HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>China's defense budget will reach Rmb1.55trn in 2023, a 7.2% YoY increase and up from 7.1% in 2022. This also equals to 1.22% of GDP, vs. 1.2% in 2022. </li>
<li>
<a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> has the most direct exposure to China's aerospace and defense developments given its holdings in A-share defense stocks.</li>
<li>
<a href="https://www.smartkarma.com/entities/avic-shenyang-aircraft-co-ltd" target="_blank" data-smartkarma-citation="entities:12150:1" rel="noopener">Avic Shenyang Aircraft (600760 CH)</a> will benefit from its unique position as the key manufacturer of aircraft, parts and components for China's combat fighter fleet.</li>
</ul>


China's defense budget will reach Rmb1.55trn in 2023, a 7.2% YoY increase and up from 7.1% in 2022. This also equals to 1.22% of GDP, vs. 1.2% in 2022. 

AviChina Industry &amp; Technology H (2357 HK) has the most direct exposure to China's aerospace and defense developments given its holdings in A-share defense stocks.

Avic Shenyang Aircraft (600760 CH) will benefit from its unique position as the key manufacturer of aircraft, parts and components for China's combat fighter fleet.


China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<ul>
<li>
The FTSE ST China Index generated a 7.1% gain last week, following a 7.4% total return in 2020. The Index is comprised of the 17 stocks of the FTSE ST All-Share Index with more than 50% revenue exposure/assets associated with China operations. 
	 </li>
	<li>
The newest entrant to the FTSE ST China Index is Nanofilm Technologies International which began 2021 with a 12% gain taking its gains since listing to 91%. Nanofilm’s prospectus detailed that two-thirds of its FY19 revenue was generated from invoices issued by its China operations. 
	 </li>
	<li>
Nanofilm Technologies was also the strongest performer of 17 stocks in 2020, followed by a 34% gain for Hi-P International and a 30% gain for Sunpower Group. On 31 Dec, Sunpower International entered into a SPA to divest the Manufacturing &amp; Services business to Nanjing Sunpower Holdings, enabling a strategic focus on its Green Investments. 
	 </li>
</ul>
 The FTSE ST China Index has gained 7.1% over the week 2021, adding to its 7.4% total return in 2020. The Index is comprised of 17 stocks of the FTSE ST All-Share Index that report more than 50% of their revenues or assets to China (click <a href="https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=FSTCT&amp;IsManual=false&amp;force_isolation=true">here</a> for more).
</body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2021-01/Capture_9.PNG' alt='FTSE ASEAN All-share index' />
 </figure>
 <div class='content-caption'>FTSE ASEAN All-share index</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body><table class="table table-striped"><tbody>
<tr>
<td>
			FTSE ST China Index Constituents (Sort by most traded in first week of 2021)
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			2020 Total Return
			</td>
			<td>
			2021 YTD Total Return 
			</td>
			<td>
			Net Insti Inflow 2020 S$M
			</td>
			<td>
			Net Insti Inflow 2021 YTD S$M
			</td>
			<td>
			10 Year Total Return 
			</td>
			<td>
			Sector
			</td>
		</tr>
<tr>
<td>
			Wilmar Intl
			</td>
			<td>
			F34
			</td>
			<td>
			31,833
			</td>
			<td>
			17%
			</td>
			<td>
			8%
			</td>
			<td>
			-42
			</td>
			<td>
			73
			</td>
			<td>
			11%
			</td>
			<td>
			Consumer Non-Cyclicals
			</td>
		</tr>
<tr>
<td>
			YZJ Shipbldg SGD
			</td>
			<td>
			BS6
			</td>
			<td>
			3,925
			</td>
			<td>
			-11%
			</td>
			<td>
			7%
			</td>
			<td>
			-173
			</td>
			<td>
			27
			</td>
			<td>
			-22%
			</td>
			<td>
			Industrials
			</td>
		</tr>
<tr>
<td>
			Nanofilm
			</td>
