External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.</li><li>Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.</li><li>Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Semi Field Trip Takeaways

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

Jiangxi Special Electric Motor A / Event-Driven

<ul>
<li>Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.</li>
<li>There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.</li>
<li>The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.</li>
</ul>


Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.


CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

Post market close on 27 August, the Shanghai Stock Exchange and China Securities Index Company announced the changes to the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR 50 (STAR50 INDEX)</a>. The changes will be effective after the close of trading on 10 September.There are 5 inclusions and 5 exclusions in the review. The inclusions are <a href="https://www.smartkarma.com/entities/pylon-technologies-co-ltd" target="_blank" data-smartkarma-citation="entities:33153:1" rel="noopener">Pylon Technologies Co Ltd (688063 CH)</a>, <a href="https://www.smartkarma.com/entities/3peak-inc" target="_blank" data-smartkarma-citation="entities:33460:1" rel="noopener">3peak (688536 CH)</a>, <a href="https://www.smartkarma.com/entities/bestechnic-shanghai-co-ltd" target="_blank" data-smartkarma-citation="entities:33459:1" rel="noopener">Bestechnic Shanghai (688608 CH)</a>, <a href="https://www.smartkarma.com/entities/zhejiang-supcon-technology-co" target="_blank" data-smartkarma-citation="entities:33457:1" rel="noopener">Zhejiang Supcon Technology (688777 CH)</a> and <a href="https://www.smartkarma.com/entities/tianneng-battery-group-co-ltd" target="_blank" data-smartkarma-citation="entities:33458:1" rel="noopener">Tianneng Battery Group (688819 CH)</a>, while the deletions are <a href="https://www.smartkarma.com/entities/guangzhou-fangbang-electronics-a" target="_blank" data-smartkarma-citation="entities:30313:1" rel="noopener">Guangzhou Fangbang Electronics-A (688020 CH)</a>, <a href="https://www.smartkarma.com/entities/piesat-information-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:30328:1" rel="noopener">Piesat Information Technology (688066 CH)</a>, <a href="https://www.smartkarma.com/entities/shanghai-shen-lian-biomedical" target="_blank" data-smartkarma-citation="entities:30339:1" rel="noopener">Shanghai Shen Lian Biomedical (688098 CH)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-lifotronic-technology-a" target="_blank" data-smartkarma-citation="entities:30395:1" rel="noopener">Shenzhen Lifotronic Technology-A (688389 CH)</a> and <a href="https://www.smartkarma.com/entities/farasis-energy-gan-zhou-co-a" target="_blank" data-smartkarma-citation="entities:28385:1" rel="noopener">Farasis Energy Gan Zhou Co-A (688567 CH)</a>. The changes imply that a 6 month minimum listing was used. This is surprising (but not totally unexpected) since there were 141 stocks that were listed for longer than 1 year and that number was at the upper end of the 100-150 range where the methodology would change to use a minimum 12 month listing history.Even more surprising is the deletion of <a href="https://www.smartkarma.com/entities/farasis-energy-gan-zhou-co-a" target="_blank" data-smartkarma-citation="entities:28385:1" rel="noopener">Farasis Energy Gan Zhou Co-A (688567 CH)</a>. The stock ranks much higher than other index constituents and we cannot see any reason for its deletion from the index.The inclusions, exclusions and capping changes will result in a one-way turnover of 10.46% and result in a one-way trade of CNY4.05bn.

Post market close on 27 August, the Shanghai Stock Exchange and China Securities Index Company announced the changes to the SSE STAR 50 (STAR50 INDEX). The changes will be effective after the close of trading on 10 September.There are 5 inclusions and 5 exclusions in the review. The inclusions are Pylon Technologies Co Ltd (688063 CH), 3peak (688536 CH), Bestechnic Shanghai (688608 CH), Zhejiang Supcon Technology (688777 CH) and Tianneng Battery Group (688819 CH), while the deletions are Guangzhou Fangbang Electronics-A (688020 CH), Piesat Information Technology (688066 CH), Shanghai Shen Lian Biomedical (688098 CH), Shenzhen Lifotronic Technology-A (688389 CH) and Farasis Energy Gan Zhou Co-A (688567 CH). The changes imply that a 6 month minimum listing was used. This is surprising (but not totally unexpected) since there were 141 stocks that were listed for longer than 1 year and that number was at the upper end of the 100-150 range where the methodology would change to use a minimum 12 month listing history.Even more surprising is the deletion of Farasis Energy Gan Zhou Co-A (688567 CH). The stock ranks much higher than other index constituents and we cannot see any reason for its deletion from the index.The inclusions, exclusions and capping changes will result in a one-way turnover of 10.46% and result in a one-way trade of CNY4.05bn.

