining the Tender Offer – https://www.starwoodjapantob.jp/ – says the website is still being prepped.

This deal comes in well over book and at something like 19x TTM FFO. 

The market’s immediate reaction this morning is to bid the REIT through terms. 

Start Date? Unknown. 
Minimum Threshold? Unknown. 

J-REIT takeovers are rare enough that hostile action is also rare, though not unknown. This will, however, be the first TOB of a Japanese REIT where the goal is to delist the REIT.

Hostile action on J-REITs comes with its own issues and parameters. And it is not as hard as it might be for a corporation. Starwood is counting on it. And that limits the Asset Manager’s ability to defend itself. 

Singaporean SPACs: Democratizing Access To High Growth

By David Blennerhassett

On the 6 January 2010, the SGX issued a consultation paper on the “Proposed Revisions to Mainboard Admission Criteria and the Introduction of SPAC“.  Following the feedback at that time, SGX determined that it was not an opportune time to introduce SPACs.

In Virtual IPOs/Direct Listings: Uninhibited Price Discovery on the 29 November last year, I mentioned a white paper on special purpose acquisition company (SPAC) may be issued by the SGX in the first half of the following year.

In January, the Business Times reported that a consultation could be launched by the SGX as early as this quarter – see Singapore Exchange: Asia’s Future SPAC Hub. The SGX did sound out the Listings Advisory Committee (“LAC”) for advice on SPACs in January, and after consideration, the LAC advised that it was in favour of SPAC listings, subject to the appropriate safeguards.

The Singapore Exchange announced last week a regulatory framework for SPACs to list on the SGX and asked the market for feedback.

Subsequent to the feedback phase ending on the 28 April, the framework may be finalised in the middle of this year. 

The SGX makes it clear SPACs are susceptible to execution risks where the SPAC is unable to identify a suitable target company or successfully consummate the business combination within the pre-determined period. But given the clear demand for such instruments, the SGX evidently sees the benefits outweigh the risks.

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