In today’s briefing:
- CES China Semiconductor Chips Index Rebalance: Six Changes in June
- CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Changes Afoot
- Anycolor (5032 JP) – Moving to Prime Next Week, TOPIX Inclusion Next Month
- ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- Medtronic’s Delisting Offer For EOFlow
- SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks
- Seven & I: ValueAct’s Proposals Unlikely to Be Considered, Investor Activism Effectively Over
- FEMSA’s Exit from Heineken/Heineken Holding and Share Price Spread
CES China Semiconductor Chips Index Rebalance: Six Changes in June
- There are 6 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 June.
- All the inclusions are also additions to the CSI 500 Index and the passive flows will come from multiple trackers.
- The adds have outperformed the deletes over the last couple of weeks and there could be further outperformance over the next two weeks.
CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 9 June.
- The inclusions will also be added to other indices over the next couple of weeks and there will be inflows from multiple index trackers.
- The adds have outperformed and with 9 trading days to implementation of the changes and the inclusions also being added to other indices, there could be further outperformance near-term.
Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article last year shows.
- The general gist of the idea is that retail investors in Australia will take gains on things which run up in price, or get taken over, then look for losses.
- Below I present a study using data from 2012-2022 of how a basket portfolio trade might work.
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Changes Afoot
- The review period for the June rebalance ended on 31 May. Announcement of the changes will be made on 9 June with implementation at the close on 16 June.
- There could be 3 or 4 A-share additions due to their inclusion in Northbound Stock Connect. That in turn expands the index universe and could result in 2-3 deletions.
- If there are 4 adds and 2 deletes at the June rebalance, estimated one-way turnover at the rebalance will be 13.4% and will result in a one-way trade of US$81m.
Anycolor (5032 JP) – Moving to Prime Next Week, TOPIX Inclusion Next Month
- Anycolor (5032 JP) IPOed a year ago, rose several-fold, saw the underwriting broker offer a huge target price, then it fell. There was an offering. And then the murders began.*
- The offering in January, discussed here, created overhang, and the stock fell sharply in the next 6 weeks. Blowout earnings came in mid-March. Along with a TSE Prime transfer application.
- Now we have the Prime promotion on 8 June, which leads to a TOPIX inclusion on 28 July.
ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- There will be 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 June.
- One-Way turnover for the Chinext Price Index is estimated at 3.17% while the one-way turnover for the ChiNext50 Index is 6.61%. The one-way trade across both indices is CNY 2.72bn.
- The adds have outperformed the deletes by a huge margin over the last 3 months and there could be profit taking into implementation.
Medtronic’s Delisting Offer For EOFlow
- Back on the 25 May, healthcare company Medtronic Plc (MDT US) announced it had entered into a set of definitive agreements to acquire EOFlow (294090 KS).
- Via a three-step process – SPAs, issuance of new shares, and a Tender Offer – Medtronic will seek majority control, together with a view to delisting EOFlow.
- Completion is expected in 4Q23. Regulatory approvals – domestic and foreign – form part of the conditions. Trading wide to terms.
SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks
- The June 2023 regular rebalance index changes for the SE600 index and the EURSTX index were announced after the close yesterday.
- There are 8 ADDs/DELs for the SE600 index and 3 ADDs and 2 DELs for the EURSTX index.
- In this insight, we take a closer look at our final index flow expectations for June 2023.
Seven & I: ValueAct’s Proposals Unlikely to Be Considered, Investor Activism Effectively Over
- Last week, shareholders of Seven & I Holdings (3382 JP) rejected all four of the board nominees proposed by ValueAct.
- ValueAct, seeing their higher vote count as a modest success, sent a letter to Seven & I, requesting a resumption of discussions despite the failed attempt to remove senior leadership.
- We think the company is unlikely to seriously consider Value Act’s proposals any longer, indicating the end of the investor activism campaign.
FEMSA’s Exit from Heineken/Heineken Holding and Share Price Spread
- FEMSA has placed c.€3.3 billion of Heineken NV (HEIA NA) and Heineken Holding NV (HEIO NA) shares and tap €250 million of existing 2026 Exchangeable bonds. The placement removes a major overhang.
- The holding structure (equivalence 1 HEIO NA ~ 1 HEIA NO) allows the Heineken family to control the second largest brewer worldwide, with just a 27.3% economic interest (post-FEMSA’s placement).
- The discount has tightened to 15.8%, still above the 10.4% average of the last ten years, and rather large considering such a simple structure.
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