Most Read Archives | Page 90 of 91 | Smartkarma

With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.

BHP Unification – Trading and Spread Update

The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…

Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.

CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark

Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.

AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer

By David Blennerhassett

Flexible printed board player Akm Industrial (1639 HK) has announced a pre-conditional Scheme from Alpha Luck and AKM Meadville at HK$1.82/share. The Offer price will NOT be increased.
Alpha Luck is ultimately held by SASAC and AKM Meadville by the government of Haicang District, Xiamen. The two intend to hold 40:60 respectively in the unlisted vehicle.
Various PRC regulatory approvals are required. This appears a transaction geared to complete. Timing is the key risk to the deal.

Before it’s here, it’s on Smartkarma

Jan 17

Most Read: Mitsui O.S.K. Lines, BHP Group, LG Energy Solution, Nippon Paint Holdings, Mercari Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
BHP Unification – Trading and Spread Update
LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications
Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts

With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.

BHP Unification – Trading and Spread Update

The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications

The LG Energy Solution (373220 KS) IPO was oversubscribed 2,023 times. At the IPO price of KRW 300,000/share, that works out to US$11.92 trillion of bids.
Over 77% of the shares bid for by institutions had voluntary lock-ups from 15 days to 6 months. The final allocations could have between 60-65% of the allocation locked up.
Fast Entry to the KOSPI2, MSCI Standard and the FTSE All-World Indexes is a near certainty. Around 15% of float will be bought by these passive trackers in Feb/March.

Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…

Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.

Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced.
This will end up being a BIG TOPIX inclusion in May or June.
And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).

Before it’s here, it’s on Smartkarma

Jan 16

Most Read: Kweichow Moutai, LG Energy Solution, Kakao Pay and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy Bookbuilding: Detailed Results
FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March
LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications
End of Lock-Up Periods for Kakao Pay, Kakao Bank, Krafton, HHI, & SD Biosensor in 1Q 2022
ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

LG Energy Bookbuilding: Detailed Results

By Sanghyun Park

This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.

FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

A ground rule change will see Foreign Ownership Restrictions and Minimum Foreign Headroom Requirements applied to the FTSE China A50 Index (XIN9I INDEX) universe from the March rebalance.
There will be plenty of stocks that will see their investability weight reduced. We estimate a one-way turnover of 15.2% and one-way trade of CNY 8.04bn due to the change.
Bank Of Ningbo Co Ltd A and Will Semiconductor Ltd are locked in a race for index inclusion in March, while Chongqing Zhifei Biological Products (300122 CH) could be deleted.

LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications

The LG Energy Solution (373220 KS) IPO was oversubscribed 2,023 times. At the IPO price of KRW 300,000/share, that works out to US$11.92 trillion of bids.
Over 77% of the shares bid for by institutions had voluntary lock-ups from 15 days to 6 months. The final allocations could have between 60-65% of the allocation locked up.
Fast Entry to the KOSPI2, MSCI Standard and the FTSE All-World Indexes is a near certainty. Around 15% of float will be bought by these passive trackers in Feb/March.

End of Lock-Up Periods for Kakao Pay, Kakao Bank, Krafton, HHI, & SD Biosensor in 1Q 2022

By Douglas Kim

In this insight, we discuss the end of lock-up periods for Kakao Pay, KakaoBank, Hyundai Heavy Industries, Krafton Inc, and SD Biosensor in 1Q 2022.
Typically, investors tend to focus on the end of the lock-up periods in Korea about 1-2 months ahead of the actual end of these lock-up periods.
Among these five companies, there are relatively large number of shares that could be sold post end of the lock-up periods for Kakao Pay and Kakao Bank in 1Q 2022.

ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
LG Energy Solution (373220 KS) saw very strong demand for its mega US$10bn+ IPO.
While other IPO markets were in torpor, a number of placements continued to flow in.

Before it’s here, it’s on Smartkarma

Jan 15

Most Read: Hitachi Construction Machinery, LG Energy Solution, Kweichow Moutai and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
LG Energy Bookbuilding: Detailed Results
China Property Services: Pair Trades in a Beaten Down Industry
FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List

The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions.

LG Energy Bookbuilding: Detailed Results

By Sanghyun Park

This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.

China Property Services: Pair Trades in a Beaten Down Industry

Stocks in the China Property Services industry have taken a beating over the last year on heightened regulatory fears, placements and potential stake sales by their large property developer holders.
The Hang Seng Property Service and Management Index (HSPSM) has underperformed the Hang Seng Mainland Property Index (HSMPI) over the last 3 months and there could be some recovery.
We take a look at some pair trades that could provide outperformance in the short-term with a lower level of risk.

FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

A ground rule change will see Foreign Ownership Restrictions and Minimum Foreign Headroom Requirements applied to the FTSE China A50 Index (XIN9I INDEX) universe from the March rebalance.
There will be plenty of stocks that will see their investability weight reduced. We estimate a one-way turnover of 15.2% and one-way trade of CNY 8.04bn due to the change.
Bank Of Ningbo Co Ltd A and Will Semiconductor Ltd are locked in a race for index inclusion in March, while Chongqing Zhifei Biological Products (300122 CH) could be deleted.

Before it’s here, it’s on Smartkarma

Jan 14

Most Read: LG Energy Solution, Nippon Paint Holdings, Hitachi Construction Machinery, 51 Job Inc Adr and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
Nippon Paint Placement Quick Update – Better Positioned After Delivering the Largest Correction
LG Energy Solution Bookbuilding Results
Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
51job (JOB US): 27.6% Reduction In Terms

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List

The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.

Nippon Paint Placement Quick Update – Better Positioned After Delivering the Largest Correction

A group of shareholders of Nippon Paint Holdings, plan to raise around US$1.4bn via selling nearly 6% of the stock.
We covered most aspects of the deal in our previous note, Nippon Paint Holdings Placement – Nothing particularly exciting, needs to correct.
In this note, we will talk about the updates and share price movement since then.

LG Energy Solution Bookbuilding Results

By Douglas Kim

Numerous local media have mentioned that the institutional book building of LG Energy Solution IPO has been a big success.
It is estimated that the demand ratio of this IPO was more than 1,500 to 1. The IPO price has been mostly confirmed at 300,000 won per share.
Our base case valuation of LG Energy Solution is implied market cap of 99.2 trillion won and implied price per share of 424,093 won.

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions.

51job (JOB US): 27.6% Reduction In Terms

By David Blennerhassett

Not an overreaction after all. After shares closed down 19.2% on the 8 November, 20% adrift of indicative terms, that appeared overdone.
Now 51 Job Inc (JOBS US) has announced the Offeror has proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
Shares closed up, but still at a 14.5% gross spread to terms. The new construct, and the reasons for doing so, are decidedly baffling.

Before it’s here, it’s on Smartkarma

Jan 13

Most Read: BHP Group, SM Investments, LG Energy Solution, SK IE Technology and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

BHP Unification – ASX Upweight in One Shot
BHP Unification: It’s “Flowfront” Against Post-Merger Capital Structure Expectations
FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March
KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes
TIGER Secondary Cell ETF Rebalancing Trading on January 13

BHP Unification – ASX Upweight in One Shot

As expected, S&P DJI have announced that BHP Group (BHP AU)‘s weight in the S&P/ASX indices will be increased all at once at the close of trading on 28 January.
We estimated passive S&P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.
BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.

BHP Unification: It’s “Flowfront” Against Post-Merger Capital Structure Expectations

The endgame approaches o the BHP Unification trade. S&P announced the S&P/ASX upweight would be one-shot, as expected. Regulatory approvals are in. SARB has set BHP SJ as “domestic.”
Proxy advisors are FOR. Most large shareholders who have been vocal are for. Pendal Group is against saying it gives value to UK line shareholders (which I think weird)
Some flows net out – MSCI/FTSE World holders of PLC receive the Limited line – but index and non-index flows will be large and the arb may be messy.

FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March

We see five stocks failing the Median Liquidity test at the March SAIR and expect them to be deleted from the FTSE AW/AC index at the close on 18 March.
The stocks are Hap Seng Consolidated (HAP MK), IOI Properties Group (IOIPG MK), Sime Darby Property Bhd (SDPR MK), SM Investments (SM PM) and Sundaram Finance (SUF IN).
Impact ranges from 34-82 days of ADV. The largest outflows will be seen on SM Investments and Sundaram Finance, while the flows on the other stocks are smaller.

KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes

The review period for the March rebalance ends on 31 January, the announcement of the changes will be end February/beginning March, implementation will be at the close on 10 March.
LG Energy Solution (LGENERGY KS) will be included in the Battery index, and there will be other changes to the Bio, Internet, Game and BBIG indices.
The largest selling is expected to be on Douzone Bizon (012510 KS) due to a potential downweight in the Internet index and a deletion from the BBIG index.

TIGER Secondary Cell ETF Rebalancing Trading on January 13

By Sanghyun Park

The rebalancing trade of the WISE Secondary Cell ETF will take place tomorrow, January 13 (Thursday), supposedly at the close.
Those names with a significant passive impact among the stocks with a daily trading amount of +US$10M are: SKIET +0.71x ADTV, POSCO Chemical +0.46x ADTV, & SoulBrain: -0.69x ADTV
The most likely new addition is Enchem (348370) with a passive impact of 0.60x ADTV. So, I expect a significant level of price action tomorrow.

