In today’s briefing:
- S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
- S&P500 Index Rebalance: One-Way Trade of US$30bn
- Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind
- Toshiba – Surprise, Surprise, More Drama
- KOSPI200 Index Rebalance: Float Changes, Flows & Trades
S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
- There is one set of changes to the S&P/ASX 50, one deletion for the S&P/ASX 100, and four adds/ five deletes for the S&P/ASX 200 (AS51 INDEX).
- Passive trackers will need to trade between 2-6 days of ADV on nearly all stocks. Short interest spikes in a few names indicate pre-positioning for the passive flow.
- Core Lithium Ltd (CXO AU) is a potential inclusion to the MVIS Global Rare Earth/Strategic Metals Index in June and that could add to the passive inflows on the stock.
S&P500 Index Rebalance: One-Way Trade of US$30bn
- There are quite a few changes for stocks across the S&P 500 (SPX INDEX), MidCap 400 Index and SmallCap 600 Index that will result in a one-way trade of US$30bn.
- There are adds/deletes that have over 5 days of ADV to trade from passive funds, plus many stocks that have over +/-1 day of ADV from other changes.
- The largest impact of passive buying will be on Keurig Dr Pepper Inc (KDP US), On Semiconductor (ON US) and VICI Properties Inc (VICI US).
Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind
- Kyokuto Kaihatsu Kogyo Co (7226 JP) has always been cash-rich. Recently there are better noises. Sold real estate. New Mid-Term Plan. Raised the payout ratio to 50%. Slowly selling crossholdings.
- But it isn’t fast enough, and activist Strategic Capital this spring announced a flurry of AGM agenda items to extract value for shareholders.
- The company today announced a buyback – additive, but there is a lot to look at here. Shareholder structure is key. And forward cash-flows tell you more buybacks could come.
Toshiba – Surprise, Surprise, More Drama
- The days since Toshiba’s last briefing session have been eventful with METI expressing concern about foreign investor control and a split emerging in the board over director nominations.
- These developments create significant risk of activist-friendly director candidates being vetoed in our view.
- Toshiba stock has been trading in line with Hitachi’s strong performance of late despite being more expensive and thus risk has increased.
KOSPI200 Index Rebalance: Float Changes, Flows & Trades
- There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
- There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
- The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.
Before it’s here, it’s on Smartkarma
