In today’s briefing:
- Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback
- CSI300 Index Rebalance: The Surprises Could Outperform
- SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
- CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- Korea FSC: Major Changes in Foreign Investor Registration & IPO Pricing
- KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points
- Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak
- Skymark Airlines IPO – Peer Comparison & Valuation – Asking Too Much for Clipped Wings
Nomura Research Institute (4307) Large Secondary Offering – Demand Profile and Index Implications
- On Friday, Nomura Research Institute Ltd (4307 JP) announced that Jafco Co Ltd (8595 JP) and Nomura Holdings (8604 JP) would each sell NRI shares in a Secondary Offering.
- JAFCO is selling to fund a giant buyback. Nomura is selling to round out the offering size. The total is 37mm shares plus greenshoe of 5.5mm shares.
- At Friday’s price that is ~¥140bn (including greenshoe), 7% of shares out, 10% of float, and about 25% of Real World Float. There are index implications.
JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback
- Jafco Co Ltd (8595 JP) has long been known as a “cheap” listed “venture fund” because of its additional large (for it) holding in Nomura Research Institute Ltd (4307 JP).
- Well-Known Japanese activist Yoshiaki MURAKAMI and his related companies bought a stake. JAFCO responded with a “Policy” (poison pill). Murakami-san ducked and dodged then bought more. Now the exit.
- JAFCO will sell its Nomura Research shares in a Secondary Offering, and conduct a large buyback via tender offer. Like other Murakami exits, this one is not designed for you.
CSI300 Index Rebalance: The Surprises Could Outperform
- There are 15 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- While most of the deletions are in line with forecasts, there are a few differences on the inclusions as the index committee has used its discretion to overlook some names.
- The Industrials, Materials and Utilities sectors gain index spots at the expense of Health Care, Financials, Consumer Staples and Consumer Discretionary.
SSE180/SSE380 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 December.
- There will be 10 deletions from the MSCI Standard Index and 26 deletions from the FTSE All-World/All-Cap indices at the close on 9 December.
- Currently, 8 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 21 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.
Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong
- There were a lot of review cutoffs last Monday and a lot of announcements for China indexes post market close on Friday.
- The coming week has announcements for the FTSE country indices as well as implementation for the MSCI indices and the Hang Seng family of indexes.
- Big inflows to MSCI Korea, iShares MSCI ACWI ETF (ACWI US) and iShares MSCI Emerging Markets (EMXC US); outflows for Tracker Fund of Hong Kong Ltd (2800 HK).
CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
- 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.
Korea FSC: Major Changes in Foreign Investor Registration & IPO Pricing
- FSC’s unveiled measures: 1. declare a dividend before determining which shareholder to receive, 2. scrap foreign investor ID, & 3. widen price limit on a listing day & allow “test-the-waters”
- These are still drafts, but since they have already been coordinated with the Yoon administration, it is highly likely that they will be implemented in the not-too-distant future.
- FSC will disclose detailed plans next month. We should rush to prepare for them, which significantly impacts the increase in foreign investors’ trading volume and the IPO pricing.
KOSPI 200 Sector/Size & KRX 300 Sector: Constituent Changes & Trading Points
- The additional Lotte Confectionery/Samyang Holdings flow will come from K200/KRX 300 Consumer Staples, K200 MidSmallCap, and K200 Ex-Top. However, the actual flow impact wouldn’t be significant.
- From a flow trading standpoint, the KOSPI 50’s HMM/Hanon System probably deserves our attention because additional inflows come from the pensions that account for more than half of local PASSIVE.
- Since their rebalancing trading tends to be somewhat dispersed, the return rate was the best when the position holding period was from T-3 to the effective date.
Nomura Research Placement – Somewhat Well Flagged, past Deals Have Done Well but Momentum Is Weak
- Nomura Holdings (8604 JP) and Jafco Co Ltd (8595 JP) are looking to raise around US$850m via selling 5.7% of Nomura Research Institute Ltd (4307 JP).
- This is not the first sale by Nomura and marks a clean up for Jafco. Hence it might not come as a complete surprise.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
Skymark Airlines IPO – Peer Comparison & Valuation – Asking Too Much for Clipped Wings
- Skymark Airlines (9204 JP) is looking to raise approximately US$235m in its Japan IPO.
- Skymark Airlines (SA) is a Japanese low-cost airline, being the third largest domestic airline according to the company. Unlike major airlines and other low-cost carriers, Skymark operates only domestic flights.
- In our previous notes, we looked at the company’s past performance. In this note, we talk about peer comparison and valuations.
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