In today’s briefing:
- Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
- STAR100 Index Rebalance Preview: High Risk/Return Trade Setup
- Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
- MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete
- Hang Seng Index (HSI) Rebalance: Idling at 82 Members; 100 Members in 2025 at the Earliest
- Snow Peak (7816) – Nikkei Says Bain to Launch ¥50bn MBO
- EQD | HSI Rally: Possible Brief Stop This Week
- [Japan Governance] FSA Urges Japan Non-Life Insurers to Eliminate Cross-Holdings – Sales Coming
- Japan Weekly | Rakuten, Asics, Ebara, Tokyo Electron Chalk up Big Gains
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Altium, Ansarada, Roland DG, Welbe, Orecorp, Vinda
Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
- The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
- Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
- The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).
STAR100 Index Rebalance Preview: High Risk/Return Trade Setup
- The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
- There are 10 stocks in inclusion zone and 11 in deletion zone. There should be 10 changes since that is the cap for the maximum changes at a single rebalance.
- The potential adds and deletes are down between 37-47% over the last 6 months and a long/short trade could provide superior risk-adjusted returns.
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
- There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
- The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
- There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.
MVIS Australia A-REITs Index Rebalance Preview: ASK Looks Like a Delete
- The review period for the March rebalance ends in a couple of weeks. There could be one deletion from the index and a bunch of capping changes.
- The index changes will lead to a one-way turnover of 2.2% resulting in a one-way trade of A$13m. There are two stocks with over A$3m to trade.
- With market participants expecting lower interest rates, there has been short covering on a lot of the REITs in the last few months.
Hang Seng Index (HSI) Rebalance: Idling at 82 Members; 100 Members in 2025 at the Earliest
- In a surprise, the Hang Seng index committee has decided not to make any constituent changes to the Hang Seng Index (HSI INDEX) at the March rebalance.
- We now see the index reaching its 100-member target in 2025 at the earliest, though we would not be surprised to see it spill into 2026 as well.
- Free float and capping changes will result in one-way turnover of 1.2% resulting in a round trip trade of HK$4.54bn. HSBC Holdings (5 HK) is the biggest sell.
Snow Peak (7816) – Nikkei Says Bain to Launch ¥50bn MBO
- Apparently, MergerMarket had an article out Friday saying once-higher-flying outdoor/sporting goods retailer Snow Peak Inc (7816 JP) was considering going private. The company said(J) late they were considering multiple options.
- A Nikkei article (J) Saturday said it was Bain would launch an MBO/Tender Offer as early as this week paying ¥50bn.
- This will probably go limit up Monday. I’d expect an announcement post-close Monday. Long-suffering long-only investors who have already sold will be disappointed. Those who were late to sell? Happy.
EQD | HSI Rally: Possible Brief Stop This Week
- The Hang Seng Index is rallying as anticipated in a previous insight, but it could stop this week and pullback a bit.
- 3 possible trades available: go SHORT and hold to profit from a re-start of the downtrend, go SHORT and close after 1 week, wait the pullback and go LONG.
- It’s unclear at the moment if the index will go lower or rebound after the upcoming pullback.
[Japan Governance] FSA Urges Japan Non-Life Insurers to Eliminate Cross-Holdings – Sales Coming
- There has been a recent non-life insurer price-fixing scandal. The JFTC and FSA investigated. Last December, the FSA issued Business Improvement Orders to the four majors.
- There was a Bigmotor scandal last summer and Sompo Japan got a Business Improvement Order last month. All four insurers have
- 9 Feb post-close, Jiji/Nikkei had articles saying the FSA had urged four major non-lifes subject to the first BIO to accelerate sales of ¥6.5trln+ of 5,900 Cross-Holdings. That’s big.
Japan Weekly | Rakuten, Asics, Ebara, Tokyo Electron Chalk up Big Gains
- The Nikkei hasn’t been this high since the Berlin Wall came toppling down. The Nikkei was up over 4% on the week and stands 15% higher YTD.
- There were plenty of reasons not to be higher. US stocks closed marginally lower; AI stocks like SMCI crashed on Friday;
- Japanese stocks were higher but that hides significant divergence between the winners and losers after a heavy week of earnings releases. Perhaps a pause for breath next week.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Altium, Ansarada, Roland DG, Welbe, Orecorp, Vinda
- I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Four new deals discussed this week on Smartkarma: Altium Ltd (ALU AU), Ansarada Group Ltd (AND AU), Roland DG Corp (6789 JP), and Welbe Inc (6556 JP).
- Key updates took place on JSR Corp (4185 JP) and Outsourcing Inc (2427 JP)
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