In today’s briefing:
- TIP Customized Taiwan Select High Dividend Index Rebal Preview: 8 Changes; US$8bn Trade
- FXI Rebalance: 3 Changes as H/A Premium Trades Back in Focus
- Aspen Group (APZ AU): Global Sector Index Inclusion
- AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- China A50 ETF Rebalance: Two Sets of Changes
- NIFTY200 Momentum30 Index Rebalance: Huge Turnover and Flow in December
- MV US Listed Semiconductor 25 Index Rebalance: Capping Leads to US$5.5bn Trade
- [Japan Partial Tender] AEON (8267) Tender for TSURUHA (3391) Trading Rich
- MV Global Defense Industry Index Rebalance: 4 Adds; 5.8% Turnover; US$850m Trade
- Sony Is Reinventing Gaming, Sensors, & Sports—How Far Can This Strategy Go?
TIP Customized Taiwan Select High Dividend Index Rebal Preview: 8 Changes; US$8bn Trade
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 403bn (US$12.8bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of 30.6% resulting in a round-trip trade of US$7.9bn.
- The forecast adds have outperformed the forecast deletes over the last couple of weeks and we expect the adds to continue outperforming the deletes over the next few days.
FXI Rebalance: 3 Changes as H/A Premium Trades Back in Focus
- As forecast, there will be 3 constituent changes for the iShares China Large-Cap (FXI US) at the close of trading on 19 December.
- Two of the inclusions will also have inflows from the FGlobal Index at the same time, while the third is an HSCEI INDEX add at the close tomorrow.
- The HA premiums for CATL (3750 HK) and Jiangsu Hengrui Pharmaceuticals (1276 HK) dropped prior to lock-up expiry and there could be a short-term premium expansion closer to index/ETF inclusion.
Aspen Group (APZ AU): Global Sector Index Inclusion
- Aspen Group (APZ AU) will be added to a global sector index at the close 19 December. The stock is also a potential inclusion to a global index in March.
- Estimated passive buying in Aspen Group (APZ AU) is U$21m and positioning in the stock could continue to build in the next few days.
- Positioning in the stock has been increasing over the last few months with a jump that started at the beginning of November.
AU Small Finance Bank (AUBANK IN): Increased FOL & Large Passive Flows/ Impact
- AU Small Finance Bank Limited (AUBANK IN) has received approval from the Ministry of Finance to increase its Foreign Ownership Limit from 49% to 74% (the maximum permitted).
- The increased FOL will result in passive inflows from global index trackers in February and March. The inflows are multiple days of ADV.
- There has been little increase in positioning. The increased Foreign Ownership Limit and the passive flows to come could lead to the stock moving higher over the next few weeks.
China A50 ETF Rebalance: Two Sets of Changes
- CMOC (603993 CH) and Sungrow Power Supply (300274 CH) will replace S.F. Holding (002352 CH) and Bank of Jiangsu (600919 CH) in the ETFs at the close on 19 December.
- Passive trackers will need to trade between 0.1-0.5 days of ADV in the constituent changes.
- The adds have outperformed the deletes by a big margin over the last 6 months. After a period of underperformance in November, the adds have started moving higher again.
NIFTY200 Momentum30 Index Rebalance: Huge Turnover and Flow in December
- There will be 19 constituent changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December.
- Estimated one-way turnover is 64.6% resulting in a round-trip trade of INR 161.3bn (US$1.8bn). There are 27 stocks with over 1x ADV to trade.
- Some stocks will have passive flows from other index trackers at the same time while others are potential adds/close adds to global indices over the next couple of months.
MV US Listed Semiconductor 25 Index Rebalance: Capping Leads to US$5.5bn Trade
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in December but there are a lot of float and capping changes.
- Estimated one-way turnover is 7.5% resulting in a round-trip trade of US$5.5bn. There are 3 stocks with over half a yard to trade.
- The largest flows will be in NVIDIA, Micron Technology, Applied Materials, Lam Research, Intel Corp, Texas Instruments and TSMC (Taiwan Semiconductor Manufacturing) – ADR.
[Japan Partial Tender] AEON (8267) Tender for TSURUHA (3391) Trading Rich
- Aeon Co Ltd (8267 JP)‘s Partial Offer for Tsuruha Holdings (3391 JP) discussed in [Japan Partial Tender] AEON (8267) Partial Offer for TSURUHA (3391) Announced at ¥2,900/Share is trading rich.
- The Conclusions/Trade section was clear on the near-term risks. There was good short-term upside. There may be less with the stock trading 0.5% away from the tender price.
- With the stock trading so close, it changes the calculus, in both directions.
MV Global Defense Industry Index Rebalance: 4 Adds; 5.8% Turnover; US$850m Trade
- BigBear.ai Holdings, NextVision Stabilized Systems, Ondas Holdings Inc and Planet Labs will be added to the MarketVector Global Defense Industry Index at the close on 19 December.
- The 4 adds, float changes and capping changes will result in an estimated one-way turnover of 5.8% resulting in a round-trip trade of US$846m.
- The adds have all run up over the last year and the passive buying could give the stocks another leg up in the short-term.
Sony Is Reinventing Gaming, Sensors, & Sports—How Far Can This Strategy Go?
- Sony Group Corporation reported a strong financial performance for the latest quarter with record sales and operating income figures.
- Sales from continuing operations increased by 5% year-on-year to JPY 3,107.9 billion, with a 10% rise in operating income to JPY 429 billion.
- Net income rose by 7% to JPY 311.4 billion.
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