In today’s briefing:
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
- CES China Semiconductor Chips Index Rebalance: Four Changes in December
- Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe
- Sunshine Insurance (6963 HK) IPO – Index Inclusion Timeline
- FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
- End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022
- Good Morning Japan | Powell: “Pace of Hikes to Moderate in Dec; Landing Plausible”; Equities Rip
- CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
- The largest inflows will be on Alibaba Group, Haier Smart Home, Kuaishou Technology, Li Auto, PetroChina, Tencent, JD.com, China Resources Mixc Lifestyle Services and Tingyi Holding.
- The largest outflows will be on SMIC, NetEase, AIA Group, HSBC Holdings, China Construction Bank, Alibaba Health Information Technology, Innovent Biologics, China Mobile, Ping An Insurance and ICBC.
FTSE China 50 Index Rebalance: JD Health, Yum China IN; Longfor, Xpeng OUT
- JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
- The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
- Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.
CES China Semiconductor Chips Index Rebalance: Four Changes in December
- There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
- Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
- Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.
Toyo Construction (1890) – Creeping Up On The Next “Tender Offer Start Date”….. Uh…. Maybe
- In March 2022, Toyo Construction (1890 JP) agreed to be taken over by equity affiliate stake owner INFRONEER Holdings (5076 JP) at what was a low price.
- Nintendo Founder Family Office “YFO” objected, and bought 25+% of the company, then offered to buy it out 30% higher. Toyo Construction objected.
- Four months later they finally signed an NDA and then started negotiating. Early in November the target date for a Tender Offer start by YFO was pushed to early December.
Sunshine Insurance (6963 HK) IPO – Index Inclusion Timeline
- Sunshine Insurance (SUN HK) is looking to raise between US$859m-US$950m by selling 1.15bn shares in its IPO. At the top end, the company will be valued at HK$74bn.
- All of the pre-IPO shares are Domestic Shares and there appear to be no immediate plans to convert them to H-shares. The only H-shares will be the IPO shares.
- MSCI China inclusion requires a higher stock price or conversion of Domestic Shares to H-shares; FTSE inclusion is likely in June; HSCI and Stock Connect inclusion is expected in March.
FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
- Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
- Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.
Appier (4180) Nearing A TSE Prime (And TOPIX) Announcement?
- On 17 Feb 2022, Janaghan Jeyakumar, CFA wrote about Appier Group (4180 JP) suggesting it was a TOPIX inclusion candidate in the not-distant future.
- In mid-August 2022, he reiterated his opinion. Three days later, the company said they had applied for TSE Prime membership. We are coming up on the timing for an announcement.
- It would mean buying, but the shareholder structure is interesting, and intentions are not easy to read. But if they announce imminently, the calendar makes the event even more interesting.
End of Mandatory Lock-Up Periods for 58 Companies in Korea in December 2022
- We discuss end of the mandatory lock-up periods for 58 stocks in Korea in December 2022, among which 9 are in KOSPI and 49 are in KOSDAQ.
- These 58 stocks on average could be subject to further selling pressures in December and could underperform relative to the market.
- Among these 58 stocks, the top 5 market cap stocks include HYBE, Kakao Games, WCP, Sillajen, and Duksan Neolux.
Good Morning Japan | Powell: “Pace of Hikes to Moderate in Dec; Landing Plausible”; Equities Rip
- Good Morning Japan: We strive to provide the best macro, stock and thematic overnight news that impacts your trading day in Japan. FOLLOW US TO KEEP ABREAST.
- OVERSEAS: To Dog Powell confirms 50bps at the next Fed meeting; Equities rip as it as a “no stock left behind day”; China COVID sentiment continues to improve.
- JAPAN: NKY to add 1-2% today; Yen at 130/USD; Eisai says the 2 deaths not due to their drug-positive; Shippers continue to diversify-MOL goes into Real Estate.
CSI KRX China-Korea: Rebalancing Results from KRX & Flow Trading Considerations
- KRX unveiled the rebalancing results of the CSI KRX China-Korea indices for Korean constituents yesterday.
- There is still insufficient evidence data to estimate specific passive impact. The previous rebalancing in June showed no clear correlation between constituent changes and price impact.
- Although it may be risky to trade on this rebalancing, monitoring the correlation of their passive impact at this point, one year after the release, seems worthwhile.
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