In today’s briefing:
- Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
- KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- MVIS Australia A-REITs Index Rebalance Preview: One Deletion & Capping Changes
- MVIS Australia Equal Weight Index Rebalance Preview: Three Close Deletions
- Local Observations on Carlyle’s Possible Buyout of Hanon Systems
- Nippon Express (9147 JP): The Current Playbook
- [Tencent (700 HK, BUY, TP HK$362) TP Change]: Core Business Is Robust While VA Is Expanding Fast
- Last Week in Event SPACE: Keisei Electric, New World Development, Alumina Ltd, Azure Minerals, TDCX
Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
- The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
- Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!
S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
- There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
- The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
- There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.
KRX BBIG K-New Deal Rebalancing: Official Results & Passive Flow Impacts
- After results were transitioned to non-public information, it has been observed that results are reflected in prices significantly later, with substantial price impact occurring close to the rebalancing trading day.
- Even though the AUMs have recently decreased, the passive impact size is quite substantial, considering a recent pattern of price impact concentrating within a maximum of about two trading days.
- A heavy Long-Short setup on these pairs, DearU / Douzone Bizon and SK Biopharmaceuticals / SK Bioscience (302440 KS), is something we should very actively consider.
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.
MVIS Australia A-REITs Index Rebalance Preview: One Deletion & Capping Changes
- With the review period for the March rebalance complete, Abacus Storage King (ASK AU) could be deleted from the index and there will be capping changes.
- The index changes will lead to a one-way turnover of 3.6% resulting in a one-way trade of A$21m. There are three stocks with over A$4m to trade.
- Goodman Group (GMG AU) is an inclusion to a global index in March and that buying will far outweigh the selling from the Vaneck Vectors Australian Property ETF (MVA AU).
MVIS Australia Equal Weight Index Rebalance Preview: Three Close Deletions
- With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the March rebalance.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 4.4% and a one-way trade of A$97m.
- There are 9 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.
Local Observations on Carlyle’s Possible Buyout of Hanon Systems
- Carlyle’s renewed interest in acquiring Hanon Systems is evident from recent local market news, indicating outreach to bankers for a potential buyout, as confirmed by a local brokerage.
- Carlyle eyes majority control of Hanon Systems, targeting 50.5% from Hahn & Co and 19.5% from Hankook Tire. Carlyle may extend a tender offer for the remaining 30%.
- Still early stages; no solid info on deal certainty or specifics. Limited immediate trading opportunities, but worth monitoring as it progresses.
Nippon Express (9147 JP): The Current Playbook
- Since the US$260 million secondary placement announcement, Nippon Express Holdings (9147 JP) shares are down 5.3% from the undisturbed price of JPY8,039 per share (1 March).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Nippon Express shares have followed the pattern of previous large placements.
- The offering will likely be priced on 11 March. Investors who have participated in previous large Japanese placements tend to secure positive returns.
[Tencent (700 HK, BUY, TP HK$362) TP Change]: Core Business Is Robust While VA Is Expanding Fast
- We expect Tencent to report C4Q23 revenue, IFRS op. profit and IFRS net income in line, (3.3%) and (4.9%) vs. consensus.
- The robust topline growth was mainly contributed by fast growing WeChat VA (Video Account) and strong performances of <Dream Star> in December.
- We cut our TP to HK$362 to reflect operating margin decline caused by increased sales and marketing.
Last Week in Event SPACE: Keisei Electric, New World Development, Alumina Ltd, Azure Minerals, TDCX
- Keisei Electric Railway Co (9009 JP) places out 1% of Oriental Land (4661 JP), but rejects lowering its stake to 15%. That is the end of the near-term catalyst.
- New World Development (17 HK) popped after property cooling measures were scrapped. Then gave those gains back. And then some, and is now trading at 0.11x P/B, its lowest-ever level.
- The spreads for both Alumina Ltd (AWC AU) and Azure Minerals (AZS AU) are trading wide; both potentially FIRB-related.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