			<td>
			MZH
			</td>
			<td>
			3,262
			</td>
			<td>
			70%
			</td>
			<td>
			12%
			</td>
			<td>
			-30
			</td>
			<td>
			4
			</td>
			<td>
			N/A
			</td>
			<td>
			Technology (Hardware/ Software)
			</td>
		</tr>
<tr>
<td>
			CapitaR China Tr
			</td>
			<td>
			AU8U
			</td>
			<td>
			2,203
			</td>
			<td>
			-7%
			</td>
			<td>
			4%
			</td>
			<td>
			-116
			</td>
			<td>
			3
			</td>
			<td>
			131%
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			Sunpower
			</td>
			<td>
			5GD
			</td>
			<td>
			665
			</td>
			<td>
			30%
			</td>
			<td>
			2%
			</td>
			<td>
			-1
			</td>
			<td>
			-1
			</td>
			<td>
			110%
			</td>
			<td>
			Industrials
			</td>
		</tr>
<tr>
<td>
			Hi-P
			</td>
			<td>
			H17
			</td>
			<td>
			1,607
			</td>
			<td>
			34%
			</td>
			<td>
			-1%
			</td>
			<td>
			35
			</td>
			<td>
			3
			</td>
			<td>
			196%
			</td>
			<td>
			Industrials
			</td>
		</tr>
<tr>
<td>
			HPH Trust USD
			</td>
			<td>
			NS8U
			</td>
			<td>
			2,489
			</td>
			<td>
			24%
			</td>
			<td>
			9%
			</td>
			<td>
			-4
			</td>
			<td>
			-1
			</td>
			<td>
			N/A
			</td>
			<td>
			Industrials
			</td>
		</tr>
<tr>
<td>
			Yanlord Land
			</td>
			<td>
			Z25
			</td>
			<td>
			2,183
			</td>
			<td>
			-2%
			</td>
			<td>
			1%
			</td>
			<td>
			-19
			</td>
			<td>
			-2
			</td>
			<td>
			-18%
			</td>
			<td>
			Real Estate (Non-REITs)
			</td>
		</tr>
<tr>
<td>
			Hong Leong Asia
			</td>
			<td>
			H22
			</td>
			<td>
			595
			</td>
			<td>
			16%
			</td>
			<td>
			4%
			</td>
			<td>
			3
			</td>
			<td>
			0
			</td>
			<td>
			-69%
			</td>
			<td>
			Consumer Cyclicals
			</td>
		</tr>
<tr>
<td>
			Sasseur REIT
			</td>
			<td>
			CRPU
			</td>
			<td>
			1,007
			</td>
			<td>
			0%
			</td>
			<td>
			2%
			</td>
			<td>
			-35
			</td>
			<td>
			1
			</td>
			<td>
			N/A
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			Valuetronics
			</td>
			<td>
			BN2
			</td>
			<td>
			263
			</td>
			<td>
			-24%
			</td>
			<td>
			3%
			</td>
			<td>
			-20
			</td>
			<td>
			0
			</td>
			<td>
			454%
			</td>
			<td>
			Technology (Hardware/ Software)
			</td>
		</tr>
<tr>
<td>
			China Aviation
			</td>
			<td>
			G92
			</td>
			<td>
			955
			</td>
			<td>
			-13%
			</td>
			<td>
			5%
			</td>
			<td>
			1
			</td>
			<td>
			0
			</td>
			<td>
			11%
			</td>
			<td>
			Energy/ Oil &amp; Gas
			</td>
		</tr>
<tr>
<td>
			EC World REIT
			</td>
			<td>
			BWCU
			</td>
			<td>
			576
			</td>
			<td>
			4%
			</td>
			<td>
			0%
			</td>
			<td>
			-10
			</td>
			<td>
			0
			</td>
			<td>
			N/A
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			China Sunsine
			</td>
			<td>
			QES
			</td>
			<td>
			481
			</td>
			<td>
			-1%
			</td>
			<td>
			0%
			</td>
			<td>
			-1
			</td>
			<td>
			-1
			</td>
			<td>
			326%
			</td>
			<td>
			Materials &amp; Resources
			</td>
		</tr>
<tr>
<td>
			Tianjin ZX USD
			</td>
			<td>
			T14
			</td>
			<td>
			2,343
			</td>
			<td>
			7%
			</td>
			<td>
			1%
			</td>
			<td>
			-11
			</td>
			<td>
			0
			</td>
			<td>
			42%
			</td>
			<td>
			Healthcare
			</td>
		</tr>
<tr>
<td>
			China Everbright
			</td>
			<td>
			U9E
			</td>
			<td>
			644
			</td>
			<td>
			-25%
			</td>
			<td>
			0%
			</td>
			<td>
			-13
			</td>
			<td>
			0
			</td>
			<td>
			-49%
			</td>
			<td>
			Utilities
			</td>
		</tr>
<tr>
<td>
			SIIC Environment
			</td>
			<td>
			BHK
			</td>
			<td>
			458
			</td>
			<td>
			-32%
			</td>
			<td>
			2%
			</td>
			<td>
			-1
			</td>
			<td>
			0
			</td>
			<td>
			-35%
			</td>
			<td>
			Utilities
			</td>
		</tr>
<tr>
<td colspan="9">
			Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 31 December 2020)
			</td>
		</tr>
</tbody></table></body></html>





