In today’s briefing:
- OOIL (316 HK): Peak Index Inclusion?
- STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- Crown Resorts: Regulatory Approvals Falling Into Place
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
- Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality
OOIL (316 HK): Peak Index Inclusion?
- Over the last 3 months, Orient Overseas International (316 HK) has been added to the FTSE All-World Index, MSCI Standard Index and Hong Kong Hang Seng Index (HSI INDEX).
- The stock has outperformed its Asia peers and now trades at a higher valuation. Shorts have been building positions over the last couple of months.
- Cumulative excess volume on the stock has been increasing. While a lot of positioning has likely been unwound, there could be more unwinding over the next few weeks.
STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
- That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
- Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.
Crown Resorts: Regulatory Approvals Falling Into Place
- Into the final straight. Victoria and NSW have signed off on Blackstone’s proposed acquisition of Crown Resorts (CWN AU).
- Gaming regulatory approval from Western Australia remains outstanding, but this is done. Crown’s conduct in WA was no better – or worse – than it was in Victoria and NSW.
- Trading super tight with potentially another month or so until payment.
Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, net inflow was ~US$0.6bn, split (roughly) <US$0.1bn for Shanghai and US$0.5bn for Shenzhen.
- The largest inflows were into Kuaishou Technology (1024 HK) and Wuxi Biologics (2269 HK). The largest outflows were in CNOOC Ltd (883 HK) and Tencent (700 HK).
Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality
- Tokyo Electron has announced a new Medium-term Plan that shows what the company could probably do if the next five years were as good as the last five years.
- That seems unlikely. The plan ignores rising interest rates, the risk of recession, political risk, and the possibility of demand from South Korea, Taiwan and China maxing out.
- It looks like FY Mar-23 guidance is intended to be conservative. That cannot be take for granted.
Before it’s here, it’s on Smartkarma
