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>An ad hoc <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> rebalance will be implemented at the close on 17 October with <a href="https://www.smartkarma.com/entities/light-wonder-inc-7e7d040f-e811-4fb9-9710-796a39af299e" target="_blank" data-smartkarma-citation="entities:40171:1" rel="noopener">Light &amp; Wonder (LNW AU)</a> replacing <a href="https://www.smartkarma.com/entities/united-malt-group-ltd" target="_blank" data-smartkarma-citation="entities:29116:1" rel="noopener">United Malt Group Ltd (UMG AU)</a>. </li>
<li>The rebalances of <a href="https://www.smartkarma.com/entities/wisdomtree-emerging-markets-146edc02-f8a5-4ac5-968b-5f0f7c89e476" target="_blank" data-smartkarma-citation="entities:32683:1" rel="noopener">Wisdomtree Emerging Markets (DEM US)</a>, <a href="https://www.smartkarma.com/entities/wisdomtree-em-small-cap" target="_blank" data-smartkarma-citation="entities:32679:1" rel="noopener">Wisdomtree Em Small Cap (DGS US)</a> and <a href="https://www.smartkarma.com/entities/wisdmtree-emerg-mkt-ex-st-ow" target="_blank" data-smartkarma-citation="entities:32798:1" rel="noopener">Wisdmtree Emerg Mkt Ex-St Ow (XSOE US)</a> will be implemented on 18 October.</li>
<li>There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI Smallcap 500 Index</a> and CSI 1000 Index trackers.</li>
</ul>


An ad hoc S&amp;P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light &amp; Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU). 
The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.


Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

EURO STOXX 50 Price EUR / Technical Analysis

<ul>
<li>Key support levels on global equity indexes (EURO STOXX 50, $ACWX, $EFA) are beginning to break as the U.S. dollar (DXY) and 10-year Treasury yield break above $105.70 and 4.35%.</li>
<li>This significantly increases the odds of a break below major $92-$93 support on $ACWI, and we would shift to a more cautious outlook only on a break below $92.</li>
<li>We shifted to overweight value within non-U.S. equities last week, and we are now also shifting to overweight small-caps within non-U.S. equities as well. Buys in Transportation, Communications, and HealthCare</li>
</ul>


Key support levels on global equity indexes (EURO STOXX 50, $ACWX, $EFA) are beginning to break as the U.S. dollar (DXY) and 10-year Treasury yield break above $105.70 and 4.35%.
This significantly increases the odds of a break below major $92-$93 support on $ACWI, and we would shift to a more cautious outlook only on a break below $92.
We shifted to overweight value within non-U.S. equities last week, and we are now also shifting to overweight small-caps within non-U.S. equities as well. Buys in Transportation, Communications, and HealthCare


Supports Starting to Break; Upgrading Non-U.S. Small-Caps to Overweight; Transports/Comm/HC Buys

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>According to SCMP, Londian Wason is getting ready for an IPO in the US in 2024. Londian Wason is planning to raise nearly US$500 million in pre-IPO funding and IPO.</li>
<li>SK Inc owns about 30% stake in Londian Wason, a leading copper foil maker in China. It is estimated that SK Inc's stake is worth about US$1.1 billion. </li>
<li>In 2022, Londian Wason generated sales of 1.47 trillion won. Since SK's investment in Londian Wason in 2019, the company's sales has been growing at more than 50% per annum.</li>
</ul>


According to SCMP, Londian Wason is getting ready for an IPO in the US in 2024. Londian Wason is planning to raise nearly US$500 million in pre-IPO funding and IPO.
SK Inc owns about 30% stake in Londian Wason, a leading copper foil maker in China. It is estimated that SK Inc's stake is worth about US$1.1 billion. 
In 2022, Londian Wason generated sales of 1.47 trillion won. Since SK's investment in Londian Wason in 2019, the company's sales has been growing at more than 50% per annum.


Londian Wason Energy Tech: Planning an IPO in the US in 2024 (Impact on SK Inc)

<ul>
<li>The coming week has the rebalance implementation for the NIFTY family of indices on Thursday and the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> on Friday.</li>
<li>The review period for the December rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index</a> and the HSCI Index ends on Friday.</li>
<li>Inflows to mainland China ETFs resumed following a pause as markets continue to trade weak.</li>
</ul>


The coming week has the rebalance implementation for the NIFTY family of indices on Thursday and the Nikkei 225 (NKY INDEX) on Friday.
The review period for the December rebalance of the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI Index ends on Friday.
Inflows to mainland China ETFs resumed following a pause as markets continue to trade weak.


Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP

Equity Bottom-Up

<ul>
<li>Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.</li>
<li>SK Inc has underperformed most other SK Group related companies YTD but this underperformance may be excessive and SK Inc could outperform as more value investors seek deeply discounted companies.</li>
<li>SK Inc's dividend yield is 3.3%, which is higher than the dividend yields of most other major SK Group companies excluding SK Telecom which has a dividend yield of 6.5%.</li>
</ul>


Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.
SK Inc has underperformed most other SK Group related companies YTD but this underperformance may be excessive and SK Inc could outperform as more value investors seek deeply discounted companies.
SK Inc's dividend yield is 3.3%, which is higher than the dividend yields of most other major SK Group companies excluding SK Telecom which has a dividend yield of 6.5%.


South Korea

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

KRTnet Corporation provides radio relay services for mobile phone companies by building and maintaining relay station.  The Company also manufactures telecommunication equipment used for radio relay station.

LG Uplus Corp., an affiliate of LG Group, provides a wide range of personal communications services (PCS) using code division multiple access (CDMA) technology.  The Company offers call forwarding, call and data transfer, call waiting, voice mail, Internet-phone, prepaid call, and authentication text-to-speech (TTS) services.

KINX INC is the Internet linkage and line adapter service providing firm.  The Company provides IX and Internet Data Center service to the network service providers to reduce the traffic and to contruct Internet infrastructure.  KINX also provides VoIP service.

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Sejong Telecom, Inc. develops and provides various telecom service.  The Company's main service include international phone call, Internet phone call, and long distance call.

Netmarble Corporation develops and publishes mobile games. The Company develops and publishes casual games, action, sports games, strategy, simulation games, and social casino games. Netmarble offers services worldwide.

Pearl Abyss Corp. operates as a computer games making company. The Company offers games development, games exporting, and other services. Pearl Abyss serves customers worldwide.

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

ECS Telecom Co.,Ltd. is a provider of communication products and services.  The company offers private branch exchange (PBX), IP telephony, contact center solution, and trading system.

CelcomDigi Berhad is a mobile network operator. The Company offers Internet and wireless telecommunication products and services through the global system for mobile telecommunications (GSM) network. CelcomDigi serves customers in Malaysia.

Taiwan Mobile Co., Ltd. provides cellular telecommunication services in Taiwan. The Company also sells and leases cellular phones.

Vodafone Idea Limited operates as a telecom service provider. The Company offers 2G, 3G, and 4G mobile services, as well as mobile payments, advanced enterprise offerings, and entertainment. Vodafone Idea serves customers in India.

Far EasTone Telecommunications Co., Ltd. provides mobile communication and Internet access services.  The Company also sells cellular phones and related equipment.

Turkcell Iletisim Hizmetleri AS (Turkcell) is a converged communication and technology services player with regional assets and globally relevant services. The Company provides mobile and fixed voice, data, television, and other services over its network in Turkey.

MTN Group Limited provides a wide range of communication services. The Company's services include cellular network access and business solutions. MTN Group is a multinational telecommunications group, operating in countries in Africa and the Middle East.

Maxis Berhad operates as a mobile and fixed communication service provider. The Company, through mobile and fiber telecommunications along with IT infrastructure services, offers mobile and fixed data products, voice and SMS services, mobile payment solutions, remote health monitoring, Cloud solutions, and a business directory to businesses and individuals in Malaysia.

Intouch Holdings Public Company Limited is a holding company that invests in diversified telecommunication and media and advertising businesses.  The Company, through its subsidiaries, provides television broadcasting, cellular phone and wireless services.

Tele2 AB is a telecommunications company.  The Company offers mobile services, fixed broadband and telephony, data network services and content services. Tele2 operates throughout Europe and EuroAsia.

Vodacom Group Limited operates a cellular telephone network in South Africa. The Company has mobile operations in Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

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SK Telecom (017670 KS)

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown

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

Brian Freitas

Supports Starting to Break; Upgrading Non-U.S. Small-Caps to Overweight; Transports/Comm/HC Buys

Support levels on global indexes (EURO STOXX 50, $ACWX, $EFA) beginning to break as $DXY and 10-year Treasury yield $TNX break above $105.70 and...

Vermilion Research

Londian Wason Energy Tech: Planning an IPO in the US in 2024 (Impact on SK Inc)

Londian Wason is getting ready for an IPO in the US in 2024. Londian Wason is planning to raise nearly US$500 million in pre-IPO funding and IPO....

Douglas Kim

Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP

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

Brian Freitas

SK Inc: Updated NAV Valuation Analysis

Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.

Douglas Kim

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