In today’s briefing:
- China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- MVIS Global Rare Earth/Strategic Metals Index Rebalance: Some Large Capping Ouflows in Australia
- KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- FTSE All-World/All-Cap Index Rebalance Preview (June): IPO Inclusions Coming Up
- Western Areas: IGO Firm On Pricing As Nickel Soars
China ADRs & HFCAA: Pace of Homecoming Listings Should Pick Up & Implications
- China ADRs were sharply lower last week as the SEC started to name companies that were identified under the Holding Foreign Companies Accountable Act (HFCAA).
- Then DiDi Global dropped 44% on Friday following reports that the their proposals to prevent data/security leaks did not meet CAC’s requirements and work on the HK listing was halted.
- With 2024 not too far away, a lot of the U.S. listed companies will look at listing in Hong Kong in the near future. That will have its own implications.
MVIS Global Rare Earth/Strategic Metals Index Rebalance: Some Large Capping Ouflows in Australia
- There are no adds/deletes to the MVIS Global Rare Earth/Strategic Metals Index at the March rebalance. However, there are changes to free floats and capping factors.
- The largest impacts are on ioneer Ltd (INR AU), AVZ Minerals (AVZ AU), Australian Strategic Materials (ASM AU), Iluka Resources (ILU AU) and Pilbara Minerals (PLS AU).
- The non-inclusion of Core Lithium Ltd (CXO AU) and Lake Resources Nl (LKE AU) could lead to a selloff tomorrow. Both stocks are FTSE All-Cap and S&P/ASX300 inclusions on Friday.
KODEX (FnGuide) Battery ETF Rebalancing: Passive Flow Tracking for Two Remaining Days
- KODEX battery ETF does rebalancing four times a year from this March. The rebalancing trading is done for 3-trading days from March 14 to 16, presumably equal daily weight.
- Due to the low float rate, LG Energy will fall to third place. Samsung SDI should become the top constituent with a 20% cap, followed by SK Innovation at 15%.
- The passive impact sizes of the top four stocks are significant, considering they are in the same sector. So, they should make themselves a suitable target for long/short basket trading.
FTSE All-World/All-Cap Index Rebalance Preview (June): IPO Inclusions Coming Up
- We see 20 potential inclusions to the FTSE All-World and All-Cap indices that will be implemented at the close of trading on 17 June. Most are high probability inclusions.
- LG Energy Solution (373220 KS), Kakao Pay (377300 KS) and Mitratel (MTEL IJ) are the top 3 stocks with the most passive inflows.
- There are a few stocks that will have passive inflows from other index trackers while there are others that have lock-up expiries from now to implementation of the changes.
Western Areas: IGO Firm On Pricing As Nickel Soars
- IGO Ltd (IGO AU) said it has no obligation, nor any current intention to increase the consideration for Western Areas (WSA AU) in response to recent short-term events.
- The Scheme timetable is, however, expected to face a short delay with implementation in May/June compared to April previously.
- Currently trading comfortably through terms, as it has done since shortly after the invasion of Ukraine.
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