The FTSE ST China Index generated a 7.1% gain last week, following a 7.4% total return in 2020. The Index is comprised of the 17 stocks of the FTSE ST All-Share Index with more than 50% revenue exposure/assets associated with China operations. 
	 
	
The newest entrant to the FTSE ST China Index is Nanofilm Technologies International which began 2021 with a 12% gain taking its gains since listing to 91%. Nanofilm’s prospectus detailed that two-thirds of its FY19 revenue was generated from invoices issued by its China operations. 
	 
	
Nanofilm Technologies was also the strongest performer of 17 stocks in 2020, followed by a 34% gain for Hi-P International and a 30% gain for Sunpower Group. On 31 Dec, Sunpower International entered into a SPA to divest the Manufacturing &amp; Services business to Nanjing Sunpower Holdings, enabling a strategic focus on its Green Investments.  
	 

 The FTSE ST China Index has gained 7.1% over the week 2021, adding to its 7.4% total return in 2020. The Index is comprised of 17 stocks of the FTSE ST All-Share Index that report more than 50% of their revenues or assets to China (click here for more).



      
    
    FTSE ASEAN All-share index




			FTSE ST China Index Constituents (Sort by most traded in first week of 2021)
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			2020 Total Return
			
			
			2021 YTD Total Return 
			
			
			Net Insti Inflow 2020 S$M
			
			
			Net Insti Inflow 2021 YTD S$M
			
			
			10 Year Total Return 
			
			
			Sector
			
		


			Wilmar Intl
			
			
			F34
			
			
			31,833
			
			
			17%
			
			
			8%
			
			
			-42
			
			
			73
			
			
			11%
			
			
			Consumer Non-Cyclicals
			
		


			YZJ Shipbldg SGD
			
			
			BS6
			
			
			3,925
			
			
			-11%
			
			
			7%
			
			
			-173
			
			
			27
			
			
			-22%
			
			
			Industrials
			
		


			Nanofilm
			
			
			MZH
			
			
			3,262
			
			
			70%
			
			
			12%
			
			
			-30
			
			
			4
			
			
			N/A
			
			
			Technology (Hardware/ Software)
			
		


			CapitaR China Tr
			
			
			AU8U
			
			
			2,203
			
			
			-7%
			
			
			4%
			
			
			-116
			
			
			3
			
			
			131%
			
			
			REITs
			
		


			Sunpower
			
			
			5GD
			
			
			665
			
			
			30%
			
			
			2%
			
			
			-1
			
			
			-1
			
			
			110%
			
			
			Industrials
			
		


