In today’s briefing:
- Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD
- Fast Retailing: Earnings Preview
- Rakuten Bank (5838 JP) Stands Out from the Other Asian Digital Banks
- Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
- Hong Kong Buybacks Weekly (Mar 29th): Tencent, Aia, CK Asset
- Introducing a Data Source for Korean Local Institutions’ Interests
- End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024
Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
- Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
- Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
- There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
- Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD
- In March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split I suggested Socionext (6526 JP) needed a stock split to get in.
- Today after the close, Socionext reported H1, guided up full-year earnings (still too conservative), raised its div, and announced a 5:1 stock split for Jan1 2024.
- DISCO Corp (6146 JP) is now likely to be a top 75, which leaves the question of which Consumer Goods stock would likely be added.
Fast Retailing: Earnings Preview
- While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
- Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
- Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.
Rakuten Bank (5838 JP) Stands Out from the Other Asian Digital Banks
- Despite Rakuten Bank shares’ re-rating, we believe it remains attractive, with its strong balance sheet and its low cost base with undemanding valuations compared to its Asian digital banking peers
- Rakuten Bank is well positioned to benefit from the negative interest rate policy exit in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
- It continues to leverage off the Rakuten Group eco-system, as a low cost source of new customers; nearly a third of clients use Rakuten Bank as their primary Japanese bank
Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
- Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
- Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
- Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.
Hong Kong Buybacks Weekly (Mar 29th): Tencent, Aia, CK Asset
- We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Mar 29th based on HKEx daily reports.
- In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), CK Asset (1113 HK).
- In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Dongyue (189 HK), AIA (1299 HK).
Introducing a Data Source for Korean Local Institutions’ Interests
- Recent trends in the most viewed local brokerage research reports by Korean institutions, compiled by FnGuide, offer insights into current investor interests.
- Notable resurgence in local institution interest in the semiconductor sector, especially with the temporal gap until May when the Value-up momentum materializes, notably evident in the AI semiconductor rally companies.
- Local institutions typically follow stocks of their interest with a slight lag. This suggests potential positive flows in the listed semiconductor companies until the Value-up momentum solidifies in May.
End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024
- We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in April 2024, among which 6 are in KOSPI and 40 are in KOSDAQ.
- These 46 stocks on average could be subject to further selling pressures in April and could underperform relative to the market.
- The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in April include APR, Angel Robotics, and Samhyun.
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