In today’s briefing:
- Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
- S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
- NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- KOSPI200 Index Rebalance Preview: Changes in April & June
- HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
- Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
- Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
- HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
- Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
- HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
- MSCI announced the changes to the GIMI on Friday as part of the February QCIR. MSCI also announced a review of the free float of the Adani Group companies.
- FTSE will announce the changes to the All-World and All-Cap indices after the close of trading on Friday, 17 February. The same day is the S&P/ASX review cutoff for March.
- Yet another weekly outflow for the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) taking the YTD outflow to over US$2.5bn.
S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
- We currently see 1 change for the ASX20 Index, 2 changes for the ASX100 Index, 4 changes for the ASX200 Index, 10 adds/7 deletes for the ASX300 Index in March.
- On average, the potential adds to each of the indices have outperformed the potential deletes with the largest outperformance for the ASX300 Index.
- Shorts have continued to increase positions on the potential deletes while covering their positions on the potential adds. We expect there are large pre-positions on some of the stocks now.
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
- Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
- Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.
KOSPI200 Index Rebalance Preview: Changes in April & June
- Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
- We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
- Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.
HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
- In a surprise, the Hang Seng index committee has decided not to make any changes to the Hong Kong Hang Seng Index (HSI INDEX) at the March rebalance.
- This further delays the timeline for the index to reach 80 constituents. The earliest we will reach the target now is June 2023 (a year later than targeted).
- Despite no changes to the index constituents, capping and float changes will lead to a one-way turnover of 2.61% resulting in a one-way trade of HK$5.1bn.
Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
- A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
- Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
- Other equity tranche participants apparently want to reduce exposure as well.
Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
- Alibaba’s 3QFY23 results marginally topped consensus. With the share price dropping 0.65% cf. +0.35% for the index, both results and the price reaction were in line with our expectations.
- Yesterday’s results confirm that Alibaba (ADR) (BABA US)’s core businesses, Taobao and Tmall are in trouble and cost-cutting elsewhere is insufficient to offset the short-term weakness.
- Therefore, we do think that this is a good opportunity to profit on the short side with Alibaba shares having the potential to fall another 40-45% in the short term.
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
- There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
- We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
- 19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.
Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
- On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
- It also announced that it would move to TSE Prime on 14 March.
- This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
- As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
- Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
- Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.
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