Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<p>This insight re-introduces a weekly monitor for H-Share/A-Share spreads.</p>
<p>The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
<ul>
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the narrowest and widest spread and the average spread over the last three years. </li>
</ul>
<p>In the example for the H/A spreads in the <strong>Materials</strong> sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> and <a href="https://www.smartkarma.com/entities/ganfeng-lithium-co-ltd" target="_blank" data-smartkarma-citation="entities:26795:1" rel="noopener">Ganfeng Lithium (1772 HK)</a> are spreads at the relatively narrow end of their 52-week ranges, while <a href="https://www.smartkarma.com/entities/maanshan-iron-steel-h" target="_blank" data-smartkarma-citation="entities:204:1" rel="noopener">Maanshan Iron &amp; Steel H (323 HK)</a>, <a href="https://www.smartkarma.com/entities/bbmg-corp-h" target="_blank" data-smartkarma-citation="entities:2821:1" rel="noopener">BBMG Corp H (2009 HK)</a>, <a href="https://www.smartkarma.com/entities/sinopec-shanghai-petrochemical-co-ltd" target="_blank" data-smartkarma-citation="entities:17576:1" rel="noopener">Sinopec Shanghai Petrochemical (338 HK)</a>, and <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement Co Ltd H (914 HK)</a> are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.</p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/165/714/original/Screenshot%202020-10-18%20at%202.00.22%20AM.png?1602957633" class="editor-image img-responsive" data-smartkarma-image-id="165714"></figure>
<p></p>
</section>
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<p>Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.</p>
<div class="content-highlight">
<p>Recommendations are in highlights like this.</p>
</div>
<section class="figure">
<p>More below the fold.  </p>
<hr>
<p><em>By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).</em></p>
</section>

This insight re-introduces a weekly monitor for H-Share/A-Share spreads.
The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...

H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the narrowest and widest spread and the average spread over the last three years. 

In the example for the H/A spreads in the Materials sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. Shandong Gold Mining Co., Ltd. (1787 HK) and Ganfeng Lithium (1772 HK) are spreads at the relatively narrow end of their 52-week ranges, while Maanshan Iron &amp; Steel H (323 HK), BBMG Corp H (2009 HK), Sinopec Shanghai Petrochemical (338 HK), and Anhui Conch Cement Co Ltd H (914 HK) are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.






Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.

Recommendations are in highlights like this.


More below the fold.  

By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).


Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

David Blennerhassett

Event-Driven

<div>
<p>This week in StubWorld ...</p>
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<div>
<div>
<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/china-everbright-ltd" target="_blank" data-smartkarma-citation="entities:167:1" rel="noopener">China Everbright (165 HK)</a> outperforms in the last month, after touching a one-year low, but still looks inexpensive. </p>
</div>
</div>
</div>
<div>
<p>Preceding my comments on China Everbright are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>


This week in StubWorld ...




China Everbright (165 HK) outperforms in the last month, after touching a one-year low, but still looks inexpensive. 




Preceding my comments on China Everbright are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: China Everbright Bounces Off Lows But Still Cheap

Equity Capital Markets

Huatai Securities Co Ltd (H) / Equity Capital Markets

<p>Today, <a href="https://www.smartkarma.com/entities/huatai-securities-co-ltd-h" target="_blank" data-smartkarma-citation="entities:449:1">Huatai Securities Co Ltd (H) (6886 HK)</a> (or <a href="https://www.smartkarma.com/entities/huatai-securities-co-ltd-a" target="_blank" data-smartkarma-citation="entities:450:1">Huatai Securities Co Ltd (A) (601688 CH)</a> more properly) <a href="https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/14097594.html" target="_blank">announced</a> at the London Stock Exchange that it was resuming the process of its GDR (Global Depositary Receipt) issuance, with an offer of up to 82,515,00 GDRs.</p><p>As covered six months ago, each GDR represents 10 A shares, that is up to RMB 15.578bn at the last traded price of the A shares today (RMB 18.88/share), which is a fair bit more than the <em>"not less than US$500mm"</em> which had been expected as a potential issuance. If all the shares were issued that would be about 10% of the share capital of Huatai (pre-issuance). </p><p>This [re-] launches the London side of the London-Shanghai Connect.</p><p>It creates an "access trade arb" so people will look at the GDRs vs the Hs vs the As.</p><p>And it creates <em>another arb</em>.</p>

