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 and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.</li>
<li>
<a href="https://www.smartkarma.com/entities/strike-energy-ltd" target="_blank" data-smartkarma-citation="entities:12473:1" rel="noopener">Strike Energy (STX AU)</a> will replace <a href="https://www.smartkarma.com/entities/costa-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:22632:1" rel="noopener">Costa Group Holdings (CGC AU)</a> in the <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> at the close on 8 February.</li>
<li>The inflows to mainland China ETFs continue for another week. There were big inflows to <a href="https://www.smartkarma.com/entities/ishares-msci-india-etf" target="_blank" data-smartkarma-citation="entities:282:1" rel="noopener">iShares India ETF (INDA US)</a> and <a href="https://www.smartkarma.com/entities/ishares-msci-india-small-cap" target="_blank" data-smartkarma-citation="entities:32064:1" rel="noopener">Ishares India Small-Cap (SMIN US)</a>. </li>
</ul>


The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.

Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&amp;P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US). 


Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The MSCI revised the Adani Group weighting after reviewing FF. <a href="https://www.smartkarma.com/entities/adani-enterprises-ltd" target="_blank" data-smartkarma-citation="entities:245:1" rel="noopener">Adani Enterprises (ADE IN)</a>affected. <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green (ADANIGR IN)</a>, <a href="https://www.smartkarma.com/entities/adani-power-ltd" target="_blank" data-smartkarma-citation="entities:247:1" rel="noopener">Adani Power (ADANI IN)</a>, and <a href="https://www.smartkarma.com/entities/adani-ports-special-economic-zone-ltd" target="_blank" data-smartkarma-citation="entities:246:1" rel="noopener">Adani Ports (ADSEZ IN)</a> not affected. </li>
<li>
<a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a> is dirt cheap at 0.3x P/B. It is a China re-opening play. Plus the company is buying back shares. </li>
<li>The Nikkei didn't write an article on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba (6502 JP)</a> when everyone else did. They waited another day, with what appears to be a zinger on price at "about ¥2trln". </li>
</ul>


The MSCI revised the Adani Group weighting after reviewing FF. Adani Enterprises (ADE IN)affected. Adani Green (ADANIGR IN), Adani Power (ADANI IN), and Adani Ports (ADSEZ IN) not affected. 

Hongkong Land (HKL SP) is dirt cheap at 0.3x P/B. It is a China re-opening play. Plus the company is buying back shares. 
The Nikkei didn't write an article on Toshiba (6502 JP) when everyone else did. They waited another day, with what appears to be a zinger on price at "about ¥2trln". 


Last Week in SPACE: Adani Group, Hongkong Land, Toshiba, Haw Par, Renault/Nissan

<ul>
<li>Last November I highlighted <a href="https://www.smartkarma.com/entities/haw-par-corp-ltd" target="_blank" data-smartkarma-citation="entities:9898:1" rel="noopener">Haw Par Corp (HPAR SP)</a>'s multi-year trough levels on an implied stub valuation, and on an HPAR/<a href="https://www.smartkarma.com/entities/united-overseas-bank-ltd" target="_blank" data-smartkarma-citation="entities:113:1" rel="noopener">UOB (UOB SP)</a> ratio.</li>
<li>That trade has panned out well as the ratio steadily increased. But it remains below the 200 MDA.</li>
<li>A recovery in Tiger Balm sales is expected in Haw Par's full-year results later this month.  UOB's financials, and <a href="https://www.smartkarma.com/entities/uol-group-ltd" target="_blank" data-smartkarma-citation="entities:142:1" rel="noopener">UOL (UOL SP)</a>'s, are also due out this month.</li>
</ul>


Last November I highlighted Haw Par Corp (HPAR SP)'s multi-year trough levels on an implied stub valuation, and on an HPAR/UOB (UOB SP) ratio.
That trade has panned out well as the ratio steadily increased. But it remains below the 200 MDA.
A recovery in Tiger Balm sales is expected in Haw Par's full-year results later this month.  UOB's financials, and UOL (UOL SP)'s, are also due out this month.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/sm-investments-corp" target="_blank" data-smartkarma-citation="entities:20015:1" rel="noopener">SM Investments (SM PM)</a>, the leading Filipino conglomerate, recently announced strong 9M22 earnings, buoyed by increased economic activity and strong consumer sentiment.</li>
<li>The standout was the unlisted SM Retail segment which recorded net income of PHP 11.5bn, exceeding 2019 pre-pandemic levels. </li>
<li>The implied stub/share - net of all listcos - of PHP 208/share compares to the five-year average of PHP 273/share, and the two-year average of PHP 252 preceding Covid. </li>
</ul>



SM Investments (SM PM), the leading Filipino conglomerate, recently announced strong 9M22 earnings, buoyed by increased economic activity and strong consumer sentiment.
The standout was the unlisted SM Retail segment which recorded net income of PHP 11.5bn, exceeding 2019 pre-pandemic levels. 
The implied stub/share - net of all listcos - of PHP 208/share compares to the five-year average of PHP 273/share, and the two-year average of PHP 252 preceding Covid. 


SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

<ul>
<li>The in-specie distribution is basically a forward block sale of <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>. You know it's coming. You don't know how large it is. It is not unlike a lockup situation. </li>
<li>
<a href="https://www.smartkarma.com/entities/china-hainan-rubber-industry-group" target="_blank" data-smartkarma-citation="entities:10551:1" rel="noopener">China Hainan Rubber Industry (601118 CH)</a> will start with 36% in <a href="https://www.smartkarma.com/entities/halcyon-agri-corp-ltd" target="_blank" data-smartkarma-citation="entities:18191:1" rel="noopener">Halcyon Agri (HACL SP)</a>. Founders and friends have ~10%. Getting to 50%+ will be easy.</li>
<li>The <a href="https://www.smartkarma.com/entities/swire-pacific-ltd" target="_blank" data-smartkarma-citation="entities:23726:1" rel="noopener">Swire Pacific (B)</a> / <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A)</a> ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks. </li>
</ul>


The in-specie distribution is basically a forward block sale of Meituan (3690 HK). You know it's coming. You don't know how large it is. It is not unlike a lockup situation. 

China Hainan Rubber Industry (601118 CH) will start with 36% in Halcyon Agri (HACL SP). Founders and friends have ~10%. Getting to 50%+ will be easy.
The Swire Pacific (B) / Swire Pacific (A) ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks. 


Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals

Singapore

UOL Group Limited is a property company. The Company has a diversified portfolio of development and investment properties, hotels, and serviced suites. UOL Group, through its subsidiary owns a portfolio of commercial assets and hotels. UOL Group operates in Asia, Oceania, and North America.

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UOL Group (UOL SP)

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

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Haw Par Corp Is Still Trading Cheap

I still like Haw Par here, and recommend going long outright or hedging against UOB (~58% of its NAV, 90% of its market cap).

David Blennerhassett

SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

SMIC is benefitting from increased economic activity and buoyant consumer sentiment. Go outright long or hedge out SM Prime and BDO, in which the...

David Blennerhassett

Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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