			Hi-P
			
			
			H17
			
			
			1,607
			
			
			34%
			
			
			-1%
			
			
			35
			
			
			3
			
			
			196%
			
			
			Industrials
			
		


			HPH Trust USD
			
			
			NS8U
			
			
			2,489
			
			
			24%
			
			
			9%
			
			
			-4
			
			
			-1
			
			
			N/A
			
			
			Industrials
			
		


			Yanlord Land
			
			
			Z25
			
			
			2,183
			
			
			-2%
			
			
			1%
			
			
			-19
			
			
			-2
			
			
			-18%
			
			
			Real Estate (Non-REITs)
			
		


			Hong Leong Asia
			
			
			H22
			
			
			595
			
			
			16%
			
			
			4%
			
			
			3
			
			
			0
			
			
			-69%
			
			
			Consumer Cyclicals
			
		


			Sasseur REIT
			
			
			CRPU
			
			
			1,007
			
			
			0%
			
			
			2%
			
			
			-35
			
			
			1
			
			
			N/A
			
			
			REITs
			
		


			Valuetronics
			
			
			BN2
			
			
			263
			
			
			-24%
			
			
			3%
			
			
			-20
			
			
			0
			
			
			454%
			
			
			Technology (Hardware/ Software)
			
		


			China Aviation
			
			
			G92
			
			
			955
			
			
			-13%
			
			
			5%
			
			
			1
			
			
			0
			
			
			11%
			
			
			Energy/ Oil &amp; Gas
			
		


			EC World REIT
			
			
			BWCU
			
			
			576
			
			
			4%
			
			
			0%
			
			
			-10
			
			
			0
			
			
			N/A
			
			
			REITs
			
		


			China Sunsine
			
			
			QES
			
			
			481
			
			
			-1%
			
			
			0%
			
			
			-1
			
			
			-1
			
			
			326%
			
			
			Materials &amp; Resources
			
		


			Tianjin ZX USD
			
			
			T14
			
			
			2,343
			
			
			7%
			
			
			1%
			
			
			-11
			
			
			0
			
			
			42%
			
			
			Healthcare
			
		


			China Everbright
			
			
			U9E
			
			
			644
			
			
			-25%
			
			
			0%
			
			
			-13
			
			
			0
			
			
			-49%
			
			
			Utilities
			
		


			SIIC Environment
			
			
			BHK
			
			
			458
			
			
			-32%
			
			
			2%
			
			
			-1
			
			
			0
			
			
			-35%
			
			
			Utilities
			
		


			Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 31 December 2020)
			
		



