In today’s briefing:
- HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect
- Key Flow Trading Opportunities After KRX Suddenly Added POSCO Holdings to the BBIG Battery Mix
- S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
- S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company
- Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- Haitong Securities (6837 HK): Evaluating the Potential Merger with GTJA (2611 HK)
- Ohayo Japan | Volatile Week Ahead
- 99 Speedmart Holdings IPO Trading – Poised for a Steady Listing
- Quiddity TDIV/50/100 Sep 24 Rebal: 100% Hit Rate; Perfectly Positioned for Our Trade
HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect
- There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
- We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.
- Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.
Key Flow Trading Opportunities After KRX Suddenly Added POSCO Holdings to the BBIG Battery Mix
- Got surprised by KRX adding POSCO Holdings to the Battery Index. Normally predictable rebalancing went off-script with this unexpected move.
- POSCO Holdings, not Posco Future M, replaced Ecopro BM. Plus, Alteogen Inc is replacing SK Biopharmaceuticals in the BBIG, driving notable flow.
- Consider a day trading long POSCO Holdings and short Ecopro BM. Also, a long-short futures basket could be worth exploring for names with big passive flows.
S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
- There are 3 changes for the S&P 500 INDEX, 8 changes for the S&P Midcap400 Index and 15 changes for the S&P SmallCap600 Index at the September rebalance.
- Dell Technologies (DELL US) and Palantir Technologies (PLTR US) were finally added to the S&P 500 INDEX (SPX INDEX) and there is huge size to trade in the stocks.
- There will also be big buying in Apple (AAPL US) following a float increase driven by Berkshire Hathaway Inc Cl A (BRK/A US) selling last quarter.
S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
- The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
- The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.
KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company
- Hankook & Company is unexpectedly entering Autos, the only large-cap inclusion, likely getting a significant weight and facing a massive flow impact.
- Like BBIG, this single-day flow event driven by one or two ETFs means smaller front-running impact, but names like Hankook & Company could see early positioning due to massive flows.
- I’ll position in big impact names two days before the ETF rebalance trading. I’ll then go long on a basket of those with over 0.5x ADTV at Wednesday’s close.
Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
- The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
- Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
- Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.
Haitong Securities (6837 HK): Evaluating the Potential Merger with GTJA (2611 HK)
- On 6 September, Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) entered a legally binding agreement to merge through absorption and share exchange.
- The high-profile merger aligns with the Chinese government’s ambition to reform the brokerage sector and create world-class investment banks. The merger would result in the largest China broker by assets.
- In this note, we evaluate the potential share exchange ratio and the risks to satisfying the conditions for implementing the potential merger.
Ohayo Japan | Volatile Week Ahead
- U.S. stocks slumped Friday, capping a volatile week as weak August jobs data fueled concerns about the economy
- Seiren: Hong Kong’s activist fund Oasis Management acquired a 6.28% stake in Seiren, becoming its third-largest shareholder
- Toyota announced plans to produce next-generation EV batteries at new plants in Fukuoka and Hyogo prefectures.
99 Speedmart Holdings IPO Trading – Poised for a Steady Listing
- 99 Speed Mart Retail Holdings (99SPD MK) raised around US$530m in its Malaysia IPO. The IPO had been a mix of primary and secondary shares.
- 99 Speed Mart Retail Holdings (99 Speedmart) operates the “99 Speedmart” chain of mini-market outlets, retailing daily necessities across Malaysia.
- We have covered various aspects of the deal in our previous notes. In this note, we will talk about the demand and trading dynamics.
Quiddity TDIV/50/100 Sep 24 Rebal: 100% Hit Rate; Perfectly Positioned for Our Trade
- The ADDs/DELs for the TDIV, T50, and T100 indices for the September 2024 index rebal event was confirmed after market close on Friday 6th September 2024.
- There will be one change for the T50 index and four separate changes for the T100 index. One of the T100 changes will also trigger a TDIV index deletion.
- In this insight, we have presented our final estimates for the index flows for ADDs/DELs and capping flows for the TDIV index.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
