Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in March 2024.</li>
<li>Based on the current data, I see only one low-conviction ADD and one low-conviction DEL.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in March 2024.
Based on the current data, I see only one low-conviction ADD and one low-conviction DEL.


Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Resources Pharmaceutical / Equity Bottom-Up

<ul>
<li>As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies' internationalization strategies.</li>
<li>For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent. </li>
<li>As a top pharmaceutical SOE, <a href="https://www.smartkarma.com/entities/china-resources-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:22928:1" rel="noopener">China Resources Pharmaceutical (CRP)</a> wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.</li>
</ul>


As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies' internationalization strategies.
For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent. 
As a top pharmaceutical SOE, China Resources Pharmaceutical (CRP) wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.


China Healthcare Weekly (Jan.19) - Bottom Fish A-Share?/“Style” of FDA/Pharma's Key Benchmark/3320HK

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<ul>
<li>SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. </li>
<li>SOUTHBOUND saw HK$6.8bn of net OUT-flows in the week to 12 Jan 2024. Total flows were HK$118bn.</li>
<li>SOUTHBOUND saw large net selling of ETFs (unwinding Week 1) and large net buying of high-div SOEs like CNOOC, China Mobile/Telecom/Unicom, and coal names.</li>
</ul>


SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. 
SOUTHBOUND saw HK$6.8bn of net OUT-flows in the week to 12 Jan 2024. Total flows were HK$118bn.
SOUTHBOUND saw large net selling of ETFs (unwinding Week 1) and large net buying of high-div SOEs like CNOOC, China Mobile/Telecom/Unicom, and coal names.


HK Connect SOUTHBOUND Flows (To 12 Jan 2024); High Div SOEs Still the Biggest Buys

ImmuneOnco Biopharmaceuticals (Shanghai) / Equity Bottom-Up

<ul>
<li>The entire R&amp;D cycle involves multi-party cooperation, leveraging one's strengths. So, it is not difficult to understand some of the choices made by domestic pharmaceutical companies (e.g. Innovent, BeiGene).</li>
<li>Due to outdated technology, investment value of Sirnaomics is low, which means the likelihood of the company being acquired is also not high. We remain conservative about the outlook. </li>
<li>ImmuneOnco's stock price has performed much better-than-expected after IPO on HKEX. However, the endgame of ImmuneOnco’s market value could be only about RMB1.5 billion, which means large potential downside ahead.</li>
</ul>


The entire R&amp;D cycle involves multi-party cooperation, leveraging one's strengths. So, it is not difficult to understand some of the choices made by domestic pharmaceutical companies (e.g. Innovent, BeiGene).
Due to outdated technology, investment value of Sirnaomics is low, which means the likelihood of the company being acquired is also not high. We remain conservative about the outlook. 
ImmuneOnco's stock price has performed much better-than-expected after IPO on HKEX. However, the endgame of ImmuneOnco’s market value could be only about RMB1.5 billion, which means large potential downside ahead.


China Healthcare Weekly (Jan.12) - Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/posco-dx-co-ltd" target="_blank" data-smartkarma-citation="entities:5198:1" rel="noopener">Posco DX (022100 KS)</a> continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.</li>
<li>There were big net inflows to China ETFs with creations in <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a> ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.</li>
<li>Creations continued in the <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex China (EMXC US)</a> ETF with units outstanding reaching a new high.</li>
</ul>



Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.


Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

China

BeiGene, Ltd. operates as a commercial stage biopharmaceutical company. The Company focuses on discovery, development, and commercialization of molecularly targeted and immuno-oncology drugs for the treatment of cancer. BeiGene serves patients worldwide.

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BeiGene (6160 HK)

Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions

The index changes for HSCEI index for the March 2024 index rebal will be announced on 16th February 2024. In this insight, I have discussed the...

Janaghan Jeyakumar, CFA

HK Connect SOUTHBOUND Flows (To 12 Jan 2024); High Div SOEs Still the Biggest Buys

SOUTHBOUND saw large net buying of High-Div SOEs. Again. Many weeks in a row now and in terms of % of volume, the mobile phone cos rank high. ETFs...

Travis Lundy

China Healthcare Weekly (Jan.12) - Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

If we look at mainstream R&D trend, the choices made by companies like Innovent/BeiGene are reasonable. Investment value of Sirnaomics is low....

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions

The index changes for HSCEI index for the March 2024 index rebal will be announced on 16th February 2024. In this insight, I have discussed the...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (Jan.19) - Bottom Fish A-Share?/“Style” of FDA/Pharma's Key Benchmark/3320HK

The more A-share fall, the more excited we are. CR Pharmaceutical won't go bankrupt. It's a good investment in bear mkt. FDA's approval style gives...

Xinyao (Criss) Wang

HK Connect SOUTHBOUND Flows (To 12 Jan 2024); High Div SOEs Still the Biggest Buys

SOUTHBOUND saw large net buying of High-Div SOEs. Again. Many weeks in a row now and in terms of % of volume, the mobile phone cos rank high. ETFs...

Travis Lundy

China Healthcare Weekly (Jan.12) - Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

If we look at mainstream R&D trend, the choices made by companies like Innovent/BeiGene are reasonable. Investment value of Sirnaomics is low....

Xinyao (Criss) Wang

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas