In today’s briefing:
- Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea
- Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
- STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro
- Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications
- China Mobile (600941 CH): Potential Index Fast Entry
Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea
- The review period for the HSI, HSCEI, HSTECH, HSCI, PCOMP and the FTSE All-World/All-Cap indices ended on 31 December. The changes will be announced in the next few weeks.
- We expect an upweight for JD Health (6618 HK) at the MSCI Feb QIR, while there will be buying in Sea Ltd (SE US) due to the tranched inclusion.
- Inflows continue into the Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) even as the markets head lower.
Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
- The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
- The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.
- At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.
STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro
- The next FTSE Straits Times Index rebalance will use data from the close on 21 February. The changes will be announced on 3 March and become effective post 18 March.
- Based on data from 7 January, we see Olam International (OLAM SP) replacing Comfortdelgro Corp (CD SP) in the index. The estimated impact on the stocks is quite high.
- Olam International (OLAM SP)‘s market cap needs to stay ahead of City Developments (CIT SP) and Mapletree Commercial Trust (MCT SP) over the next six weeks for index inclusion.
Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications
- When Wuthelam took control of Asia’s largest coatings business, Nippon Paint Holdings (4612 JP), in August 2020, I was bearish. It was great for the Goh family but minorities lost.
- At the time, I said “Float is low”, and “There are cross-holders who don’t need to be there. This would be a very good sell for them. “
- 17 months later, 6 financial institutions will now sell their cross-holdings. There is float impact and some immediate index impact.
China Mobile (600941 CH): Potential Index Fast Entry
- China Mobile (600941 CH) listed on 5 January after raising CNY 56bn in its A-share IPO. The stock could get Fast Entry to the CSI300, SSE50 and SSE180 indices.
- Stocks will be deleted from these indices to maintain the number of index constituents. Jonjee High-Tech could be deleted from the CSI300 and Shandong Gold Mining from the SSE50.
- China Mobile (600941 CH) trades at a 41.7% premium to China Mobile (941 HK), substantially lower than the 89% premium for China Telecom (601728 CH)/China Telecom (H) (728 HK).
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