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>The review period for a global index commenced last week and will run through this week as well.</li>
<li>The announcement of the changes for the LQ45 Index should be announced in the coming week and will be implemented at the close on 31 January.</li>
<li>Huge inflows to <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a> trackers during the week while there was a big outflow from <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong (2800 HK)</a>. </li>
</ul>


The review period for a global index commenced last week and will run through this week as well.
The announcement of the changes for the LQ45 Index should be announced in the coming week and will be implemented at the close on 31 January.
Huge inflows to CSI 300 Index trackers during the week while there was a big outflow from Tracker Fund of Hong Kong (2800 HK). 


Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC

<ul>
<li>With over 80% of the review period complete, there could be 26 adds/deletes across the S&amp;P/ASX family of indices in March.</li>
<li>The largest flow will be on <a href="https://www.smartkarma.com/entities/newmont-corp" target="_blank" data-smartkarma-citation="entities:40416:1" rel="noopener">Newmont (NEM AU)</a> due to the potential S&amp;P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.</li>
<li>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.</li>
</ul>


With over 80% of the review period complete, there could be 26 adds/deletes across the S&amp;P/ASX family of indices in March.
The largest flow will be on Newmont (NEM AU) due to the potential S&amp;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.


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

Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Thematic (Sector/Industry)

<ul><li>A lift in new dwelling investment to a record high has underpinned Australia's current housing expansion.  The revolution in Australian housing reflects a shift towards higher density dwellings.  Building approvals for high density dwellings now accounts for half of residential approvals, well above the historical norm of around one-third.  Moreover, within the higher density segment, there has been a shift towards apartment blocks with four or more storeys.</li><li>Evidente believes that Australia's housing revolution is here to stay.  Australia's urban population density is still amongst the lowest in the world, consumer tastes continue to evolve towards more affordable, apartment living, and there are simply physical limits to the urban sprawl in Australia's major cities.</li><li>I identify two listed stocks that are leveraged to the prospect of strong growth in transport infrastructure designed to ease traffic congestion associated with more higher density dwellings: toll road operator, <a href="https://www.smartkarma.com/entities/593" target="_blank" data-smartkarma-citation="entities:593">Transurban Group (TCL AU)</a>, and <a href="https://www.smartkarma.com/entities/12350" target="_blank" data-smartkarma-citation="entities:12350">Downer EDI Ltd (DOW AU)</a>, which generates more than one-third of its revenues from its transport services and rail divisions.</li><li>Around the new normal however, booms and busts are inevitable. The RBA has identified a growing risk of over-supply of apartments emerging in inner city Brisbane and Melbourne.  Bank exposures here are limited such that apartment prices would need to drop by more than 25% for banks to experience material losses.  Evidente's model portfolio remains modestly overweight Australia's major banks due to the large P/B discount relative to industrials.</li></ul>

A lift in new dwelling investment to a record high has underpinned Australia's current housing expansion.  The revolution in Australian housing reflects a shift towards higher density dwellings.  Building approvals for high density dwellings now accounts for half of residential approvals, well above the historical norm of around one-third.  Moreover, within the higher density segment, there has been a shift towards apartment blocks with four or more storeys.Evidente believes that Australia's housing revolution is here to stay.  Australia's urban population density is still amongst the lowest in the world, consumer tastes continue to evolve towards more affordable, apartment living, and there are simply physical limits to the urban sprawl in Australia's major cities.I identify two listed stocks that are leveraged to the prospect of strong growth in transport infrastructure designed to ease traffic congestion associated with more higher density dwellings: toll road operator, Transurban Group (TCL AU), and Downer EDI Ltd (DOW AU), which generates more than one-third of its revenues from its transport services and rail divisions.Around the new normal however, booms and busts are inevitable. The RBA has identified a growing risk of over-supply of apartments emerging in inner city Brisbane and Melbourne.  Bank exposures here are limited such that apartment prices would need to drop by more than 25% for banks to experience material losses.  Evidente's model portfolio remains modestly overweight Australia's major banks due to the large P/B discount relative to industrials.

Australia's Housing Revolution Continues, but for How Much Longer?

Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which partners with progressive farmers to provide capital solutions to fund productivity growth and innovation.With drastic shortages of capital in Australian farming, CommStream leverages its industry expertise and relationships to bring farmers an overdue, innovative financing solution, which drives productivity growth and helps fund generational…

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which partners with progressive farmers to provide capital solutions to fund productivity growth and innovation.With drastic shortages of capital in Australian farming, CommStream leverages its industry expertise and relationships to bring farmers an overdue, innovative financing solution, which drives productivity growth and helps fund generational…

CommStream Capital Limited Interview: Insight From Australia's First Agricultural Streaming Company

<ul><li>A recent speech from Vice Chairman Stanley Fischer suggests that the secular decline in the neutral rate of interest is guiding the Fed’s view and internal debate around policy normalization.  Fischer cites a number of developments that have contributed to lower real interest rates, including the low capital intensity of the IT sector, the demographics of ageing and high savings rates in EM.</li><li>To the extent that these structural shifts are long lasting, Fischer suggests this supports the case for the neutral rate remaining low for the policy relevant future.   This represents a hint that growth in the US economy might remain tepid for some time and that inflation will remain low thanks to the long lasting powerful impact of excess desired saving over investment intentions.</li><li>If Fischer is right that the saving-investment imbalance is expected to persist and hold down the neutral rate of interest for the foreseeable future, then the new policy normal of low and slow should provide an environment conducive to continued strong returns from listed Australian infrastructure stocks - notably SYD, TCL and APA - despite the fact their valuations remain stretched.  Investors should treat any pull-backs in these stocks as a buying opportunities</li></ul>

A recent speech from Vice Chairman Stanley Fischer suggests that the secular decline in the neutral rate of interest is guiding the Fed’s view and internal debate around policy normalization.  Fischer cites a number of developments that have contributed to lower real interest rates, including the low capital intensity of the IT sector, the demographics of ageing and high savings rates in EM.To the extent that these structural shifts are long lasting, Fischer suggests this supports the case for the neutral rate remaining low for the policy relevant future.   This represents a hint that growth in the US economy might remain tepid for some time and that inflation will remain low thanks to the long lasting powerful impact of excess desired saving over investment intentions.If Fischer is right that the saving-investment imbalance is expected to persist and hold down the neutral rate of interest for the foreseeable future, then the new policy normal of low and slow should provide an environment conducive to continued strong returns from listed Australian infrastructure stocks - notably SYD, TCL and APA - despite the fact their valuations remain stretched.  Investors should treat any pull-backs in these stocks as a buying opportunities 

Infrastructure Assets to Benefit from the New Normal of Low and Slow

Australia

K & S Corporation Limited provides transportation, warehousing, logistics, fuel distribution and various services to companies throughout Australia.  K & S provides road, rail and sea forwarding services, warehousing and storage, fuel distribution to fishing, farming and retail customers in certain regions of Australia.  K & S also provides bulk distribution throughout New Zealand.

Alliance Aviation Services Ltd. is a mining services company. The Company specializes in providing transportation by air of its mining and energy customers' employees and contractors to and from remote locations, ad hoc charter services - operating commercial air charters servicing the needs of Government and corporate customers, and wet leasing services.

Future Generation Investment Company Limited is an investment company incorporated in Australia.  The objective of the Fund is to provide exposure to a group of prominent Australian fund managers in a single investment vehicle. The Fund will invest in funds managed by a number of Australian fund managers with diversified exposure to Australian equities.

Lindsay Australia Limited is an integrated transport, logistics and rural supply company.  The Company primarily services customers in the food processing, food services, fresh produce, rural and horticultural industries.

CTI Logistics Limited provides courier services, freight forwarding, parcel, warehousing, logistic and customs broking services.  The Company also designs, produces and installs security systems in Western Australia along with plastic services such as manufacturing plumbing fittings.

Monadelphous Group Limited provides engineering and construction services to the resources and petrochemical industries. The Company provides mining and processing industry maintenance, mining equipment refurbishment, project management, construction, and airport ground handling services. Monadelphous Group serves customers in Australia.

McMillan Shakespeare Limited provides salary packaging services.  The Company also offers services like procurement of motor vehicles, insurance, finance and fuel and service maintenance programs.

SG Fleet Group Ltd provides vehicle leasing and fleet management services. The Company offers its services to corporate and government customers and individual employees of those customers.

Austal Limited is an emerging global defence prime contractor. The Group supplies vessel platforms such as the Littoral Combat Ship and the Joint High Speed Vessel to the United States Navy, an extensive range of patrol and auxiliary vessels to defence forces around the world, and installs and maintains military communications, radar and command and control systems.

SmartGroup Corp Ltd. is an Australian outsourced salary packaging company within the health, not-for-profit, State and Federal Government departments and corporate sectors nationwide.

Eagle Bulk Shipping Inc. owns a fleet of dry bulk vessels and transports a range of major and minor bulk cargoes.  The Company transports iron ore, coal, grain, cement, and fertilizer along worldwide shipping routes.

NS United Kaiun Kaisha, Ltd. operates specialized carriers and tramps to ship iron ore, steel, coal, crude oil, and gas. The Company is affiliated with Nippon Yusen. The Company also has close ties with Nippon Steel.

