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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Beijing Kingsoft Office Softwa / Event-Driven

We are nearly 95% through the review period for the June review of the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a>. With a large AUM in ETFs tracking the index, large open interest on the CFFEX listed futures, and volatile stocks, it could pay to look at the potential changes to the index.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.08% and will result in a one-way trade of CNY 10.8bn.The expected inclusions have outperformed the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a> on a year to date basis even post the momentum selloff that started in February. Buying the inclusion basket vs selling the CSI300 futures as a hedge could provide good market neutral returns over the next few weeks.

We are nearly 95% through the review period for the June review of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX). With a large AUM in ETFs tracking the index, large open interest on the CFFEX listed futures, and volatile stocks, it could pay to look at the potential changes to the index.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.08% and will result in a one-way trade of CNY 10.8bn.The expected inclusions have outperformed the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) on a year to date basis even post the momentum selloff that started in February. Buying the inclusion basket vs selling the CSI300 futures as a hedge could provide good market neutral returns over the next few weeks.

CSI300 Index Rebalance Preview: Recovering from the Growth Sell-Off

The <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a> consists of stocks from the Shanghai Stock Exchange and the Shenzhen Stock Exchange and is one of the most widely tracked A-share indices with passive tracking products listed in multiple markets globally. There are CFFEX listed futures that trade actively as well.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.There were 21 changes to the index at the June 2020 review and 26 changes at the December 2020 review. We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.56%.With passive tracking products holding around US$32bn of AUM, plus another US$53bn in open interest on the listed futures, plus active managers benchmarked to the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX)</a>, there could be significant moves in the inclusion/exclusion names from now to the end of the review period. There will only be 9-10 trading days between the announcement of the changes and the implementation, so having a pre-position should pay off. There should not be too many changes in the possible list of inclusions and exclusions due to the averaging process over the last year of trading.

The Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) consists of stocks from the Shanghai Stock Exchange and the Shenzhen Stock Exchange and is one of the most widely tracked A-share indices with passive tracking products listed in multiple markets globally. There are CFFEX listed futures that trade actively as well.China Securities Index Co (CSI) will announce the changes end May/beginning June and the changes will be effective after the close of trading on 11 June.There were 21 changes to the index at the June 2020 review and 26 changes at the December 2020 review. We expect 30 changes at the upcoming June 2021 index review - this is the maximum number of changes that are permitted at a single review. Estimated one-way turnover is 4.56%.With passive tracking products holding around US$32bn of AUM, plus another US$53bn in open interest on the listed futures, plus active managers benchmarked to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), there could be significant moves in the inclusion/exclusion names from now to the end of the review period. There will only be 9-10 trading days between the announcement of the changes and the implementation, so having a pre-position should pay off. There should not be too many changes in the possible list of inclusions and exclusions due to the averaging process over the last year of trading.

CSI300 Index Rebalance Preview: Maxing Out the Number of Changes

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

Samsung Electro Mechanics Co, Ltd. / Equity Bottom-Up

Looking into the following news that <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a>  will be supplying iPhone 12 from 2H2020.  They key is the actuator which is needed for the folder zoom to work as best as possible with the lens.  I would think that SEMCO gets this business in 2022 and <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> also wins. Here's how.

Looking into the following news that Samsung Electro Mechanics Co, Ltd. (009150 KS)  will be supplying iPhone 12 from 2H2020.  They key is the actuator which is needed for the folder zoom to work as best as possible with the lens.  I would think that SEMCO gets this business in 2022 and Samsung Electronics (005930 KS) also wins. Here's how.

Is SEMCO Entering Apple Supply Chain for Cameras?

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

As we mentioned in a comment in  <a href="https://www.smartkarma.com/insights/japan-display-cost-structure-improvement-is-good-but-shipment-delay-and-iphone-xr-cloud-outlook" target="_blank" data-smartkarma-citation="insights:25878">Japan Display: Cost Structure Improvement Is Good but Shipment Delay and IPhone XR Cloud Outlook</a> the <a href="https://www3.nhk.or.jp/nhkworld/en/news/20181213_46/" target="_blank">NHK reported</a> last night that JDI was in talks with a Chinese consortium to secure something in the region of ¥50bn in funding (more than its market cap yesterday) for a more than 33% stake in the company. <a href="https://asia.nikkei.com/Business/Business-Deals/Japan-Display-in-talks-with-Chinese-companies-for-lifeline" target="_blank">The Nikkei shed light</a> on the identities of some of the consortium this morning mentioning investment fund Silk Road, <a href="https://www.smartkarma.com/entities/9232" target="_blank" data-smartkarma-citation="entities:9232:1">Minth Group Ltd (425 HK)</a> and  <a href="https://www.smartkarma.com/entities/20340" target="_blank" data-smartkarma-citation="entities:20340:1">Shenzhen O Film Tech Co A (002456 CH)</a>. Bloomberg has also mentioned that the consortium could invest a further ¥500bn to establish a new facility in China for the production of OLED panels.We spoke to the company this morning to get colour on these announcements.