Before it’s here, it’s on Smartkarma

Jan 12

Most Read: China Overseas Land & Investment, Shinsei Bank, BHP Group, Softbank Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover
TSE Announces Market Structure Revisions: Still Much Ado About Nothing
BHP Unification – ASX Upweight in One Shot
Softbank – The Credit Suisse Dispute

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.

FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover

There could be 3 changes at the March rebalance with Nongfu Spring, Xpeng and China Overseas Land replacing China Tower, China Resources Beer and Geely Automobile.
There will be large capping changes due to the price moves on the constituents, resulting in a one-way turnover estimated at 7.79% and in a one-way trade of HK$3,470m.
There are a lot of current constituents bunched around the HK$200bn market cap and there could be some names changes among the deletions by the end of the review period.

TSE Announces Market Structure Revisions: Still Much Ado About Nothing

Today the TSE announced its long-awaited segmentation of the 3,777 stocks listed on the five major venues, and where they will move on 4 April 2022.
TSE1 represented just under 98% of Japan’s float market cap as of today’s close. As some TSE1 members will move to TSE Standard, TSE Prime will represent 97+%.
There are tiny changes to TOPIX because of the moves – roughly 3bp of flow per quarter starting Oct 2022. The FFW Model Revision will be far more interesting.

BHP Unification – ASX Upweight in One Shot

As expected, S&P DJI have announced that BHP Group (BHP AU)‘s weight in the S&P/ASX indices will be increased all at once at the close of trading on 28 January.
We estimated passive S&P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.
BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.

Softbank – The Credit Suisse Dispute

By Mio Kato

The FT reports that Credit Suisse is increasingly aggressive in its dispute with Softbank over the lack of payment of funds to its clients related to Katerra and Greensill.
Masayoshi Son apparently denies any knowledge of the Katerra deal which Credit Suisse is attempting to refute with documentation from Greensill.
The flare up with one of its major previous financial partners is telling and the whole episode does not look good for Softbank’s governance image.

Before it’s here, it’s on Smartkarma

Jan 11

Most Read: Shinsei Bank, Nippon Paint Holdings, China Mobile, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications
China Mobile (600941 CH): Potential Index Fast Entry
ECM Weekly (9th Jan 2022) – LG Energy, Hyundai Engineering, JL Mag, 2022 Pipeline, 2021 Performance
Nippon Paint Holdings Placement – Nothing Particularly Exciting, Needs to Correct

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.

Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications

When Wuthelam took control of Asia’s largest coatings business, Nippon Paint Holdings (4612 JP), in August 2020, I was bearish. It was great for the Goh family but minorities lost.
At the time, I said “Float is low”, and “There are cross-holders who don’t need to be there. This would be a very good sell for them. “
17 months later, 6 financial institutions will now sell their cross-holdings. There is float impact and some immediate index impact.

China Mobile (600941 CH): Potential Index Fast Entry

China Mobile (600941 CH) listed on 5 January after raising CNY 56bn in its A-share IPO. The stock could get Fast Entry to the CSI300, SSE50 and SSE180 indices.
Stocks will be deleted from these indices to maintain the number of index constituents. Jonjee High-Tech could be deleted from the CSI300 and Shandong Gold Mining from the SSE50.
China Mobile (600941 CH) trades at a 41.7% premium to China Mobile (941 HK), substantially lower than the 89% premium for China Telecom (601728 CH)/China Telecom (H) (728 HK).

ECM Weekly (9th Jan 2022) – LG Energy, Hyundai Engineering, JL Mag, 2022 Pipeline, 2021 Performance

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
LG Energy Solution (LGENERGY KS) started book building for its mega US$10bn+ IPO
Placements too got off to a large, if not strong, start with Sea Ltd (SE US) and Nippon Paint Holdings (4612 JP) US$1bn+ deals.

Nippon Paint Holdings Placement – Nothing Particularly Exciting, Needs to Correct

A group of shareholders of Nippon Paint Holdings, plan to raise around US$1.4bn via selling nearly 6% of the stock.
The shares haven’t done much this year and despite having corrected by around 40% since the start of 2021, they are trading just about inline with analyst average target price.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Before it’s here, it’s on Smartkarma

Jan 10

Most Read: Mitsui O.S.K. Lines, Shinsei Bank, Olam International, Nippon Paint Holdings, China Mobile and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea
Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro
Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications
China Mobile (600941 CH): Potential Index Fast Entry

Index Rebalance & ETF Flow Recap: MSCI, FTSE, HSCEI, KS200, KQ150, ASX200, STAR50, PCOMP, JDH, Sea

The review period for the HSI, HSCEI, HSTECH, HSCI, PCOMP and the FTSE All-World/All-Cap indices ended on 31 December. The changes will be announced in the next few weeks.
We expect an upweight for JD Health (6618 HK) at the MSCI Feb QIR, while there will be buying in Sea Ltd (SE US) due to the tranched inclusion.
Inflows continue into the Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) even as the markets head lower.

