In today’s briefing:
- Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
- S&P/ASX Index Rebalance (Mar 2023): Big Impact Changes as Adds Outperform Deletes
- Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
- Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- Last Week in Event SPACE: Japan Post/Japan Post Bank, Downer, HKBN, Golden Energy
- KOSPI Size Indices – Changes in March & Implications
- CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
- OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes
- K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities
Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- As expected, Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) IN, and Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) OUT.
- The Nikkei implemented the “Tricky Twist” discussed. This lowers the total amount to buy on Oriental Land vs what many would have expected.
- That’s “disappointing” BUT… the behavioural aspects here are really interesting, and the timetable for the event is worth thinking about.
Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
- The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&S (7003), and Matsui Securities (8628).
- Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba’s disposition changes in the interim.
S&P/ASX Index Rebalance (Mar 2023): Big Impact Changes as Adds Outperform Deletes
- There is one change for the ASX20, two for the ASX100, four for the S&P/ASX 200 INDEX and 12 adds/ 9 deletes for the ASX300 Index at the March rebalance.
- There will be between 7-20 days of ADV to trade on the ASX100 and ASX200 adds while the impact on the deletions is between 1-11 days of ADV.
- The adds have outperformed the deletes on all indices over the last few months. Short interest has jumped on a lot of the large deletes.
Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
- The MSCI Feb QCIR was implemented on Tuesday and there were a bunch of announcements for other indices from Wednesday to Friday.
- The implementation of the March rebalance for the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) take place at the close on Friday.
- Redemptions continue on IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) and KraneShares CSI China Internet ETF (KWEB US).
Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- HKEX (388 HK) has announced that the expansion of Northbound Stock Connect eligible stocks will take effect from the start of trading on 13 March.
- 598 stocks listed on the Shanghai Stock Exchange and 436 stocks listed on the Shenzhen Stock Exchange will be added to Northbound Stock Connect.
- Currently, we see 43 stocks being added to the MSCI China Index in May (inflows of US$1.42bn), further increasing China’s weight in the MSCI Emerging Markets Index.
Last Week in Event SPACE: Japan Post/Japan Post Bank, Downer, HKBN, Golden Energy
- Big picture: Japan Post (6178 JP) selling 29% of Japan Post Bank (7182 JP) is a Very Big Offering at ¥1.236trln. 80/20 dom/international. A TOUGH sell. 1.089bn shares is 4x float.
- Downer EDI (DOW AU)‘s CEO resigned ahead of announcing accounting irregularities last December. The CFO resigned this week after Downer announced another profit downgrade. Now the chairman is exiting.
- Hong Kong broadband play HKBN Ltd (1310 HK)said it has been approached by I Squares’ HGC. No pricing announced, but talks continue.
KOSPI Size Indices – Changes in March & Implications
- There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
- The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
- Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.
CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
- The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
- There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
- There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.
OZ Minerals (OZL AU): Scheme Meeting in April; Potential S&P/ASX Changes
- The OZ Minerals (OZL AU) Scheme Meeting for the acquisition by BHP Group (BHP AU) will be held 13 April. The stock could stop trading post close on 18 April.
- OZ Minerals Ltd (OZL AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) so there will be replacements made at the close on 18 April.
- Passive trackers will need to buy a fair amount of stock (with a decent impact) on the potential inclusions and the stocks could outperform over the next few weeks.
K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities
- Notable constituent changes are Posco Chemical (003670 KS), Douzone Bizon (012510 KS), Ecopro (086520 KS), Connectwave (119860 KS), SK Innovation (096770 KS), KMW (032500 KS), & Hanmi Science (008930 KS).
- Among these, Douzone Bizon (012510 KS) and KMW (032500 KS) are expected to receive the most significant flow impact (x ADTV) at the close of March 9th.
- Since the flow size is concentrated within a fairly right trading window, between 2 pm and the close on the 9th, the degree of price impact should be relatively higher.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
