In today’s briefing:
- Horizon Robotics (9660 HK): Index Inclusion & Upweights to Drive US$1bn Inflows
- India: Potential Free Float Changes & Passive Flows in August
- Laopu Gold (6181 HK): Potential Inclusion in Both Global Indices
- Dian Swastatika Sentosa (DSSA IJ): Surprise, Surprise!
- King Slide Works (2059 TT): Sliding into a Global Index
- Korea: 3 Potential Index Deletions in August; Positioning Watch
- Dentsu Group (4324 JP): Global Index Deletion Likely
- Hoshizaki Corp (6465 JP): Close Global Index Deletion in August
- Hisense Home Appliances (921 HK): Global Index Deletion Coming Up
- JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up
Horizon Robotics (9660 HK): Index Inclusion & Upweights to Drive US$1bn Inflows
- There should be big passive inflows to Horizon Robotics (9660 HK) over the next 6 weeks and that could take the stock higher in the short term.
- Southbound Stock Connect investors have bought more than 10% of the Class B shares outstanding since the stock was added to the link a couple of months ago.
- Short interest jumped following the Stock Connect inclusion but there has been covering over the last few weeks. Short-term direction for the stock price looks to be higher.
India: Potential Free Float Changes & Passive Flows in August
- Companies in India have disclosed their shareholding pattern as of end-June in July. There are companies with significant float changes from end-March and/or end-December.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in flow from passive trackers.
- Depending on the date that the shareholding was published, there could be 11 stocks with passive inflows from global trackers while 5 could have passive outflows in August.
Laopu Gold (6181 HK): Potential Inclusion in Both Global Indices
- Laopu Gold (6181 HK) missed global index inclusion in May following completion of full circulation. The primary placement in May then improved chances of index inclusion in August.
- The stock rose nearly 60% in the 2 months following the placement and has lost more than a third of its value from the peak in the last month.
- The stock could be added to both global indices with one inclusion at the end of August and one in mid-September. That could provide short-term support for the stock.
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.
King Slide Works (2059 TT): Sliding into a Global Index
- King Slide Works (2059 TT)‘s stock price has more than doubled over the last 4 months and that should result in global index inclusion in August.
- King Slide Works (2059 TT) has outperformed its peer group over the last few months and now trades at a big valuation premium.
- There has been a lot of short covering, and positioning in the stock appears to be smaller than the estimated passive buying.
Korea: 3 Potential Index Deletions in August; Positioning Watch
- There are 3 stocks in Korea that could be deleted from a global index in August and that will result in large selling from passive trackers.
- Short interest has increased in all 3 stocks since the resumption of short selling. Cumulative excess volume is higher in all stocks over the last couple of months.
- Given the increase in shorts and positioning, there could be short covering in two of the three stocks. The third could still drop over the next couple of weeks.
Dentsu Group (4324 JP): Global Index Deletion Likely
- The drop in Dentsu Inc (4324 JP)‘s stock price over the last few months could lead to the deletion of the stock from a global index in August.
- Dentsu Inc (4324 JP) has underperformed its peers over the last year and trades cheaper than the average of its Advertising peers.
- There is positioning in Dentsu Inc (4324 JP), though it is likely to be smaller than the estimated passive selling. A relative selloff could be used to enter the stock.
Hoshizaki Corp (6465 JP): Close Global Index Deletion in August
- Hoshizaki Corporation (6465 JP)‘s stock price has dropped over the last 3 months, and the lower market cap could result in global index deletion in August.
- An early cutoff in the review period could result in the stock staying on in the index but that puts it at risk of deletion in November.
- There has been an increase in short interest and cumulative excess volume over the last couple of months and that indicates positioning in the stock.
Hisense Home Appliances (921 HK): Global Index Deletion Coming Up
- The fall in Hisense Home Appliances Group (921 HK)‘s stock price over the last year puts it at risk of deletion from a global index in August.
- Short interest and positioning have picked up in the stock over the last couple of weeks and there should be short covering against the passive selling.
- The AH premium for Hisense Home Appliances Group could increase over the near-term as positioning continues ahead of the passive selling.
JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up
- There are 39 adds/34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn).
- The adds have outperformed the deletes over the last year and there has been a move higher in the last few days too.
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