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.

STI Index Rebalance Preview (March 2022): Olam Could Replace ComfortDelGro

The next FTSE Straits Times Index rebalance will use data from the close on 21 February. The changes will be announced on 3 March and become effective post 18 March.
Based on data from 7 January, we see Olam International (OLAM SP) replacing Comfortdelgro Corp (CD SP) in the index. The estimated impact on the stocks is quite high.
Olam International (OLAM SP)‘s market cap needs to stay ahead of City Developments (CIT SP) and Mapletree Commercial Trust (MCT SP) over the next six weeks for index inclusion.

Nippon Paint (4612) – A BIG Secondary Which Is a Tough Sell, with Variable Index Implications

When Wuthelam took control of Asia’s largest coatings business, Nippon Paint Holdings (4612 JP), in August 2020, I was bearish. It was great for the Goh family but minorities lost.
At the time, I said “Float is low”, and “There are cross-holders who don’t need to be there. This would be a very good sell for them. “
17 months later, 6 financial institutions will now sell their cross-holdings. There is float impact and some immediate index impact.

China Mobile (600941 CH): Potential Index Fast Entry

China Mobile (600941 CH) listed on 5 January after raising CNY 56bn in its A-share IPO. The stock could get Fast Entry to the CSI300, SSE50 and SSE180 indices.
Stocks will be deleted from these indices to maintain the number of index constituents. Jonjee High-Tech could be deleted from the CSI300 and Shandong Gold Mining from the SSE50.
China Mobile (600941 CH) trades at a 41.7% premium to China Mobile (941 HK), substantially lower than the 89% premium for China Telecom (601728 CH)/China Telecom (H) (728 HK).

Before it’s here, it’s on Smartkarma

Jan 09

Most Read: BHP Group, Nippon Paint Holdings, LG Chem Ltd, Mitsubishi Heavy Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March
Nippon Paint (4612 JP): Secondary Offering & Index Implications
LG Chem – Holdco Discount Narrowed Like a Charm… Time to Exit
MHI (7011 JP): Opportunity or Value Trap?
Cybersecurity/ Evergrande/ Covid/ Environment/ Hong Kong

ASX100/200/300 Index Rebalance Preview (March 2022): A Lot Happening From Now to March

There could be 2 changes to the ASX100 and ASX200 prior to the March rebalance due to the acquisitions of Ausnet Services (AST AU) and Sydney Airport (SYD AU).
There will also be the large BHP Group (BHP AU) upweight and funding trade following unification, and possibly the Afterpay Touch (APT AU) acquisition by Square Inc (SQ US).
Then there will be more changes to the ASX200 and ASX300 at the March rebalance. There could be a lot of new listings included in the ASX300.

Nippon Paint (4612 JP): Secondary Offering & Index Implications

Nippon Paint Holdings (4612 JP) will offer up to 140.133m shares in a secondary offering. Six financial institutions will sell shares aimed at lowering ‘strategic holdings’ and improving stock liquidity.
There will also be an over-allotment option for 17.63m shares. In total, the offering size could reach JPY 198bn. There will be an increase in the stock free float.
We expect MSCI/FTSE to implement the changes at the time of the event. TOPIX is a wild card since they may not see a 5-6% increase in FFW as significant.

LG Chem – Holdco Discount Narrowed Like a Charm… Time to Exit

By Mio Kato

Our enthusiasm for the LG Energy Solutions IPO has been rather muted given a plethora of red flags and demanding valuations.
However, given market enthusiasm for the name, the underperformance of parent LG Chem created an opportunity.
A 16% move in four days has corrected most of the discrepancy though and it is time to leave in our view.

MHI (7011 JP): Opportunity or Value Trap?

By Scott Foster

MHI is selling at 9.9x EPS guidance and 0.7x book value, with a dividend yield of 3.0%. We see potential upside of at least 25% beyond the New Years bounce.
The shares have underperformed for several years due to serious managerial errors. But the mess is being cleaned up and new growth opportunities have emerged.
Risks include limited margins in the energy and aerospace & defense sectors and the possibility of renewed investment in the failed regional jet aircraft project.

Cybersecurity/ Evergrande/ Covid/ Environment/ Hong Kong

By Diana Choyleva

The Cyberspace Administration of China set new rules requiring platform companies with data on more than one million users to undergo a security review before listing their shares overseas.
Evergrande, the world’s most indebted developer was last week ordered to demolish 39 buildings of its flagship property project on Ocean Islands, for breaching building approval procedures.
After a spike in Covid cases, China’s tough lockdown of the city of Xi’an has confined 13 million people to their homes and shuttered businesses.

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