In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- Toshiba (6502) Update – No Longer Worthwhile to Be Short Toshiba Vs Peers
- 10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- STI Index Rebalance Preview: Three Cheers for Emperador?
- Swire Buyback Update – It’s On, and Regulatorily Constrained
- Yum China Pursues Primary Listing Conversion On The HKEx
- FTSE TWSE Quiddity Leaderboard Sep 2022: Elan Micro (2458 TT) Could Be a Big Negative Surprise
- Bright Scholar: Cheap Homecoming, Yet Limited Downside
- FTSE EPRA Nareit Developed Asia Preview: A Few Inclusion Possibilities
- Xiamen Port (3378 HK)’s Composite Doc Out; Shareholders To Vote On 16 Sept
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- We do not forecast any deletions from the FTSE TWSE Taiwan Dividend+ Index in September. There will be a lot of flow from dividend yield changes and capping changes.
- Based on the closing prices from 22 August, we estimate one-way turnover of 13.6% at the September rebalance resulting in a one-way trade of TWD 19,664m (US$653m).
- Passive inflows will be focused (for the most part) on stocks that have underperformed and outflows will mainly be on recent outperformers.
Toshiba (6502) Update – No Longer Worthwhile to Be Short Toshiba Vs Peers
- Since late June when I recommended to not be long Toshiba vs Peers, Toshiba has fallen 9.5% vs Peers (-6% on its own and an equal-weighted Peer Basket is +3.9%).
- If one assumes the likelihood of a privatisation has not gone down, and the likely takeout price is the same, back-end adjusted, probability-adjusted IRRs are up 6-8%, to decent levels.
- This changes my recommendation from Bearish to Probability-Adjusted Bullish, but it is nuanced, and it is still a range trade.
10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- Ten names, five each for each direction, are almost guaranteed to migrate between MID and LARGE. From the last time we checked, Hyundai Marine and Hanmi Science are newly added.
- The rebalancing trading day is September 8, and both directions of MID⇔LARGE cause significant passive impact. So, Long/Short basket trading is a practical approach, starting about 20 days before effective.
- We should consider approaching this event in conjunction with the MSCI IR. This is because of Hyundai Mipo Dockyard, the only candidate likely to join the MSCI Standard this November.
STI Index Rebalance Preview: Three Cheers for Emperador?
- We expect Emperador (EMI SP) to be added to the FTSE Straits Times Index at the September rebalance after meeting the free float, market cap and liquidity requirements.
- As the lowest ranked current index constituent, we expect Comfortdelgro Corp (CD SP) will be deleted heaping pressure on the beleaguered stock with over 4 days of ADV to sell.
- Emperador (EMP PM) is an inclusion to the FTSE All-World Index and there is a lot to buy on that line from passive trackers at the close on 16 September.
Swire Buyback Update – It’s On, and Regulatorily Constrained
- And on the 6th Day, Swire Pacific (A) (19 HK) commenced its buyback.
- It took until the 6th day for Swire to start its buyback, and now that it has started, we may have a little better idea of the parameters. And impact.
- So far, they appear to be bending the rules a little, but it is still the way it should be. So there is still a trade here to do.
Yum China Pursues Primary Listing Conversion On The HKEx
- Last week Yum China Holdings Inc (9987 HK) announced it has applied for voluntary conversion to a primary listing on the Hong Kong Stock Exchange.
- Should all necessary approvals from the HKEx be satisfied, Yum will become dual primary listed on the New York Stock Exchange and the HKEx.
- This regulatory process, facilitated by rules introduced by the HKEx over the past year, enables the de-listing of the ADRs and the smooth transition to a sole HK listing.
FTSE TWSE Quiddity Leaderboard Sep 2022: Elan Micro (2458 TT) Could Be a Big Negative Surprise
- Monday 22nd August 2022 was the base date for the FTSE TWSE Taiwan 50 and Taiwan Mid-Cap 100 Indices for the September 2022 Rebalance.
- With the reference period for selection now complete, we take a look at the potential ADDs and DELs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices.
- One special candidate, Elan Microelectronics (2458 TT) could be in for a big negative surprise when the results are announced in a couple of weeks.
Bright Scholar: Cheap Homecoming, Yet Limited Downside
- Bright Scholar Education (BEDU US) (BSE), an operator of schools across China, the UK, and the US, received an Offer earlier this year from Huiyan Yang, the chairperson.
- Yang is offering US$3.32/ADS – adjusted for the recent reverse split – a 44% premium to the undisturbed price.
- Yang controls 92.5% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.
FTSE EPRA Nareit Developed Asia Preview: A Few Inclusion Possibilities
- The FTSE EPRA Nareit Index September rebalance will use data from 22 August. The changes will be announced on 31 August and implemented at the close on 16 September.
- Healthcare & Medical Investment Corporation (3455 JP) is a potential inclusion, while there are a few others that are close adds on market cap & other criteria.
- Healthcare & Medical Investment Corporation (3455 JP) is also an inclusion to the FTSE All Cap Index at the September rebalance and the EPRA Nareit inclusion will increase passive inflows.
Xiamen Port (3378 HK)’s Composite Doc Out; Shareholders To Vote On 16 Sept
- Back on 2 June, SOE terminal operator Xiamen International Port (3378 HK) announced a pre-conditional Offer of $2.25/share from Xiamen Port Holding, a Fujian SASAC-controlled entity.
- The pre-conditions – NDRC, MoC, SAFE, and CSRC – were fulfilled on the 16 August.
- The Composite Doc is now out. The H-class meeting will be held on the 16 September. There is no tendering condition. Payment should be the 6 October.
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