In today’s briefing:
- Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
- FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
- Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion
- Bharti Singtel Possible Selldown/Holdco Trade – Singtel Appears to Be Ready for Cashing in US$1-2bn
- FTSE GEIS Korea: Rebalancing Week Trades
Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
- Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
- Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
- We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).
FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
- Between tightening regulations to government and regulatory support for the market to geopolitical issues, there has been a lot of market volatility and investor focus on China.
- Valuations of China focused indices are lower than those of other Developed and Emerging markets.
- Investors can use the SGX FTSE China A50 Index futures and the SGX FTSE China H50 Index futures to get exposure to the onshore and offshore China market.
Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion
- Alipay’s sale of 5m shares in Kakao Pay (377300 KS) has caused the stock to slide below its IPO price. Foreign investors have sold while retail have bought last week.
- Alipay still holds 34.7% of Kakao Pay (377300 KS) and this will be an overhang on the stock for some time.
- Kakao Pay (377300 KS) will be added to the FTSE All-World Index at the close on Friday. MSCI inclusion will likely be at the May 2023 SAIR.
Bharti Singtel Possible Selldown/Holdco Trade – Singtel Appears to Be Ready for Cashing in US$1-2bn
- Various recent media reports have indicated that Singtel aims to sell 2-4% of its stake in Bharti Airtel. Singtel has officially dismissed the reports as media speculation.
- There have been subsequent reports in the Indian media about the founder, Sunil Mittal, looking to raise around US$2bn in debt, to finance an increase in his stake in Airtel.
- In this note, we talk about the possible deal and its implications.
FTSE GEIS Korea: Rebalancing Week Trades
- We typically estimate the size of the FTSE All Cap tracking fund to be around $600B. However, empirically, one-third of this was witnessed in Korean stocks during the rebalancing week.
- Estimating each passive flow based on this, we should expect LG Energy to receive the most significant flow at 1.16x ADTV from this point until the closing of this Friday.
- As for Kakao Pay, the FTSE announced an increase in the investability to 15.8% (due to Alipay’s block deals), offering a passive inflow of 0.36x ADTV.
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