In today’s briefing:
- S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- KOSPI200 Index Rebalance: Two Sets of Changes
- MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating
- Postcard from HK <> SG | “The Frog in the Well”
- Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key.
- Alibaba Potential IPOs – Part 3 – An Early Look at Cloud, Easy US$10bn+
- Asia Long/Short Update
- Tokyo Electron. Betting Big On MAGIC Despite The Downturn
- Official Results of KOSPI 200 Sector Indices Rebalancing: Kakao Pay’s Sector Change Confirmed
S&P/ASX Index Rebalance Preview: Potential Changes, Impact, Shorts & Positioning
- The review period for the June rebalance of the S&P/ASX family of indices ends tomorrow and we expect two changes for the S&P/ASX 200 (AS51 INDEX).
- Impact of passive trading on the stocks varies between 4.3-11 days of ADV. Short interest on the potential adds is small while there are significant shorts on the potential deletes.
- We expect there is pre-positioning on at least three of the four stocks. In some cases that is small, while it could be a lot larger in other stocks.
KOSPI200 Index Rebalance: Two Sets of Changes
- There will be 2 additions and 2 deletions for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the June rebalance that will be implemented on 8 June.
- Kum Yang (001570 KS) and Cosmochemical (005420 KS), both high probability names, are inclusions while Hwaseung Enterprise (241590 KS) and Dongwon Industries (006040 KS) are deletions.
- Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.
MVIS Australia A-REITs Index Rebalance Preview: Capping Changes & Flows
- We do not expect any constituent changes in June (that could change though!). The only flows are likely to be from capping the constituents at 10% of the index weight.
- Capping changes will lead to a one-way turnover of 2.15% resulting in a one-way trade of A$14m. There are two stocks with over A$5m to trade.
- Stockland (SGP AU) will be the most affected stock with passive trackers needing to sell over 1 day of ADV. The stock has run up and shorts are increasing.
KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating
- There are 8 inclusions and 8 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance to be implemented at the close on 8 June.
- There is one surprise on the deletions and there are a few surprise non-deletions. Smaller surprise on some non-inclusions.
- Short interest is non-existent on the adds and is a lot larger on the deletes. Shorts on the deletes will be covered in the next few weeks.
Postcard from HK <> SG | “The Frog in the Well”
- Over the last week, we engaged in fruitful interactions with fellow analysts and portfolio managers in Hong Kong and Singapore.
- In this insight, we share perspectives we picked up on India as a market, along with regional market dynamics.
- The way ahead involves embracing a glass well approach, combining our deep focus on Indian equities with a broader understanding of regional markets and consumer trends.
Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key.
- Suruga Bank Ltd (8358 JP) today signed an MOU (with board resolution) to form a business and capital alliance with Credit Saison (8253 JP).
- Suruga will sell (post-dilution) 15+% of voting rights to Credit Saison, and buy 4.44% of CreditSaison. Then Suruga will try to buy back the shares it sold to Credit Saison.
- A look at the history is instructive, as is a look at the shareholder structure and the change in business model post-2019. Not as easy as it looks.
Alibaba Potential IPOs – Part 3 – An Early Look at Cloud, Easy US$10bn+
- On 28th Mar 2023, Alibaba Group (9988 HK) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In our previous note, we highlighted which division could list. In this note, we will look at the Cloud segement.
Asia Long/Short Update
- Top longs have been India and Australia. Top shorts HSI and Korea. Korea’s bearish wedge is maturing and stands out as macro risk.
- Turned neutral the Nikkei above 29,200. 29,500 represents from buy support to threaten 31,000. Near term top at 31k for a pullback try.
- USD upside breakout is front running a softer equity bias in Asia for June. SPX 4,200/20 top zone throw over probable.
Tokyo Electron. Betting Big On MAGIC Despite The Downturn
- Q1’23 revenues of ¥558.2 billion, up 19% sequentially and up 1% YoY
- FY24 outlook down 23% YoY with H2 showing a modest improvement compared to H1
- R&D & CapEx investment increasing significantly while YoY revenue set to decline by 23%
Official Results of KOSPI 200 Sector Indices Rebalancing: Kakao Pay’s Sector Change Confirmed
- The fact that KS200 IT has a significantly higher AUM provides a flow trading opportunity. This is due to the change in GICS for Kakao Pay from IT to Financials.
- It has been observed that Kakao Pay’s DTV has recently decreased significantly. This may result in the flow size reaching up to 1.4 times DTV.
- It is advisable to design an outright short position for day trading purposes. Additionally, a more aggressive approach can be considered by combining a long position on Samsung SDS.
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