In today’s briefing:
- CSI300 Index Rebalance: The Surprises Could Outperform
- JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback
- Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
- SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
- STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- Sembcorp Marine Takeover of Keppel O&M – Almost There
- SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking
CSI300 Index Rebalance: The Surprises Could Outperform
- There are 15 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- While most of the deletions are in line with forecasts, there are a few differences on the inclusions as the index committee has used its discretion to overlook some names.
- The Industrials, Materials and Utilities sectors gain index spots at the expense of Health Care, Financials, Consumer Staples and Consumer Discretionary.
JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback
- Jafco Co Ltd (8595 JP) has long been known as a “cheap” listed “venture fund” because of its additional large (for it) holding in Nomura Research Institute Ltd (4307 JP).
- Well-Known Japanese activist Yoshiaki MURAKAMI and his related companies bought a stake. JAFCO responded with a “Policy” (poison pill). Murakami-san ducked and dodged then bought more. Now the exit.
- JAFCO will sell its Nomura Research shares in a Secondary Offering, and conduct a large buyback via tender offer. Like other Murakami exits, this one is not designed for you.
Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
- JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares.
- At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.
Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
- There were a lot of review cutoffs last Monday and a lot of announcements for China indexes post market close on Friday.
- The coming week has announcements for the FTSE country indices as well as implementation for the MSCI indices and the Hang Seng family of indexes.
- Big inflows to MSCI Korea, iShares MSCI ACWI ETF (ACWI US) and iShares MSCI Emerging Markets (EMXC US); outflows for Tracker Fund of Hong Kong Ltd (2800 HK).
SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well
- There are 5 changes for the SSE50 Index that will be implemented at the close on 9 December. Passive selling on a few deletions is pretty large.
- We estimate a one-way turnover of 4.07% at the December rebalance leading to a one-way trade of CNY 3.36bn. Index arb activity could add to the impact on the stocks.
- The adds have dropped over the last few months while the deletes have moved higher. There could be a reversion of that trend till implementation of the changes.
STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in December.
- All changes are in line with our forecasts and there appears to be some pre-positioning over the last week as the deletes have sold off hard.
- One-Way turnover is estimated at 5.34% and will result in a one-way trade of CNY 3,766m. The estimated impact on the deletes is higher than that on the adds.
CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
- 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.
Sembcorp Marine Takeover of Keppel O&M – Almost There
- Last Wednesday, Keppel Corp (KEP SP) announced 8 Dec as the EGM date for shareholders to approve the AssetCo Transfer, the Keppel O&M/SMM combo, and the distribution of SMM shares.
- This should probably sail through. Investors who want to submit questions in advance can email [email protected] by 3pm 30 Nov.
- I still like Keppel. I think investors will find it attractive post-spin.
SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
- There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
- Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.
Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking
- Socionext (6526 JP) was offered in a range of ¥3,480-3,650, oversubscribed, IPOed at ¥3,650 and closed ¥4200 on Day 1. We can assume that was the “right price.”
- Since then, while peers are up 19.8% in the 6 weeks since then, Socionext is up 66%. This year’s biggest Japan IPO has been a big winner.
- The TOPIX inclusion is on Tuesday at the close. Beware, you don’t know who is in the stock and who is not.
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