STAR50 Index Rebalance: If You Obey All The Rules, You Miss All The Fun

Beijing Huafeng Test & Control / Event-Driven

<div>The <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR 50 (STAR50 INDEX)</a> is a free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market.</div><div>The review period for the September rebalance ends on 31 July, the results of the rebalance will be announced towards the end of August and the changes will be implemented at the close of trading on 10 September.</div><div>
With only 2 trading days left in the review period, we see <a href="https://www.smartkarma.com/entities/shanghai-shen-lian-biomedical" target="_blank" data-smartkarma-citation="entities:30339:1" rel="noopener">Shanghai Shen Lian Biomedical (688098 CH)</a>, <a href="https://www.smartkarma.com/entities/piesat-information-technology" target="_blank" data-smartkarma-citation="entities:30328:1" rel="noopener">Piesat Information Technology (688066 CH)</a>, <a href="https://www.smartkarma.com/entities/guangzhou-fang-bang-electr-a" target="_blank" data-smartkarma-citation="entities:30313:1" rel="noopener">Guangzhou Fang Bang Electr-A (688020 CH)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-lifotronic-techno-a" target="_blank" data-smartkarma-citation="entities:30395:1" rel="noopener">Shenzhen Lifotronic Techno-A (688389 CH)</a> and <a href="https://www.smartkarma.com/entities/appotronics-corp-ltd" target="_blank" data-smartkarma-citation="entities:28235:1" rel="noopener">Appotronics Corp Ltd (688007 CH)</a> as high probability deletions from the index.
Coming up with a definitive list of inclusions is tougher given the subjectivity of the index rules for this review. The subjectivity comes from the whether the index committee uses a minimum listing history period of 12 months or 6 months.
Higher probability inclusions (if a 12 month minimum listing history is used) are <a href="https://www.smartkarma.com/entities/eyebright-medical-technology-beijing-co-ltd" target="_blank" data-smartkarma-citation="entities:33455:1" rel="noopener">Eyebright Medical Technology Beijing (688050 CH)</a>, <a href="https://www.smartkarma.com/entities/sinocelltech-group-ltd" target="_blank" data-smartkarma-citation="entities:33456:1" rel="noopener">Sinocelltech Group (688520 CH)</a>, <a href="https://www.smartkarma.com/entities/beijing-huafeng-test-control-technology-a" target="_blank" data-smartkarma-citation="entities:30367:1" rel="noopener">Beijing Huafeng Test &amp; Control Technology-A (688200 CH)</a>, <a href="https://www.smartkarma.com/entities/zhejiang-orient-gene-biotech-a" target="_blank" data-smartkarma-citation="entities:30379:1" rel="noopener">Zhejiang Orient Gene Biotech-A (688298 CH)</a> and <a href="https://www.smartkarma.com/entities/tinavi-medical-technologies-co-ltd" target="_blank" data-smartkarma-citation="entities:33453:1" rel="noopener">Tinavi Medical Technologies (688277 CH)</a>.
Lower probability inclusions (if a 6 month minimum listing history is used) are <a href="https://www.smartkarma.com/entities/zhejiang-supcon-technology-co" target="_blank" data-smartkarma-citation="entities:33457:1" rel="noopener">Zhejiang Supcon Technology (688777 CH)</a>, <a href="https://www.smartkarma.com/entities/tianneng-battery-group-co-ltd" target="_blank" data-smartkarma-citation="entities:33458:1" rel="noopener">Tianneng Battery Group (688819 CH)</a>, <a href="https://www.smartkarma.com/entities/bestechnic-shanghai-co-ltd" target="_blank" data-smartkarma-citation="entities:33459:1" rel="noopener">Bestechnic Shanghai (688608 CH)</a>, <a href="https://www.smartkarma.com/entities/3peak-inc" target="_blank" data-smartkarma-citation="entities:33460:1" rel="noopener">3peak (688536 CH)</a> and <a href="https://www.smartkarma.com/entities/pylon-technologies-co-ltd" target="_blank" data-smartkarma-citation="entities:33153:1" rel="noopener">Pylon Technologies Co Ltd (688063 CH)</a>.
The inclusions, exclusions and capping changes will result in a one-way turnover of 8.45% and result in a one-way trade of CNY3.3bn.
</div>

The SSE STAR 50 (STAR50 INDEX) is a free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market.The review period for the September rebalance ends on 31 July, the results of the rebalance will be announced towards the end of August and the changes will be implemented at the close of trading on 10 September.
With only 2 trading days left in the review period, we see Shanghai Shen Lian Biomedical (688098 CH), Piesat Information Technology (688066 CH), Guangzhou Fang Bang Electr-A (688020 CH), Shenzhen Lifotronic Techno-A (688389 CH) and Appotronics Corp Ltd (688007 CH) as high probability deletions from the index.
Coming up with a definitive list of inclusions is tougher given the subjectivity of the index rules for this review. The subjectivity comes from the whether the index committee uses a minimum listing history period of 12 months or 6 months.
Higher probability inclusions (if a 12 month minimum listing history is used) are Eyebright Medical Technology Beijing (688050 CH), Sinocelltech Group (688520 CH), Beijing Huafeng Test &amp; Control Technology-A (688200 CH), Zhejiang Orient Gene Biotech-A (688298 CH) and Tinavi Medical Technologies (688277 CH).
Lower probability inclusions (if a 6 month minimum listing history is used) are Zhejiang Supcon Technology (688777 CH), Tianneng Battery Group (688819 CH), Bestechnic Shanghai (688608 CH), 3peak (688536 CH) and Pylon Technologies Co Ltd (688063 CH).
The inclusions, exclusions and capping changes will result in a one-way turnover of 8.45% and result in a one-way trade of CNY3.3bn.


STAR50 Index Rebalance Preview: Big Turnover in a Volatile Market

China

3Peak Incorporated. manufactures and distributes electronics components. The Company produces signal chain analog chips, power management analog chips, linears, converters, interfaces, amplifiers, comparators, and other products. 3Peak supplies its products in information communication, industrial control, medical health, household appliances, and mother fields.

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3peak (688536 CH)

China Technology – Semi Field Trip Takeaways

Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials...

CMB International

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

We forecast 50 changes a side at the June rebal leading to a one-way turnover of 11.47% & in a one-way trade of CNY 10bn. The potential adds have...

Brian Freitas

STAR50 Index Rebalance: If You Obey All The Rules, You Miss All The Fun

There are 5 changes to the STAR Index at the Sep rebalance. The index provider has used a 6 month minimum listing history. One-way turnover is in...

Brian Freitas

STAR50 Index Rebalance Preview: Big Turnover in a Volatile Market

We see 5 changes at the September rebalance and expect CSI/SSE to use a 12 month minimum listing history. One way turnover is around 8.45% and most...

Brian Freitas

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