Most Read: Shinsei Bank, Varun Beverages Ltd, Softbank Group, Toyota Motor, Nissan Motor, Bilibili, Lifestyle International Holdings, Toyo Construction, Pylon Technologies Co Ltd, Hisense Home Appliances Group Co., Ltd. H and more

• The TSE announced its first large FFW rebalance under new rules and Market Segmentation. ~1,000 names see FFW drop 5% or more. 100+ rise 5+%. Reverse funding trades are significant.
• Top BUY flow: Toyota, Olympus, Daiichi Sankyo, Tokio Marine, JP Holdings with an average of 4.0 days’ ADV to buy. Softbank/9984, MitCorp, Hitachi, Suzuki, Marubeni average 4.8 days to SELL.
• 493 names start their phased weight reduction out of TOPIX because they do not meet the hurdle for minimum trading value. And… Shinsei is the most impressive SELL name.

• We see 9 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR. There are a few stocks close to the cutoffs.
• Inclusion in the index will require passive trackers to buy 7-14 days of ADV on the stocks. That increases to 18-55 days of delivery volume.
• There appears to be significant pre-positioning on a lot of the potential adds and the shareholding pattern as of end September should provide a better picture.

• As a follow-on to TOPIX October 2022 Rebal – BIG Names with BIG Flows which discussed ¥2.1trln a side flows overall, this insight analyses and proposes intra-sector baskets.
• In general, the sector-neutral BUYs vs SELLs baskets of all names where Index Shares change by 10% or more have seen BUYs sharply outperform SELLs in the past three weeks.
• Look for pre-positioning unwinds so trading BUY vs SELL baskets which have bucked the trend, banks and chemicals – might be worthwhile. Otherwise, pick your spots. Use the flow.

• At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
• Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
• Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.

• In April, a Bloomberg story said Renault SA (RNO FP) might sell shares in Nissan Motor (7201 JP) to support its investment in EVs. They might sell to Nissan, others.
• Renault shares popped hard, this two months after CEO Luca de Meo had said Renault might split, investing in and listing its EV business separately.  But since then? Crickets.
• Over the weekend, we have news talks are coming to a head. My feeling? The results won’t be pretty – a messy agreement which inspires nobody, but probably still works.

• Bilibili Inc (BILI US) listed in the US in April 2018. It eventually listed in Hong Kong under the ticker Bilibili (9626 HK) in March 2021 as a Secondary Listing. 
• Bilibili (9626 HK)  announced 16 March 2022 it intended to pursue a HK Primary Listing.  Application was announced on 2 May 2022, Circular a month later. Results announced 29 September.
• As of 3 October, it is a Dual Primary Listing, making it eventually eligible for Southbound Trading. But there as confusion as to when. Hint:  It’s March 2023.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US).
• Lowest spreads – Tyro Payments (TYR AU), OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), MACA Ltd (MLD AU), Singapore Medical (SMG SP), Jinke Smart Services (9666 HK).

Our latest Webinar looks at news updates on Shinsei, Toa Oil, and Toyo Construction. To help us explore the implications for investors, we welcome Insight Provider Travis Lundy of Quiddity Advisors. 

The webinar will be hosted on Wednesday, 12 October 2022, 17:00 SGT/HKT.

Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

• Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
• The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.

• Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest  RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
• Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
• Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.