In today’s briefing:
- STI Index Rebalance Preview: Three Cheers for Emperador?
- FTSE EPRA Nareit Developed Asia Preview: A Few Inclusion Possibilities
- JAFCO (8595) Down as Murakami Affiliates Sell the Pop on the Poison Pill, So Buy the Range Dip
- Ramsay Keeps Door Ajar After KKR’s “Meaningful Inferior” Offer
- NDX Short Conviction
- STAR50 Index Rebalance: Adds Continue to Outperform as Changes Are Announced
- Model Solution IPO Preview
- JY Lee Pardoned; What Should He Do Next?
- Index Rebalance & ETF Flow Recap: FTSE AW/AC, CH 50/A50, STI, KLCI, TW 50/Div+, STAR50, EPRA Nareit
- SungEel HiTech: KOSDAQ 150 Early Entry in December
STI Index Rebalance Preview: Three Cheers for Emperador?
- We expect Emperador (EMI SP) to be added to the FTSE Straits Times Index at the September rebalance after meeting the free float, market cap and liquidity requirements.
- As the lowest ranked current index constituent, we expect Comfortdelgro Corp (CD SP) will be deleted heaping pressure on the beleaguered stock with over 4 days of ADV to sell.
- Emperador (EMP PM) is an inclusion to the FTSE All-World Index and there is a lot to buy on that line from passive trackers at the close on 16 September.
FTSE EPRA Nareit Developed Asia Preview: A Few Inclusion Possibilities
- The FTSE EPRA Nareit Index September rebalance will use data from 22 August. The changes will be announced on 31 August and implemented at the close on 16 September.
- Healthcare & Medical Investment Corporation (3455 JP) is a potential inclusion, while there are a few others that are close adds on market cap & other criteria.
- Healthcare & Medical Investment Corporation (3455 JP) is also an inclusion to the FTSE All Cap Index at the September rebalance and the EPRA Nareit inclusion will increase passive inflows.
JAFCO (8595) Down as Murakami Affiliates Sell the Pop on the Poison Pill, So Buy the Range Dip
- Entities related to noted Japanese activist Yoshiaki Murakami had bought 11+%, suggested 15%, proposed 51%, and pestered Jafco Co Ltd (8595 JP) for an asset sale and super-large buyback.
- JAFCO decided to launch a poison pill process as a hostile takeover defence mechanism, with the Record Date at August month-end.
- The shares popped. I was bearish. It turns out Murakami affiliates sold the pop. And this starts the range trade.
Ramsay Keeps Door Ajar After KKR’s “Meaningful Inferior” Offer
- KKR has all-but-abandoned its A$88/share cash offer for Ramsay Health Care (RHC AU), Australia’s largest private hospital group.
- KKR’s alternative proposal involves $88/share for the 5,000 RHC shares, followed by A$78.20/cash + 0.22 Ramsay Generale de Sante (GDS FP) shares thereafter – or an indicative value of A$84.93/share.
- Despite announcing horrible annual results, Ramsay’s board considers the alternative proposal to be meaningfully inferior to the KKR’s indicative proposal of $88.00/share.
NDX Short Conviction
- NDX was our top US short bet from 13,750/500. NDX below 13,000 is a risk off pivot for the global cycle. Conviction call to build NDX short on strength.
- NDX 13k will now act as resistance with 12,500 and 12,100 downside targets. SPX reaction rise due Monday with resistance at 4,130/70.
- Risk cycle peak rolled a bit early (before late August) sold weaker markets early (NDX, DAX, Taiwan, HK, Korea).
STAR50 Index Rebalance: Adds Continue to Outperform as Changes Are Announced
- The index committee has continued to use a 6 month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in September.
- One-Way turnover is estimated at 4.07% and will result in a one-way trade of CNY 2,265m. Passive trackers will need to trade between 1-5 days ADV on the adds/deletes.
- The adds have outperformed the deletes and the CSI500 Index since the end of the review period. We’d look to buy the adds and hedge with CSI500 Index futures.
Model Solution IPO Preview
- Model Solution makes prototypes to mainly check design and function in the product development stage, which is before the mass production stage of new products such as IT devices.
- The IPO price range is from 24,000 won to 27,000 won. The expected market cap of the IPO is from 153 billion won to 173 billion won.
- The company had sales of 61.1 billion won (up 9.9% YoY) and operating profit of 8.9 billion won (up 32.1% YoY) in 2021.
JY Lee Pardoned; What Should He Do Next?
- With JY Lee pardoned this past Monday, there is a lot of speculation about the speed of restructuring
- A lot will depend on what happens with whether Samsung Life will be forced to sell its shares in Samsung Electronics
- What should be done for the best of the family and shareholders is to buyout the pref shares
Index Rebalance & ETF Flow Recap: FTSE AW/AC, CH 50/A50, STI, KLCI, TW 50/Div+, STAR50, EPRA Nareit
- It was a busy week with a lot of review cutoffs for the FTSE country indices and the announcement of the STAR50 INDEX changes for September.
- The coming week has the implementation of the JPXNK400, MSCI, HSI, HSCEI and HSTECH rebalances. Plus announcements of the changes to the FTSE, NIFTY and S&P/ASX indices.
- There were outflows from iShares MSCI All Country Asia ex-Japan ETF (AAXJ US), IShares Core MSCI Asia Ex Japan ETF (3010 HK) and KraneShares CSI China Internet ETF (KWEB US).
SungEel HiTech: KOSDAQ 150 Early Entry in December
- So far, SungEel is in the top 50, currently ranked 38th. Given that the gap with 50th place is more than ₩100B, its early entry in December is very likely.
- Rsupport is currently at the bottom with an average daily market cap of ₩0.27T. However, there are four other names under ₩0.30T, so we have to wait a little longer.
- SungEel can expect a passive inflow equivalent to 1.0x ADTV. Combined with potential passive inflows from the local battery ETFs, it will form a quite solid flow momentum until December.
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