In today’s briefing:
- CSI300 Index Rebalance: 14 Changes & A Few Surprises
- CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
- CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
- ChiNext/ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
- SET50 Index Rebalance Preview: KCE Could Replace TIDLOR
- S&P500 Index Rebalance: Calling an UBER
- Japan Activism: Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price
- [Blue Lotus Daily]: XPEV/NIO/BYD/TSLA LI/Geely/ACMR/ MU/NVDA/981.HK/1810.HK/000660.KS
- 2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees
- Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake
CSI300 Index Rebalance: 14 Changes & A Few Surprises
- There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
- While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
- The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.
CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
- There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 8 December.
- There are 15 stocks that overlap between the CSI 300 Index and the CSI Smallcap 500 Index and there will be opposing flows from passive trackers.
- One way turnover at the rebalance is estimated at 9.56% leading to a one-way trade of CNY 6.04bn. Industrials and Information Technology gain index spots while Materials and Financial lose.
CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
- There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
- This is yet another index inclusion for Hygon Information Technology C (688041 CH) – the stock continues to move higher on expected passive buying over the next two weeks.
- Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.
ChiNext/ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
- There will be 6 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 8 December.
- There is a lot of overlap between the adds and deletes across both indices with the one-way trade across both indices estimated to be CNY 2.4bn.
- The adds and deletes have drifted lower over the last few months. However, the adds have outperformed the deletes significantly in the last month.
SET50 Index Rebalance Preview: KCE Could Replace TIDLOR
- With the review period complete, KCE Electronics PCL (KCE TB) should replace Ngern Tid Lor (TIDLOR TB) in the SET50 INDEX at the December rebalance.
- Liquidity is poor in Intouch Holdings (INTUCH TB) and Thai Life Insurance (TLI TB) but the stocks should be maintained in the index.
- Passive trackers will need to buy 0.9x ADV (1.2% of float) of KCE Electronics PCL (KCE TB) and sell 0.8x ADV (1.6% of float) of Ngern Tid Lor (TIDLOR TB).
S&P500 Index Rebalance: Calling an UBER
- Uber Technologies (UBER US), Jabil Circuit (JBL US) and Builders Firstsource (BLDR US) will be added to the S&P 500 INDEX (SPX INDEX) at the close on 15 December.
- There are a bunch of inclusions. deletions and migrations across the S&P 500 INDEX (SPX INDEX), the S&P Midcap 400 Index, and the S&P SmallCap 600 Index.
- We estimate passive trackers will need to buy around US$18bn of Uber Technologies (UBER US). There has been positioning in the stock for just over a month now.
Japan Activism: Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price
- Japan Catalyst Fund is a relatively young effort in the Japan “engagement activism” space, having been founded by Monex Group in September 2019. Total assets remain apparently small.
- Championed by Monex Group founder Oki Matsumoto, despite small AUM, the fund has decent access. As of end-October, Taisho Pharmaceutical Holdings (4581 JP) was #5 and 5.26%. Now it’s #2.
- Friday, they released a statement about the MBO. It isn’t a barn-burner, but the stock has traded through terms since announcement at a too-low price. And nobody else has commented.
[Blue Lotus Daily]: XPEV/NIO/BYD/TSLA LI/Geely/ACMR/ MU/NVDA/981.HK/1810.HK/000660.KS
- XPEV/NIO/BYD/TSLA: Luxeed S7 officially launched, price lowered by RMB 8,200 (-)
- NIO: Geely and NIO enter into strategic cooperation agreement for battery swapping (+)
- ACMR/ MU/ NVDA/ 981.HK/ 1810.HK/ 000660.KS: CXMT launches first domestic LPDDR5 RAM (+/+/+/-/-/-)
2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees
- China stock market despair has brought down China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years
- Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins
- Using the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)
Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake
- The question of how Murakami-san would get out of his stake in Cosmo Energy Holdings (5021 JP) was always a biggie. He likes to sell stock in tender offer buybacks.
- Cosmo wasn’t going to do that for him. They promised dividends and a high payout ratio, but that left the question was how he was going to get out.
- A semi-obvious solution was to find a corporate partner to buy his stake and today, Iwatani Corp (8088 JP) announced that it had bought 19.86% of Murakami-san’s 20.01% holding.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
