In today’s briefing:
- Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
- LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- KOSPI200 Index Rebalance Preview (June): Changes from Now to June
- Alibaba – Cash Cows in Trouble & Rapidly Rising COVID Creates New Headwinds
- KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In
- HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- Align Partners Goes Activist on Seven Banking Group Companies in Korea
Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
- The Stock Exchange of Thailand SET 50 Index (SET50 INDEX) rebalance was implemented at the close on Friday and there were a bunch of review cutoffs on the same day.
- Passive Hang Seng trackers need to sell Meituan (3690 HK) at the close on 4 January following Tencent (700 HK) in-specie distribution.
- We take a look at flows to Asian focused ETFs over the course of 2022. A lot of winners in terms of AUM, but a few losers too.
LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- The review period for the LQ45 Index ended on 30 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
- Potential adds are Bumi Resources Minerals Tbk (BRMS IJ), Surya Esa Perkasa (ESSA IJ), Saratoga Investama Sedaya (SRTG IJ), Adaro Minerals (ADMR IJ) and Mitratel (MTEL IJ).
- Potential deletions are PT Wijaya Karya (Persero) Tbk (WIKA IJ), Erajaya Swasembada (ERAA IJ), Media Nusantara Citra (MNCN IJ), Chandra Asri Petrochemical (TPIA IJ) and HM Sampoerna (HMSP IJ).
HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
- The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
- If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.
NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- We expect 5 changes to the Nifty 100 Index (NSE100 INDEX) at the March rebalance. The review period ends on 31 January and the announcement should be late February.
- The largest impact of passive trading will be on Page Industries (PAG IN), Biocon Ltd (BIOS IN), Mphasis Ltd (MPHL IN) and ABB India Ltd (ABB IN).
- There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.
KOSPI200 Index Rebalance Preview (June): Changes from Now to June
- A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
- There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
- Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.
Alibaba – Cash Cows in Trouble & Rapidly Rising COVID Creates New Headwinds
- After bouncing more than 60% from a near-all-time low, Alibaba Group (9988 HK)’s progress seems to have ended abruptly with the share-price holding flat for almost a month in December-2022.
- Meanwhile, the company’s cash cows, Taobao and Tmall are losing market share. Rapidly rising COVID infections create new headwinds that could affect business performance for at least two more quarters.
- With the shares trading near the top end of the new downward trend channel, we are short Alibaba as earnings are expected to miss consensus estimates in the next two-quarters.
KOSDAQ150 Index Rebalance Preview (June): Changes Keep Rolling In
- One third of the way through the review period for the June rebalance, we see 9 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX).
- One way turnover is estimated at 3.3% and the impact on the expected deletions is a lot higher than the impact on the expected inclusions.
- The potential adds have massively outperformed the potential deletes over the last year. We’d wait for a reversal before entering a trade here – worth monitoring.
HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
- Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK).
- Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.
Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- There are four weeks left to go in the data period for calculating the next Nikkei 225 review for March, likely to be announced ~7 March 2023.
- The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723) , and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707) , Toyobo (3101), and Nippon Light Metal (5703)
- Oriental Land is the one to watch in March. Slight underperformance would boost buying impact. The Sep23 rebalance and subsequent ones are smaller in size but more interesting in impact.
Align Partners Goes Activist on Seven Banking Group Companies in Korea
- On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
- According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
- Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x.
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