Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<div>
<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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>
</div>
<div>
<ul style="list-style-type: disc;">
<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 average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
<p>On average, </p>
<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  </p>
<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> where the net selling activity amounted to 15.5% and 22% of volume respectively. </p>
<p>Hisense remains at the overbought end of the 52-week range. <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> are now at 52-week wides. </p>
<div class="content-highlight">
<p>Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.</p>
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<p></p>
<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>
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The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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 average sector spread and the individual spreads within each sector over the last three years. 

On average, 
The first sector is Consumer, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of Hisense Home Appliances Group Co., Ltd. H (921 HK), this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  
Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both Tsingtao Brewery Co Ltd H (168 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) where the net selling activity amounted to 15.5% and 22% of volume respectively. 
Hisense remains at the overbought end of the 52-week range. Great Wall Motor (2333 HK) and Guangzhou Automobile Group (2238 HK) are now at 52-week wides. 

Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.





For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

<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>
</section>
<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

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.</p><p>The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.</p><p>With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.</p><p>In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.</p>

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.

China AH Premium: Trade Ideas As We Near Previous Highs

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<p>President Trump has coordinated a global crude-oil production-restraint deal among OPEC (led by Saudi Arabia), Russia and other major producers (implicitly including the US), ending the Saudi-Russian price war that had briefly taken the Brent crude price below US$25/bbl and WTI to US$20/bbl (at the end of March 2020). At a minimum, this largest-ever crude output-reduction deal should ensure that Brent finds a sustained trough at US$25/bbl, likely settling closer to US$40/bbl -- still a third below prices that prevailed until two months ago. </p><p>Global oil demand is slated to decline about 30% (from the 2019 consumption level of 100.1 million barrels per day, mmbd) in 2Q 2020. The deal agreed over the past 3 days will take 9.7 mmbd of OPEC supply off the market in May and June, 7.7m barrels/day for the rest of 2020, and 5.8m barrels/day in Jan-Apr 2021. The key hope is that lower prices will reduce US and Canadian production by 3 and 1 mmbd respectively, with marginal shale and oil-sands producers forced out of the market. Major G20 oil consumers like the US, China, Japan, India and South Korea are expected to add their heft to the deal by buying crude for their strategic petroleum reserves. We estimate (based on US EIA forecast assumptions) that, even after this agreement, global excess inventories will likely be close to 5 million barrels/day in 1H 2020 -- a massive overhang. </p><p>Currently, massive excess oil inventories exist on tankers across the world, with the latest fortnight being the worst phase of the Covid-induced sudden stop in aviation and petrol (gasoline) use. Any durable stabilization of oil markets requires key global sources of oil demand -- the US, China, India, Japan -- to return to post-Covid normalcy. The US, slow to impose a nationwide lockdown, now appears unlikely to be able to resume economic activity before mid-June 2020. China's industrial and real-estate over-capacity will constrain its ability to ramp up production amid a slump in global demand. Near-term, Brent is thus likely to be closer to US$30/barrel, rising toward US$40/barrel only by mid-June. That stabilization of prices, however, will bolster the viability of non-OPEC production (including in net importers like China and India), lending some economic stability to the global oil complex. With Brent still remaining in a low-price equilibrium (about a third below prices that prevailed until mid-February 2020), the outcome will likely remain positive for the global economy and markets -- low enough to facilitate a gradual economic recovery in 2H 2020, but not so low as to induce massive bankruptcies among oil companies.   </p>

President Trump has coordinated a global crude-oil production-restraint deal among OPEC (led by Saudi Arabia), Russia and other major producers (implicitly including the US), ending the Saudi-Russian price war that had briefly taken the Brent crude price below US$25/bbl and WTI to US$20/bbl (at the end of March 2020). At a minimum, this largest-ever crude output-reduction deal should ensure that Brent finds a sustained trough at US$25/bbl, likely settling closer to US$40/bbl -- still a third below prices that prevailed until two months ago. Global oil demand is slated to decline about 30% (from the 2019 consumption level of 100.1 million barrels per day, mmbd) in 2Q 2020. The deal agreed over the past 3 days will take 9.7 mmbd of OPEC supply off the market in May and June, 7.7m barrels/day for the rest of 2020, and 5.8m barrels/day in Jan-Apr 2021. The key hope is that lower prices will reduce US and Canadian production by 3 and 1 mmbd respectively, with marginal shale and oil-sands producers forced out of the market. Major G20 oil consumers like the US, China, Japan, India and South Korea are expected to add their heft to the deal by buying crude for their strategic petroleum reserves. We estimate (based on US EIA forecast assumptions) that, even after this agreement, global excess inventories will likely be close to 5 million barrels/day in 1H 2020 -- a massive overhang. Currently, massive excess oil inventories exist on tankers across the world, with the latest fortnight being the worst phase of the Covid-induced sudden stop in aviation and petrol (gasoline) use. Any durable stabilization of oil markets requires key global sources of oil demand -- the US, China, India, Japan -- to return to post-Covid normalcy. The US, slow to impose a nationwide lockdown, now appears unlikely to be able to resume economic activity before mid-June 2020. China's industrial and real-estate over-capacity will constrain its ability to ramp up production amid a slump in global demand. Near-term, Brent is thus likely to be closer to US$30/barrel, rising toward US$40/barrel only by mid-June. That stabilization of prices, however, will bolster the viability of non-OPEC production (including in net importers like China and India), lending some economic stability to the global oil complex. With Brent still remaining in a low-price equilibrium (about a third below prices that prevailed until mid-February 2020), the outcome will likely remain positive for the global economy and markets -- low enough to facilitate a gradual economic recovery in 2H 2020, but not so low as to induce massive bankruptcies among oil companies.   

Trump Orchestrates an OPEC+ Production Cut with G20 Backing: Crude to Stay Low

David Blennerhassett

Event-Driven

Last Week in Event SPACE: Chiyoda, Bandai, Unizo, Ascendas, Villa World, Avon, SIA Engineering

China

Sinopec Shanghai Petrochemical Company Limited processes crude oil into a broad range of synthetic fibers, resins and plastics, intermediate petrochemical products and petroleum products.

Price Gauge
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Sinopec Shanghai Petrochemical (338 HK)

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Trump Orchestrates an OPEC+ Production Cut with G20 Backing: Crude to Stay Low

President Trump has coordinated a global crude-oil production-restraint deal among OPEC (led by Saudi Arabia), Russia and other major producers...

Prasenjit K. Basu

Last Week in Event SPACE: Chiyoda, Bandai, Unizo, Ascendas, Villa World, Avon, SIA Engineering

Last Week in Event SPACE ... As expected, Chiyoda Corp (6366 JP) is out of the Nikkei. Unexpectedly, Bandai Namco Holdings (7832 JP) is the...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Quiddity H/A Spread Monitor for the week ending 23 October 2020. Spreads widened in Consumer, narrowed in every other sector. Southbound were...

Travis Lundy

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

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Trump Orchestrates an OPEC+ Production Cut with G20 Backing: Crude to Stay Low

President Trump has coordinated a global crude-oil production-restraint deal among OPEC (led by Saudi Arabia), Russia and other major producers...

Prasenjit K. Basu

Last Week in Event SPACE: Chiyoda, Bandai, Unizo, Ascendas, Villa World, Avon, SIA Engineering

Last Week in Event SPACE ... As expected, Chiyoda Corp (6366 JP) is out of the Nikkei. Unexpectedly, Bandai Namco Holdings (7832 JP) is the...

David Blennerhassett

Quiddity Weekly H/A: Share Spread Monitor 23 Oct 2020