Today, Huatai Securities Co Ltd (H) (6886 HK) (or Huatai Securities Co Ltd (A) (601688 CH) more properly) announced at the London Stock Exchange that it was resuming the process of its GDR (Global Depositary Receipt) issuance, with an offer of up to 82,515,00 GDRs.As covered six months ago, each GDR represents 10 A shares, that is up to RMB 15.578bn at the last traded price of the A shares today (RMB 18.88/share), which is a fair bit more than the "not less than US$500mm" which had been expected as a potential issuance. If all the shares were issued that would be about 10% of the share capital of Huatai (pre-issuance). This [re-] launches the London side of the London-Shanghai Connect.It creates an "access trade arb" so people will look at the GDRs vs the Hs vs the As.And it creates another arb.

Huatai Securities GDR Back On - Good Replacement Trade But Not Great Otherwise

<p style="text-align: start;">This week in StubWorld ...</p>
<ul>
<li>Select media ops (Free TV and OTT), together with substantial losses booked to other businesses and eliminations, continue to weigh heavily on <strong><a href="https://www.smartkarma.com/entities/873" target="_blank" data-smartkarma-citation="entities:873:1">PCCW Ltd (8 HK)</a></strong>'s stub ops.</li>
</ul>
<p style="text-align: start;">Preceding my comments on PCCW and other stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
<p style="text-align: start;">These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>

This week in StubWorld ...

Select media ops (Free TV and OTT), together with substantial losses booked to other businesses and eliminations, continue to weigh heavily on PCCW Ltd (8 HK)'s stub ops.

Preceding my comments on PCCW and other stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.

StubWorld: PCCW Is “Cheap” but Stub Ops Are Deteriorating

Huatai Securities Co Ltd (H) / Event-Driven

<p>On Friday 30 November, after a couple of months of speculation that it would try, and 8 days after <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/1122/LTN20181122277.pdf" target="_blank">announcing</a> that it had applied to the CSRC to float GDRs on the London Stock Exchange, <a href="https://www.smartkarma.com/entities/450" target="_blank" data-smartkarma-citation="entities:450:1">Huatai Securities Co Ltd (A) (601688 CH)</a> (and <a href="https://www.smartkarma.com/entities/449" target="_blank" data-smartkarma-citation="entities:449:1">Huatai Securities Co Ltd (H) (6886 HK)</a>) <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/1130/LTN201811301137.pdf" target="_blank">announced</a> that the CSRC had given the company approval to list up to (but not more than) 82,515,000 GDRs. The English text on the LSE of the "Intention to Float" can be found <a href="https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13876802.html" target="_blank">here</a> (and <a href="https://www.investegate.co.uk/huatai-securities-co/rns/intention-to-float/201811220817451830I/" target="_blank">here</a>).</p><p>As each GDR represents 10 A shares, that is up to RMB 13.7bn at last traded price of the A shares, which is a fair bit more than the <em>"not less than US$500mm"</em> which had been expected as a potential issuance. If all the shares were issued that would be about 10% of the share capital of Huatai (pre-issuance). </p><p>This launches the London side of the London-Shanghai Connect.</p><p>It creates an "access trade arb" so people will look at the GDRs vs the Hs.</p><p>And it creates <em>another arb</em>.</p><hr><p><em>A prospectus had been expected next week, and a party for the launch had been planned as well. That has now <a href="https://uk.reuters.com/article/china-listings-london/shanghai-london-stock-connect-launch-delayed-by-at-least-a-month-sources-idUKL8N1YA174" target="_blank">apparently been put off</a> into the New Year. There are some rumors and some suggestions as to why. This insight assumes it will all go ahead after a short delay.</em></p><p><em>For that, this insight proposes to explain the structure and dynamics of what the value of the GDR trade might be.</em></p>

