In today’s briefing:
- HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues
- ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport
- TOPIX-Nikkei Skew Trade Starting to Work Nicely
- S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale
- Microstrategy’s Unsurprising Bitcoin Loss
- KOSPI 200 Rebalancing Screening: Prediction Likelihood, Special Issues, & Passive Impacts
- BGH Lodges Application With The Takeovers Panel Over CapVest’s Bid for Virtus
- FnGuide TIGER Top 10 Rebalancing: LG Energy IN & Celltrion OUT
HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues
- The March rebalance should see the slow crawl toward 80 index members continue. We should get up to 68-70 members in March. Reaching 80 by June is unlikely.
- High probability inclusions are Kuaishou Technology (1024 HK), Smoore International (6969 HK), Nongfu Spring (9633 HK), JD Health (6618 HK) and JD Logistics (2618 HK).
- Currently, index turnover due to capping/float changes is low which will allow more stocks to be added to the index. Increase in the turnover will result in fewer changes.
ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport
- Sydney Airport (SYD AU) will be deleted from the S&P/ASX 200 (AS51 INDEX) after the close of trading on 9 February and Telix Pharmaceuticals (TLX AU) will be included.
- There will be selling on Sydney Airport (SYD AU) from MSCI, FTSE and S&P/ASX trackers and there could be opportunities for arbs to buy below the offer price and tender.
- The recent institutional placement, share purchase plan and promoter selldown could put a lid on Telix Pharmaceuticals (TLX AU)‘s stock price heading into the index inclusion.
TOPIX-Nikkei Skew Trade Starting to Work Nicely
- After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
- It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly.
- Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.
S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale
- The Sydney Airport ASX200 exclusion sets up with Telix Pharma replacing it, and two more likely changes – one each in ASX50 and ASX100.
- Telix as an inclusion is a known known. The others are too.
- Sydney Airport will end up seeing a LOT of stock for sale on 9 Feb at the close.
Microstrategy’s Unsurprising Bitcoin Loss
- Microstrategy Inc(MSTR US) reported a net loss of $90mn or $8.43/share in the fourth quarter, missing consensus estimates for a profit of US$0.89/share.
- The loss is predominantly due to the inclusion of impairment losses of US$146.6mn on its Bitcoin holdings, negating the $110.5mn in gross profit from the software ops.
- MicroStrategy remains a bet on Bitcoin. Yet almost any alternate cryptocurrency security appears a better bet, if that is your bent.
KOSPI 200 Rebalancing Screening: Prediction Likelihood, Special Issues, & Passive Impacts
- The screening results based on the average market cap for the screening period until the last closing price have seven additions/deletions.
- LG Energy will make Fast Entry. The one to make room for LG Energy should be Dongwon F&B, an additional deletion to the seven deletions through the preliminary filtering.
- F&F Holdings may fail to meet the minimum float rate. If it doesn’t make KOSPI 200 this time, Hyundai Marine & Fire Insurance will get to stay in the Index.
BGH Lodges Application With The Takeovers Panel Over CapVest’s Bid for Virtus
- BGH has filed an application with the Takeover Panel over, inter alia, Virtus Health (VRT AU) granting exclusivity to CapVest.
- This application is similar in nature to the one filed by APA Group (APA AU) last year after AusNet Services (AST AU) granted Brookfield exclusivity in a competitive bidding stoush.
- Virtus is currently trading at a gross spread of ~5.0% to the Scheme price, 3.6% to the Alternative Offer, and 1.8% above BGH’s terms.
FnGuide TIGER Top 10 Rebalancing: LG Energy IN & Celltrion OUT
- The screening period for the upcoming rebalancing is May 3-31. LG Energy satisfies the 3-month minimum listing requirement, so it becomes eligible to join the Index in this rebalancing.
- LG Energy will likely receive an inflow of ₩44.6B, 0.04% of SO. Considering its tight real-world float (less than 6%), it would still be something we don’t want to overlook.
- What is critical is an estimated outflow size of Celltrion. It would be about the same amount, but relative to its ADTV, it will be -0.26x.
Before it’s here, it’s on Smartkarma
