In today’s briefing:
- RMB Dual Counter Trading Is Coming – This Changes AH Relationships
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance: Huge Turnover & Flow Overlap
- Select Sector Indices and S&P Equal Weight Rebalance Preview: US$17bn Round-Trip Trade
- A/H Premium Tracker (To 6 June 2025): Narrow Premia Hs Worst Performers, BYD Relents
- NIFTY200 Momentum30 Index Rebalance: HUGE Turnover and Trade as Financials Shine
- S&P/ASX Index Rebalance (June 2025): Changes, Flows, Shorts & Positioning
- NAV Valuations of Top Five Largest “Pure” Holdcos in Korea
- With Us (9696 JP): NSSK’s JPY3,237 Tender Offer
- [Japan ECM/Index] Azoom (3496) Offering to Enable Move to TOPIX
- Index Treatment of Sony (6758 JP)’s Spinoff of the Financial Services Business
RMB Dual Counter Trading Is Coming – This Changes AH Relationships
- A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
- They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
- RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: Huge Turnover & Flow Overlap
- There are 5 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in June with implementation starting on 20 June and ending on 26 June.
- Estimated one-way turnover is 17.7% resulting in a round-trip trade of TWD 158bn (US$5.3bn). There are 10 stocks with over 5 days of ADV to trade.
- There are a few stocks that have same-way or opposing flows from other index trackers over the next couple of weeks and those stocks could outperform/underperform their peers.
Select Sector Indices and S&P Equal Weight Rebalance Preview: US$17bn Round-Trip Trade
- There are no constituent changes for the S&P 500 INDEX (SPX INDEX) in June but there are capping changes for the Select Sector indices and the Equal Weight Index.
- The round-trip trade is US$17.4bn with a big chunk from the Equal Weight Index, Communication Services Select Sector SPDR Fund (XLC US) and Energy Select Sector SPDR Fund (XLE US).
- The largest flows are expected in Exxon Mobil, Alphabet, Chevron Corp, Visa, Blackstone, Live Nation Entertainment, Meta, Broadcom, TKO Group Holdings, Dell Technologies and Omnicom Group.
A/H Premium Tracker (To 6 June 2025): Narrow Premia Hs Worst Performers, BYD Relents
- AH spreads are slightly narrower. BANKS, INSURERS, BROKERS, INDUSTRIALS, PHARMA and UTILITIES see significant H-share outperformance vs their A pairs. TECH, CONSUMER, ENERGY mixed to worse.
- Ongoing skew on H-vs-A performance this week. Those trading AH Premium <20% saw H outperform sharply but those with H Premia contracted. Quiddity Portfolio alpha trending strongly.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
NIFTY200 Momentum30 Index Rebalance: HUGE Turnover and Trade as Financials Shine
- There are 20 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 27 June. We had correctly forecast 39 of the 40 changes.
- Estimated one-way turnover is 68.4% resulting in a round-trip trade of INR 160bn (US$1.9bn). There are 22 stocks with over 1x ADV to trade.
- The Financials sector has 9 net inclusions to the index while the Information Technology and Consumer Discretionary sectors have 2 net deletions each.
S&P/ASX Index Rebalance (June 2025): Changes, Flows, Shorts & Positioning
- There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index and 2 changes for the S&P/ASX 200 (AS51 INDEX).
- There is between A$30m-A$135m to trade in the index changes and that is between 0.7-16 days of ADV in the stocks. Short interest has jumped in a few stocks.
- We expect positioning to be lower than the passive trading in Nick Scali, Viva Energy Group, Perseus Mining, Austal Ltd and Healius.
NAV Valuations of Top Five Largest “Pure” Holdcos in Korea
- Holding companies have been the best performing asset class in the Korean stock market in the past month.
- In this insight, we provide updated NAV valuations of the top five, largest “pure” holdcos in Korea including SK Square, SK Inc, LG Corp, Hanjin KAL, and HD Hyundai.
- The NAVs of these five holdcos are about 18% higher than their current prices on average.
With Us (9696 JP): NSSK’s JPY3,237 Tender Offer
- With Us Corp (9696 JP) has recommended a tender offer from Nippon Sangyo Suishin Kiko (NSSK) at JPY3,237, an 18.0% premium to the last close price.
- The offer represents an all-time high and concludes SwissAsia’s activist campaign to spill the Board at the AGM on 26 June.
- SwissAsia and the founding family have provided irrevocables (39.81% ownership ratio), paving the way for deal completion.
[Japan ECM/Index] Azoom (3496) Offering to Enable Move to TOPIX
- On Friday 6 June, Azoom (3496 JP) announced it would conduct an offering (small issuance of new shares, some Treasury shares, larger selldown by the main shareholder).
- That comes in conjunction with a transfer to TSE Prime from TSE Growth, which itself leads to a TOPIX Inclusion trade next month.
- The company has decided to tack on a special dividend for this year, on top of growth and more liquidity. None of this is especially bad.
Index Treatment of Sony (6758 JP)’s Spinoff of the Financial Services Business
- For each share of Sony Corp (6758 JP), shareholders will receive 1 share of Sony Financial Group. Ex-date for the dividend in-kind is 29 September.
- The Nikkei has started a market consultation on treatment of the spinoff in the Nikkei225 and that means the dividend in-kind will not be included in the Dividend Point Index.
- There will be some selling in SFGI from passive trackers and the company will buy back some stock following listing. Details of the buyback have not been announced yet.
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