As we mentioned in a comment in  Japan Display: Cost Structure Improvement Is Good but Shipment Delay and IPhone XR Cloud Outlook the NHK reported last night that JDI was in talks with a Chinese consortium to secure something in the region of ¥50bn in funding (more than its market cap yesterday) for a more than 33% stake in the company. The Nikkei shed light on the identities of some of the consortium this morning mentioning investment fund Silk Road, Minth Group Ltd (425 HK) and  Shenzhen O Film Tech Co A (002456 CH). Bloomberg has also mentioned that the consortium could invest a further ¥500bn to establish a new facility in China for the production of OLED panels.We spoke to the company this morning to get colour on these announcements.

Japan Display: Squeezing Up 36% As Chinese Investment Could Solve Balance Sheet Troubles

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

2018 iPhones EVT:According to our extensive checks with the component suppliers that are participating in the upcoming iPhone 2018 EVT (Engineering Validation Test), we expect a minimum of new features in the next generation iPhones as <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666:1">Apple Inc (AAPL US)</a> shifts its strategy to lower price and improve iPhone affordability.  Similar to the last cycle, there are 3 new models being tested for the launch in the fall: one with LCD screen and two OLED screens with 5.8” and 6.4’’ in diagonal length, respectively.  We expect that all three models will have full screens with no home key and no fingerprint.  All three phones will have 3D facial recognition features and the 6.4” screen OLED model is likely to have 4 rear cameras to take 3D pictures and to prepare for the AR application in the next few years. iPhone X’s disappointing launch and weaker than expected demand has sent a strong message to Tim Cook. There is an upper limit to the price that iPhone fans are willing to pay, and it is clearly lower than $999 USD for a basic OLED model (and 30% more in China after the import tax).  It is a good thing that Apple is listening.  For the new models of iPhones this fall,  Apple aims to manage the  bill-of-material (BoM) more effectively by recruiting more competitive suppliers, and getting rid of features that have proven not to be economical, cost-benefit adjusted.

2018 iPhones EVT:According to our extensive checks with the component suppliers that are participating in the upcoming iPhone 2018 EVT (Engineering Validation Test), we expect a minimum of new features in the next generation iPhones as Apple Inc (AAPL US) shifts its strategy to lower price and improve iPhone affordability.  Similar to the last cycle, there are 3 new models being tested for the launch in the fall: one with LCD screen and two OLED screens with 5.8” and 6.4’’ in diagonal length, respectively.  We expect that all three models will have full screens with no home key and no fingerprint.  All three phones will have 3D facial recognition features and the 6.4” screen OLED model is likely to have 4 rear cameras to take 3D pictures and to prepare for the AR application in the next few years. iPhone X’s disappointing launch and weaker than expected demand has sent a strong message to Tim Cook. There is an upper limit to the price that iPhone fans are willing to pay, and it is clearly lower than $999 USD for a basic OLED model (and 30% more in China after the import tax).  It is a good thing that Apple is listening.  For the new models of iPhones this fall,  Apple aims to manage the  bill-of-material (BoM) more effectively by recruiting more competitive suppliers, and getting rid of features that have proven not to be economical, cost-benefit adjusted.  

2018 IPhone EVT Update:  Prioritizing Cost Reduction, Expecting Another Muted Cycle

China

Shenzhen O-film Tech Co., Ltd. manufactures precision optical thin-film components.  The Company's products include infrared cut-off filters and mirror block components, and flat panel touch screens.

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Shenzhen O-Film Tech (002456 CH)

CSI300 Index Rebalance Preview: Recovering from the Growth Sell-Off

We forecast 30 changes to the CSI300 Index at the June review that will be announced at the end of May and effective 11 June. The expected...

Brian Freitas

CSI300 Index Rebalance Preview: Maxing Out the Number of Changes

We see 30 potential inclusions/exclusions to the CSI300 index at the June review that will become effective COB 11 June. With a lot of benchmarked...

Brian Freitas

Is SEMCO Entering Apple Supply Chain for Cameras?

Looking into the following news that Samsung Electro Mechanics Co, Ltd. (009150 KS) will be supplying iPhone 12 from 2H2020. They key is the...

Ken S. Kim

Japan Display: Squeezing Up 36% As Chinese Investment Could Solve Balance Sheet Troubles

As we mentioned in a comment in Japan Display: Cost Structure Improvement Is Good but Shipment Delay and IPhone XR Cloud Outlook the NHK reported...

Mio Kato

2018 IPhone EVT Update: Prioritizing Cost Reduction, Expecting Another Muted Cycle

2018 iPhones EVT:According to our extensive checks with the component suppliers that are participating in the upcoming iPhone 2018 EVT (Engineering...

JL Warren Capital

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