In today’s briefing:
- BHP Unification: Index Changes and Flows
- BHP Unification A Done Deal – Now for the BIG FLOWS
- LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups
- HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- LG Energy Post-Listing Flow Tracking by Date: Passive Inflows & Lockup Release Outflows
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.
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.
LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups
- ESOP marginally undersubscribed, retail investors were allocated 25.8% of the IPO while institutions got 55%. Post IPO, LG Chem Ltd (051910 KS) owns 81.84% of LG Energy Solution (373220 KS).
- Around 58% of the institutional allocation is subject to voluntary lockups. For Fast Entry, MSCI will use a FIF of 9%, while FTSE will use an investability weight of 4.16%.
- LG Energy Solution (373220 KS) needs to rally 84% by the close on 27 January to get FTSE Fast Entry. MSCI Standard and KOSPI200 index inclusions are a near certainty.
HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
- SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
- Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.
LG Energy Post-Listing Flow Tracking by Date: Passive Inflows & Lockup Release Outflows
- The KOSPI inclusion will be officially implemented on January 28. As a result, local active funds benchmarking the KOSPI will compete to buy LG Energy on the listing date.
- Passive Inflow appears one week after listing, particularly MSCI and KODEX/TIGER battery ETFs. The KODEX/TIGER rebalancing effective date is virtually confirmed on February 10, meaning rebalancing trading on February 9.
- Another two weeks later, the KOSPI 200 and KRX BBIG rebalancing await us. Combined with KRX BBIG, there will be a passive inflow of about 0.5% of SO.
Before it’s here, it’s on Smartkarma
