In today’s briefing:
- PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
- Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT
- Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba
- Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance
- ECM Weekly (18th Dec 2022) – China ADRs, Skymark, Daiei, Weilong, KFintech, Sula, Endeavour, Adani
- Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities
- Kanzhun (BZ US/ 2076 HK): Dual Primary Listing & Potential HSTECH Inclusion
- MSCI Korea: An Early Assessment of February Index Review
- Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro
- KOSPI Size Index: Early Preview at One Fourth into Screening Period
PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
- From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
- We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
- There are a few other potential changes to the index and the passive flow on the stocks will be material.
Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT
- It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.
- The coming week should be relatively quiet with the announcement of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) changes expected.
- There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to Hang Seng H Share Index ETF and outflows from Tracker Fund of Hong Kong.
Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba
- Stay long NTT Data Corp (9613 JP) through mid-January. Then sell.
- Origin Energy (ORG AU) may drift lower as the street crunches numbers, in tandem with a vacuum of news as Brookfield undertakes its due diligence.
- Toyo Construction (1890 JP) is now upset that YFO has decided to release the reason why Toyo management didn’t.
Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance
- The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
- Stocks with buy flows dropped 1.82% on average on Friday while the stocks with sell flows rose 1.03%. On a flow weighted basis, the numbers were -2.01% vs +1.09%.
- Given the large volumes at auction and the large moves on stocks, we cannot rule out the possibility that a lot of pre-positions were unwound at the close on Friday.
ECM Weekly (18th Dec 2022) – China ADRs, Skymark, Daiei, Weilong, KFintech, Sula, Endeavour, Adani
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs
- On the IPO front, things are started to cool down in to the year end with some smaller issuers still trying their luck to get listed before the year end.
- On placements front, most of the action was in India with Australia seeing a large offering after a while.
Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities
- OVERSEAS: WCUP: Argentina/Messi prevail; SPX -2.1%WoW on recession narrative; SPX option expiry exacerbates moves; Calls for new TESLA CEO; GS to cut 8% of workforce; Covid spreads in China
- JAPAN: NKY Futs at -0.9% vs Cash; Defense Bill Approved – no tax hike till 2024; Lawson’s Seijo Ishii IPO postponed; Renesas suspends China ops on Covid; Decarbonization-related investments unabated
- DAILY NUGGET: We look a the another attempt of the Japanese government at regional revitalization. Smells of pork barrel spending to us.
Kanzhun (BZ US/ 2076 HK): Dual Primary Listing & Potential HSTECH Inclusion
- Kanzhun (BZ US) will Dual Primary list on the HKEX (388 HK) by Way of Introduction and the stock is expected to start trading on 22 December.
- Following the changes to the handling of Dual-Primary-listed companies, Kanzhun (BZ US) should be added to the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
- Kanzhun (BZ US)‘s inclusion will lead to other changes to the Hang Seng Tech Index (HSTECH INDEX) with an extra deletion to keep the number of index constituents at 30.
MSCI Korea: An Early Assessment of February Index Review
- MSCI’s quarterly comprehensive index review begins with the February review. QIR disappears, and all quarters are subject to the SAIR rules.
- Currently, no constituents face deletion risk. On the other hand, we have three potential additions: Hanwha Aerospace (012450 KS), Meritz Financial Group (138040 KS), and Kakao Pay (377300 KS).
- Meritz Financial will likely take Meritz Fire’s place through a Continuation. Kakao’s chances have increased significantly due to the recent price rise and the comprehensive index review.
Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), Origin Energy (ORG AU).
- Lowest spreads Warrego Energy (WGO AU), Nitro Software Ltd (NTO AU), Chip Eng Seng Corp (CHIP SP), Uzabase Inc (3966 JP), Norwest Energy Nl (NWE AU), Elmo Software (ELO AU).
KOSPI Size Index: Early Preview at One Fourth into Screening Period
- To MID migrants: Amorepacific Group (002790 KS), E Mart (139480 KS), Iljin Materials (020150 KS), Hanjin KAL (180640 KS), OCI (010060 KS), LX Semicon (108320 KS), and SOCAR (403550 KS)
- To LARGE migrants: Hyundai Rotem (064350 KS), Hotel Shilla (008770 KS), GS Retail (007070 KS), CS Wind (112610 KS), and Posco International (047050 KS)
- This time, the degree of predictability is high as the MC gap widened from an early point. So, we should consider building our position in phases from early next month.
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