In today’s briefing:
- India: Potential Free Float Changes & Passive Flows in February
- Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Hexaware Technologies IPO: Delisted in 2020; Now Looking to Raise US$1bn
- Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- PT Petrindo Jaya Kreasi (CUAN IJ): Free Float to Determine Global Index Inclusion
- Quiddity Leaderboard NIFTY Mar 25: Final Expectations; Expected DELs Could Underperform Index
- NIFTY50 Index Rebalance Preview: Adds Secure; Tight Among the Deletes
- A Partial Tender Offer of Englewood Lab by Cosmecca Korea
- CNBM (3323 HK): A Closer Look At Proration
- Korea’s First ATS Launching March 4: Arb Opportunities to Watch
India: Potential Free Float Changes & Passive Flows in February
- Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-June.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 13 stocks with passive inflows from global trackers while 4 could see passive outflows in February.
Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Barito Renewables Energy (BREN IJ) stock has gone through a series of gyrations as index inclusion was announced and then retracted due to the concentrated holding of the stock.
- With pre-IPO PE/VC investors selling some stock, the increase in float could result in the inclusion of Barito Renewables Energy (BREN IJ) in a global index later this month.
- The inclusion of the stock in the index will require passive trackers to buy just over 400m shares of the stock. That is over 14x ADV and will be impactful.
Hexaware Technologies IPO: Delisted in 2020; Now Looking to Raise US$1bn
- In November 2020, HT Global IT Solutions acquired all the shares it did not own in Hexaware Technologies (HEXW IN) and delisted the stock from the NSE and BSE.
- Now, Carlyle Group is looking to raise INR 87.5bn by selling stock at a price range of INR 674-708/share, valuing Hexaware Technologies (HEXW IN) at US$4.8bn.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and September, though the impact will be limited.
Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
- The TFTC approved in early January, The TFTC said market power would be limited and competition unrestricted. Another CNA article suggested the two FHCs were completing employee placement plans.
- Apparently, as of a month ago, only the Shin Kong Bank employee settlement plan had not been completed but the FSC has rules about that. Consideration likely proceeds.
- There are specific rules about how these things are dealt with. In the meantime, the spread – still wide – is narrowing.
PT Petrindo Jaya Kreasi (CUAN IJ): Free Float to Determine Global Index Inclusion
- Low free float market cap has kept PT Petrindo Jaya Kreasi Tbk (CUAN IJ) out of a major global index so far.
- An increase in float recently to just above 15% could result in the inclusion of the stock in the index in February and that will trigger large passive buying.
- There is positioning in the stock, and the future stock path will depend on whether it is added to the index or not.
Quiddity Leaderboard NIFTY Mar 25: Final Expectations; Expected DELs Could Underperform Index
- NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
- In this insight, we are presenting our final expectations for ADDs and DELs for the March 2025 index rebal event.
- We see two changes for NIFTY 50 and four changes for NIFTY 100. We expect the results to be announced in the next few days.
NIFTY50 Index Rebalance Preview: Adds Secure; Tight Among the Deletes
- Following their inclusion in the F&O segment in November, Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) appear to be sure-shot inclusions to the NIFTY Index in March.
- Bharat Petroleum Corp (BPCL IN) is a certain deletion from the index. Britannia Industries‘ average free-float market cap is less than 0.004% below Hero Motocorp‘s. It’s very close.
- Passive trackers need to trade between 3.7-11.8 days of ADV on the stocks. The impact increases significantly to between 8.4-21.8 days of delivery volume to trade on the stocks.
A Partial Tender Offer of Englewood Lab by Cosmecca Korea
- On 6 February, Cosmecca Korea (241710 KS) launched a partial tender offer on Englewood Lab (950140 KS).
- Cosmecca Korea announced that it plans to purchase 11% (2.185 million) of Englewood Lab’s outstanding shares at the tender offer price of 10,000 won.
- It appears that this partial tender offer is an attempt by Cosmecca Korea to increase its stake in Englewood Lab even further, capitalizing on the lower share price.
CNBM (3323 HK): A Closer Look At Proration
- Back on the 6th December, China National Building Material (3323 HK) (CNBM), China’s leading building materials company, offered to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
- As this elevates CNBM’s parent’s stake to 50.01% of total shares from 45.02% currently, independent H-shareholder will vote on a whitewash waiver on the 19th February.
- Minimum pro-ration is 19.24%. It is likely to be higher. The question is whether to buy, and/or borrow, and tender; or simply short outright.
Korea’s First ATS Launching March 4: Arb Opportunities to Watch
- Korea’s first ATS goes live on March 4, starting with 10 tickers based on liquidity and market cap, expanding to 800 over time. First 10 revealed next week.
- KRX vs ATS arbitrage will be key, with execution speed differences causing price dislocations, especially for KOSPI 200 stocks. Lower ATS fees may shift institutional flow, increasing arb opportunities.
- On top of that, lack of market makers could widen bid-ask spreads, creating opportunities for spread scalpers to profit.
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