In today’s briefing:
- Select Sector Indices – Updated Flows as Round-Trip Trade Hits US$35bn
- Fuji Soft (9749 JP): Bain’s Rumoured Counteroffer
- HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- Hang Seng, HSCEI, HSTECH Sep24 Rebal Final Capping Flows
- MSC Aug 24 Rebalance: Brazil Takes the EM Flow, SA & China Downweighted Again (Tencent)
- Potential Sale of SK Specialty and Deleveraging of the SK Group – Impact on SK Inc and NAV Analysis
- Fuji Soft (9749 JP) – Bain Bids More, The Market Goes Even Higher
- ChiNext/ChiNext50 Index Rebalance Preview: 22 Changes & US$700m Trade
- Intel’s Crisis Deepens: Is the Foundry Business Next on the Chopping Block?
- CrowdStrike’s Post-Outage Reality: Navigating the Challenges Ahead!
Select Sector Indices – Updated Flows as Round-Trip Trade Hits US$35bn
- The changes to the S&P 500 INDEX (SPX INDEX), S&P400 Index and S&P600 Index will be announced after market close on Friday.
- The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
- Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.
Fuji Soft (9749 JP): Bain’s Rumoured Counteroffer
- Nikkei reports that Bain will launch a competing tender offer for Fuji Soft Inc (9749 JP) around JPY9,200-9,300 per share, around 5% higher than KKR’s offer.
- The Board responded that Bain submitted a non-binding proposal on 26 July. The special committee will consider its feasibility if a binding proposal is submitted.
- KKR has three options to respond to a higher Bain offer: revise it, launch a hostile offer at unchanged terms, or walk away. The first option is the most likely.
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
Hang Seng, HSCEI, HSTECH Sep24 Rebal Final Capping Flows
- The close of 3 September 2024 was the final price to determine capping for the Hang Seng Index Rebalances which will take place this Friday 6 September 2024 at close.
- The numbers are largely unchanged, though price changes in the interim cause more Kuaishou Technology (1024 HK) to be bought, and more Xiaomi Corp (1810 HK) to be sold.
- The biggest name in flows is, of course, ASM Pacific Technology (522 HK) which sees 15 days to buy.
MSC Aug 24 Rebalance: Brazil Takes the EM Flow, SA & China Downweighted Again (Tencent)
- South Africa was downweighted in ACW, EM and EM ex China for a second consecutive quarter.
- Brazil was the largest upweight in ACW, EM and EM ex China.
- Tencent was downweighted in the EM index but upweighted in ACW.
Potential Sale of SK Specialty and Deleveraging of the SK Group – Impact on SK Inc and NAV Analysis
- In this insight, we discuss the potential sale of SK Specialty by SK Inc (034730 KS) which owns 100% stake in the company.
- If SK Inc could sell SK Specialty at about 3 trillion won to 4 trillion won, this could reduce significantly reduce debt burden of SK Inc.
- Our base case NAV value per share for SK Inc is 203,288 won per share, representing 38% upside from current levels.
Fuji Soft (9749 JP) – Bain Bids More, The Market Goes Even Higher
- The original Target Opinion Statement for KKR’s bid at ¥8,800/share offered a glimpse at a non-binding, questionably feasible offer at a slightly higher price, which 3DIP might have rejected.
- That was apparently Bain, and now we know Bain has consistently had the higher price. Fuji Soft Inc (9749 JP) handled this whole process badly, perhaps cowed by 3DIP.
- Now the cat is amongst the pigeons. This is less hostile than it looks IMO. The market thinks it will be a bun fight.
ChiNext/ChiNext50 Index Rebalance Preview: 22 Changes & US$700m Trade
- With 70% of the review period complete, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
- There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
- The potential adds have outperformed the potential deletes for both indices on a year-to-date basis, but near-term performance has been lackluster.
Intel’s Crisis Deepens: Is the Foundry Business Next on the Chopping Block?
- Intel Corporation finds itself at a critical juncture as it heads into its mid-September 2024 board meeting, grappling with a series of severe challenges that threaten the company’s stability and future prospects.
- Once a titan of the semiconductor industry, Intel has been beset by financial difficulties, including continuous losses, declining market share, and an increasingly competitive landscape.
- The situation has been exacerbated by the recent departure of key executives, adding to the uncertainty surrounding the company’s strategic direction.
CrowdStrike’s Post-Outage Reality: Navigating the Challenges Ahead!
- CrowdStrike, a leader in cybersecurity known for its AI-driven Falcon platform, now finds itself grappling with significant challenges in the wake of a global IT outage that has shaken its foundations.
- While the company has long been recognized for its robust growth, technological innovation, and a solid client base, the recent incident has exposed vulnerabilities that could impact its future trajectory.
- The outage, which disrupted services across critical sectors, has raised questions about the resilience of CrowdStrike’s operations and the reliability of its platform.
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