In today’s briefing:
- SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
- Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback
- HSCI Index Rebalance and Stock Connect: Potential Changes in June and September
- KOSDAQ150 Index Rebalance Preview: 14 Potential Changes in June
- JAPAN ACTIVISM: Silchester Goes After Shiga Bank
SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
- SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
- The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
- Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.
Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback
- Hitachi Ltd (6501 JP) results were salutary but noisy and the year to March 2023 is forecast similar (salutary but noisy). Service integration and growth to external customers is key.
- Forecast growth in main businesses ex- to-be-sold listed subs is decent, but could be better.
- A SEMI-Bigly buyback will help cushion any selling, but it has recently outrun Siemens on a like-for-like basis.
HSCI Index Rebalance and Stock Connect: Potential Changes in June and September
- We see seven new listings as potential inclusions to the HSCI in June. One is already a part of Connect while five will be added to Southbound Stock Connect.
- We see 19 potential changes to the HSCI in September. Seven of the deletions are on market cap, four on liquidity, and eight due to prolonged trading suspension.
- Some of the potential deletions have large Southbound holdings and some of these could be trimmed over the next couple of months.
KOSDAQ150 Index Rebalance Preview: 14 Potential Changes in June
- The review period for the June rebalance of the KOSDAQ 150 Index ended on Friday. We see 14 potential changes to the index – most are high probability.
- The impact of passive trading is higher on the deletions than on the additions. Short interest on the potential adds is zero/negligible and a lot larger on the potential deletions.
- Short interest on a couple of potential deletion exceeds the estimated passive selling, while there are others where short interest is three-quarters of the estimated passive selling.
JAPAN ACTIVISM: Silchester Goes After Shiga Bank
- In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.
- The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.
- While Bank of Kyoto (8369 JP) is the biggie, Shiga Bank (8366 JP) is another one with significant equity holdings.
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