In today’s briefing:
- Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- StubWorld: Swire Acquires Coke’s Ops in Vietnam & Cambodia
- Nikkei 225 March 2023 Rebal On The Follow – Predictions (3 In, 3 Out) & Problems
- STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes
- Perpetual Mulls Another Bid for Pendal
- Taking Advantage of SKT’s Rapid Increase in Short-Selling Amid MSCI Deletion Event
- S&P/ASX Quiddity Leaderboard Sep 2022: Potential ADDs Could Outperform Potential DELs
- République Française/EDF: 53% Premium
- Zomato IPO Lock-Up – A US$3.4bn Lockup Release Test Case for India
Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
- I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
- The impact on Real World Float is non-negligible. One name in particular is deserving of attention.
NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- With over 90% of the review period complete, Adani Enterprises (ADE IN) is a high probability inclusion to the NIFTY Index (NIFTY INDEX) and will replace Shree Cement (SRCM IN).
- We estimate passive NIFTY Index (NIFTY INDEX) trackers will need to buy nearly 7% of the real float on Adani Enterprises (ADE IN) and the stock should continue to outperform.
- Adani Green Energy (ADANIGR), Adani Transmission (ADANIT) and Avenue Supermarts Ltd (DMART) have higher average free float market caps and could be included if added to the F&O segment.
StubWorld: Swire Acquires Coke’s Ops in Vietnam & Cambodia
- Swire Pacific (A) (19 HK) expands its beverages ops, its best-performing unlisted segment, via the acquisition of Coke bottling operations in Vietnam and Cambodia.
- Preceding my comments on Swire – and Swire Properties (1972 HK) and Cathay Pacific Airways (293 HK) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Nikkei 225 March 2023 Rebal On The Follow – Predictions (3 In, 3 Out) & Problems
- Yesterday I published Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out. Assuming correct, and we move the last 6mos of data 6mos forward, March23 Rebal is below.
- This too is 3 in, 3 out. But it is complicated. “Required” changes would move the sector balance further out of whack.
- And while some of the trades are “interesting”, the rebal is smaller and the bigger question is “What comes after that?”
STAR50 Index Rebalance Preview (Sep): Adds Outperforming the Deletes
- Over 96% of the way through the review period, we see 1 change using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
- We expect the index committee to continue using the shorter minimum listing history since the potential adds have much larger market caps than the potential deletes.
- The potential adds have outperformed the potential deletes over the last month and there could be more once the current consolidation is complete.
Perpetual Mulls Another Bid for Pendal
- Perpetual Ltd (PPT AU) confirmed today that it is currently in “high-level, preliminary, confidential discussions with Pendal in relation to a potential acquisition.”
- Since rejecting Perpetual’s offer, Pendal Group (PDL AU)’s shares have underperformed most of its peers largely due to poor FUM performance.
- Despite today’s pop, Pendal trades at a discount to historical and peer multiples. Perpetual’s renewed interest points to its underlying value.
Taking Advantage of SKT’s Rapid Increase in Short-Selling Amid MSCI Deletion Event
- As of July 19, SKT was in the top 50 short-selling KOSPI stocks. SK Telecom ranked 8th and 18th in terms of short-selling amount and short-selling ratio to trading volume.
- Deletion is practically a foregone conclusion if MSCI does not calculate SKT’s foreign room that reflects the DR situation. Reversing requires calculating a flexible foreign room considering the DR situation.
- However, the critical point here is that in any of the above cases, SKT’s stock price is highly likely to rise on the date the results are announced.
S&P/ASX Quiddity Leaderboard Sep 2022: Potential ADDs Could Outperform Potential DELs
- In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the September 2022 Rebalance.
- I expect there to be 7 ADDs and 7 DELs for the ASX 200 Index and 23 ADDs and 18 DELs for the ASX 300 Index.
- Based on recent price performance, I believe the Potential ADDs could outperform the Potential DELs over the next few weeks.
République Française/EDF: 53% Premium
- The listing of EDF’s shares is resumed with the announcement of a minorities buyout offer at €12/share, a 53% premium to the undisturbed share price.
- It is a generous offer that also aims to avoid the outcry of EDF’s employees (c. 1% stake). Interloper risk is nil. Delisting is expected by the end of October.
- Gross spread is 2.13% which could lead to an interesting c. 8% estimated annual return if settlement takes place by the end of October. Long and tender.
Zomato IPO Lock-Up – A US$3.4bn Lockup Release Test Case for India
- Zomato (Zomato IN) raised US$1.3bn in its India IPO in Jul 2021. At that time, it was the largest technology sector listing in India.
- Zomato is one of two leading food delivery app operators in India. It recently acquired Blinkit marking its foray into the instant grocery segment.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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