In today’s briefing:
- STAR50/STAR100 Index Rebalance: No Changes for STAR50; 4 Changes for STAR100
- Six Hang Seng Index Family Indices: Flows for Dec 6 Rebal
- KWEB Index Rebalance: 1 Add & 4 Deletes in December
- Quiddity CSI 300/500 Dec 24 Results: ~90% Hit Rate; Positive Start for the Trade
- WealthNavi (7342 JP): MUFG (8306 JP)’s Opportunistic Tender Offer
- HK Connect SOUTHBOUND Flows (To 29 Nov 2024); SB Trading Volumes Lower, Still Strong Net Buying Tech
- CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- SSE50/SSE180 Index Rebalance: Couple of Surprises; Seres Group’s Multiple Inclusions; US$3.2bn Trade
- MUFG Launches a TOB to Take Out Robo-Advisor WealthNavi (7342) – The 81.4% Premium Is Light
- Aster DM and Quality Care India: A Deep Dive into the Merger
STAR50/STAR100 Index Rebalance: No Changes for STAR50; 4 Changes for STAR100
- As forecast, there are no changes for the SSE STAR50 (STAR50 INDEX) in December while there are 4 changes for the STAR100 Index.
- There will be big outflows for Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) due to SSE STAR50 (STAR50 INDEX) capping. There will be selling from other index trackers too.
- Hainan Jinpan Smart Technology (688676 CH) had been ignored by the index committee at the September rebalance, so this inclusion in the STAR100 Index could come as a surprise.
Six Hang Seng Index Family Indices: Flows for Dec 6 Rebal
- In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
- The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
- By Quiddity calculations based on prices of 29 November’s close, there is one-way flow across these six indices of HK$15,894,690,433.49 to trade on 6 December. Roughly speaking.
KWEB Index Rebalance: 1 Add & 4 Deletes in December
- The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
- Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
- The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.
Quiddity CSI 300/500 Dec 24 Results: ~90% Hit Rate; Positive Start for the Trade
- The December 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 29th November 2024.
- There will be 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500.
- The CSI 300 and CSI 500 index rebal events could trigger US$4.5bn and US$3.8bn in one-way flows respectively.
WealthNavi (7342 JP): MUFG (8306 JP)’s Opportunistic Tender Offer
- In response to a Nikkei article, WealthNavi (7342 JP) disclosed Mitsubishi UFJ Financial (MUFG) (8306 JP)’s tender offer at JPY1,950 per share, an 84.3% premium to the undisturbed price.
- The high premium reflects WealthNavi’s steep 46% YTD share price decline, i.e., the timing is opportunistic. The offer is below the Board’s requested price.
- While the irrevocable has a competing offer clause, a competing proposal is unlikely due to MUFG’s stake. However, a bump is possible if activist(s) take around a 15% stake.
HK Connect SOUTHBOUND Flows (To 29 Nov 2024); SB Trading Volumes Lower, Still Strong Net Buying Tech
- SOUTHBOUND gross trading activity dropped sharply again to the lowest in a few months but net SOUTHBOUND buying remains very strong, with big flows on tech.
- Most of the top names were tech names – both in gross and net buys. Only 1 tech name in top five net sells.
- Last week I said I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US. Continue.
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
- There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
- Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.
SSE50/SSE180 Index Rebalance: Couple of Surprises; Seres Group’s Multiple Inclusions; US$3.2bn Trade
- There are 5 changes for the SSE50 Index (SSE50 INDEX) and 18 changes for the SSE180 Index that will be implemented at the close on 13 December.
- Seres Group (601127 CH) is an add to both indices, plus the CSI 300 Index, and passive trackers will need to buy over US$900m of the stock.
- The adds have outperformed the deletes with a lot of the outperformance coming in the last couple of months. Trim positions in the expected adds/deletes and build positions in surprises.
MUFG Launches a TOB to Take Out Robo-Advisor WealthNavi (7342) – The 81.4% Premium Is Light
- MUFG (8306) bought 15.5% of WealthNavi (7342 JP) in February at ¥1,718/share – zero premium. The shares fell. Now they are bidding for the rest 13.5% higher.
- WealthNavi forecasts fantastic growth. Dec29 OP is specifically estimated at ¥13.822bn. Everyone agrees there are synergies, but they’re not “valued” because they “cannot be specifically estimated at this moment.”
- I believe investors should start demanding Synergy CVRs of acquirors when synergies are not included in the fair value calculations.
Aster DM and Quality Care India: A Deep Dive into the Merger
- Aster DM Healthcare Ltd (ASTERDM IN) and Quality Care India are merging to form India’s third-largest hospital chain with over 10,150 beds.
- This merger combines two major players, generating significant scale, diversification, and financial strength. The merged entity will benefit from synergies and plans to expand to over 13,000 beds by FY27.
- The merged entity is expected to be EPS accretive and expected to increase EBITDA by 10-15% through synergies
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