In today’s briefing:
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- Goodman Group (GMG AU) Placement: Limited Index Flows
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- Cromwell Prop (CMW AU): ESR Exit Post-Privatization?
- Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?
- Quiddity TDIV/50/100 Dec 24 Results: 100% Hit Rate; 20x+ ADV for Many Names; US$2.3bn One-Way
- S&P500 December 2024 Forecast (Final): Flipping the COIN
- Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
- There are now new changes forecast for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
- Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
- The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.
Goodman Group (GMG AU) Placement: Limited Index Flows
- China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
- Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
- There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
- The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
- The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.
Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
- We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
- There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.
Cromwell Prop (CMW AU): ESR Exit Post-Privatization?
- Back in August 2021, ESR Group (1821 HK) acquired unlisted ARA Asset Management for US$5.2bn. This was discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management.
- Included in the transaction (completed early-2022) was ARA’s ~30.7% stake in office play Cromwell Property (CMW AU).
- ESR has in the past said Cromwell was a non-core holding. With ESR now expected to be privatized by Warburg/Starwood, does this accelerate the narrative?
Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?
- A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP).
- The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
- There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.
Quiddity TDIV/50/100 Dec 24 Results: 100% Hit Rate; 20x+ ADV for Many Names; US$2.3bn One-Way
- The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 6th December 2024.
- There will be one ADD/DEL for T50, five ADDs/DELs for T100, and 8 ADDs/7 DELs for TDIV. All of these are perfectly in line with our final expectations.
- In this insight, we take a look at Quiddity’s final flow expectations for the December 2024 index rebal event and potential trade ideas based on the flow dynamics.
S&P500 December 2024 Forecast (Final): Flipping the COIN
- Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
- Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
- Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.
Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional
- Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
- Charter Halls currently has 31.37%, including 6.66% via the acceptance facility. That facility has now closed following this unconditional statement.
- It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.
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