In today’s briefing:
- China: Huge ETF Inflows & Impact on Stocks
- Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
- Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus
- StubWorld: China Conch Plumbs New Lows
- KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
- Vingroup: VinFast’s Valuation Makes No Sense
- Seven & I: An Update on Investor Activism
- Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
- EQD | Nikkei 225 (NKY) Rising but for How Long?
China: Huge ETF Inflows & Impact on Stocks
- Nearly US$20bn has flowed into mainland China listed ETFs since 18 July and could be driven by the National Team supporting the market.
- Most of the inflows have been focused on large cap indices including CSI 300, STAR50, CSI 500, SSE50, ChiNext and other sectoral and thematic ETFs.
- The largest impact has been on the SSE STAR50 (STAR50 INDEX) constituents, but that has not stopped the slide in the stocks.
Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
- Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
- We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.
STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
- As expected, the index committee has used a 6-month minimum listing history and that results in two changes to the SSE STAR50 (STAR50 INDEX) in September.
- Piotech (688072 CH) and Hwatsing Technology (688120 CH) will replace Suzhou Nanomicro Technology (688690 CH) and Zhuhai CosMX Battery (688772 CH) in the index.
- One-Way turnover is estimated at 2.83% and will result in a one-way trade of CNY 3,562m. There does not appear to be a lot of pre-positioning on the stocks.
Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus
- HLB’s process of selecting a lead underwriter for the KOSPI listing has been witnessed in Yeouido.
- The price impact becomes most evident on the board approval date as the point at which this impact is most pronounced is substantially accelerated due to the market’s learning effect.
- There is a strong likelihood that HLB will have its board decision by mid-September, necessitating our preparation for a position setup targeting this timing.
StubWorld: China Conch Plumbs New Lows
- The China Conch Venture Holdings (586 HK)/ Anhui Conch Cement (600585 CH) ratio, and the implied stub, are now at all-time lows.
- Preceding my comments on China Conch/Anhui are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
- Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
- The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
- The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.
Vingroup: VinFast’s Valuation Makes No Sense
- VinFast (VFS US), the EV arm of Vietnamese conglomerate Vingroup Jsc (VIC VN), commenced trading on the 14 August. And promptly took off.
- VinFast’s current market cap is ~4x General Motors (GM US)‘s, twice that of Mercedes-Benz (MBG GR)‘s, and the second-largest pure-play EV-maker after Tesla (TSLA US).
- Vingroup’s holding in VinFast is worth 13x its market cap. This is not sustainable.
Seven & I: An Update on Investor Activism
- Sogo & Seibu’s labor union threatens strike if job protection talks stall. This emphasizes the number of considerations Seven & I Holdings (3382 JP) had to consider during changes.
- Had ValueAct shown more patience, they might have worked with Seven & I to improve the struggling Eto Yokado supermarkets business.
- Thus, ValueAct’s investor activism campaign seem unlikely to achieve a full restructuring of underperforming businesses at Seven & I.
Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
- Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
- Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module
- In this note, we will talk about the positive aspects of the deal.
EQD | Nikkei 225 (NKY) Rising but for How Long?
- Rebound on Nikkei 225 INDEX may not last for long, 2-3 weeks tops, it will encounter resistance no later than mid of September (most unfavorable month for stocks gains).
- Resistance levels to watch vary, depending on number of weeks up. For this week and the next, a new pullback could start from 32476 and 32817.
- If the index goes =>33000, it means it is rallying and will not correct into September, the rally then could last into October.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
