Daily Brief Energy/Materials: Syrah Resources, Kum Yang Co Ltd, SK Innovation and more

In today’s briefing:

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore
KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the run up to the March 2023 Rebalance.
Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index.
I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance.

One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups.

The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.
Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

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