In today’s briefing:
- FTSE All-World/All-Cap Index Rebalance Preview: Some Big Changes in China
- Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- FTSE All-World/All-Cap Sep Index Rebalance Preview: Asia Ex Japan Ex China
- JAPAN PASSIVE – The GPIF in FY2021
- Critical Flaws in the MSCI Methodology for SK Telecom’s Foreign Room Calculation
FTSE All-World/All-Cap Index Rebalance Preview: Some Big Changes in China
- The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 19 September.
- There are a lot of potential inclusions to the indices for China -some changes are a result of stocks being included in Northbound Stock Connect.
- Gcl Poly Energy Holdings Limited (3800 HK) is the largest potential inclusion (in terms of passive flow) in the index following resumption of trading in November 2021.
Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
- Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
- Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.
FTSE All-World/All-Cap Sep Index Rebalance Preview: Asia Ex Japan Ex China
- The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 16 September.
- For Asia ex-Japan ex-China, we see 7 inclusions to All-World, 58 inclusions to All-Cap, 9 migrations from All-Cap to All-World, 5 migrations from All-World to All-Cap, and 20 deletions.
- There are quite a few names in Australia that could have same way flows from the S&P/ASX 200 and S&P/ASX 300 Index trackers on the same day as the FTSE trackers.
JAPAN PASSIVE – The GPIF in FY2021
- The GPIF reported its annual investment results for the FY to March 2022 last Friday. The investment report makes for interesting reading.
- The GPIF made 5.42% but alpha was negative 6bp vs time-weighted and money-weighted benchmarks.
- The re-allocations amongst asset classes now means more money tracks TOPIX, and it means active managers have their work cut out for them going forward.
Critical Flaws in the MSCI Methodology for SK Telecom’s Foreign Room Calculation
- MSCI does not have any explicitly-defined foreign room calculation method for Korean FOL stocks with DRs.
- 58M shares can still be converted into ADRs, close to 27% of SO. There are still ample foreign rooms for SKT, making its situation quite different from KT’s in 2019.
- MSCI, which places the most importance on actual investability, won’t delete SKT, which has a substantial real-world foreign room simply because the nominal value has fallen below the threshold.
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