In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Updated Dividends & Flow Shift
- ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Mean Reversion
- KOSDAQ150 Index Rebalance Preview: Big Churn in IT, Healthcare Stocks
- SSE180 Index Rebalance Preview: Market Volatility & Index Changes
- FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!
- Singapore Medical Extends Offer As Tendering Surprises
- Bikaji Foods International IPO – Spicy Snacks
- Singapore Medical’s VGO: Revised Offer of S$0.40 Is Good to Go
- KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning
- A Pair Trade Between Orion Holdings and Orion Corp
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Updated Dividends & Flow Shift
- Updated forward dividend estimates and price moves lead to changes in adds/deletes and to estimated flows at the December rebalance. We now see 26 adds and 5 deletes in December.
- The estimated one-way turnover due to adds, deletes, funding and capping is 46.6% and will result in a one-way trade of TWD 72.7bn (US$2.26bn).
- Passive trackers will need to buy over 5 days of ADV on 15 stocks and sell over 5 days of ADV on 14 stocks. There will be trading opportunities galore.
ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Mean Reversion
- At the end of the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
- Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. The impact on the potential deletions is higher on average.
- The potential adds have outperformed the potential deletes over the last six months, though there has been a sharp narrowing of the gap over the last few weeks.
KOSDAQ150 Index Rebalance Preview: Big Churn in IT, Healthcare Stocks
- With the review period complete, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
- Most of the potential changes are high probability ones, but there are some stocks that are very close to market cap and liquidity cutoffs.
- The impact of passive trading will be much higher on the potential deletes as compared to the potential inclusions, though trade notionals are higher for the potential adds.
SSE180 Index Rebalance Preview: Market Volatility & Index Changes
- With the review period complete, we expect 18 changes to the index in December – most deletions are Financials, most inclusions are Industrials.
- The market volatility over the last couple of weeks has altered the sectoral breakup of the potential changes with Industrials gaining index spots at the expense of Consumer Staples.
- We see 5 of the potential adds being added to the MSCI China Index in February and 6 of the potential adds being added to the FTSE All-World/All-Cap in March.
FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!
- In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
- The estimated one-way flow was ~US$2bn and I discussed my flow expectations for this event in FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
- With less than three weeks remaining to the base date, below is an updated look at my latest flow expectations for this event.
Singapore Medical Extends Offer As Tendering Surprises
- Back on the 14 September, healthcare provider Singapore Medical (SMG SP) announced a voluntary MBO from TLW at S$0.37/share. The IFA concluded the Offer was “not fair but reasonable”.
- The Offer is conditional on 90% of shares out held by the Offeror, and the TLW shareholders plus irrevocables hold 51.67% all-in. This 90% conditionality is firm.
- As of the first close, TLW now has 77.37%. The Offer has been extended by a fortnight. The Offer price has NOT been declared final.
Bikaji Foods International IPO – Spicy Snacks
- Bikaji Foods (BIKAJI IN), an ethnic snacks company, is looking to raise approximately US$107m in its India IPO.
- Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
- In this note, we look at the company’s past performance.
Singapore Medical’s VGO: Revised Offer of S$0.40 Is Good to Go
- Singapore Medical (SMG SP)‘s voluntary conditional offer from management (chairman, CEO, exec director) has been increased from S$0.37 to S$0.40 per share (share option unchanged).
- The revised offer is final unless there is a competitive situation. The offeror came to the realisation that a bump was required to meet the 90% minimum acceptance condition.
- Acceptances stand at 77.42% of outstanding shares. The revised offer is now reasonable and should be sufficient to nudge holdouts to accept. At last close, the gross spread is 5.3%.
KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning
- With the review period complete, we see 1 high probability change and 1 lower probability change for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in December.
- We estimate passive trackers will need to trade over 10 days of ADV on the high probability names. There are indications that there are pre-positions built on the stocks.
- With short-sell eligibility flipping post implementation of the changes, a lot of pre-positions will be unwound prior to implementation and there will be trading opportunities on the reverse side.
A Pair Trade Between Orion Holdings and Orion Corp
- In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).
- Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp.
- We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.
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