In today’s briefing:
- MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do
- Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- S&P/ASX Index Rebalance Preview: High Impact Changes in March
- Adani Ent FPO – Early Demand Muted, Adani & Hindenburg Trade Barbs Again, But Not a Good Look
- Smartkarma Webinar | This Is Not A Webinar On Adani
- NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- Renault & Nissan “Agree” On New Terms – A Diet Nothing🍔, Exchangeable into Shaq Fingerguns
- Quiddity Flow Expectations HSTECH Mar 23: Two Index Changes Possible
- Matheson To Exit Greatview Aseptic
- STAR50 Index Rebalance Preview: 5 Changes Forecast as Review Period Ends
MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do
- The Adani Group listcos have been on a wild ride for the last few years, rising from 10x TTM EV/EBITDA in March 2020 to 60x at end-September 2022.
- Adani Group “business incubator’ Adani Enterprises (ADE IN) last fall indicated it might raise $2.4bn of equity and combined 6 co market cap is down $135bn since.
- A short seller report last week put the cat amongst the pigeons. Now MSCI is consulting investors about what it might do regarding Things.
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- The review period for the upcoming rebalance of the MSCI, Nikkei 225, NIFTY, Nifty Next 50, SSE STAR50 and KRX New Deal Indices ends on 31 January.
- The IDX30, LQ45, IDX80, Global X Uranium ETF (URA US) rebalances will be implemented on 31 January while the PSEi Index (PCOMP INDEX) rebalance will be implemented on 3 February.
- There were inflows to Asian country ETFs and iShares MSCI Emerging Markets (EEM), and outflows from IShares MSCI Min Vol EM ETF (EEMV) and iShares MSCI Pacific ex Japan (EPP).
S&P/ASX Index Rebalance Preview: High Impact Changes in March
- We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
- Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks.
- Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.
Adani Ent FPO – Early Demand Muted, Adani & Hindenburg Trade Barbs Again, But Not a Good Look
- The Adani Enterprises (ADE IN) FPO saw VERY muted demand (realtime available on NSE+BSE websites) on Day 1 Friday as the share price plummeted through the bottom of the range.
- The Adani Group responded to Hindenburg late Sunday with a 400-page rebuttal, cloaked in nationalistic terms. Hindenburg responded saying the company failed to answer 62 of 88 questions.
- This is not going away. They could lower the FPO price, or just pull the FPO. That won’t materially change the significant over-valuation of many Adani Group listco share prices.
Smartkarma Webinar | This Is Not A Webinar On Adani
In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Provider, Travis Lundy as he gives us a quick rundown about what is the current situation that is happening with Adani Enterprises and where they are headed from this point on.
The webinar will be hosted on Wednesday, 1 February 2023, 17:00 SGT/HKT.
Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.
NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
- A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
- The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.
Renault & Nissan “Agree” On New Terms – A Diet Nothing🍔, Exchangeable into Shaq Fingerguns
- Today, a Nikkei article suggested (after other media suggested last week) that Renault SA (RNO FP) and Nissan Motor (7201 JP) have come to agreement about their new deal.
- Post-Close, an announcement. Two striking things about this “agreement” a) it comes many months after they started negotiating, and b) we have few details, and c) we’re missing a bit.
- Renault agrees to cap voting rights in Nissan. Nissan agrees to invest in RNO’s EV spinoff, and so far, they agree to strengthen the Alliance. What’s missing is interesting/key.
Quiddity Flow Expectations HSTECH Mar 23: Two Index Changes Possible
- In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng Tech Index (HSTECH INDEX) in March 2023.
- According to our estimation, there could be two changes for the HSTECH in March 2023 and there could be one-way index flows of US$365mn.
- The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.
Matheson To Exit Greatview Aseptic
- Shandong Xinjufeng Technology Packaging (301296 CH) is seeking to acquire Jardine Matheson Holdings (JM SP)‘s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65/share.
- Greatview is currently suspended “pending the release of an announcement which contains inside information“, suggesting there is no follow on Offer for remaining shares.
- Elsewhere, Matheson has resumed its share repurchase program, providing near-term support.
STAR50 Index Rebalance Preview: 5 Changes Forecast as Review Period Ends
- The review period for the March rebalance ends today. We forecast 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
- We expect the index committee to continue using a 6-month minimum listing history. The impact on the potential deletes is a lot higher than the impact on the potential adds.
- With 5 changes to the index, estimated one-way turnover is 5.1% resulting in a one-way trade of CNY 4,549m. There is a reasonably large reverse funding trade.
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