In today’s briefing:
- FTSE All-World/All-Cap Index Rebalance: Changes, Switches, Hits & Misses
- Index Rebalance & ETF Flow Recap: S&P/ASX, CSI300, SSE50, HSI, HSCEI, HSTECH, HSCI, CTG IPO, KQ150
- HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- Daiwa House REIT Placement – Well-Flagged but Low on DPU Accretion
- 10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- FTSE TWSE Taiwan 50 Index Rebalance Preview: PSMC (6770) Deletion Could Offset Some All-World Flow
- FTSE China A50 Index Rebalance Preview: PetroChina & EVE Energy Are Potential Adds
- Softbank Short Resistance
- Samsung Electronics: Local Market’s Bet on a Buyback
FTSE All-World/All-Cap Index Rebalance: Changes, Switches, Hits & Misses
- FTSE announced the results of the September SAIR for the FTSE All-World/All-Cap indices on Friday. There are 243 changes (adds, deletes, migrations across AW/AC) across Asia-Pac.
- The largest inflows will go to PSMC (6770 TT), Sumber Alfaria Trijaya (AMRT IJ), Daqo New Energy (DQ US) and Tianqi Lithium (002466 CH).
- FTSE will switch index membership from the US ADRs to the HK listings for New Oriental Education & Technology Group (9901 HK) and XPeng (9868 HK).
Index Rebalance & ETF Flow Recap: S&P/ASX, CSI300, SSE50, HSI, HSCEI, HSTECH, HSCI, CTG IPO, KQ150
- A busy Friday with the end of the S&P/ASX review period and announcement of changes to the Hang Seng family of indices and FTSE AW/AC at the September rebalance.
- Monday is the review cutoff for the FTSE TWSE Taiwan 50, STI, FTSE China 50 and A50 indices, among others. STAR50 Sep changes announcement expected post market close on Friday.
- There were some big inflows into Asia focused ETFs during the week, while the outflows from KraneShares CSI China Internet ETF (KWEB US) continued for yet another week.
HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect
- There are 24 adds and 14 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
- 19 of the 24 HSCI inclusions will be added to Southbound Stock Connect, while 12 of the 14 HSCI deletions will be removed from Southbound Stock Connect.
- Five of the HSCI constituents could be removed from Southbound Stock Connect only since the average market cap over the last year is less than HK$5bn.
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- We do not forecast any deletions from the FTSE TWSE Taiwan Dividend+ Index in September. There will be a lot of flow from dividend yield changes and capping changes.
- Based on the closing prices from 22 August, we estimate one-way turnover of 13.6% at the September rebalance resulting in a one-way trade of TWD 19,664m (US$653m).
- Passive inflows will be focused (for the most part) on stocks that have underperformed and outflows will mainly be on recent outperformers.
Daiwa House REIT Placement – Well-Flagged but Low on DPU Accretion
- Daiwa House Reit Investment (8984 JP) is looking to raise around US$98m to acquire four new properties.
- Overall, the deal is well flagged with Daiwa House REIT (DHR) making capital raises almost an annual routine. The acquisition would be accretive to DPU as well.
- In this note, we will look at the assets to be acquired, impact on forecast and portfolio, and run the deal through our framework.
10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- Ten names, five each for each direction, are almost guaranteed to migrate between MID and LARGE. From the last time we checked, Hyundai Marine and Hanmi Science are newly added.
- The rebalancing trading day is September 8, and both directions of MID⇔LARGE cause significant passive impact. So, Long/Short basket trading is a practical approach, starting about 20 days before effective.
- We should consider approaching this event in conjunction with the MSCI IR. This is because of Hyundai Mipo Dockyard, the only candidate likely to join the MSCI Standard this November.
FTSE TWSE Taiwan 50 Index Rebalance Preview: PSMC (6770) Deletion Could Offset Some All-World Flow
- Today is the review cutoff and we expect SinoPac Holdings (2890 TT) to replace Powerchip Semiconductor Manufacturing Corp (6770 TT) in the FTSE TWSE Taiwan 50 Index in September.
- Passive Taiwan50 trackers will need to buy over 5 days ADV on SinoPac Holdings (2890 TT) and sell less than a days ADV on Powerchip Semiconductor Manufacturing Corp (6770 TT).
- Powerchip Semiconductor Manufacturing Corp (6770 TT) has been added to the FTSE All-World Index and those trackers need to buy around 96.5m shares.
FTSE China A50 Index Rebalance Preview: PetroChina & EVE Energy Are Potential Adds
- PetroChina (601857 CH) and EVE Energy (300014 CH) could replace China Pacific Insurance (Group) (601601 CH) and Zhangzhou Pientzehuang Pharmaceutical Co. (600436 CH) in the index at the September rebalance.
- Assuming both changes are implemented, estimated one-way turnover is 2.24% and will result in a one-way trade of CNY 1,180m.
- There has been no announcement from FTSE yet on the potential increase in the number of index constituents from 50 to 100.
Softbank Short Resistance
- Softbank (9982 JP) is knocking on 6,000 compelling resistance that sets up a short trade just under this barrier. 5,300 lower pattern support is the level to test/break.
- RSI is also building energy for a powerful breakout from the triangle/flat range with a bear spin.
- 6,000 is a stiff barrier and if it caps will set in motion a higher degree decline to retest the 4,200-macro support line.
Samsung Electronics: Local Market’s Bet on a Buyback
- The local market is betting that Samsung Electronics will announce an additional shareholder return measure. Special dividends or buyback? They lean towards a buyback.
- It is unlikely that it will be another pref-skewed buyback. The Lee family needs cash now, so preventing the dilution of voting shares becomes the top priority.
- Hence, we should not have high expectations for a further decline in the pref discount. Instead, we should consider designing a short position aimed at block sales.
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