In today’s briefing:
- Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
- Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes
- IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- SenseTime (20 HK): Index Inclusions Incoming?
- Adani Enterprises US$2.4bn FPO – Updates, Pricing, Structure, Anchor and Some More
- Northbound Stock Connect Expansion: Updated Details
- JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang
- Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Unconditional
- Where To Go With Warrego?
Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
- The review period for the Nikkei 225 (NKY INDEX) March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.
- Lasertec Corp (6920), Oriental Land (4661) and Renesas Electronics (6723) remain our top inclusions, while Toyobo Co Ltd (3101), Nippon Light Metal (5703) and Toho Zinc (5707) could be deleted.
- Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.
Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes
- Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.
- Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.
- Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.
IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
- Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
- With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.
SenseTime (20 HK): Index Inclusions Incoming?
- SenseTime Group (20 HK) was added to the Non-SDN Chinese Military-Industrial Complex Company (NS-CMIC) list on 10 December 2021. So, the stock is not a part of any global indices.
- There is a possibility that the stock is no longer restricted to U.S. investors and that could lead to multiple index inclusions over the next few months.
- Inclusion in the MSCI China Index could take place in February or May while inclusion in the FTSE All-World Index could take place in March.
Adani Enterprises US$2.4bn FPO – Updates, Pricing, Structure, Anchor and Some More
- Adani Enterprises is looking to raise INR200bn (US$2.4bn) via a further public offering (FPO). Bookbuild will begin tomorrow (27th Jan 23) and last till the end of the month.
- Adani Enterprises is the flagship company of the Adani Group. The group’s entities’ stock performance over the past few years has made the founder one of the richest persons globally.
- We have covered most aspects of the deal in our earlier note published. In this note, we talk about the recent updates and the deal pricing and structure.
Northbound Stock Connect Expansion: Updated Details
- On 19 January, the HKEX clarified the liquidity criteria as well as treatment of Differentiated Voting Rights (DVR) stocks and the criteria for current Northbound stocks to become Sell-only.
- We currently see 975 China A-shares becoming eligible for Northbound Stock Connect when the extension is implemented.
- With the extension likely to be implemented in June, there will be additions to the MSCI China Index, FTSE All-World Index and FTSE All-Cap Index in August and September.
JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang
- Jafco Co Ltd (8595 JP) announced the results of its Tender Offer Buyback today. They wanted to buy 16.8mm shares including 13.9mm from Murakami-san. He sold 9.63mm. Oops.
- Pro-Ration was 69.25% which means that Murakami entities are still long about 4.276mm shares or 5.83% of shares out.
- There should be some index selling, and some Murakami Overhang. There may be more overhang at recent prices.
Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- The Adani Enterprises (ADE IN) Further Public Offering (“FPO”) expected to raise Rs 200bn has its first leg publicly complete with anchor investors taking Rs 59.849bn.
- Noted shortseller Hindenburg Research published a long report suggesting Adani Enterprises and indeed the Adani Group were over-priced according to fundamentals and were the result of a “con.”
- Now the book build starts. Deal structure and Adani Group CFO comments continue to suggest that Liquidity is a Bug, not a Feature.
Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Unconditional
- As expected, Acotec Scientific Holdings (6669 HK)’s partial offer from Boston Scientific (BSX US) at HK$20 per share is now unconditional. The final closing date is 9 February.
- The current acceptances representing 78.59% of outstanding shares imply current proration is 82.71%. Current pro-ration suggests CA Medtech post-offer shares will be counted towards the public float.
- Based on the current proration of 82.71% and at the last close price of HK$19.78 per share, the breakeven price is HK$19.00 per share.
Where To Go With Warrego?
- It’s a fair bet Hancock Prospecting and Mineral Resources (MIN AU) are actively discussing the final stages for Warrego Energy (WGO AU) behind the scenes.
- It is unlikely MinRes aggressively builds a ~19% stake in a company subject to a two-way takeover battle, and declares its position “strategic” with no intention of making an Offer.
- This stake may be a bargaining chip from MinRes to keep Hancock on the sidelines in its tilt for Norwest Energy NL (NWE AU).
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