In today’s briefing:
- Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
- LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- PCOMP Index Rebalance Preview Feb 23: Float Increases to Drive Changes & Flow
- KOSPI200 Index Rebalance Preview (June): Changes from Now to June
- Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Now Open
- HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
- The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
- Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.
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.
HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- We expect at least one change to the Hang Seng Tech Index (HSTECH INDEX) in March – though there could be another change as well.
- Changes to the index handling for Dual Primary Listings should result in an increase in free float and passive inflows to Li Auto (2015 HK) and XPeng (9868 HK).
- Estimated one-way turnover is 5.83% resulting in a one-way trade of HK$4.87bn and this is mainly driven by float and capping changes.
Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
- The Stock Exchange of Thailand SET 50 Index (SET50 INDEX) rebalance was implemented at the close on Friday and there were a bunch of review cutoffs on the same day.
- Passive Hang Seng trackers need to sell Meituan (3690 HK) at the close on 4 January following Tencent (700 HK) in-specie distribution.
- We take a look at flows to Asian focused ETFs over the course of 2022. A lot of winners in terms of AUM, but a few losers too.
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).
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.
KOSPI200 Index Rebalance Preview (June): Changes from Now to June
- A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
- There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire & Marine Insurance.
- Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.
Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023)
- There are four weeks left to go in the data period for calculating the next Nikkei 225 review for March, likely to be announced ~7 March 2023.
- The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723) , and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707) , Toyobo (3101), and Nippon Light Metal (5703)
- Oriental Land is the one to watch in March. Slight underperformance would boost buying impact. The Sep23 rebalance and subsequent ones are smaller in size but more interesting in impact.
Acotec (6669 HK): Boston Scientific’s HK$20 Partial Offer Now Open
- Acotec Scientific Holdings (6669 HK)’s partial offer from Boston Scientific (BSX US) at HK$20 per share is now open. The IFA opines it to be fair and reasonable.
- The partial offer is conditional on the offeror hitting 50.01% voting rights. Irrevocables ensure that it will be declared unconditional on or before the first closing date (26 January).
- Based on a minimum proration of 71.31% and at the current share price of HK$17.20 per share, the estimated breakeven price is HK$10.38 per share.
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.
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