In today’s briefing:
- Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
- Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- KOSPI Size Indices – Changes in March & Implications
- CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
- K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities
- Adani Family Sells Stakes To GQG
- Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing
- SBI Sumishin Net Bank Pre-IPO – Revised Forecast and Valuations – RoA or RoE?
- KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
Nikkei 225 Sep 2023 PREVIEW – Lasertec, Toshiba, Nitori, Maybe Zozo
- The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.
- That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&S (7003), and Matsui Securities (8628).
- Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba’s disposition changes in the interim.
Northbound Stock Connect Expansion: List Announced; Potential MSCI Adds in May
- HKEX (388 HK) has announced that the expansion of Northbound Stock Connect eligible stocks will take effect from the start of trading on 13 March.
- 598 stocks listed on the Shanghai Stock Exchange and 436 stocks listed on the Shenzhen Stock Exchange will be added to Northbound Stock Connect.
- Currently, we see 43 stocks being added to the MSCI China Index in May (inflows of US$1.42bn), further increasing China’s weight in the MSCI Emerging Markets Index.
KOSPI Size Indices – Changes in March & Implications
- There are 5 migrations from MidCap to LargeCap, 4 LargeCap to MidCap, 3 new additions to MidCap, 9 SmallCap to MidCap, 11 MidCap to SmallCap, 3 new additions to SmallCap.
- The migrations from SmallCap to MidCap have outperformed the stocks migrating between other segments by a huge margin over the last few months.
- Given the huge outperformance and looking at how the migrations have performed historically, we’d expect the stocks migrating to MidCap to underperform post implementation of the changes.
CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March
- The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
- There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
- There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.
K-New Deal Official Constituent Changes: Evaluating Flow Trading Opportunities
- Notable constituent changes are Posco Chemical (003670 KS), Douzone Bizon (012510 KS), Ecopro (086520 KS), Connectwave (119860 KS), SK Innovation (096770 KS), KMW (032500 KS), & Hanmi Science (008930 KS).
- Among these, Douzone Bizon (012510 KS) and KMW (032500 KS) are expected to receive the most significant flow impact (x ADTV) at the close of March 9th.
- Since the flow size is concentrated within a fairly right trading window, between 2 pm and the close on the 9th, the degree of price impact should be relatively higher.
Adani Family Sells Stakes To GQG
- Late Thursday night, the Adani Group announced that the family entities had sold Rs 154bn or US$1.8bn+ of stock in four listed entities to Australian-listed GQG Partners (GQG AU).
- GQG is a US$90bn AUM asset manager specialising in emerging markets. They bought stakes of 2.55-4.10% in each of four entities.
- This “increases” float, but doesn’t. As of now, this will partially offset one MSCI downweight in May, and will likely cause three FIF uplifts.
Long Short Setup Candidate: Posco Holdings & Celltrion with TIGER Top 10 Rebalancing
- Celltrion and Posco Holdings will switch places. Although there is still time until the screening period, the market capitalization gap between them has already widened significantly.
- Posco Holdings will likely welcome a passive inflow of 0.44x ADTV, whereas Celltrion is expected to face outflows of around 0.69x ADTV.
- Ecopro BM entered the Top 20 (preliminary screening table) with a YTD stock price increase of 130%, becoming the first KOSDAQ-listed company to do so.
SBI Sumishin Net Bank Pre-IPO – Revised Forecast and Valuations – RoA or RoE?
- SBI Sumishin Net Bank (7163 JP) (SSNB) is now looking to raise around US$380m in its second listing attempt.
- SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
- In this note, we talk about our updated earnigns forecast and thoughts on valuations
KOSDAQ150 Index Rebalance Preview: Potential Adds Outperform Deletes by 50% in 4 Months, EXIT!
- Two thirds 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 3.5%. Impact on the expected deletions is a lot higher than the impact on the expected inclusions and shorts are building up on the deletes.
- Since the start of the review period, the potential inclusions have outperformed the potential deletions by nearly 50% and the KOSDAQ 150 Index (KOSDQ150 INDEX) by over 20%.
Japan Post Bank Placement – Misbehaving – Still Has Time to Correct – A Look at past Deals
- Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
- We have looked at the deal in our past note, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback.
- In this note, we talk about the updates since our last note and have a look at some of the past deals.
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