In today’s briefing:
- CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
- Samsung SDI Capital Raise: A Mega Deal Rarely Seen in the Local Market
- CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions
- MarketVector Vietnam Local Index Rebalance: One Add, Capping & Float Changes
- Plant-based Butadiene Emerges, Thanks To Zeon And Yokohama
- EUDR: EC Mandates Due Diligence For All In Rubber Supply Chain Except SMEs
- DN Solutions IPO Preview
- MV Australia A-REITs Index Rebalance: Waypoint REIT (WPR AU) Deleted
- Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (17 March 2025)
CSI300 Index Rebalance Preview: 7 Changes a Side as Market Trades in a Range
- There could be 7 changes at the June rebalance with the Information Technology sector gaining 3 index spots and the Materials sector losing 3 spots.
- We estimate one-way turnover of 1.45% at the rebalance leading to a round-trip trade of CNY 28.1bn (US$3.9bn). There are 6 stocks with over 2x ADV to trade.
- There have been redemptions in mainland China ETFs over the last couple of months and that leads to a lower impact on the stocks compared to the last rebalance.
Samsung SDI Capital Raise: A Mega Deal Rarely Seen in the Local Market
- The discount’s tight, but this near-2-trillion-won raise is a rare mega-deal in Korea, despite the issuance ratio below 20%.
- Samsung Electronics is in for 150 billion won, but plenty of supply remains. A smooth clearance? Unlikely. This could drive stock rights costs lower as price discovery unfolds.
- The optimal approach is to wait for a decline in rights prices and assess hedge costs through single stock futures (or TRS, if doable), given the shorting restrictions.
CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions
- With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
- We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
- The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.
MarketVector Vietnam Local Index Rebalance: One Add, Capping & Float Changes
- Nam A Commercial Joint Stock Bank (NAB VN) will be added to the MarketVector Vietnam Local Index at the close on 21 March.
- Estimated one-way turnover is 3.1% and that results in a round-trip trade of US$26m. There are 3 stocks with more than 1x ADV to trade from passives.
- Vietnam is on the watchlist of a global index provider for possible reclassification from Frontier to Secondary Emerging Market and that could lead to inflows to the stocks.
Plant-based Butadiene Emerges, Thanks To Zeon And Yokohama
- Zeon will develop BR and Yokohama will make tires with it
- Facility to be installed at Zeon’s Tokuyama Plant in Shunan City in Japan
- Trial production scheduled for 2026 and mass production by 2030
EUDR: EC Mandates Due Diligence For All In Rubber Supply Chain Except SMEs
- EC publishes 11 commodities’ scenarios including rubber
- Non-SME operators, dealers tasked with due diligence onus
- German Rubber Association criticism fails to make impact
DN Solutions IPO Preview
- DN Solutions is getting ready to complete its IPO in Korea in May 2025. The IPO price range is from 65,000 won to 89,700 won.
- The book building for the institutional investors will last from 22 to 28 April. The expected IPO offering amount is from 1.14 trillion won to 1.57 trillion won.
- The IPO price range is based on DN Solutions’ net profit of 317.4 billion won, P/E of 25.2x, and IPO discount rates of 29.1% to 48.6%.
MV Australia A-REITs Index Rebalance: Waypoint REIT (WPR AU) Deleted
- Waypoint REIT (WPR AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) next week. There are float changes and capping changes too.
- Estimated one-way turnover is 4.3% and will result in a round-trip trade of A$49m. There are 3 stocks with over 0.5x ADV to trade from passive trackers.
- We had Waypoint REIT (WPR AU) as a delete in December, but the stock was not deleted from the index. We had it as a close delete this time.
Gunma Bank (8334) And DHFG (7327) In Integration Talks – ‘Guess The Ratio’ Is ‘Efficiency Vs Value’
- Nikkei Business reported Friday 14 March that Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) (“DHFG”) were in talks to integrate to create a Super-Regional Bank
- Gunma and Daishi-Hokuetsu are part of the same multiple-regional bank alliances, including the Gunma-Daishi Hokuetsu Alliance since 2021, in order to collaborate regionally, build scale, and lower service provision cost.
- As Gunma and Daishi Hokuetsu serve adjacent jurisdictions, and they are already exploring sharing branches, this makes sense. The World with Interest (rates above zero) may cause more integration talk.
Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (17 March 2025)
- In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks starting 17 March.
- Some of the top 10 Korean stock picks in the bi-weekly (starting 17 March) include Kepco Plant Service & Engineering, Hyundai Wia, Poongsan, and Doosan Enerbility.
- The biggest near-term negative catalyst on the Korean stock market remains tariffs. The final legal outcome on President Yoon Seok-Yeol is expected to be made by the end of March.
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