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

Event-Driven

<ul>
<li>With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it's been a year later than originally planned to reach 80 index constituents.</li>
<li>We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.</li>
<li>There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.</li>
</ul>


With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it's been a year later than originally planned to reach 80 index constituents.
We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.


Hang Seng Index Rebalance Preview: A Year Later Than Planned - 80 Members at Last?

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>700.HK/ IQ： Tencent Video and Douyin reach strategic cooperation （+/-）</li>
<li>NIO: NIO to allow consumers to lock in EC7 orders starting Apr 10 （+）</li>
<li>ZLAB/1801HK: ZaiLab started FGFR2 mAb Phase III trial for Gastric Cancer in China (+)</li>
</ul>


700.HK/ IQ： Tencent Video and Douyin reach strategic cooperation （+/-）
NIO: NIO to allow consumers to lock in EC7 orders starting Apr 10 （+）
ZLAB/1801HK: ZaiLab started FGFR2 mAb Phase III trial for Gastric Cancer in China (+)


China TMT Update(Apr.10): 700.HK/IQ/NIO/ZLAB/1801HK - Tencent Video and Douyin Reach Cooperation

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.</li>
<li>In <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-for-hang-seng-index-mar-23-healthcare-names-could-dominate" target="_blank" data-smartkarma-citation="insights:94998" rel="noopener">Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate</a>, we expected some healthcare names to be added but there were no index changes in March 2023. </li>
<li>Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. </li>
</ul>


The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.
In Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate, we expected some healthcare names to be added but there were no index changes in March 2023. 
Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. 


Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting

Equity Bottom-Up

Innovent Biologics Inc / Equity Bottom-Up

<ul>
<li>Innovent reported C2H22 top line 13% below our estimate and 4.5% below consensus. Operating/net losses missed our expectation slightly, thanks to better gross margin, OPEX cutting and FX gain; </li>
<li>With biosimilars and license-in drugs contributing ~60% of total revenues, Innovent is effectively becoming a channel company. </li>
<li>We acknowledge it has a comprehensive pipeline, but stress that it is only in quantity not in quality; We maintain our SELL rating and cut TP by HK$1 to HK$24.</li>
</ul>


Innovent reported C2H22 top line 13% below our estimate and 4.5% below consensus. Operating/net losses missed our expectation slightly, thanks to better gross margin, OPEX cutting and FX gain; 
With biosimilars and license-in drugs contributing ~60% of total revenues, Innovent is effectively becoming a channel company. 
We acknowledge it has a comprehensive pipeline, but stress that it is only in quantity not in quality; We maintain our SELL rating and cut TP by HK$1 to HK$24.


[Innovent Biologics (1801 HK) Target Price Change]: Biotech Cannot Shun Itself Away from R&D Risks

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Akeso achieved outstanding product sales last year, mainly due to off-label prescriptions.It means Akeso has "overdrawn" AK104's performance on other indications in advance. Sales could significantly slow down over time.</li>
<li>It is difficult to turn loss into profit by selling drugs alone. As the profits from selling drugs are far lower than R&amp;D expenditures, losses are the norm.</li>
<li>Akeso is overvalued, but if AK112 is successful in head-to-head trial with Keytruda, Akeso would be a player to compete on international stage. Its valuation would reach a new level.</li>
</ul>


Akeso achieved outstanding product sales last year, mainly due to off-label prescriptions.It means Akeso has "overdrawn" AK104's performance on other indications in advance. Sales could significantly slow down over time.
It is difficult to turn loss into profit by selling drugs alone. As the profits from selling drugs are far lower than R&amp;D expenditures, losses are the norm.
Akeso is overvalued, but if AK112 is successful in head-to-head trial with Keytruda, Akeso would be a player to compete on international stage. Its valuation would reach a new level.


Akeso Biopharma (9926.HK) - Behind the Outstanding Performance in 2022 and the Potential Challenges

China

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

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Innovent Biologics Inc (1801 HK)

Hang Seng Index Rebalance Preview: A Year Later Than Planned - 80 Members at Last?

We highlight 10 potential adds in June. Adding all 10 stocks will result in one-way turnover of 5%, so fewer stocks (some large, some small) will...

Brian Freitas

China TMT Update(Apr.10): 700.HK/IQ/NIO/ZLAB/1801HK - Tencent Video and Douyin Reach Cooperation

Tencent Video and Douyin reach strategic cooperation ； NIO to allow onsumers to lock in EC7 orders starting Apr 10 ；ZaiLab started FGFR2 mAb Phase...

Blue Lotus Research Institute

Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting

I have presented 24 Names from Healthcare, Consumer Discretionary, Properties, Utilities, and Conglomerates as high-likelihood names. Quiddity's...

Janaghan Jeyakumar, CFA

[Innovent Biologics (1801 HK) Target Price Change]: Biotech Cannot Shun Itself Away from R&D Risks

We acknowledge it has a comprehensive pipeline, but stress that it is only in quantity not in quality; We maintain our SELL rating and cut TP by...

Blue Lotus Research Institute

Akeso Biopharma (9926.HK) - Behind the Outstanding Performance in 2022 and the Potential Challenges

Akeso's strong sales were driven by off-label use, and sales growth could significantly slow down over time. Due to high R&D expense, it's hard to...

Xinyao (Criss) Wang

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