In today’s briefing:
- HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- Align Partners Goes Activist on Seven Banking Group Companies in Korea
- Merger Arb Mondays (02 Jan) – Toyo Construction, Origin Energy, Warrego, Nitro, Fengxiang
- PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: OZ Minerals, Warrego, Shandong Fengxiang, Toyo Construction
HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
- The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
- If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.
NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- We expect 5 changes to the Nifty 100 Index (NSE100 INDEX) at the March rebalance. The review period ends on 31 January and the announcement should be late February.
- The largest impact of passive trading will be on Page Industries (PAG IN), Biocon Ltd (BIOS IN), Mphasis Ltd (MPHL IN) and ABB India Ltd (ABB IN).
- There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.
Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- There are four weeks left to go in the data period for calculating the next Nikkei 225 review for March, likely to be announced ~7 March 2023.
- The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723) , and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707) , Toyobo (3101), and Nippon Light Metal (5703)
- Oriental Land is the one to watch in March. Slight underperformance would boost buying impact. The Sep23 rebalance and subsequent ones are smaller in size but more interesting in impact.
HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
- Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK).
- Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.
Align Partners Goes Activist on Seven Banking Group Companies in Korea
- On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
- According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
- Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x.
Merger Arb Mondays (02 Jan) – Toyo Construction, Origin Energy, Warrego, Nitro, Fengxiang
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Genesis Minerals (GMD AU), 111 Inc (YI US), Origin Energy (ORG AU).
- Lowest spreads – Nitro Software Ltd (NTO AU), Norwest Energy NL (NWE AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Elmo Software (ELO AU).
PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
- Some creative float increases for AC Energy Corp (ACEN), San Miguel (SMC PM) and Emperador (EMP PM) should result in the stocks remaining in the index and getting passive inflows.
- DMCI Holdings (DMC PM) should replace Megaworld Corp (MEG PM), while UnionBank of the Philippines (UBP PM)‘s inclusion should result in Robinsons Land Co (RLC PM)‘s deletion from the index.
- There will be a big impact on the additions, deletions and stocks with float changes. The stocks have already started to move ahead of the passive flows.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: OZ Minerals, Warrego, Shandong Fengxiang, Toyo Construction
- There are 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- No new deals were discussed on Smartkarma in the past week.
- Key updates took place for: OZ Minerals Ltd (OZL AU), Warrego Energy (WGO AU), Shandong Fengxiang (9977 HK), and Toyo Construction (1890 JP).
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