In today’s briefing:
- Japan Post Bank (7182) – The Flow Calendar
- HSCEI Index Rebalance Preview: China Shenhua (1088) Could Replace Country Garden (2007); Div Impact
- Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL
- CSI300 Index Rebalance Preview: Narrowing the Gap
- An Increasing Probability of LG Corp Preferred Shares Cancellation
- Trial Holdings IPO: Valuation Insights
- Longs on Next Low
- S-REITs: Investing In An Inflationary Environment
- Good Morning Japan |VICTORY Declared as Bailouts Rule; NUGGET: ORIX-Riding the Zero-Carbon MegaTrend
- Flow Trading Targeting Cap Reversion in TIGER Battery ETF Rebalancing on April 13
Japan Post Bank (7182) – The Flow Calendar
- The near-term Supply/Demand Balance is helped or hurt – depending on how well the deal has been placed to retail, by overseas bank turmoil.
- Quality of placement to retail is tough to know from outside. We have near-term offsets with both index demand and dividend looming.
- The biggest near-term differentiator in possible supply/demand outcomes is, of course, in the hands of the TSE Index team. And we just don’t know.
HSCEI Index Rebalance Preview: China Shenhua (1088) Could Replace Country Garden (2007); Div Impact
- China Shenhua Energy Co H (1088 HK) could replace Country Garden Holdings Co (2007 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance.
- Short interest on China Shenhua Energy Co H (1088 HK) is pretty small while the short interest on Country Garden Holdings Co (2007 HK) is large and possibly getting bigger.
- The change could result in a big increase in the fair value for the HSCEI 2023 dividend futures. Currently, we estimate an increase of up to 9 DIPS.
Index Rebalance & ETF Flow Recap: MSCI China, S&P/ASX, KOSDAQ150, KOSPI, CPSE/Bharat22, YES, OZL
- Some KOSPI indices rebalanced at the close on Thursday while the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) rebalanced at the close on Friday.
- The S&P/ASX family, MVIS family and a bunch of other indices will rebalance at the close on coming Friday.
- After seeing big inflows over the last couple of years, outflows from Samsung KODEX Secondary Battery ETF (305720) and Mirae Asset TIGER Secondary Cell ETF (305540) have started to pick up.
CSI300 Index Rebalance Preview: Narrowing the Gap
- Over 85% of the way through the review period, we see 14 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 2.28% at the June rebalance leading to a one-way trade of CNY 5.95bn.
- The potential adds have outperformed the CSI 300 Index over the last two months but have underperformed the potential deletes. The gap has been narrowing recently.
An Increasing Probability of LG Corp Preferred Shares Cancellation
- In this insight, we discuss an increasing probability of the cancellation of LG Corp preferred shares.
- We provide five major reasons as to why LG Corp should cancel its entire preferred shares and how this could have a positive impact on LG Corp’s share price.
- We believe a 5-10% buyback and cancellation of LG Corp’s preferred shares in the next 1-2 years is a higher probability.
Trial Holdings IPO: Valuation Insights
- Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$380 million at the IPO reference price of JPY2,000. Pricing on 26 March.
- We previously discussed the IPO in Trial Holdings IPO: The Bull Case and Trial Holdings IPO: The Bear Case.
- In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY2,000. We would participate in the IPO.
Longs on Next Low
- SPX and NKY top short picks near term but new low attempts will see the immediate down leg exhaust. Yield decline is exhausting.
- Increasing oversold readings set the stage for some key low on weakness. Euro bank range is 92 to 108.
- Taiwan remains our top long in Asia. Trading bounce lows in ASX, Korea and Europe look attractive/viable.
S-REITs: Investing In An Inflationary Environment
- For the better part of two decades, Singaporean real estate investment trusts (REITs) have provided an efficient and popular exposure to quality large-scale commercial properties.
- Yet as global central banks hike interest rates to address inflationary pressures, can REITs retain their attractiveness?
- SREITs have corrected as Singaporean interest rates have increased. The question is whether higher interest rates are baked in, and which SREITs will hold up; and which ones will not?
Good Morning Japan |VICTORY Declared as Bailouts Rule; NUGGET: ORIX-Riding the Zero-Carbon MegaTrend
- OVERSEAS. Crisis Over !Bailouts from US to Europe, Stocks rally as Contagion fears wane; Major Banks rescue First Republic Bank; Swiss Central Bank protects Credit Suisse; ECB raises by 50bps
- JAPAN. NKY Futs flat vs Cash; USDJPY 133.8; Expect Japan Equities to start the road to recovery with macro fears subsiding; Japan-Korea move fwd on trade/security.
- NUGGET. Orix – one of the Biggest Renewables Plays in Japan. Riding the Decarbonization MegaTrend
Flow Trading Targeting Cap Reversion in TIGER Battery ETF Rebalancing on April 13
- There seems to be no constituent change this time. However, opportunities from cap reversion are likely to lead to noteworthy passive flows.
- Ecopro BM and Ecopro Co will experience a weight movement of -4.35% and -3.68%p. On the other hand, SK Innovation will enjoy the most pleasant passive impact.
- At KODEX Battery’s March rebalancing, the Long SK Innovation Short Ecopro BM position setup provided a return of more than 10% with a similar level of impact x ADTV.
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