In today’s briefing:
- S&P/ASX Index Rebalance Preview: Potential Changes in September
- SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
- Keisei Electric: Valuation Distortion Set to Unravel with Fantasy Springs’ Opening in Spring 2024
- S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
- StubWorld: SZ International’s Logistics Spin-Offs
- Ventia Services (VNT) Selected to Join ASX 200 – Not A Surprise
- Ohayo Japan | Bullish Banks, Ai , US Consumer; NUGGET: Isuzu(7202) – EV Outlook Better for Trucks
S&P/ASX Index Rebalance Preview: Potential Changes in September
- We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
- Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
- Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.
SK Telecom (017670 KS): Foreign Room Increase Has Implications
- Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
- That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
- SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.
Nidec (6594) Goes Hostile On Takisawa Machine Tool (6121) – I’ve Got 🍿🍿
- Last year Nidec Corp (6594 JP) approached machine tool maker Takisawa Machine Tool (6121 JP) interested in an integration with their sub. Takisawa said “Talk to the hand.”
- Now Nidec – a blue chip (from Kyoto no less, which traditionally abhors hostile activity) – has gone hostile on Takisawa bidding 65-100% depending how you see undisturbed.
- Lots of moving parts on this one, but in the end, Retail probably decides this.
Index Rebalance & ETF Flow Recap: ASX, Chinext, URA, Korea Stocks, NKY
- Busy week in India with the adhoc changes to the NIFTY, NSE Nifty Next 50, S&P BSE SENSEX and Nifty Bank due to the HDFC Limited and HDFC Bank merger.
- The IDX could announce the changes to the IDX30, LQ45 and IDX80 indices in the coming week, though there is no firm schedule for announcements.
- Yet another week of inflows to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF and outflows from the Hang Seng H Share Index ETF (2828 HK).
Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023.
- The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
- We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares.
Keisei Electric: Valuation Distortion Set to Unravel with Fantasy Springs’ Opening in Spring 2024
- Since the announcement of the proposed Tokyo Disney Sea expansion in 2015, Keisei Electric Railway Co (9009 JP)‘s price perfromance has significantly diverged from Oriental Land (4661 JP)‘s price performance.
- The valuation disparity may result from the Disney Sea expansion’s impact, possibly due to Keisei Electric’s value-oriented investor base.
- Fantasy Springs’ opening could resolve the valuation distortion, leading to potential rewards in a Long Keisei Electric and Short Oriental Land trade.
S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
- Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
- The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
- Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.
StubWorld: SZ International’s Logistics Spin-Offs
- Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and 51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
- Preceding my comments on SZ Int’l/SZ E’Way are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Ventia Services (VNT) Selected to Join ASX 200 – Not A Surprise
- After the Blackmores Ltd (BKL AU) Scheme Meeting result was announced earlier today, post-close the S&P/ASX team announced Ventia (VNT AU) would replace it on 21 July at the close.
- This is not that surprising. Janaghan Jeyakumar, CFA expected it in June, and it was a super-close second recently for him for the Sep rebalance.
- Given the shareholder structure and flow dynamics, it’s worth taking a closer look.
Ohayo Japan | Bullish Banks, Ai , US Consumer; NUGGET: Isuzu(7202) – EV Outlook Better for Trucks
- OVERSEAS. SPX new 52W highs on Bank earnings, AI (thx to MSFT), and Resilient Retail print; MSFT prices Copilot at high end; US bank CEOs showing optimism.
- JAPAN. NKY Futures +0.8% vs Cash; USDJPY 138.8; Look for continued follow through in Japan equity bid; Bank bid thematic gaining more traction on BOJ tweak view; Kishida cabinet reshuffle?
- NUGGET. Isuzu(7202) – Big EV Spending but Still looks Cheap at 1x PBR. A 15% FY3/26 ROE as per mid term plan makes this look interesting for LT investors here.
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