Event-Driven and Index Rebalance

Weekly Top Ten Event-Driven and Index Rebalance – Jan 21, 2024

By January 21, 2024 No Comments
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. S&P/​​​​​​​​​ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

By Brian Freitas, Periscope Analytics

  • With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
  • The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
  • There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

2. Benefit One (2412): The Plot Thickens

By Travis Lundy, Quiddity Advisors

  • Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
  • Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
  • The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

3. KOSPI200 Index Rebalance Preview: Four Potential Changes in June

By Brian Freitas, Periscope Analytics

  • Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
  • The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
  • There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

4. Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang

By Brian Freitas, Periscope Analytics

5. KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

By Brian Freitas, Periscope Analytics

6. Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud

By Brian Freitas, Periscope Analytics

7. Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

By Brian Freitas, Periscope Analytics

  • Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
  • Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
  • There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

8. Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

By Arun George, Global Equity Research Ltd

9. Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

By Travis Lundy, Quiddity Advisors

  • After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation. 
  • The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
  • The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

10. Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

By Janaghan Jeyakumar, CFA, Quiddity Advisors

  • STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
  • In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
  • I currently expect three changes for the STAR 50 index in March 2024.