In today’s briefing:
- Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Gold Miners ETF (GDX US): Capping Pushes Trade to Over US$10bn
- HSCI Index Rebalance: 24 Adds, 22 Deletes, Changes to Southbound Stock Connect & BIG Outperformance
- Fast Retailing (9983 JP) Tactical Outlook: Turning OVERSOLD, Potential BUY Ahead of Sep-25 Rebalance
- Hang Seng Index (HSI) Rebalance: Pop Mart, China Telecom, JD Logistics Added to Get to 88 Members
- DigiCo Infrastructure REIT (DGT AU) And HealthCo REIT (HCW AU): Passive Flows
- [Japan CorpGov] TSE “Mgmt Conscious” Reports (Sep25), TSE Presents Interesting Feedback
- POSCO: Reviewing a Potential M&A of HMM
- KRX September Sector Index Review Finalized: Passive Impact Read
- DISCO Corporation (TSE: 6146) – From Abrasive Wheels to AI Packaging Champion
Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Last evening, Hang Seng announced a methodology change for the Hang Seng Internet & Information Technology Index (HSIII Index) with implementation in two phases.
- The capping methodology will be updated at the September rebalance and the turnover and sector requirements will be updated at the December rebalance.
- The updated capping scheme increases turnover and flow in September, while there could be one constituent change for the index at the December rebalance.
Gold Miners ETF (GDX US): Capping Pushes Trade to Over US$10bn
- The VanEck Gold Miners ETF/USA (GDX US) will change benchmark from the NYSE Arca Gold Miners Index to the MarketVector Global Gold Miners Index at the close on 19 September.
- The differences in the constituents between the two indices should result in 8 adds and 25 deletes. Estimated one-way turnover is 22.9% resulting in a round-trip trade of US$10.2bn.
- The forecast adds have underperformed the forecast deletes since the last Insight that highlighted the big valuation gap that had opened up since the announcement of the benchmark switch.
HSCI Index Rebalance: 24 Adds, 22 Deletes, Changes to Southbound Stock Connect & BIG Outperformance
- There are 24 adds and 22 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 504.
- We expect 20 of the 24 HSCI inclusions to be Stock Connect adds from the open on 8 September. 19 of the 22 deletions could be removed from Stock Connect.
- On average, stocks that are expected to be added to Southbound Stock Connect have outperformed stocks that are expected to be removed from Southbound Stock Connect.
Fast Retailing (9983 JP) Tactical Outlook: Turning OVERSOLD, Potential BUY Ahead of Sep-25 Rebalance
- In his recent insight, Brian Freitas stated that Fast Retailing (9983 JP)‘s CPAF will stay the same at the September 25 Nikkei 225 Index rebalance.
- The stock is turning oversold—not yet extreme, but notable. Historically, this short-term downtrend pattern often reversed after two weeks of declines; we are now in the second consecutive week lower.
- Monitor the 47150 support level: the stock is trading at 47810 at the moment of writing, if it goes at or below 47150 it will start to be clearly oversold.
Hang Seng Index (HSI) Rebalance: Pop Mart, China Telecom, JD Logistics Added to Get to 88 Members
- China Telecom (H) (728 HK), JD Logistics (2618 HK) and Pop Mart (9992 HK) will be added to the Hang Seng Index (HSI INDEX) at the close on 5 September.
- Estimated one-way turnover is 2.5% and the estimated round-trip trade is HK$11.25bn (US$1.44bn). The official capping will be done based on closing prices from 2 September.
- At 88 constituents, we near the 100-index member target. The target is likely to be reached by early-2027 – maybe 2026 given mainland companies listing of H-shares on the HKEX.
DigiCo Infrastructure REIT (DGT AU) And HealthCo REIT (HCW AU): Passive Flows
- DigiCo Infrastructure REIT (DGT AU) will be added to a global sector index at the close on 19 September while HealthCo REIT (HCW AU) will be deleted.
- Estimated passive buying in DigiCo Infrastructure REIT (DGT AU) is US$32m while the passive selling in HealthCo REIT (HCW AU) is estimated to be US$7m.
- Shorts have increased in both stocks. There could be short covering in DigiCo Infrastructure REIT followed by new shorts, while shorts could look to cover HealthCo REIT as passives sell.
[Japan CorpGov] TSE “Mgmt Conscious” Reports (Sep25), TSE Presents Interesting Feedback
- TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
- 216 new CGRs filed in Aug-2025 (after 783 in July, 1,389 in June). Our tools show every report, links to every document, and a diff-file tool. Input name, see changes.
- The JPX Council of Experts met on 2 Sep (and 9 July before that). The parent-sub changes are slow to come. 2 Sep docs may be worth reading in parts.
POSCO: Reviewing a Potential M&A of HMM
- The biggest potential M&A event right now in Korea is the potential acquisition of HMM Co., Ltd. (011200 KS) by POSCO Holdings (005490 KS).
- Overall, we believe there is a higher probability of POSCO backing out of this potential acquisition of HMM, rather than POSCO completing this M&A deal.
- Although POSCO claims that it spends about 3 trillion won annually on logistics, the actual synergies among these three businesses (steel, rechargeable battery, and logistics) remain murky.
KRX September Sector Index Review Finalized: Passive Impact Read
- KRX dropped its September sector rejig post-close: only Semis (₩0.96T), Autos (₩0.51T), and Healthcare (₩0.31T) matter. Lineup below.
- AUM-Wise, Semis was key. September TMI reshuffle saw light additions, heavy deletions; otherwise, results largely matched earlier forecasts.
- TMI reshuffle flew under the radar with little pre-positioning; ETF rebalances next Thursday could trigger notable price moves — consider long/short baskets on high-impact names.
DISCO Corporation (TSE: 6146) – From Abrasive Wheels to AI Packaging Champion
- DISCO is the global leader in wafer dicing and grinding, holding ~70–80% market share in critical back-end semiconductor tools.
- Anagement is expanding capacity via the Gohara Plant (FY2028) and upgrading innovation at the Haneda R&D Center (FY2025–27) to secure its edge in hybrid bonding, PLP, and stealth dicing.
- Revenues are projected to grow ~11% CAGR to FY2028, with EPS potentially reaching ¥1,500, but the stock trades at a premium ~33x FY26E P/E.
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