In today’s briefing:
- Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi
- Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
- Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added
- Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals
- EQD | Here Is Why the S&P500 MONTHLY Rally Could Continue in December
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Benefit One, Japan Best Rescue System, IJTT, Ohizumi, VNET
- SK Square: Two Remaining Credible Options for 11 Street
- HSTECH Index Rebalance: No Constituent Changes; Round-Trip Trade of US$1.4bn
- Weekly Deals Digest (19 Nov) – Benefit One, JBR, Eoflow, Haitong, Vinda, Asahi, Tata Tech, Zeekr
Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi
- The FRTIB benchmark switch from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index will result in a round trip trade of around US$56bn.
- The changes for the CSI 300, CSI 500, STAR50, SSE50 and a bunch of other mainland China indices will be announced after market close on Friday.
- Relatively quiet week for ETF flows with no major creations or redemptions during the week.
Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
- On 16th November 2023, Tokyo-based Industrial-use precious metal products manufacturer Furuya Metal (7826 JP) announced they would be moving from TSE Standard to TSE Prime on 6th December 2023.
- This move would trigger a TOPIX Index Inclusion event at the end of January 2024 which would require all the TOPIX-tracking passive funds to buy shares in the company.
- The company also launched an offering in conjunction with the TSE Prime announcement. In this insight, we take a look at the flow dynamics of the upcoming TOPIX Inclusion event.
Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added
- Li Auto (2015 HK) and WuXi AppTec (2359 HK) will be added to the Hang Seng at the close on 1 December taking the number of index constituents to 82.
- Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise – that could take place at the next rebalance.
- Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in Alibaba (9988 HK) and selling in Tencent (700 HK) and HSBC (5 HK).
Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals
- Pasona Group (2168 JP) is massively net cash. And it’s ofloading Benefit One Inc (2412 JP). Though we don’t know what the future holds, Pasona is the wrong price.
- ENN Energy (2688 HK) controlling shreholder announced it intends to increase it stake. And it’s been in the market almost everry day since the interims.
- Zhejiang Expressway (576 HK) announced its rights offering. It’s at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio
EQD | Here Is Why the S&P500 MONTHLY Rally Could Continue in December
- The S&P 500 INDEX will probably continue to rally in December (as long as the November rally does not reach extreme OVERBOUGHT conditions.
- The OVERBOUGHT condition begins at around 4600, so the index is NOT overbought (yet).
- The index will probably pullback soon for 1 or 2 weeks and then you can buy to ride the continuation of the rally into December (classic Christmas Rally).
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Benefit One, Japan Best Rescue System, IJTT, Ohizumi, VNET
- I tally 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Six new deals were discussed this week: Benefit One (2412 JP), Japan Best Rescue System (2453 JP), IJTT (7315 JP), Ohizumi (6618 JP), Amara (AMA SP), and Atlantic Lithium (A11 AU).
- Key updates took place for: VNET (VNET US), Eoflow (294090 KS), Azure Minerals (AZS AU), Origin Energy (ORG AU), Haitong International Securities Group (665 HK) and Shidax Corp (4837 JP).
SK Square: Two Remaining Credible Options for 11 Street
- We discuss the two remaining options for 11 Street post the cancellation of its sale to Qoo10 Pte.
- As these strategic sale of 11 Street to Qoo10 Pte. has failed, the possibility of a forced sale of 11 Street by the financial investors has increased.
- The higher probability event is for the Nile Holdings consortium to try to sell 11 Street to other financial investors.
HSTECH Index Rebalance: No Constituent Changes; Round-Trip Trade of US$1.4bn
- As expected, there are no constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December. However, there are float and capping changes for a lot of stocks.
- Estimated one-way turnover is 4.8% leading to a one-way trade of HK$5.29bn (US$679m). There are 4 stocks with over 1 day of ADV to trade.
- The largest selling will be on Xiaomi Corp (1810 HK) offset by buying in Meituan (3690 HK), JD.com (9618 HK) and Alibaba Group Holding (9988 HK).
Weekly Deals Digest (19 Nov) – Benefit One, JBR, Eoflow, Haitong, Vinda, Asahi, Tata Tech, Zeekr
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Asahi Group Holdings (2502 JP)‘s US$1.3 billion secondary offering; ZEEKR (ZK US), Tata Technologies (TATATECH IN) and Cainiao Smart Logistics Network (1437124D HK) IPOs
- Event-Driven developments Benefit One Inc (2412 JP), Japan Best Rescue System Co (2453 JP), Eoflow (294090 KS), Haitong International Securities Group (665 HK), Vinda International (3331 HK), Amara Holdings (AMA SP).
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