In today’s briefing:
- HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week
- HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
- Hyundai Motor India: Index Entry Timing for India’s Biggest IPO
- Rio Tinto Goes All-In for Arcadium Lithium
- KOSDAQ150 Index Rebalance Preview: 10 Changes in December
- EQD | The HSI Rally: Go LONG Now or Wait?
- Ministry of Finance Press Conference – First Take
- Korea Zinc: Latest Stockholder Record for Proration Risk
- China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen’s Bleak Outlook, Zai Lab’s Trouble
HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week
- There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
- Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
- Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.
HSTECH Index Rebalance Preview: $800m Round-Trip Trade
- The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
- We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
- If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.
KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
- 85% of the way through the review period, there could be 4 adds and 5 deletes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
- The impact on the potential inclusions ranges from 1.4-17 days of ADV while the impact on the potential deletions varies from 4-8 days of ADV.
- The potential adds outperformed the potential deletes early in the review period before giving up all the gains over the following months.
Hyundai Motor India: Index Entry Timing for India’s Biggest IPO
- Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
- The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.
Rio Tinto Goes All-In for Arcadium Lithium
- Late last evening, Rio Tinto Ltd (RIO AU) and Arcadium Lithium (LTM AU) announced a definitive agreement where Rio will acquire Arcadium for US$5.85/share in cash.
- Arcadium Lithium (ALTM US) closed nearly 31% higher at US$5.55/share and Arcadium Lithium (LTM AU) should follow when the stock opens.
- Arcadium Lithium (LTM AU) could move around 40% higher today to catch up with Arcadium Lithium (ALTM US) – that would still leave a 5.4% spread to the offer price.
KOSDAQ150 Index Rebalance Preview: 10 Changes in December
- With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
- Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
- The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.
EQD | The HSI Rally: Go LONG Now or Wait?
- In our previous insight about the Hang Seng Index‘s we theorized a probable continuation of the rally in October, after some resistance, but the index just shoot up straight.
- Resistance appeared last week, from an area considered a tail by our SHORT model, so it was not possible to make a forecast from there.
- The question now is: can the index re-start to rally from here? Or will it pull back more this coming week?
Ministry of Finance Press Conference – First Take
- Heavyweights attended as per previous conferences. Finance Minister (FM) Lan Foan and his three deputies
- Economists’ and market expectations damped down to RMB 1.5 – 2 Trillion in stimulus.
- Some major positive points we believe, but will be a disappointment to some
Korea Zinc: Latest Stockholder Record for Proration Risk
- If NPS and passive funds each tender half, it could hit 24%, pushing investors to consider both sides. The market’s eyeing a ratio of about MBK 3 to Choi 7.
- This tight vote could drag out the event longer than expected, and MBK might scoop up more shares if they miss their minimum target.
- MBK will likely go for open market buys against Korea Zinc’s buyback. Consider tendering to MBK Monday and spread trading futures, or push Korea Zinc to raise their buyback offer.
China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen’s Bleak Outlook, Zai Lab’s Trouble
- Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
- “Increasing revenue without increasing profits” is actually a “denial” of a company’s business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
- Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor’s valuation and allowing Edding to achieve its goal of going public.
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