In today’s briefing:
- MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
- BHP Unification – Trading and Spread Update
- Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
- CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
- AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer
MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
- 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
- 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.
Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
- 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.
CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
- Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
- There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
- The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.
AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer
- Flexible printed board player Akm Industrial (1639 HK) has announced a pre-conditional Scheme from Alpha Luck and AKM Meadville at HK$1.82/share. The Offer price will NOT be increased.
- Alpha Luck is ultimately held by SASAC and AKM Meadville by the government of Haicang District, Xiamen. The two intend to hold 40:60 respectively in the unlisted vehicle.
- Various PRC regulatory approvals are required. This appears a transaction geared to complete. Timing is the key risk to the deal.
Before it’s here, it’s on Smartkarma