In today’s briefing:
- KOSPI200 Index Rebalance: Float Changes, Flows & Trades
- ETFs in Stock Connect: Criteria & Potential Southbound Inclusions
- Kakao Pay Placement – Discount Is Enticing, That’s It
- HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping
- Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)
KOSPI200 Index Rebalance: Float Changes, Flows & Trades
- There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
- There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
- The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.
ETFs in Stock Connect: Criteria & Potential Southbound Inclusions
- On 27 May, the SFC and CSRC announced that they had agreed in principle to the inclusion of Exchange Traded Funds by mainland and Hong Kong exchanges in Stock Connect.
- We currently see 6 ETF being eligible for inclusion in Southbound Connect and another couple that could be included at a subsequent review.
- Increased mainland participation in the ETF market could lead to sustained premium/discount on the ETFs and this will be transmitted to index futures and affect pricing of short-term/long-term repo.
Kakao Pay Placement – Discount Is Enticing, That’s It
- Alipay aims to raise around US$386m via selling around 3.3% of outstanding shares of Kakao Pay.
- The stock more than doubled on listing, providing one of the best first day returns in 2021. However, its performance since then hasn’t been all that great.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping
- The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
- The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
- The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).
Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)
- After the market close today, Kakao Pay (377300 KS) announced that there will be a block deal sale of the company’s shares (5 million) by Alipay Singapore Holdings.
- Alipay is the second largest shareholder of Kakao Pay with a 38.52% stake. After the block deal sale, there will be continued overhang on the remaining shares held by Alipay.
- We continue to have a NEGATIVE view on Kakao Pay and we also have a negative view on this block deal sale as well.
Before it’s here, it’s on Smartkarma
