Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/contact-energy-ltd" target="_blank" data-smartkarma-citation="entities:13136:1" rel="noopener">Contact Energy (CEN NZ)</a> has outperformed <a href="https://www.smartkarma.com/entities/mighty-river-power" target="_blank" data-smartkarma-citation="entities:9933:1" rel="noopener">Mercury NZ Ltd (MCY NZ)</a> over the last month off the back of expected passive flows in February.</li>
<li>Despite the outperformance, <a href="https://www.smartkarma.com/entities/contact-energy-ltd" target="_blank" data-smartkarma-citation="entities:13136:1" rel="noopener">Contact Energy (CEN NZ)</a> trades at a lower forward PE compared to <a href="https://www.smartkarma.com/entities/mighty-river-power" target="_blank" data-smartkarma-citation="entities:9933:1" rel="noopener">Mercury NZ Ltd (MCY NZ)</a>, though it does trade at a higher Price to Book. </li>
<li>There could be large passive inflows to <a href="https://www.smartkarma.com/entities/contact-energy-ltd" target="_blank" data-smartkarma-citation="entities:13136:1" rel="noopener">Contact Energy (CEN NZ)</a> and large passive outflows from <a href="https://www.smartkarma.com/entities/mighty-river-power" target="_blank" data-smartkarma-citation="entities:9933:1" rel="noopener">Mercury NZ Ltd (MCY NZ)</a> in February.</li>
</ul>



Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book. 
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.


NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>September 2024 was a record month for Contact Energy (CEN), courtesy of a strong rebound in hydro generation and being able to sell high-priced hedge contracts to competitors.</li><li>We expect that momentum to continue through October 2024, at which point the high-priced hedge contract ceases.</li><li>In addition, CEN has good momentum with its new geothermal plant. </li></ul>

September 2024 was a record month for Contact Energy (CEN), courtesy of a strong rebound in hydro generation and being able to sell high-priced hedge contracts to competitors.We expect that momentum to continue through October 2024, at which point the high-priced hedge contract ceases.In addition, CEN has good momentum with its new geothermal plant. 

Contact Energy - Well-Timed Inflows Enable Record Sept 2024

<ul><li>Based on the Commerce Commission's (ComCom) Mergers &amp; Acquisitions (M&amp;A) guidelines, and our analysis of the wholesale electricity market, we believe that Contact Energy's (CEN) proposed acquisition of Manawa Energy (MNW) is likely to be approved.</li><li>However, it is not a fait accompli, given the political and regulatory scrutiny the sector is currently under and the perception of reduced competition.</li><li>We lift the probability that the deal will be cleared to 70% (from 50%). </li></ul>

Based on the Commerce Commission's (ComCom) Mergers &amp; Acquisitions (M&amp;A) guidelines, and our analysis of the wholesale electricity market, we believe that Contact Energy's (CEN) proposed acquisition of Manawa Energy (MNW) is likely to be approved.However, it is not a fait accompli, given the political and regulatory scrutiny the sector is currently under and the perception of reduced competition.We lift the probability that the deal will be cleared to 70% (from 50%). 

Contact Energy - Watts on the ComCom’s Mind

Thematic (Sector/Industry)

<ul>
<li>2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and reiterate the buying opportunity in Mercury (MCY).</li>
<li>The likely inclusion of CEN at the expense of MCY in the MSCI Standard Index has seen CEN’s share price pop and MCY's drop.</li>
<li>2024 was dominated by two events that will shape the sector in the years ahead. </li>
</ul>


2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and reiterate the buying opportunity in Mercury (MCY).
The likely inclusion of CEN at the expense of MCY in the MSCI Standard Index has seen CEN’s share price pop and MCY's drop.
2024 was dominated by two events that will shape the sector in the years ahead. 


Power Points Index Opportunities — January 2025

<ul><li>Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price and +20% premium to our MNW valuation.</li><li>The deal makes strategic sense, but the offer price is full and will require CEN to deliver on synergy benefits to create value.</li><li>With MNW directors and major shareholders Infratil (IFT) and TECT Holdings supportive of the deal, the only hurdle of note is obtaining Commerce Commission (ComCom) clearance. </li></ul>

Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price and +20% premium to our MNW valuation.The deal makes strategic sense, but the offer price is full and will require CEN to deliver on synergy benefits to create value.With MNW directors and major shareholders Infratil (IFT) and TECT Holdings supportive of the deal, the only hurdle of note is obtaining Commerce Commission (ComCom) clearance. 

Contact Energy - Time to Contact the ComCom

New Zealand

Contact Energy Limited is a diversified and integrated energy company which focuses on the generation of electricity and the sale of electricity and gas in New Zealand.

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Contact Energy (CEN NZ)

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy has outperformed Mercury NZ over the last couple of months. A major catalyst is the potential migration of the stocks between size...

Brian Freitas

Contact Energy - Well-Timed Inflows Enable Record Sept 2024

September 2024 was a record month for Contact Energy (CEN), courtesy of a strong rebound in hydro generation and being able to sell high-priced...

Forsyth Barr

Contact Energy - Watts on the ComCom’s Mind

We lift the probability that the deal will be cleared to 70% (from 50%). The ComCom is expected to release its Statement of Preliminary Issues in...

Forsyth Barr

Power Points Index Opportunities — January 2025

2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and...

Forsyth Barr

Contact Energy - Time to Contact the ComCom

Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)