In today’s briefing:
- Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- KOSPI Size Indices – Changes in March & Implications
- OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes
- Merger Arb Mondays (06 Mar) – HKBN, Yashili, OZ Minerals, Nitro, Tyro, Golden Energy, GK Goh
Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- HKEX (388 HK) has announced that the expansion of Northbound Stock Connect eligible stocks will take effect from the start of trading on 13 March.
- 598 stocks listed on the Shanghai Stock Exchange and 436 stocks listed on the Shenzhen Stock Exchange will be added to Northbound Stock Connect.
- Currently, we see 43 stocks being added to the MSCI China Index in May (inflows of US$1.42bn), further increasing China’s weight in the MSCI Emerging Markets Index.
KOSPI Size Indices – Changes in March & Implications
- There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
- The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
- Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.
OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes
- The OZ Minerals (OZL AU) Scheme Meeting for the acquisition by BHP Group (BHP AU) will be held 13 April. The stock could stop trading post close on 18 April.
- OZ Minerals Ltd (OZL AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) so there will be replacements made at the close on 18 April.
- Passive trackers will need to buy a fair amount of stock (with a decent impact) on the potential inclusions and the stocks could outperform over the next few weeks.
Merger Arb Mondays (06 Mar) – HKBN, Yashili, OZ Minerals, Nitro, Tyro, Golden Energy, GK Goh
- 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 21Vianet Group (VNET US),Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Toyo Construction (1890 JP), Origin Energy (ORG AU), HKBN Ltd (1310 HK), Jiangnan (1366 HK)
- Lowest spreads – Ihara Science (5999 JP), Nitro Software Ltd (NTO AU), GK Goh Holdings (GKG SP), Boustead Projects (BOCJ SP), Techno Associe (8249 JP), Nissin Electric (6641 JP).
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