Singapore’s China Index Begins 2021 with 7% Gain  

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Post market close on Friday, the China Securities Index Company announced the changes 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> that will be effective after the close of trading on 11 December.
There are 26 inclusions and exclusions in the review with an estimated one-way turnover of 3.87%.
The inclusions are <a href="https://www.smartkarma.com/entities/tongfang-guoxin-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:15513:1" rel="noopener">Unigroup Guoxin (002049 CH)</a>, <a href="https://www.smartkarma.com/entities/suzhou-dongshan-precision-a" target="_blank" data-smartkarma-citation="entities:8796:1" rel="noopener">Suzhou Dongshan Precision A (002384 CH)</a>, <a href="https://www.smartkarma.com/entities/wuhan-guide-infrared-co-ltd" target="_blank" data-smartkarma-citation="entities:20330:1" rel="noopener">Wuhan Guide Infrared Co,Ltd. (002414 CH)</a>, <a href="https://www.smartkarma.com/entities/jpmf-guangdong-co-ltd-a" target="_blank" data-smartkarma-citation="entities:19050:1" rel="noopener">Jpmf Guangdong Co Ltd A (002600 CH)</a>, <a href="https://www.smartkarma.com/entities/yunnan-chuangxin-new-material" target="_blank" data-smartkarma-citation="entities:27135:1" rel="noopener">Yunnan Chuangxin New Material (002812 CH)</a>, <a href="https://www.smartkarma.com/entities/asymchem-laboratories-tianjin-co-ltd" target="_blank" data-smartkarma-citation="entities:28265:1" rel="noopener">Asymchem Laboratories (002821 CH)</a>, <a href="https://www.smartkarma.com/entities/jafron-biomedical-co-ltd" target="_blank" data-smartkarma-citation="entities:29575:1" rel="noopener">Jafron Biomedical Co Ltd (300529 CH)</a>, <a href="https://www.smartkarma.com/entities/bgi-genomics-co-ltd" target="_blank" data-smartkarma-citation="entities:25890:1" rel="noopener">Bgi Genomics (300676 CH)</a>, <a href="https://www.smartkarma.com/entities/china-cssc-holdings-ltd-a" target="_blank" data-smartkarma-citation="entities:2464:1" rel="noopener">China Cssc Holdings Ltd A (600150 CH)</a>, <a href="https://www.smartkarma.com/entities/beijing-tiantan-biological-products-corp" target="_blank" data-smartkarma-citation="entities:5190:1" rel="noopener">Beijing Tiantan Biological Products (600161 CH)</a>, <a href="https://www.smartkarma.com/entities/jcet-group-co-ltd" target="_blank" data-smartkarma-citation="entities:8628:1" rel="noopener">JCET Group (600584 CH)</a>, <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-a" target="_blank" data-smartkarma-citation="entities:846:1" rel="noopener">Tsingtao Brewery Co Ltd A (600600 CH)</a>, <a href="https://www.smartkarma.com/entities/topchoice-medical-corporation" target="_blank" data-smartkarma-citation="entities:1102:1" rel="noopener">Topchoice Medical (600763 CH)</a>, <a href="https://www.smartkarma.com/entities/shanghai-baosight-software-co" target="_blank" data-smartkarma-citation="entities:28228:1" rel="noopener">Shanghai Baosight Software Co (600845 CH)</a>, <a href="https://www.smartkarma.com/entities/jonjee-high-tech-industrial-and-commercial-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:14622:1" rel="noopener">Jonjee High-Tech Ind.&amp; Com. (600872 CH)</a>, <a href="https://www.smartkarma.com/entities/zhongtai-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:29935:1" rel="noopener">Zhongtai Securities Co Ltd (600918 CH)</a>, <a href="https://www.smartkarma.com/entities/boc-international-china-co-a" target="_blank" data-smartkarma-citation="entities:29972:1" rel="noopener">Boc International China Co-A (601696 CH)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-energy-a" target="_blank" data-smartkarma-citation="entities:14450:1" rel="noopener">China Merchants Energy A (601872 CH)</a>, <a href="https://www.smartkarma.com/entities/nanjing-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:27192:1" rel="noopener">Nanjing Securities Co Ltd (601990 CH)</a>, Gan&amp;Lee Pharma (603087 CH), <a href="https://www.smartkarma.com/entities/gongniu-group-co-ltd" target="_blank" data-smartkarma-citation="entities:30060:1" rel="noopener">Gongniu Group Co Ltd (603195 CH)</a>, <a href="https://www.smartkarma.com/entities/beijing-wantai-biological-a" target="_blank" data-smartkarma-citation="entities:30129:1" rel="noopener">Beijing Wantai Biological-A (603392 CH)</a>, <a href="https://www.smartkarma.com/entities/montage-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:28236:1" rel="noopener">Montage Technology Co Ltd (688008 CH)</a>, <a href="https://www.smartkarma.com/entities/china-railway-signal-com-a" target="_blank" data-smartkarma-citation="entities:28237:1" rel="noopener">China Railway Signal &amp; Com-A (688009 CH)</a>, <a href="https://www.smartkarma.com/entities/advanced-micro-fabrication-a" target="_blank" data-smartkarma-citation="entities:30308:1" rel="noopener">Advanced Micro-Fabrication-A (688012 CH)</a> and <a href="https://www.smartkarma.com/entities/shenzhen-transsion-holding-a" target="_blank" data-smartkarma-citation="entities:30323:1" rel="noopener">Shenzhen Transsion Holding-A (688036 CH).</a>
