In today’s briefing:
- KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, STAR50, KOSDAQ150, CPSE/CNXBANK, Kenedix Merger
- Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- Nikkei 225 Sep 2023 Review – The Mercari Conundrum
- KRX New Deal Index Rebalance Preview: Interesting Changes Emerging
- Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
- JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
- Japan Weekly | Buffett Is Still Buying Marubeni
- SK Innovation: Rights Offering of 1.2 Trillion Won at a 21% Discount to Current Price
- Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
- There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
- While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, STAR50, KOSDAQ150, CPSE/CNXBANK, Kenedix Merger
- There were a bunch of rebalances across different index families that were implemented at the close of trading on Friday.
- The coming week is quieter though there are a couple of ad hoc rebalances for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX).
- Yet another week of inflows to Tracker Fund of Hong Kong Ltd (2800 HK) as the number of units outstanding is nearly the highest over the last couple of years.
Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
- There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade.
- There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.
Nikkei 225 Sep 2023 Review – The Mercari Conundrum
- Mercari Inc (4385 JP) is potentially a leading candidate for inclusion in the Nikkei 225 in September.
- There are other technical reasons to think it is not.
- This insight looks at the issue of why it might be a leading candidate and why it might not be.
KRX New Deal Index Rebalance Preview: Interesting Changes Emerging
- The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
- There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. Plus there are a couple of changes for the BBIG indices.
- SK Biopharmaceuticals Co Ltd (326030 KS) has overtaken SK Bioscience (302440 KS) on average market cap and there will be large flows on both stocks at the rebalance.
Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
- According to Invest Chosun, Celltrion plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
- Given that the approximate timing of the merger registration statement submission has already been exposed to the market, we can track the difference between the spot and exercise prices.
- Celltrion Inc will likely attempt to minimize the appraisal rights price. We can consider capitalizing on this possibility by shorting Celltrion Inc while going long on the other two companies.
JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
- Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
- JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
- Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.
Japan Weekly | Buffett Is Still Buying Marubeni
- Has Larry Fink just jinxed the Japanese equity market? Is a slight thawing of relations between the US and China a sign that the Japanese equity market has peaked?
- Japanese stocks ended the week down 2.7% as foreigners turn net sellers for first time in 11 weeks
- Marubeni Corp (8002 JP) stock price is up 71% year to date. The equity buyback story could continue for the foreseeable future.
SK Innovation: Rights Offering of 1.2 Trillion Won at a 21% Discount to Current Price
- After the market close on 23 June, SK Innovation (096770 KS) announced that the company will conduct a rights offering worth 1.2 trillion won.
- We have a positive view on SK Innovation’s rights offering of 1.2 trillion won. The expected rights offering price is 143,800 won which is 21% discount to current price.
- Although we have a positive view of SK Innovation over the next 12 months, its share price could face some weakness in the near term due to this capital increase.
Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
- There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY).
- Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
- With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.
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