In today’s briefing:
- MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
- JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?
- PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes
- Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying
MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
- There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
- Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
- The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.
JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
- The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
- In this note, we talk about the shareholding pattern and increase in shares held in CCASS.
GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?
- GoTo (GOTO IJ) completes 20 trading days today. Based on the average price over the period and the last close, the stock meets the Fast Entry criteria for IDX30/LQ45/IDX80 inclusion.
- Using a free float of 66%, we estimate passive trackers buying 5.42bn shares (US$74m) of GoTo (GOTO IJ). Announcement could come in a few days with implementation at month-end.
- With the real float close to 4%, passive trackers will need to buy 11.6% of the real float and the stock could move higher in the short-term.
PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes
- With just over a month to go in the review period for the August rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX), we expect one potential change.
- Security Bank (SECB PM) is a potential deletion. Semirara Mining And Power Corp (SCC PM) has a higher inclusion probability as compared to UnionBank of the Philippines (UBP PM).
- Passive funds will need to trade quite a few days of ADV on the stocks. Historically, the adds have outperformed the deletes in the last leg of the review period.
Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying
- The KDIC sold a 2.33% stake in Woori Financial through an after-hours block sale. From a passive flow perspective, this is quite similar to KSOE’s HHI block deals yesterday.
- Woori is likely to show a similar share price movement as HHI. Expectations for the passive inflow effect must have dissipated, and a short-term share price correction is now inevitable.
- However, the passive inflow sizes are still too substantial. With this in mind, we need to consider a strategy that approaches this price correction as a re-entry opportunity.
Before it’s here, it’s on Smartkarma