The deletions are <a href="https://www.smartkarma.com/entities/hebei-iron-steel-co-ltd-a" target="_blank" data-smartkarma-citation="entities:11538:1" rel="noopener">Hebei Iron &amp; Steel Co Ltd A (000709 CH)</a>, <a href="https://www.smartkarma.com/entities/sichuan-tianqi-lithium-industries-inc" target="_blank" data-smartkarma-citation="entities:5698:1" rel="noopener">Sichuan Tianqi Lithium Industries, Inc (002466 CH)</a>, <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a>, <a href="https://www.smartkarma.com/entities/avic-helicopter-co-ltd-a" target="_blank" data-smartkarma-citation="entities:14380:1" rel="noopener">Avic Helicopter Co Ltd A (600038 CH)</a>, <a href="https://www.smartkarma.com/entities/tbea-co-ltd-a" target="_blank" data-smartkarma-citation="entities:20303:1" rel="noopener">Tbea Co Ltd A (600089 CH)</a>, <a href="https://www.smartkarma.com/entities/shanghai-construction-group-co-ltd" target="_blank" data-smartkarma-citation="entities:17136:1" rel="noopener">Shanghai Construction Group Co, Ltd. (600170 CH)</a>, <a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-co-ltd" target="_blank" data-smartkarma-citation="entities:24592:1" rel="noopener">Yanzhou Coal Mining (600188 CH)</a>, <a href="https://www.smartkarma.com/entities/shandong-nanshan-aluminum-a" target="_blank" data-smartkarma-citation="entities:3920:1" rel="noopener">Shandong Nanshan Aluminum A (600219 CH)</a>, <a href="https://www.smartkarma.com/entities/hainan-airlines-co" target="_blank" data-smartkarma-citation="entities:24023:1" rel="noopener">Hainan Airlines Co (600221 CH)</a>, <a href="https://www.smartkarma.com/entities/china-avionics-systems-co-ltd" target="_blank" data-smartkarma-citation="entities:11393:1" rel="noopener">China Avionics Systems Co., Ltd. (600372 CH)</a>, <a href="https://www.smartkarma.com/entities/hla-corp-ltd" target="_blank" data-smartkarma-citation="entities:2586:1" rel="noopener">HLA CORP., Ltd. (600398 CH)</a>, <a href="https://www.smartkarma.com/entities/fangda-carbon-new-material-co-ltd" target="_blank" data-smartkarma-citation="entities:14878:1" rel="noopener">Fangda Carbon New Material Co, Ltd. (600516 CH)</a>, <a href="https://www.smartkarma.com/entities/offshore-oil-engineering-co-ltd-a" target="_blank" data-smartkarma-citation="entities:4968:1" rel="noopener">Offshore Oil Engineering A (600583 CH)</a>, <a href="https://www.smartkarma.com/entities/sichuan-chuantou-energy-stock-co-ltd" target="_blank" data-smartkarma-citation="entities:2557:1" rel="noopener">Sichuan Chuantou Energy Stock (600674 CH)</a>, <a href="https://www.smartkarma.com/entities/tonghua-dongbao-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:10358:1" rel="noopener">Tonghua Dongbao Pharmaceutical (600867 CH)</a>, <a href="https://www.smartkarma.com/entities/bank-of-xi-an-co-ltd" target="_blank" data-smartkarma-citation="entities:29936:1" rel="noopener">Bank of Xi'an Co Ltd (600928 CH)</a>, <a href="https://www.smartkarma.com/entities/cnooc-energy-technology-a" target="_blank" data-smartkarma-citation="entities:29941:1" rel="noopener">Cnooc Energy Technology &amp; -A (600968 CH)</a>, <a href="https://www.smartkarma.com/entities/china-film-co-ltd" target="_blank" data-smartkarma-citation="entities:29943:1" rel="noopener">China Film Co Ltd (600977 CH)</a>, <a href="https://www.smartkarma.com/entities/ningbo-port-co-ltd-a" target="_blank" data-smartkarma-citation="entities:9969:1" rel="noopener">Ningbo Port (601018 CH)</a>, <a href="https://www.smartkarma.com/entities/baiyin-nonferrous-group-co-a" target="_blank" data-smartkarma-citation="entities:29955:1" rel="noopener">Baiyin Nonferrous Group Co-A (601212 CH)</a>, <a href="https://www.smartkarma.com/entities/qingdao-port-international-co" target="_blank" data-smartkarma-citation="entities:29958:1" rel="noopener">Qingdao Port International Co (601298 CH)</a>, <a href="https://www.smartkarma.com/entities/red-star-macalline-group-corp" target="_blank" data-smartkarma-citation="entities:26732:1" rel="noopener">Red Star Macalline Group (601828 CH)</a>, <a href="https://www.smartkarma.com/entities/china-coal-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:24607:1" rel="noopener">China Coal Energy (601898 CH)</a>, <a href="https://www.smartkarma.com/entities/bbmg-corporation" target="_blank" data-smartkarma-citation="entities:22769:1" rel="noopener">BBMG Corporation (601992 CH)</a>, <a href="https://www.smartkarma.com/entities/bank-of-guiyang-co-ltd" target="_blank" data-smartkarma-citation="entities:27479:1" rel="noopener">Bank of Guiyang Co Ltd (601997 CH)</a> and <a href="https://www.smartkarma.com/entities/hoshine-silicon-industry-c-a" target="_blank" data-smartkarma-citation="entities:26646:1" rel="noopener">Hoshine Silicon Industry C-A (603260 CH)</a>.
Only 3 of the inclusions have over 1 day of ADV to buy, while there are a lot more deletions that have over 1 day of ADV to sell.
The index universe has also been expanded to include STAR Board stocks that have been listed for over 1 year. The change was implemented at this review (with no advance notice) and will see the inclusion of <a href="https://www.smartkarma.com/entities/montage-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:28236:1" rel="noopener">Montage Technology Co Ltd (688008 CH)</a>, <a href="https://www.smartkarma.com/entities/china-railway-signal-com-a" target="_blank" data-smartkarma-citation="entities:28237:1" rel="noopener">China Railway Signal &amp; Com-A (688009 CH)</a>, <a href="https://www.smartkarma.com/entities/advanced-micro-fabrication-a" target="_blank" data-smartkarma-citation="entities:30308:1" rel="noopener">Advanced Micro-Fabrication-A (688012 CH)</a> and <a href="https://www.smartkarma.com/entities/shenzhen-transsion-holding-a" target="_blank" data-smartkarma-citation="entities:30323:1" rel="noopener">Shenzhen Transsion Holding-A (688036 CH)</a> into 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>.

