In today’s briefing:
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
- HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng
- KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
- HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
- Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
- HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
- Adani Group: GQG Bets Big; MSCI Index Impacts
- Nikkei 225 Index Rebalance: Oriental Land, Renesas, JAL IN; Toyobo, Nippon LightMetal, Toho Zinc OUT
- Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
- The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
- Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
- ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.
HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng
- Weibo Corp (9898 HK) replaces Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 March.
- Using prices from the close on 24 February, estimated one-way turnover is 8.92% and will result in a one-way trade of HK$7,078m at the close on 10 March.
- There will be big buying on Li Auto (2015 HK) and XPeng (9868 HK) due to a change in the index handling methodology for Dual Primary listings.
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
- The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
- We forecast one add/delete for the Secondary Battery Index and Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
- The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
- There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
- We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
- 19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.
Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
- The changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) were announced post market close on Friday.
- Busy start to the coming week with the MSCI implementation at the close on 28 February and a few announcements to other indices later in the week.
- There were outflows from Tracker Fund of Hong Kong Ltd (2800 HK) during the week taking the YTD outflows to over US$1bn.
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
- As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
- Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
- Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.
Adani Group: GQG Bets Big; MSCI Index Impacts
- Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
- The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
- There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.
Nikkei 225 Index Rebalance: Oriental Land, Renesas, JAL IN; Toyobo, Nippon LightMetal, Toho Zinc OUT
- Oriental Land (4661), Renesas Electronics (6723) and Japan Airlines (9201) will replace Toyobo (3101), Nippon Light Metal (5703) and Toho Zinc (5707) in the Nikkei 225 (NKY INDEX).
- Oriental Land (4661 JP) has been added at a post-split PAF of 1. This reduces the passive buying on the stock by around a third.
- Passive trackers need to buy between 2.2-6.7 days of ADV on the adds while selling between 5-12 days of ADV on the deletes. There’s a big funding trade too.
Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- As expected, Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) IN, and Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) OUT.
- The Nikkei implemented the “Tricky Twist” discussed. This lowers the total amount to buy on Oriental Land vs what many would have expected.
- That’s “disappointing” BUT… the behavioural aspects here are really interesting, and the timetable for the event is worth thinking about.
Index Rebalance & ETF Flow Recap: NKY, HSCEI, HSTECH, STAR50, MVIS, Japan Post Bank, Adani, KRX BBIG
- The MSCI Feb QCIR was implemented on Tuesday and there were a bunch of announcements for other indices from Wednesday to Friday.
- The implementation of the March rebalance for the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) take place at the close on Friday.
- Redemptions continue on IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) and KraneShares CSI China Internet ETF (KWEB US).
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