In today’s briefing:
- The TOPIX Liquidity Factor Adjustment – Still a Trade To Do
- MSCI Korea May SAIR Screening Status: 2 Certain Adds, 3 Delete Candidates, & 1 Tricky
- Activist Murakami-San Goes Substantial on Cosmo Oil (5021)
- S&P/ASX Indices: Quiddity Leaderboard for June 2022 Rebalance
- MSCI May Index Rebalance Preview: Potential Listing Switches & Implications
- CSI300 Index Rebalance Preview (June): Maxing Out the 30 Changes
- DGO Recommends Gold Road’s Firm Offer
- GoTo May Not Be So Expensive, If You Own It Through Beenos
- Brookfield/Hibernia REIT: Agreed Fair Offer
The TOPIX Liquidity Factor Adjustment – Still a Trade To Do
- Every year in April there are two TOPIX rebalance changes – the FFW review for July-September FY-end companies, and the annual liquidity factor adjustments.
- This year, the former is replaced by the TOPIX FFW Methodology Change for the new Market Structure. This is a big change, but it will not necessarily overwhelm the latter.
- Janaghan Jeyakumar, CFA‘s piece of 5 weeks ago discussing the Liquidity Factor basket has seen generally good performance. There are two days to go.
MSCI Korea May SAIR Screening Status: 2 Certain Adds, 3 Delete Candidates, & 1 Tricky
- Although this is a semi-annual IR, the number of additions won’t be large. At this point, only Hyundai Heavy Industries (329180 KS) and KT Corp (030200 KS) are screened.
- None of the exclusion candidates are below the lower buffer at this point. So, those with the lowest market caps during the review period will be excluded from the Index.
- Based on the current share prices, the following three existing constituents have the smallest market cap: Green Cross (006280 KS), Alteogen Inc (196170 KS), and SK Chemicals Co (285130 KS).
Activist Murakami-San Goes Substantial on Cosmo Oil (5021)
- Four weeks ago, the sovereign wealth fund of the UAE sold out of a 15% position in Cosmo Energy Holdings (5021 JP) they’d held for 15yrs.
- Today we see noted Japanese activist Murakami Yoshiaki and affiliates have purchased 5+% of the company, including a large chunk the day after the block trade.
- Oftentimes he buys stakes in industries where consolidation is overdue and/or natural. Construction has been one such sector. Refiners probably need consolidation too, but it’s not clear it’s easy here.
S&P/ASX Indices: Quiddity Leaderboard for June 2022 Rebalance
- The S&P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies.
- In June 2022, Index rebalance events will take place for the S&P/ASX capitalization-weighted indices including ASX 200, ASX 100, ASX 50, and ASX 20.
- In this insight, we take a look at the leading candidates who could become Adds/Deletes during the June 2022 Rebalance and other potential irregular changes.
MSCI May Index Rebalance Preview: Potential Listing Switches & Implications
- We expect Baidu (9888 HK), Bilibili (9626 HK), GDS Holdings Ltd (9698 HK) and New Oriental Education & Technology Group (9901 HK) to replace their ADRs in the MSCI indices.
- The subsequent increase in CCASS shares and/or shares held outside the ADR depositary will result in an increase in the weights of the stock in the HSCEI INDEX and HSTECH INDEX.
- The higher index weight for Baidu (9888 HK) in the HSCEI and potential inclusion of Bilibili (9626 HK) will add downward pressure on the HSCEI 2022/23 dividend steepener.
CSI300 Index Rebalance Preview (June): Maxing Out the 30 Changes
- With a few weeks to the end of the review period, we see 30 potential changes (the maximum allowed at a review) to the index in June.
- Most of the changes are high probability ones. We estimate a one-way turnover of 4.48% at the June rebalance leading to a one-way trade of CNY 7.86bn.
- The potential inclusions have outperformed the potential deletions over the last couple of months. There could be more to go here as positions are built in the next few weeks.
DGO Recommends Gold Road’s Firm Offer
- DGO Gold Ltd (DGO AU)‘s board has recommended Gold Road Resources (GOR AU)‘s all-scrip off-market Offer.
- The indicative Ofer price is a 28% premium to last close. A key condition is 80% minimum acceptance by DGO shareholders.
- A successful Offer would give the Gruyere gold mine owner a foothold in De Grey Mining (DEG AU)‘s world-class Hemi Gold Discovery.
GoTo May Not Be So Expensive, If You Own It Through Beenos
- Beenos Inc (3328 JP) is a relatively small cross-border e-commerce and internet company from Japan with a consolidated GMV of ¥64.7bn last year.
- The company also runs an incubator platform to create new businesses and invest in start-ups mainly in emerging regions such as India and South-East Asia.
- Down below, we analyse the impact on Beenos’ valuation following GOTO’s impending IPO of which Beenos owns 0.5%.
Brookfield/Hibernia REIT: Agreed Fair Offer
- Brookfield has agreed to acquire (scheme of arrangement) underperforming Hibernia REIT at €1.60 + €0.034 dividend, a 35.6% premium and 5.7% discount to EPRA NTA (above other recent deals in the sector).
- Hibernia’s shares are trading at 0.92x BVPS; the offer represents a premium to peers both on trailing and forward 12-month EV/revenue. Capital IQ consensus expects little improvement in EPS growth.
- Consideration looks fair and terms are final (except in case of competing offers). Gross spread is 1.22%, 6.54% annualised (assuming settlement on 15 June). Long HBRN ID.
Before it’s here, it’s on Smartkarma
