In today’s briefing:
- BHP Unification A Done Deal – Now for the BIG FLOWS
- BHP Unification: Index Changes and Flows
- FTSE China A50 Index Rebalance Preview (March 2022): Adds, Deletes & FOL Changes
- China Mobile Parent Ups The Ante – Announces Share Increase Plan
- Brookfield/Alstria Office REIT: Additional Acceptance Period
- ARA Logos (ALLT SP): ESR Bumps. Scheme Meeting Delayed
BHP Unification A Done Deal – Now for the BIG FLOWS
- The various Shareholder and Scheme Meetings overwhelmingly supported unification of BHP Group and Limited on Thursday. The deal is done. Now for the BIG FLOWS.
- There should be US$40bn (two way) of index-related flows on Friday across the major indices, half in funding/reverse-funding flows. Replacements are mostly decided.
- This insight looks at the expected breakdown of flows per index, the replacements, and provides a spreadsheet for all the flows.
BHP Unification: Index Changes and Flows
- BHP Billiton (BLT LN) will stop trading at the close on 28 January. MSCI, FTSE and S&P will delete BLT and increase the index shares for BHP Group (BHP AU).
- Passive MSCI Standard and FTSE AW/AC trackers will need to sell BHP Billiton (BLT LN) and buy BHP Group (BHP AU) and do a sell GBP/ buy AUD trade.
- There will be a big funding trade on the S&P/ASX 200, while Airtel Africa PLC (AAF LN) is likely to replace BHP Billiton (BLT LN) in the UKX Index.
FTSE China A50 Index Rebalance Preview (March 2022): Adds, Deletes & FOL Changes
- We see three potential changes at the March rebalance. One is a high probability change while the other two are close to the cutoff ranks.
- Then there will be changes to the investability weight of the stocks following the Ground Rule change that will cap stocks at their Foreign Ownership Limits.
- The combined impact of all changes at the rebalance will result in a one-way turnover estimated at 17.55% and will result in a one-way trade of CNY 9,744m.
China Mobile Parent Ups The Ante – Announces Share Increase Plan
- The parent company of China Mobile (941 HK) has announced a plan to increase its holding. This is not surprising given the contents of the RMB Share Issue Circular.
- If they spend the midpoint of the RMB 3.0-5.0bn plan at a 20+% premium to current price, it is 8% of the RMB Share float.
- The H-share buyback program is eligible to start after 8 Feb deadline for RMB Share greenshoe allocation. The stock is HK$51. Anything under HK$70/share is accretive vs the IPO.
Brookfield/Alstria Office REIT: Additional Acceptance Period
- The offer price has been reopened following the results of the offer period: Brookfield has received acceptances over 50.5% of the voting rights and now controls 71% of alstria.
- Depending on the results, Brookfield may initiate procedures to initiate a delisting, but will not squeeze-out for at least three years. Liquidity of the shares will be much lower.
- Brookfield may lower the dividend payout. The shares are trading at 3.4% FFO yield and 2.6% dividend yield, meaning that there are better opportunities elsewhere. Recommendation is tender.
ARA Logos (ALLT SP): ESR Bumps. Scheme Meeting Delayed
- With a little under a week to the Scheme Meeting, ESR-REIT (EREIT SP) revised terms to S$0.097 cash plus 1.7729 new EREIT Units for each ARA LOGOS (ALLT SP) unit.
- The revised terms provide an indicative Offer price of S$0.933, a 5.3% increase over the original Scheme consideration.
- The Scheme Meeting for ARA Logos – and ESR’s EGM – have been deferred. No definite timetable was provided for its rescheduling although late February is probably a reasonable estimate.
Before it’s here, it’s on Smartkarma
