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>We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.</li>
<li>The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.</li>
<li>Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.</li>
</ul>


We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.


AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

<div>The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.</div><div>
The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.
</div>

The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.
The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.


India: Stock Reclassification & Active Portfolio Management

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Kalyan Jewellers / Equity Capital Markets

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.We have looked at various aspects of the deal in our previous note, <a href="https://www.smartkarma.com/insights/kalyan-jewellers-pre-ipo-strategy-missteps-led-to-earnings-flatlining" target="_blank" rel="noopener">Kalyan Jewellers Pre-IPO - Strategy missteps led to earnings flatlining </a>and <a href="https://www.smartkarma.com/insights/kalyan-jewellers-ipo-no-glitter" target="_blank" rel="noopener">Kalyan Jewellers IPO - No Glitter</a>.In this note, we'll talk about deal updates and provide a table with implied valuations at different share price levels.

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.We have looked at various aspects of the deal in our previous note, Kalyan Jewellers Pre-IPO - Strategy missteps led to earnings flatlining and Kalyan Jewellers IPO - No Glitter.In this note, we'll talk about deal updates and provide a table with implied valuations at different share price levels.

Kalyan Jewellers IPO Trading - Subdued Demand

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<a href="https://www.smartkarma.com/entities/kalyan-jewellers" target="_blank" data-smartkarma-citation="entities:29714:1" rel="noopener">Kalyan Jewellers (KALYAN IN)</a>, one of the largest jewellery companies with around 107 showrooms across India and around 30 more in the Middle East has downsized its IPO size from INR 17.5bn (new shares - INR 10.0bn, promoter - INR 2.5bn, Highdell Investment - a part of Warburg Pincus - INR 5.0bn) to INR 11.75bn (new shares - INR 8.0bn, promoter - INR 1.25bn, Highdell Investment - INR 2.5bn).
In November last year we published two insights, discussing Kalyan’s business model and financials.
<ul>
<li><a href="https://www.smartkarma.com/insights/kalyan-jewellers-ipo-not-a-gold-rush-but-could-be-a-time-tested-investment-like-gold-it-self" target="_blank" rel="noopener">Kalyan Jewellers IPO: Not a Gold Rush But Could Be a Time-Tested Investment Like Gold It Self</a></li>
<li><a href="https://www.smartkarma.com/insights/kalyan-jewellers-ipo-in-a-recovery-following-a-strategy-mishap" target="_blank" rel="noopener">Kalyan Jewellers IPO: In a Recovery Following a Strategy Mishap</a></li>
</ul>
We were not overly optimistic on Kalyan Jewellers as a standalone business from the outset, but we were considering making a long-term bet on India’s gold jewellery industry growth. Additionally, we expect gold to outperform equities if the stock market bubble burst in the near future. Therefore, we were willing to make a bet on Kalyan Jewellers at a decent valuation.

Kalyan Jewellers (KALYAN IN), one of the largest jewellery companies with around 107 showrooms across India and around 30 more in the Middle East has downsized its IPO size from INR 17.5bn (new shares - INR 10.0bn, promoter - INR 2.5bn, Highdell Investment - a part of Warburg Pincus - INR 5.0bn) to INR 11.75bn (new shares - INR 8.0bn, promoter - INR 1.25bn, Highdell Investment - INR 2.5bn).
In November last year we published two insights, discussing Kalyan’s business model and financials.

Kalyan Jewellers IPO: Not a Gold Rush But Could Be a Time-Tested Investment Like Gold It Self
Kalyan Jewellers IPO: In a Recovery Following a Strategy Mishap

We were not overly optimistic on Kalyan Jewellers as a standalone business from the outset, but we were considering making a long-term bet on India’s gold jewellery industry growth. Additionally, we expect gold to outperform equities if the stock market bubble burst in the near future. Therefore, we were willing to make a bet on Kalyan Jewellers at a decent valuation.

Kalyan Jewellers IPO: Hedges The Equity Exposure of Those Who Fear an Impending Stock Market Crash

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

In this report, we discuss Kalyan Jeweller's upcoming IPO pricing, post-money valuations and latest financials in conjunction with our earlier discussed view on the company's business outlook. In our earlier detailed report <a href="https://www.smartkarma.com/insights/kalyan-jewellers-ipo-lacks-lustre-look-beyond-the-prospectus" target="_blank" data-smartkarma-citation="insights:44841" rel="noopener">Kalyan Jewellers (IPO): Lacks Lustre. Look Beyond the Prospectus</a>, we had highlighted concerns on the company's growth prospects. Kalyan has reported steep losses for 9 months ending December 2020 and highlighted that sales from the Middle-east fell steeply compared to India. India based jewellers had managed to report a turnaround in this period helped by a strong recovery in the December quarter. Kalyan's downsized IPO is priced almost at the average investment cost price of its private equity investor, Warburg Pincus.

In this report, we discuss Kalyan Jeweller's upcoming IPO pricing, post-money valuations and latest financials in conjunction with our earlier discussed view on the company's business outlook. In our earlier detailed report Kalyan Jewellers (IPO): Lacks Lustre. Look Beyond the Prospectus, we had highlighted concerns on the company's growth prospects. Kalyan has reported steep losses for 9 months ending December 2020 and highlighted that sales from the Middle-east fell steeply compared to India. India based jewellers had managed to report a turnaround in this period helped by a strong recovery in the December quarter. Kalyan's downsized IPO is priced almost at the average investment cost price of its private equity investor, Warburg Pincus. 

Kalyan Jewellers IPO Priced Just Above PE Investor's Cost; Not for Quick Returns

India

Kalyan Jewellers India Limited designs and manufactures gold, diamonds, stones, and other precious metal jewelry products. The Company offers rings, bangles, necklace, pendant, bracelets, earrings, and chains. Kalyan Jewellers India serves customers worldwide.

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Kalyan Jewellers (KALYANKJ IN)

AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

We see 42 potential migrations between the size categories. The small to mid migrations have outperformed. There will be a lot of overlap between...

Brian Freitas

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

Kalyan Jewellers IPO Trading - Subdued Demand

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. In this note, we'll talk about deal updates.

Sumeet Singh

Kalyan Jewellers IPO: Hedges The Equity Exposure of Those Who Fear an Impending Stock Market Crash

Kalyan could be considered an alternative to gold and in a time of a stock market bubble, Kalyan is a reasonable hedge to the equity exposures of...

Oshadhi Kumarasiri

Kalyan Jewellers IPO Priced Just Above PE Investor's Cost; Not for Quick Returns

Post money Valuations not excessive on a relative basis. Near term, concerns remain. Not for ST gains. Expect limited downside in 6-9 months. Will...

Devi Subhakesan

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