Post market close on Friday, the China Securities Index Company announced the changes to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) that will be effective after the close of trading on 11 December.
There are 26 inclusions and exclusions in the review with an estimated one-way turnover of 3.87%.
The inclusions are Unigroup Guoxin (002049 CH), Suzhou Dongshan Precision A (002384 CH), Wuhan Guide Infrared Co,Ltd. (002414 CH), Jpmf Guangdong Co Ltd A (002600 CH), Yunnan Chuangxin New Material (002812 CH), Asymchem Laboratories (002821 CH), Jafron Biomedical Co Ltd (300529 CH), Bgi Genomics (300676 CH), China Cssc Holdings Ltd A (600150 CH), Beijing Tiantan Biological Products (600161 CH), JCET Group (600584 CH), Tsingtao Brewery Co Ltd A (600600 CH), Topchoice Medical (600763 CH), Shanghai Baosight Software Co (600845 CH), Jonjee High-Tech Ind.&amp; Com. (600872 CH), Zhongtai Securities Co Ltd (600918 CH), Boc International China Co-A (601696 CH), China Merchants Energy A (601872 CH), Nanjing Securities Co Ltd (601990 CH), Gan&amp;Lee Pharma (603087 CH), Gongniu Group Co Ltd (603195 CH), Beijing Wantai Biological-A (603392 CH), Montage Technology Co Ltd (688008 CH), China Railway Signal &amp; Com-A (688009 CH), Advanced Micro-Fabrication-A (688012 CH) and Shenzhen Transsion Holding-A (688036 CH).
The deletions are Hebei Iron &amp; Steel Co Ltd A (000709 CH), Sichuan Tianqi Lithium Industries, Inc (002466 CH), STO Express (002468 CH), Avic Helicopter Co Ltd A (600038 CH), Tbea Co Ltd A (600089 CH), Shanghai Construction Group Co, Ltd. (600170 CH), Yanzhou Coal Mining (600188 CH), Shandong Nanshan Aluminum A (600219 CH), Hainan Airlines Co (600221 CH), China Avionics Systems Co., Ltd. (600372 CH), HLA CORP., Ltd. (600398 CH), Fangda Carbon New Material Co, Ltd. (600516 CH), Offshore Oil Engineering A (600583 CH), Sichuan Chuantou Energy Stock (600674 CH), Tonghua Dongbao Pharmaceutical (600867 CH), Bank of Xi'an Co Ltd (600928 CH), Cnooc Energy Technology &amp; -A (600968 CH), China Film Co Ltd (600977 CH), Ningbo Port (601018 CH), Baiyin Nonferrous Group Co-A (601212 CH), Qingdao Port International Co (601298 CH), Red Star Macalline Group (601828 CH), China Coal Energy (601898 CH), BBMG Corporation (601992 CH), Bank of Guiyang Co Ltd (601997 CH) and Hoshine Silicon Industry C-A (603260 CH).
Only 3 of the inclusions have over 1 day of ADV to buy, while there are a lot more deletions that have over 1 day of ADV to sell.
The index universe has also been expanded to include STAR Board stocks that have been listed for over 1 year. The change was implemented at this review (with no advance notice) and will see the inclusion of Montage Technology Co Ltd (688008 CH), China Railway Signal &amp; Com-A (688009 CH), Advanced Micro-Fabrication-A (688012 CH) and Shenzhen Transsion Holding-A (688036 CH) into the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX). 

