In today’s briefing:
- Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp
- Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
- Major Global Liquidity Warning – Don’t Fight the Feds
- KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
- Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- Market Share Loss for Tesla Korea Accelerating in 1Q 2023
- Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
- Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp
- The March rebalances of the NIFTY indices and the Nikkei 225 (NKY INDEX) were implemented last week. Plus some ad hoc rebalances for the KOSPI2 INDEX and KOSDQ150 INDEX.
- A quieter week coming up with multiple market holidays across markets. We also near the start of the review period for the MSCI May QCIR.
- There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and iShares FTSE/Xinhua A50 China (2823 HK) during the week while there were outflows from some Korea ETFs.
Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it’s been a year later than originally planned to reach 80 index constituents.
- We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
- There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.
S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
- Shareholders have approved OZ Minerals Ltd (OZL AU)‘s acquisition by BHP Group Ltd (BHP AU) and OZL is expected to stop trading after the close on 18 April.
- OZ Minerals Ltd (OZL AU) will be replaced by Bellevue Gold (BGL AU) in the S&P/ASX 200 (AS51 INDEX) and by Seven Group Holdings (SVW AU) in the S&P/ASX 100.
- There has been huge short covering on Seven Group Holdings (SVW AU) and Bellevue Gold (BGL AU) over the last few months.
Major Global Liquidity Warning – Don’t Fight the Feds
- A major bull market in Global Liquidity has started. Be prepared the cycle is rising and looks set to expand towards a new top sometime around 2026.
- A sharp uptick in the pace of liquidity injections into World financial markets occurred around October of last year in the wake of the British gilt crisis
- China’s PBoC also began a major easing policy coinciding with the end of COVID-lockdowns. China matters hugely to the World economy because of her whopping size.
KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
- Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
- The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
- Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.
Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
- This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
- But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.
Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- According to Hankyung Business Daily, Ecopro BM Co Ltd (247540 KS) is considering on issuing a CB worth 500 billion won to various private equity and asset managment companies.
- We would be negative on the potential CB issuance of nearly 500 billion won by Ecopro BM.
- The potential issuance of this CB is a signal from the management that it is trying to capitalize on the recent sharp increases in share price to raise more capital.
Market Share Loss for Tesla Korea Accelerating in 1Q 2023
- The fact that Tesla Korea is losing its market share significantly in Korea portends increased challenges for Tesla Motors on a global basis.
- The number of new Tesla vehicles registered in Korea was 1,303 units in 1Q 2023, down 52% YoY.
- In this insight, we provide three major reasons for Tesla’s market share losses in Korea. We also provide Tesla Korea’s 2022 results analysis.
Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
- Prosus (PRX NA) moved 96mn shares of Tencent (700 HK) into CCASS. Tencent shares fell hard. If the share price fell because of a block offering, that would be unwarranted.
- Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials.
- Japan’s Finance Minister said that companies need to improve their PBRs, and that “increasing corporate value of listed companies would allow for Japan to realise sustainable growth.”
Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
- Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
- The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
- We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.
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