In today’s briefing:
- IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- KRX New Deal Index Rebalance Preview: Some Big Impact Names
- MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
- Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC
- NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413
- Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective
- Hesai Group IPO: The Bull Case
- HESAI Group IPO Preview
IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
- Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
- With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.
KRX New Deal Index Rebalance Preview: Some Big Impact Names
- The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
- We forecast one add/delete for the Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
- The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
- The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
- Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
- On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
- The review period for the upcoming rebalance of the MSCI, Nikkei 225, NIFTY, Nifty Next 50, SSE STAR50 and KRX New Deal Indices ends on 31 January.
- The IDX30, LQ45, IDX80, Global X Uranium ETF (URA US) rebalances will be implemented on 31 January while the PSEi Index (PCOMP INDEX) rebalance will be implemented on 3 February.
- There were inflows to Asian country ETFs and iShares MSCI Emerging Markets (EEM), and outflows from IShares MSCI Min Vol EM ETF (EEMV) and iShares MSCI Pacific ex Japan (EPP).
PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC
- As forecast, DMCI Holdings (DMC) and UnionBank of the Philippines (UBP) will replace Megaworld Corp (MEG) and Robinsons Land Co (RLC) at the close on 3 February.
- The PSE is using float higher than 20% for San Miguel (SMC PM), Emperador (EMP PM) and AC Energy Corp (ACEN) – there will be passive buying on the stocks.
- Historically, the inclusions have outperformed the exclusions and there has been a big move in the stocks the day after announcement. Square off existing pre-positions by mid-week.
NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
- There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
- A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
- The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.
Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413
- The conditions precedent for China Hainan Rubber Industry (601118 CH) to acquire 36.00% of Halcyon Agri (HACL SP)’s outstanding shares from Sinochem International Corporation A (600500 CH) at US$0.315 is fulfilled.
- This will trigger an MGO at US$0.315 or S$0.413. On the assumption that the offer document is despatched by 17 February, the earliest close of the offer is 17 March.
- The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate. We think that this is achievable as the offer is attractive.
Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective
- The new rules allow investors to decide whether to hold the stock until the dividend record date after knowing the dividend amount in advance.
- The new rules will be applied starting with the annual dividends for this fiscal year. We will know this year’s yearend dividend amount before deciding whether to receive it.
- From a trading perspective, the yearend dividend arb targeting ex-date mispricing will no longer be effective, which will likely change the swing trading strategy at the beginning of the year.
Hesai Group IPO: The Bull Case
- Hesai Group (HSAI US) has launched a Nasdaq IPO to raise up to US$171 million at an indicative price range of US$17-19 per ADS.
- Hesai is a global leader in LiDAR technology for autonomous driving and ADAS. In the ADAS market, Hesai is the global leader in terms of shipment volume in 2022.
- The key elements of the bull case rest on a solid competitive positioning, large addressable markets, high growth and a strong balance sheet.
HESAI Group IPO Preview
- Hesai Group (HSAI US) is getting ready to complete its IPO in the next several weeks in the United States, planning to raise as much as $171 million.
- The ADAS penetration rate in China is expected to surge from 4.6% in 2022 to 11.2% in 2024 and 87.9% in 2030.
- The company is a leading maker of laser-based LiDAR sensors in China. The company’s major customers in the ADAS segment include Li Auto, Jidu, and Lotus.
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