In today’s briefing:
- HSTECH Index Rebalance Preview (March): Handling Treatment Changes Lead to High Turnover
- HSCEI Index Rebalance Preview: Handling Treatment & Changes in March
- 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
- HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
- HSI Index Rebalance Preview: Better Late Than Never?
- LQ45 Index Rebalance Preview (Jan): Few Weeks to Implementation
- Ping An A/H Premium: Buy the A’s, Sell the H’s
- SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
- Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
- Potential Block Deal Targets in Korea for a Preemptive Position Buildup
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.
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.
2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
- SBI Shinsei Bank (8303 JP) was my High Conviction reco in late 2020 for 2021 at ~¥1200/share. It was my High Conviction reco in late 2021 for 2022 at ¥1900/share.
- I did not get around to writing it in late December 2022, but on the first day of trading I offer Shinsei as a 2023 high conviction recommendation.
- What’s new? Not a lot, but Reading Between The Lines is still top drawer stuff.
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.
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).
Ping An A/H Premium: Buy the A’s, Sell the H’s
- Ping An Insurance (H) (2318 HK) has outperformed Ping An Insurance (601318 CH) by 38% since our last Insight. With the AH premium near parity, we take profit.
- We also reverse the position and go long Ping An Insurance (601318 CH) and short Ping An Insurance (H) (2318 HK) to play the premium expansion trade.
- Northbound holding of Ping An Insurance (601318 CH) has increased over the last couple of months while Southbound holding of Ping An Insurance (H) (2318 HK) has decreased.
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.
Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
- Weimob Inc. (2013 HK) is looking to raise about US$205m in its primary placement to fund R&D, upgrade marketing systems, and for general working capital purposes.
- On an ADV basis, the deal is a relatively small one at just 3.6 days of the firm’s three month ADV.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
Potential Block Deal Targets in Korea for a Preemptive Position Buildup
- TPG and Anchor experienced EOD risk due to the recent plunge in Kakao Bank’s stock price. So, they will sell shares if the current price rise continues a little further.
- All three PEs of Shinhan Financial are currently expected to be seeking an early exit although they expressed last year that they would remain strategic shareholders.
- Other notable targets are Hahn & Co’s Hanon Systems and K Car and MBK Partners’ ConnectWave, likely via a phased stake sale in tranches.
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