In today’s briefing:
- Haidilao’s Spin-Off of Super Hi: Index Implications
- SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
- Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT
- Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
- Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- “Buy the Worst” HSI Strategy: Big Win in 2022 and Let’s See if It Can Sustain in 2023
- O2Micro Trading Wide To Terms Ahead Of Shareholder Vote
- China Allows Import of 45 Foreign Video Games Including 7 Korean Games
- Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date
- JPX-Nikkei 400 Rebal 2023: End-Dec 2022
Haidilao’s Spin-Off of Super Hi: Index Implications
- Haidilao (6862 HK) intends to spin-off its 90% holding in Super Hi International Holding (SHI HK) with an ex-date of 16 December.
- Super Hi International Holding (SHI HK) will be deleted from the Hong Kong Hang Seng Index and Hang Seng China Enterprises Index at the close on listing day.
- There could be nationality changes and selling from MSCI and FTSE trackers as well, though the timing is uncertain at this point.
SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
- Central Plaza Hotel, Com7 PCL, Delta Electronics Thai and Ratch Group will replace Bangkok Life Assurance, IRPC PCL, KCE Electronics PCL and Srisawad Power in the SET 50 Index.
- Passive trackers will need to buy between 2-4 days of ADV on the adds while selling between 0.6-3 days of ADV on the deletes.
- The adds have significantly outperformed the deletes over the last few months. We’d use any big moves over the next couple of days to trim positions.
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.
Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
- The announcement of the changes to the Stock Exchange of Thailand SET 50 Index was made on 20 December and will be implemented at the close on 30 December.
- There are a lot of review cutoffs for different indices in the coming week with announcements in January and February.
- There were big inflows to Vanguard FTSE Emerging Markets ETF (VWO US) and big outflows from IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
- The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
- Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.
“Buy the Worst” HSI Strategy: Big Win in 2022 and Let’s See if It Can Sustain in 2023
- “Buy the Worst” strategy returned 1.9% in 2022, sharply outperformed HSI’s 15% drop. In the last two years, this strategy recorded massive aggregate outperformance of 41pp against HSI.
- For 2023, we expect to switch into Country Garden (2007 HK), Sunny Optical (2382 HK), Country Garden Services (6098 HK), Geely Auto (175 HK) and Techtronic Industries (669 HK).
- Aggressive investors can consider shorting 2022 best-performing portfolio of Sands China (1928 HK), Haidilao (6862 HK), Galaxy Entertainment (27 HK), China Shenhua (1088 HK) and China Unicom (762 HK).
O2Micro Trading Wide To Terms Ahead Of Shareholder Vote
- Back on the 30 September, O2Micro International (OIIM US), an integrated circuits play, announced a definitive privatisation from management at US$5.00/ADS, a 68.9% premium to the undisturbed price.
- An EGM will take place on the 31 January. The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. 16.9% of shares out are supportive.
- This Offer is expected to close in the 1Q23. The IFA considers the Offer fair.
China Allows Import of 45 Foreign Video Games Including 7 Korean Games
- On 28 December, the Chinese regulators announced that it will allow import of 45 foreign video games in China, among which seven are Korean video games.
- Now that the Chinese authorities have allowed greater imports of foreign games, this will act as a significant positive catalyst to boost share prices of Korean game companies.
- Among the major Korean game companies, we believe that NCsoft and Netmarble are best positioned to capitalize on this catalyst.
Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date
- This year is less intense compared to previous years. However, given this year’s overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.
- Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL’s tax avoidance-driven selling flow.
- The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.
JPX-Nikkei 400 Rebal 2023: End-Dec 2022
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-December 2022.
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