In today’s briefing:
- Solactive Lithium Index Rebalancing: Noteworthy Names in Korea Before the Announcement
- OZ Minerals – Circumstances Apparently Do NOT Merit a Revised Tilt
- Kotak Mahindra Bank (KMB IN): Foreign Room >20% Should See Staggered FTSE Inclusion Starting March
- Last Week in Event SPACE: Toshiba, United Tractor, Recruit, Tyro Payments, DTAC/True, Bank Of Kyoto
- S&P/ASX Index Rebalance Preview: Moving the Right Way
- Japan Excellent (8987) Has Been Most Excellent. It Should Still Be.
- Socionext (6526) TOPIX Inclusion
- Index Rebalance & ETF Flow Recap: SZSE1000, NIFTY, HDFC/HDFCB, Ming Yuan, Blibli, KMB IN
- Renesas (6723) | Bullish Toyota Troubles
- Giant Biogene IPO: Valuation First Look
Solactive Lithium Index Rebalancing: Noteworthy Names in Korea Before the Announcement
- LG Chem’s deletion is almost a done deal. The pouch-type pack goes to LG Energy, and the cathode business is not big enough to beat L&F.
- Chunbo is an additive field that this index has not included so far. So, Chunbo will be added as a new addition rather than replacing someone else.
- SK IE Tech is quite tricky. The key is to see separator and elecfoil as the same field. If so, SK IET is likely to replace Iljin Materials.
OZ Minerals – Circumstances Apparently Do NOT Merit a Revised Tilt
- Talk about timing… Friday before the close I wrote that I thought circumstances might merit a revised tilt at OZ Minerals Ltd (OZL AU) by BHP Group Ltd (BHP AU).
- Earnings are Monday, copper is up in AUD terms, time is moving us forward into a supply squeeze. It all looks good to me.
- But an article this morning in the AFR says BHP CEO Mike Henry called OZ Minerals “nice to have” not a “must have” and talked “discipline.” Oops.
Kotak Mahindra Bank (KMB IN): Foreign Room >20% Should See Staggered FTSE Inclusion Starting March
- Foreign investor selling has taken the foreign headroom on Kotak Mahindra Bank (KMB) to 22%. That should result in the stock being added to the FTSE All-World Index in March.
- The stock will initially be added to the index at an investability weight of 5%. Subject to >20% foreign headroom, the investability weight will increase by 5% at subsequent rebalances.
- Continued foreign selling could result in an MSCI weight increase if the headroom increases above 25%. That could still be some time away though.
Last Week in Event SPACE: Toshiba, United Tractor, Recruit, Tyro Payments, DTAC/True, Bank Of Kyoto
- Toshiba (6502 JP) investors should look at process and understand the difference between this one and others. Some news is not news, other than telling you the dance has started.
- United Tractors (UNTR IJ) is cheap. It appears to be running at 6x 2022 earnings. This is not abnormal for a cyclical at the end of the cycle.
- Westpac Banking (WBC AU) confirms its interest in Tyro Payments (TYR AU), but still nothing firm.
S&P/ASX Index Rebalance Preview: Moving the Right Way
- We see one potential change for the S&P/ASX 50 Index and two potential changes for the S&P/ASX 200 at the December rebalance, though some stocks are close to the cutoffs.
- The potential passive buying on the S&P/ASX 200 (AS51 INDEX) adds will exceed 11 days of ADV while the impact on the other stocks ranges from 1.5-4 days of ADV.
- Most stocks have been moving the right way and there will be pre-positions built up on some of the stocks. Shorts have been active on a few names too.
Japan Excellent (8987) Has Been Most Excellent. It Should Still Be.
- Two months ago I wrote about a possible “Sustained Flow Event” on Japan Excellent (8987 JP). Since then, the stock has outperformed every other Office REIT. It’s up since then.
- Outperformance within Office REITs has been a minimum of 5.9%, and a maximum of ~17% vs the biggest peer, with an average and median outperformance of 10.8% and 9.2% respectively.
- There is no reason to think it won’t continue, but the Japan Excellent story is idiosyncratic.
Socionext (6526) TOPIX Inclusion
- System-On-Chip designer and IP purveyor Socionext (6526 JP) is a recent IPO in Japan, born from a spinout of Fujitsu and Panasonic system LSI operations 7+ years ago.
- Having listed on TSE Prime from the outset, that means it gets TOPIX inclusion at the close of trading 29 November.
- Inclusion Float is a bit nebulous. There is a chance we get official company data prior to the TSE announcement, in which case we know more by cob 31 October.
Index Rebalance & ETF Flow Recap: SZSE1000, NIFTY, HDFC/HDFCB, Ming Yuan, Blibli, KMB IN
- The review period for the MSCI November SAIR started during the week and will run till 31 October. The TPX INDEX October rebalance will be implemented close on 28 October.
- The HDFC/ HDFCB merger is progressing faster than expected. NSE Indices has started a market consultation on treatment of mergers and demergers in their indices.
- There have been big redemptions in iShares MSCI Emerging Markets (EEM US) and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week. Tracker Fund had big inflows.
Renesas (6723) | Bullish Toyota Troubles
- We remain bullish on the stock price ahead of Q3 earnings
- We expect the company to surprise the market given stronger volumes and pricing trends
- If Toyota is having problems securing a stable supply of chips, we believe that industry inventories are much leaner than most believe
Giant Biogene IPO: Valuation First Look
- Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, is set to launch a US$500 million HKEx IPO.
- We previously discussed the IPO in Giant Biogene IPO: The Bull Case and Giant Biogene IPO: The Bear Case.
- In this note, we present our forecasts and take the first look at Giant Biogene’s potential valuation range.
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