On Friday 30 November, after a couple of months of speculation that it would try, and 8 days after announcing that it had applied to the CSRC to float GDRs on the London Stock Exchange, Huatai Securities Co Ltd (A) (601688 CH) (and Huatai Securities Co Ltd (H) (6886 HK)) announced that the CSRC had given the company approval to list up to (but not more than) 82,515,000 GDRs. The English text on the LSE of the "Intention to Float" can be found here (and here).As each GDR represents 10 A shares, that is up to RMB 13.7bn at last traded price of the A shares, which is a fair bit more than the "not less than US$500mm" which had been expected as a potential issuance. If all the shares were issued that would be about 10% of the share capital of Huatai (pre-issuance). This launches the London side of the London-Shanghai Connect.It creates an "access trade arb" so people will look at the GDRs vs the Hs.And it creates another arb.A prospectus had been expected next week, and a party for the launch had been planned as well. That has now apparently been put off into the New Year. There are some rumors and some suggestions as to why. This insight assumes it will all go ahead after a short delay.For that, this insight proposes to explain the structure and dynamics of what the value of the GDR trade might be.

Huatai Securities GDR Gets The Green Light, Taps Brakes

China

Huatai Securities Co., Ltd. provides financial company. The Company provides securities brokerage services, research consulting services, investment banking and direct investment services, fixed-income services and asset management services.

Founder Securities Company Limited's major business includes securities brokerage, securities investment consulting, securities trading, financial advisory on securities investment and trading activities, proprietary trading, securities asset management, investment fund distribution, margin business, and provide intermediate agency services for Founder Futures Limited.

Orient Securities Company Ltd. of China (DFZQ) provides investment advisory and brokerage services. The Company maintains assets for individual and institutional investors in equity and fixed income portfolios. 

Guotai Junan Securities Co.,Ltd. provides financial services. The Company offers corporate finance, fixed income securities, asset management, risk management, and other services. Guotai Junan Securities Company serves clients throughout China.

Guosen Securities Co.,Ltd offers securities services. The Company provides securities brokerage, securities investment, securities consulting, and other services. Guosen Securities provides its services throughout China.

Haitong Securities Co., Ltd. offers securities services. The Company provides securities brokerage, asset management, securities investment, share transfer agency, and capital intermediary services. Haitong Securities focuses on  online brokerage, wealth management, and institutional investors.

Haitong Securities Co Ltd (A) (600837 CH)

Industrial Securities Co., Ltd. is a securities company.  The Company's business covers securities brokerage, investment consulting, securities trading, financial advisory, securities underwriting and sponsorship, proprietary trading, asset management, investment funds marketing as well intermediary services for futures companies.

China Merchants Securities Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities underwriting, and other services. China Merchants Securities also operates investment management.

China Merchants Securities Co Ltd (A) (600999 CH)

GF Securities Co Ltd. is a securities firm. The Company offers investment banking services including equity and bond underwriting, mergers and acquisitions consulting, financial consulting, brokerage services, and asset management services.

China International Capital Corporation Ltd. (CICC) operates as an international investment bank. The Company provides financial services, including investment banking, capital markets, securities sales and trading, fixed income, asset management, and private equity. China International Capital also offers individual wealth management and research services.

China International Capital Corporation (3908 HK)

ASX Ltd is a demutualized company which operates Australia's primary national stock exchange and equity derivatives market. The ASX operates markets for equities, derivatives, fixed-interest securities and capital-raising for unlisted companies using advanced computer systems for both trading and settlement.

