In today’s briefing:
- HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
- Share Buybacks In Japan – A 2023 Primer
- Joyful Honda (3191) – Repeats Its ASR In Double the Size
- Last Week in Event SPACE: Aussie Tax-Loss Selling, Japan Post Bank/Holdings, AviChina, Hang Lung
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Celltrion, Sanei Architecture, T&K Toka, MPI, Chindata
- HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)
- Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI
HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
- There are 22 adds and 27 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents down to 518.
- We expect all 22 inclusions to the HSCI will be added to Stock Connect, while 24 of the 27 HSCI deletions will be removed from Southbound Stock Connect.
- Since the end of June, shares held though Southbound Connect have increased on 20 of the 27 HSCI deletions and there could be some unwinding in the next two weeks.
Share Buybacks In Japan – A 2023 Primer
- The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
- Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
- So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.
Joyful Honda (3191) – Repeats Its ASR In Double the Size
- Last year, I wrote about Joyful Honda (3191 JP)‘s implementation of a ¥2.5bn ToSTNeT-3 into Accelerated Share Repurchase. It was the first such transaction I knew of in Japan.
- This year, they have just announced another for nearly twice the size. It is worth looking at the details and comparing the stock vs Peers.
- It is also worth understanding exactly what the incentives are for whom and how that impacts the path. And who might respond to it.
Last Week in Event SPACE: Aussie Tax-Loss Selling, Japan Post Bank/Holdings, AviChina, Hang Lung
- Concerning Australian tax-loss selling baskets, the sell across the four baskets made 4.2% vs ASX200 in May, then is up.
- Be long Japan Post Bank (7182 JP). Or longJapan Post Holdings (6178 JP) for a long JPB position. Don’t be short JPB or short JPB vs JPH.
- As a PRC aviation/defense play, AviChina Industry & Technology H (2357 HK)‘s fundamentals are undemanding.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Celltrion, Sanei Architecture, T&K Toka, MPI, Chindata
- I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Three new deals this week: the Celltrion Inc (068270 KS)/Celltrion Healthcare (091990 KS) merger; and the Tender Offers for Sanei Architecture Planning (3228 JP) and T&K Toka (4636 JP).
- Key updates took place for Tesserent Ltd (TNT AU), DDH1 (DDH AU), L’Occitane (973 HK), Metro Pacific Investments Co (MPI PM), and Chindata Group (CD US).
HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)
- As expected, Trip.com Group (9961 HK) replaces Country Garden Services (6098 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 1 September.
- BeiGene (6160 HK) fails the Velocity Test and misses inclusion, while an increase in Zhongsheng Group (881 HK)‘s float keeps it in the index.
- Using prices from the close on 18 August, estimated one-way turnover is 2.78% leading to a one-way trade of HK$1.73bn (US$221m).
Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI
- Friday was the review cutoff for the September rebalance of the ASX family of indices. The September changes for the Hang Seng family of indices were also announced.
- The September changes for the SSE STAR50 (STAR50 INDEX) will be announced after the close of trading on 25 August.
- For a second week running, there were big inflows to mainland China ETFs and were spread across multiple index trackers. There were outflows from iShares Emerging Markets (EEM US).
💡 Before it’s here, it’s on Smartkarma
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