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Most Read: Mitsui O.S.K. Lines, BHP Group, LG Energy Solution, Nippon Paint Holdings, Mercari Inc and more

In today’s briefing:

  • MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
  • BHP Unification – Trading and Spread Update
  • LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications
  • Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
  • Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts

By Brian Freitas

  • With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
  • There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
  • We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.

BHP Unification – Trading and Spread Update

By Travis Lundy

  • The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
  • An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
  • All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO was oversubscribed 2,023 times. At the IPO price of KRW 300,000/share, that works out to US$11.92 trillion of bids.
  • Over 77% of the shares bid for by institutions had voluntary lock-ups from 15 days to 6 months. The final allocations could have between 60-65% of the allocation locked up.
  • Fast Entry to the KOSPI2, MSCI Standard and the FTSE All-World Indexes is a near certainty. Around 15% of float will be bought by these passive trackers in Feb/March.

Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…

By Travis Lundy

  • Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
  • The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
  • Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.

Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

By Travis Lundy

  • Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced. 
  • This will end up being a BIG TOPIX inclusion in May or June. 
  • And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).

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