In today’s briefing:
- Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO
- CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
- Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
- Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse
- NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule
- Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- Memory Makers Update: Samsung, SK Hynix, Micron, WDC, Kioxia
- Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO
- There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
- The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
- Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.
CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
- Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
- The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.
Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
- MSCI announced the changes to the GIMI on Friday as part of the February QCIR. MSCI also announced a review of the free float of the Adani Group companies.
- FTSE will announce the changes to the All-World and All-Cap indices after the close of trading on Friday, 17 February. The same day is the S&P/ASX review cutoff for March.
- Yet another weekly outflow for the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) taking the YTD outflow to over US$2.5bn.
Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse
- On 8 February, MSCI announced special treatment for the Adani names in its indices, discussed in Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case.
- Late on 15 February they came out with a revision of their implementation – which was problematic because some stocks had gone limit down many days in a row.
- The stocks responded. But it clearly isn’t an easy implementation, and it clearly isn’t over.
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
- Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
- Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.
Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule
- Hanwha Solutions received shareholder approval for its proposed demerger on February 13. The demerger will split Hanwha Solutions into two separate entities: Hanwha Galleria and Hanwha Solutions.
- Hanwha Solutions will experience a passive outflow of 0.92x ADTV at the closing price on February 24 for KOSPI 200. A similar passive inflow will occur on March 31.
- MSCI Standard will deliver an outflow of 0.43x ADTV at the close on March 31 as the weight of Hanwha Solutions, an existing constituent, will be reduced.
Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
- That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.
Memory Makers Update: Samsung, SK Hynix, Micron, WDC, Kioxia
- Semiconductor memories, the most volatile part of the chip market, have declined dramatically since June
- During downturns memory chip prices typically collapse until they hit cost
- NAND appears to be selling at or near cost, but DRAM still has room for further declines
Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
- Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
- There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.
Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
- While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here.
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