In today’s briefing:
- Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- Anycolor (5032) – Great Quarter Guys! Again. Context Issues. Still.
- EQD | Hang Seng (HSI): How Far Can It Rally Now?
- HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- NEC (6701 JP): Generative AI Is the Spark, Not the Driver
- Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
- India’s Mutual Fund Stress Testing Is Not the Solution Which Is Need of Hour.
- Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation
Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
- The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
- The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
- Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
- There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
- Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
Anycolor (5032) – Great Quarter Guys! Again. Context Issues. Still.
- Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
- After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
- The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).
EQD | Hang Seng (HSI): How Far Can It Rally Now?
- The Hang Seng Index is rallying and could co higher this week but it seems there isn’t much room to go really higher.
- A good target to cover your LONG holdings would be 17500, for this coming week and/or the following week.
- A pullback this coming week is also possible, so it’s not sure the index can rally more from here, or at least not without some correction first.
HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
- Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
- The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row.
NEC (6701 JP): Generative AI Is the Spark, Not the Driver
- The P/E ratio has risen above 20x this fiscal year from no more than 13x in the previous four years, reflecting successful restructuring and investor enthusiasm for AI.
- Profit margins are rising, but remain moderate in absolute terms with room for further improvement. The shares may consolidate, but they do not look overvalued.
- Management is aiming for generative AI sales of ¥50 billion in three years time. This is less than 2% of total sales, but a positive indicator for NEC’s software business.
Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
- In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
- The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
- We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.
India’s Mutual Fund Stress Testing Is Not the Solution Which Is Need of Hour.
- What is a stress test? How it is being calculated?
- Key Takeaways of Mutual Fund’s Stress Test Results. What should investors know?
- Flaws in SEBI’s Stress Testing Results and Way Ahead for investors
Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation
- Estimating FINANCIAL INVESTMENT’s dividend arbitrage positions’ exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January’s volume (≥₩2T).
- Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April’s end, likely impacting index negatively, akin to January.
- Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.
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