Pershing Square Holdings Ltd is a closed-ended hedge fund vehicle incorporated in Guernsey.

Singapore Exchange Limited owns and operates Singapore's Securities and derivatives exchange and their related clearing houses.  The Company also provides ancillary securities processing and information technology services to participants in the financial sector.

Houlihan Lokey, Inc. operates as an investment bank. The Company offers mergers and acquisitions, financial restructuring, capital markets, strategic consulting, and financial advisory services. Houlihan Lokey serves customers worldwide.

MarketAxess Holdings, Inc. operates an electronic, multi-dealer to client platform for U.S. and European high-grade corporate and emerging markets bond trading.  The Company's technology delivers price discovery and trade execution services to institutional and broker-dealer clients.

SBI Holdings, Inc. manages venture capital fund which mainly invest in Internet related venture companies.  The Company also provides brokerage, investment banking, and financial services.

Evercore Partners Inc. is an investment banking boutique. The firm provides advisory services to multinational corporations on mergers, acquisitions, divestitures, restructurings and other corporate transactions. Evercore also manages private equity funds for institutional investors.

Jefferies Financial Group Inc. is a global diversified financial services company focusing on investment banking and capital markets, asset management and direct investing. The Company offers a full range of investment banking, equities, fixed income, asset and wealth management products and services.

Stifel Financial Corp. is a financial services holding company whose subsidiaries serve individual and institutional clients in the U.S. and Europe. The Company's broker-dealer affiliates provide wealth management, investment banking, independent research, trading, investment advisory, and related financial services.

SEI Investments Company provides global investment solutions and business solutions.  The Company integrates technology, research, information services, financial products, and asset management advice to serve banks, mutual fund and pension plan sponsors, insurance companies, money managers, and individual investors.

Everbright Securities Co., Ltd. provides securities brokerage, trading, custody, underwriting, asset management, and investment consulting services.

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Everbright Securitie Co (A) (601788 CH)

StubWorld: China Everbright Bounces Off Lows But Still Cheap

This week in StubWorld ... China Everbright (165 HK) outperforms in the last month, after touching a one-year low, but still looks...

David Blennerhassett

Huatai Securities GDR Back On - Good Replacement Trade But Not Great Otherwise

Today, Huatai Securities Co Ltd (H) (6886 HK) (or Huatai Securities Co Ltd (A) (601688 CH) more properly) announced at the London Stock Exchange...

Travis Lundy

StubWorld: PCCW Is “Cheap” but Stub Ops Are Deteriorating

This week in StubWorld ... Select media ops (Free TV and OTT), together with substantial losses booked to other businesses and eliminations,...

David Blennerhassett

Huatai Securities GDR Gets The Green Light, Taps Brakes

On Friday 30 November, after a couple of months of speculation that it would try, and 8 days after announcing that it had applied to the CSRC to...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

Weekly Monitor for H-Share/A-Share spreads showing spread/discount performance, spread Z-scores, southbound buying and selling and net activity...

Travis Lundy

StubWorld: China Everbright Bounces Off Lows But Still Cheap

This week in StubWorld ... China Everbright (165 HK) outperforms in the last month, after touching a one-year low, but still looks...

David Blennerhassett

Huatai Securities GDR Back On - Good Replacement Trade But Not Great Otherwise

Today, Huatai Securities Co Ltd (H) (6886 HK) (or Huatai Securities Co Ltd (A) (601688 CH) more properly) announced at the London Stock Exchange...

Travis Lundy

StubWorld: PCCW Is “Cheap” but Stub Ops Are Deteriorating

This week in StubWorld ... Select media ops (Free TV and OTT), together with substantial losses booked to other businesses and eliminations,...

David Blennerhassett

Huatai Securities GDR Gets The Green Light, Taps Brakes

On Friday 30 November, after a couple of months of speculation that it would try, and 8 days after announcing that it had applied to the CSRC to...

Travis Lundy