In today’s briefing:
- HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- Australia/NZ Real Estate: Stocks With (Large) Passive Flows
- Quiddity Leaderboard S&P 500 Sep 24 Rebal (Final): 2 Changes Possible
- Midea: Thoughts on HK Listing and Valuation
- We Need To Talk About New World (17 HK)
- KOSPI Size Index Reshuffle Results Out Late Today: Early Positioning Delivered Big Gains
- Jardine Matheson (JM SP): Squeezing More Life Out Of The NAV
- The Born Korea IPO Preview
- Key Flow Trading Opportunities After KRX Suddenly Added POSCO Holdings to the BBIG Battery Mix
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- The Sep24 Nikkei 225 Review Results are out, discussed in Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT.
- That lets us move to Mar25 Nikkei 225 Rebal predictions. For the moment, I see 2 IN and 2 OUT, again.
- And at the moment, another Fast Retailing capping exercise looks likely, for roughly US$3bn a side to trade.
Australia/NZ Real Estate: Stocks With (Large) Passive Flows
- There will be passive buying in Nextdc Ltd (NXT AU) and Charter Hall (CHC AU) and selling in Vital Healthcare Property Trust (VHP NZ) at the close on 20 September.
- Charter Hall (CHC AU)‘s stock price jumped following announcement of results and that was accompanied by big short covering. There should still be more positioning here.
- Nextdc Ltd (NXT AU)‘s increase in cumulative excess volume came on a drop in the stock price. There could be some covering here as positioning builds up.
Quiddity Leaderboard S&P 500 Sep 24 Rebal (Final): 2 Changes Possible
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- The rankings used for the September 2024 index rebal event will be based on yesterday’s (4th September 2024) opening prices.
- In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.
Midea: Thoughts on HK Listing and Valuation
- Chinese appliance maker Midea’s application to list its shares on the HKEx has been approved and the company plans to list up to 10% of its shares to raise $4bn.
- Midea Group Co Ltd A (000333 CH) has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and M&A’s that have helped significantly grow its business.
- Our analysis on previous secondary listings of Chinese-listed companies on HKEx shows that the HK listings were priced at a significant discount to their A-Shares.
We Need To Talk About New World (17 HK)
- 0.08x P/B. That’s where New World Development (17 HK) is currently trading. Less than half the P/B of the next comparable real estate peer.
- So, what’s going on? Announcing an expected HK$19-20bn loss for FY24 last week didn’t help matters. Shares are down 14% this week and 85% since Covid.
- Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers.
KOSPI Size Index Reshuffle Results Out Late Today: Early Positioning Delivered Big Gains
- For this September reshuffle, fewer factors affected price impact, so outlier chances were low. Biggest price moves typically occur 30 days before the effective date, especially during LARGE↔MID transitions.
- Early positioning for this reshuffle paid off. Past trends suggest price action fades before the effective date, so consider exiting positions by tomorrow or early next week.
- Small→Mid migrants historically show weak price impacts, with no clear correlation observed in this September reshuffle either. I’m avoiding those plays targeting the effective date for now.
Jardine Matheson (JM SP): Squeezing More Life Out Of The NAV
- After publishing my insight (Jardine Matheson (JM SP): Trading “Cheap”) last week, my NAV calcs were called into question by some readers, when compared to street estimates.
- Which is cool. I’m big enough to admit mistakes, where needed. So I’ve done some digging, including a back and forth with Jardine Matheson Holdings (JM SP).
- The upshot? I have not lead you astray. You’ve been coming to the right place.
The Born Korea IPO Preview
- The Born Korea is getting ready to complete its IPO in Korea in November. The total IPO offering is expected to range from 69 billion won to 84 billion won.
- Based on the bankers’ valuation, the expected market cap of the company ranges from 357 billion won to 419 billion won.
- The Born Korea was founded by Baek Jong-Won, the most famous celebrity chef in Korea.
Key Flow Trading Opportunities After KRX Suddenly Added POSCO Holdings to the BBIG Battery Mix
- Got surprised by KRX adding POSCO Holdings to the Battery Index. Normally predictable rebalancing went off-script with this unexpected move.
- POSCO Holdings, not Posco Future M, replaced Ecopro BM. Plus, Alteogen Inc is replacing SK Biopharmaceuticals in the BBIG, driving notable flow.
- Consider a day trading long POSCO Holdings and short Ecopro BM. Also, a long-short futures basket could be worth exploring for names with big passive flows.
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