2GO Group, Inc., together with its subsidiaries, provides shipping and logistics services in the Philippines and internationally. It engages in the domestic and international delivery of documents and parcels, money remittances, cash, certificate and visas, pouches and boxes, full container and loose cargo, and supply chain services; and warehousing and distribution, asset maintenance, and relocation services. The company also provides project management and consultancy services, such as transportation of heavy and bulk-sized equipment; and logistics services, such as ambient and temperature controlled distribution centers, forward stock locations, ambient and temperature controlled cross-docking, domestic freight forwarding and land transport, bundling and kitting, control tower solutions, and logistics solutions design and consultancy services. In addition, it provides passenger travel services; and operates ferry vessels. Further, the company offers international and domestic air and sea freight forwarding services, cargo consolidation, dangerous goods handling, customs brokerage, and building and exhibition logistics; and FMCG trading and distribution, food servicing, and catering services, as well as liquid transport services. Additionally, it provides manpower, security, trucking, forwarding services, water barging, tugboat assistance, and arrastre and stevedoring services. The company operates a fleet of 23 passenger and freight vessels. It also operates 15,000 containers, 35 cross-dock warehouses, 550 trucks, 1,200 trailers, 250 motorcycles, 70,000 square meters of distribution center operations, and approximately 185 branches and outlets. The company formerly known as ATS Consolidated (ATSC), Inc. and changed its name to 2GO Group, Inc. in March 2012. The company was founded in 1949 and is headquartered in Manila, the Philippines.

Regional Container Lines Public Company Limited provides ocean freight transportation services. The Company owns and operates a fleet of container vessels covering more than 70 destinations in Asia, Australia, and the Middle East.

PT Pelayaran Tempuran Emas Tbk provides sea transportation services. The company has network of branches and agents throughout Indonesia and Singapore. Pelayaran Tempuran Emas also offers logistic supports for cargo movements.

Bohai Ferry Company Limited is a passenger liner transportation enterprise. The Company mainly operates passenger vessel transport for the Yantai-Dalian and Penglai-Dalian sea routes.

Safe Bulkers Inc. is an international provider of marine drybulk transportation services transporting bulk cargoes particularly grain, iron ore, and coal. The Company has a fleet of panamax, kamsarmax, and post-panamax class vessels.

IINO KAIUN KAISHA, LTD. owns and operates specialized tankers such as oil, chemical, and LPG carriers.  The Company transports crude oil, petroleum gasoline, and various dry consumer and agricultural goods.  Iino Kaiun Kaisha also leases and sells real estate.

Genco Shipping & Trading Ltd. provides shipping services. The Company focuses on drybulk carrier ships used to transport iron ore, coal, grain, steel, and other products. Genco Shipping & Trading serves customers worldwide.

Ningbo Marine Co., Ltd. provides freight transportation on the inland waters, as well as between the ports of Ningbo and Southeast Asian countries and Japan. The Company also invests in the transportation facility construction business and processes steel product.

MMA Offshore Limited provides diversified marine services. The Company operates mainly in the Dampier and North West Shelf in Western Australia and also in the Northern Territory. MMA Offshore operates crew vessel charters, vessel manning, management and logistics along with operating supply base facilities.

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Mma Offshore (MRM AU)

Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

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

CGC's privatisation could lead to an adhoc change in Feb. Then there could be 26 changes at the March rebalance. Newmont could be deleted from the...

Brian Freitas

Australia's Housing Revolution Continues, but for How Much Longer?

A lift in new dwelling investment to a record high has underpinned Australia's current housing expansion. The revolution in Australian housing...

Sam Ferraro

CommStream Capital Limited Interview: Insight From Australia's First Agricultural Streaming Company

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which...

Nomadic Equity

Infrastructure Assets to Benefit from the New Normal of Low and Slow

A recent speech from Vice Chairman Stanley Fischer suggests that the secular decline in the neutral rate of interest is guiding the Fed’s view and...

Sam Ferraro

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

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

CGC's privatisation could lead to an adhoc change in Feb. Then there could be 26 changes at the March rebalance. Newmont could be deleted from the...

Brian Freitas

Australia's Housing Revolution Continues, but for How Much Longer?

A lift in new dwelling investment to a record high has underpinned Australia's current housing expansion. The revolution in Australian housing...

Sam Ferraro

CommStream Capital Limited Interview: Insight From Australia's First Agricultural Streaming Company

Today I am speaking with Simon Skerrett, COO and Co-founder of CommStream Capital Limited, Australia's first agricultural streaming company which...

Nomadic Equity

Infrastructure Assets to Benefit from the New Normal of Low and Slow

A recent speech from Vice Chairman Stanley Fischer suggests that the secular decline in the neutral rate of interest is guiding the Fed’s view and...

Sam Ferraro

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