In today’s briefing:
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- Hang Seng Indexes: Rebalances Today; Recent Trading Data
- KLCI Index Rebalance: Preliminary Changes Announced; Should Be Same as Final
- FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT
- Skymark IPO – Valuation
- Perfect Medical: Double From Here, Recovery, 8% Div Yield, and 20+% CAGR Growth
- Toshiba Privatisation In Trouble
- S&P ASX Dec 22 Rebalance: MND Is the Top Pick
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
- The largest inflows will be on Alibaba Group, Haier Smart Home, Kuaishou Technology, Li Auto, PetroChina, Tencent, JD.com, China Resources Mixc Lifestyle Services and Tingyi Holding.
- The largest outflows will be on SMIC, NetEase, AIA Group, HSBC Holdings, China Construction Bank, Alibaba Health Information Technology, Innovent Biologics, China Mobile, Ping An Insurance and ICBC.
CSI 500 Index Rebalance: 50 Changes a Side Leads to 12%+ One-Way Turnover
- There are 50 changes a side for the CSI 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 December.
- One-Way turnover at the rebalance is estimated at 12.64% leading to a one-way trade of CNY 9.3bn. The Materials, Information Technology and Consumer Discretionary sectors are net gainers.
- 9 adds to the CSI 500 Index are deletes from the CSI 300 Index while 7 deletes from the CSI 500 Index are adds to the CSI 300 Index.
FTSE EPRA Nareit Index Rebalance: One Deletion for Australia
- There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU).
- Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
- Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.
Hang Seng Indexes: Rebalances Today; Recent Trading Data
- The December rebalance of the HSI INDEX, HSCEI INDEX and HSTECH INDEX takes place at the close today. One-way flow is estimated at HK$8.4bn.
- There are 3 adds for the HSI INDEX and 4 adds/ 4 deletes for the HSCEI INDEX. There are float changes for a few stocks as well as capping changes.
- There is excess volume on most adds/deletes post announcement and short interest has also picked up significantly.
KLCI Index Rebalance: Preliminary Changes Announced; Should Be Same as Final
- Post market close yesterday, FTSE announced the preliminary changes to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) for the December rebalance. The final changes will be announced today.
- As expected, AMMB Holdings (AMM MK) and Ql Resources (QLG MK) will replace Hartalega Holdings (HART MK) and Top Glove Corp (TOPG MK) in the index.
- From a near 20% index weight in 2020, Malaysian glovemakers will have no representation in the index once these changes are implemented.
FTSE TWSE Taiwan 50 Index Rebalance: Far Eastern New Century IN; AUO OUT
- Far Eastern New Century (1402 TT) will replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index at the close on 16 December.
- Passive trackers will need to buy 4.8 days of ADV on Far Eastern New Century (1402 TT) and sell 1.9 days of ADV on AU Optronics (2409 TT).
- There will be same way flow from FTSE TWSE Taiwan Dividend+ Index trackers on both stocks and that will significantly add to the passive flow.
Skymark IPO – Valuation
- Skymark is a little difficult to value given wide dispersions in peer multiples and earnings recovery trajectories.
- However, on balance we believe the issue looks to be on the cheap side.
- In addition, there are several quirks to the balance sheet, not all of which are negative.
Perfect Medical: Double From Here, Recovery, 8% Div Yield, and 20+% CAGR Growth
- Perfect Medical Health (1830 HK) showed a resilient set of numbers for H1 2023, with profits down only 30% despite losing a month in HK and more in China.
- With over 700 mn HKD in cash (18% of market capitalization), PE of 12.4x FY23e/8.5x FY24e, and dividend yields of 8.5%FY23e/12.4%FY24e it trades on an exciting yield/valuation.
- Catalysts for the company include the reopening of China (>20% of revenue), the recovery of HK(70% of revenue), and expansion into newer business lines and geographies.
Toshiba Privatisation In Trouble
- After a few successive rounds of Management and Board Proposals were shot down, last March Toshiba Corp (6502 JP) embarked on a process to generate a privatisation proposal.
- The result has ended up with one, maybe two privatisation proposals in the offing. The “leading” candidate’s proposal will not fly as proposed. The other is MIA for the moment.
- That leaves a complicated situation. Activists+active holders are stuck with Toshiba and vice versa. They want change, and out, and financiers do too. Change happens. The question is how.
S&P ASX Dec 22 Rebalance: MND Is the Top Pick
- The index changes for the S&P ASX Index family for the December 2022 Rebalance were announced after the close on Friday 2nd December 2022.
- There will be one ADD/DEL for the ASX 50 index and one ADD/DEL for the ASX 200 index.
- In this insight, we take a closer look at our expectations for index flows and potential trading ideas.
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