In today’s briefing:
- Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy
- CSI500 Index Rebalance Preview: High Turnover & Big Flow
Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy
- The Korean government has introduced policies ahead of April’s elections, with a recent notable announcement addressing the “Korea Discount” by enhancing low PBR stock valuations.
- A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
- Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, & DL E&C.
CSI500 Index Rebalance Preview: High Turnover & Big Flow
- With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
- The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.
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