In today’s briefing:
- HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
- HSI Index Rebalance Preview: Better Late Than Never?
- PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
- LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
- CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
- SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
- ASX200 Index Rebalance: PEXA to Replace Pendal
HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- We expect one change to the Hang Seng China Enterprises Index (HSCEI INDEX) in March, though there is a possibility of a second change.
- The change in the index handling treatment for Secondary Listings and Dual Primary Listings will also result in some big float changes resulting in inflows to some stocks.
- If there are two changes to the index, estimated one-way turnover is 2.39% resulting in a one-way trade of HK$1,536m.
HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
- We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
- We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
HSI Index Rebalance Preview: Better Late Than Never?
- There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
- We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
- All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.
PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
- Some creative float increases for AC Energy Corp (ACEN), San Miguel (SMC PM) and Emperador (EMP PM) should result in the stocks remaining in the index and getting passive inflows.
- DMCI Holdings (DMC PM) should replace Megaworld Corp (MEG PM), while UnionBank of the Philippines (UBP PM)‘s inclusion should result in Robinsons Land Co (RLC PM)‘s deletion from the index.
- There will be a big impact on the additions, deletions and stocks with float changes. The stocks have already started to move ahead of the passive flows.
LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- The review period for the LQ45 Index ended on 30 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
- Potential adds are Bumi Resources Minerals Tbk (BRMS IJ), Surya Esa Perkasa (ESSA IJ), Saratoga Investama Sedaya (SRTG IJ), Adaro Minerals (ADMR IJ) and Mitratel (MTEL IJ).
- Potential deletions are PT Wijaya Karya (Persero) Tbk (WIKA IJ), Erajaya Swasembada (ERAA IJ), Media Nusantara Citra (MNCN IJ), Chandra Asri Petrochemical (TPIA IJ) and HM Sampoerna (HMSP IJ).
NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In
- We expect 5 changes to the Nifty 100 Index (NSE100 INDEX) at the March rebalance. The review period ends on 31 January and the announcement should be late February.
- The largest impact of passive trading will be on Page Industries (PAG IN), Biocon Ltd (BIOS IN), Mphasis Ltd (MPHL IN) and ABB India Ltd (ABB IN).
- There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
- End December was the end of the review cutoff for a lot of indices that will rebalance within the next couple of months.
- PEXA Group (PXA AU) replaces Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 12 January.
- There were big outflows from Hong Kong and China focused ETFs led by Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).
CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
- Two thirds of the way through the review period, we see 15 potential index changes at the June rebalance that will be implemented at the close on 9 June.
- We estimate a one-way turnover of 2.35% at the June rebalance leading to a one-way trade of CNY 5.57bn.
- The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last six months, though there is some near-term deterioration.
SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
- A third of the way through the review period of the June rebalance, we see one potential index change with Adani Enterprises (ADE IN) replacing Wipro Ltd (WPRO IN).
- Adani Enterprises (ADE IN) could move lower in the short-term due to the public issue of shares but should find support from passive buying from local and global index trackers.
- Wipro Ltd (WPRO IN) has underperformed most of its peers by a wide margin over the last year and the passive selling could provide an entry point.
ASX200 Index Rebalance: PEXA to Replace Pendal
- PEXA Group (PXA AU) will replace Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 12 January.
- Passive S&P/ASX 200 (AS51 INDEX) trackers will receive PEXA Group (PXA AU) shares from their Link Administration (LNK AU) holdings and will have to buy the rest from the market.
- There will be selling in Pendal Group (PDL AU) from S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index trackers as well as from global trackers.
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