In today’s briefing:
- NASDAQ 100 Index Rebalance: 6 Regular Changes + 1 Adhoc Change; US$37bn to Trade
- Newmont’s Upcoming (March 2024) ASX Selldown
- A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As
- Asics (7936) | Footwear Fallout as Nike’s Q2 Sends Sector Shockwaves
- Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- Merger Arb Mondays (25 Dec) – JSR, Benefit One, IRC, Adbri, Link, A2B, Probiotec, Lithium Power
- Ohayo Japan | 8 Weeks of Wins; Dear Santa
- Weekly Deals Digest (24 Dec) – Benefit One, JSR, Weiqiao Textile, A2B, Adbri, Azure, Link, Probiotec
- Maybe Management Is Finally Becoming Aware of the Cost of Listing
- KOSDAQ 150’s New Fast Entry Rule: Top 30 by Market Cap in 15 Trading Days Post-Listing
NASDAQ 100 Index Rebalance: 6 Regular Changes + 1 Adhoc Change; US$37bn to Trade
- There were 6 inclusions and 6 exclusions for the Nasdaq-100 Stock Index (NDX INDEX) at the annual December reconstitution. Then another ad hoc change was added on top of that.
- Impact on the inclusions ranges from 1-8 days of ADV to buy, while the impact on the deletions varies from 0.7-2.6 days of ADV to sell.
- Apart from the constituent changes, there are expected to be inflows in Tesla Motors and Broadcom and outflows from Apple, Microsoft, Amazon.com and NVIDIA.
Newmont’s Upcoming (March 2024) ASX Selldown
- As warned in Newcrest-Newmont Merger: Fancy Index Shenanigans in October, the merger construct meant flowfront, index flowback, then later index flowback.
- We are now between the second and third events. The data on the third is there, but it won’t be obvious to everyone.
- There should be a large, not publicly announced, downweight on Newmont (NEM AU) in the March 2024 index review for the major local indices.
A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As
- The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished.
- STILL time to go long Hs vs As for the new year at 52wk wide discounts.
Asics (7936) | Footwear Fallout as Nike’s Q2 Sends Sector Shockwaves
- Nike’s Q2 results lead to a 12% drop in its shares, affecting sector peers Onon, Skechers, and Asics with significant declines.
- Challenging trading conditions in China and Europe, coupled with a subdued digital traffic outlook from Nike, raise broader concerns for the sector.
- Asics stock declines 20% post-Nike’s fall, presenting an attractive buying opportunity with an estimated 20% upside, positioning Asics as a cost-effective play in the global performance running market.
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
- The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
- There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).
Merger Arb Mondays (25 Dec) – JSR, Benefit One, IRC, Adbri, Link, A2B, Probiotec, Lithium Power
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Irc Ltd (1029 HK), Orecorp Ltd (ORR AU), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Adbri (ABC AU), Probiotec Ltd (PBP AU), Volpara Health.
- Lowest spreads – Tietto Minerals Ltd (TIE AU), A2B Australia (A2B AU), IJTT Co., Ltd. (7315 JP), T&K Toka Co Ltd (4636 JP), Tokyo Rakutenchi (8842 JP), Pact Group.
Ohayo Japan | 8 Weeks of Wins; Dear Santa
- Overseas: SPX +0.2%; PCE 3.2% v 3.3% exp; Nike -12% on job cuts, tough macro
- Today: NKY Futs +0.3% v cash. JPY142; Japan approves fiscal budget; Nexon ADR steadies after China game rout
- Japan: Dalton’s Xmas greetings to management & three shareholder proposals: effective capital allocation, strong alignment of interest, and a board with high independence and diversity
Weekly Deals Digest (24 Dec) – Benefit One, JSR, Weiqiao Textile, A2B, Adbri, Azure, Link, Probiotec
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Nothing of note in a quiet week.
- Event-Driven developments – Benefit One Inc (2412 JP), JSR Corp (4185 JP), Weiqiao Textile Co (2698 HK), Adbri (ABC AU), Azure Minerals (AZS AU), Link Administration (LNK AU).
Maybe Management Is Finally Becoming Aware of the Cost of Listing
- Many companies had the goal of IPOs as a means to save taxes rather than growth, but it’s good to seriously consider go private for the sake of their shareholders.
- This is due to companies’ awareness of listing costs, such as demands from overseas investors for improved governance and requests from TSE for “management with awareness of the stock price.”
- Another issue that needs to be examined is the loss of growth and profitability for companies that are delisted and then relisted.
KOSDAQ 150’s New Fast Entry Rule: Top 30 by Market Cap in 15 Trading Days Post-Listing
- Fast entry is now permissible for KOSDAQ 150. Within 15 trading days post-listing, the average daily total market cap must rank among the top 30 ordinary stocks on KOSDAQ.
- KOSDAQ 150 will also allow newly established entities in corporate spin-offs, following KOSPI 200’s model. Inclusion is granted if the subsidiary ranks within KOSDAQ 150’s top 160 (80%).
- The ₩1.5T cutoff for KOSDAQ 150 fast entry suggests potential candidates nearing this threshold, like Oasis, Kurly (and maybe Kakao Entertainment).
💡 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 Analytics and News
- ✓ Events & Webinars
