In today’s briefing:
- MOG Digitech (1942 HK): What the Flow Is Going On?
- Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
- NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented
- JPX Nikkei 400 Index Rebalance: Some Big Impact Names
- Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
- Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)
- Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS
- Rakuten Bank (5838 JP) – At a Valuation Inflection Point
- Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨
- Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea
MOG Digitech (1942 HK): What the Flow Is Going On?
- MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
- MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
- Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.
Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
- The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
- There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
- If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).
NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented
- Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
- Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
- The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
- There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
- There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
- The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
- Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
- There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.
Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)
- A year ago I wrote that same headline as Inpex Corp (1605 JP) reported H1 results, a change in forecasts, and a bigly buyback.
- Yesterday, Inpex reported FY2023 H1 results, a change in forecasts, and a bigly buyback.
- The mechanics are the same. The impact is a bit different, but it is worth looking at. Then there is the event on 28 February 2024.
Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS
- Chindata Group (CD US) has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.
- Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.
- CMC’s offer, while higher, does not meet the “superior proposal” criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.
Rakuten Bank (5838 JP) – At a Valuation Inflection Point
- Rakuten Bank is a clear beneficiary of the steepening yield curve in Japan, with its low LDR and healthy capital ratio
- Rakuten Bank’s LTM PE multiple of 11.4x, LTM PBV ratio of 1.5x and ROE of 13.8% makes it the best ROE to PBV ratio bank among its digital peers
- Rakuten Bank is also the lowest cost to serve Japanese digital bank; it is narrowing the PBV ratio discount gap with SBI Sumishin
Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨
- The data for the Nikkei 225 Rebalance is cemented as of 31 July 2023. Lasertec Corp (6920 JP) looks like a shoo-in. The DELETEs are obvious too.
- Fast Retailing (9983 JP) doesn’t get a cap (yet). But the other ADDs are a real question. It is a matter of interpreting the methodology and qualitative aspects. And FLOAT.
- One way, Socionext (6526) and Mercari (4385) are ADDs. Another way, it looks like Nitori Holdings (9843) and ZOZO Inc (3092) or Ryohin Keikaku (7453). FLOAT IS A PROBLEM ANYWAY.
Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea
- The review period for the September rebalance of the S&P/ASX family of indices ends on Friday. There will be a lot of changes across the family.
- Hang Seng Indices will announce the changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI after market close on Friday.
- There were HUGE inflows to onshore China focused ETFs during the week with CSI 300 Index, CSI 500 Index and SSE50 Index ETFs taking in the largest amounts.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