STAR Board: CSI300 Index Rebalance: Rule Change Sees STAR Board Stocks Included

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

AviChina Industry & Technology H / Event-Driven

Civil-aviation and defense play <a href="https://www.smartkarma.com/entities/avichina-industry-tech-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">Avichina Industry &amp; Tech H (2357 HK)</a> is trading at a steep 68% discount to NAV. The implied stub, netting off listed holdings, is also at a multi-year low.
In the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0918/2020091800348.pdf" target="_blank" rel="noopener">2020 interim report</a>, AviChina stated:
<blockquote>
During the first half of 2020, with the strategic goal of building an aviation power in the new era in all respects, the Company has been dedicated to becoming a flagship company to provide high-tech aviation products and services for both military and civil purposes.
</blockquote>
<div data-v-e1aeccf8="">
<h3>The Fifth Plenum</h3>
China concluded a four-day meeting, known as the fifth plenum, on the 29th October, in which the 14th five-year plan and the development goals for 2035 were discussed.
One of the key goals from the communique of the plenum was to turn the People‘s Liberation Army into a modern military force (one on par with the US) by 2027 - in time to mark the centennial founding of the PLA. 
Concurrent with China's "dual circularity" development - discussed in <a href="https://skr.ma/ANkER" target="_blank" rel="noopener">China's Dual Circulation: Hedged Integration</a> - wherein China will primarily depend on “domestic circulation” buttressed by external resources or “international circulation”, timing appears favourable for Chinese defense stocks.
Put another way: why provide spending transparency in a sensitive industry via a listed vehicle? At this multiyear low discount to NAV, AviChina is cheap on a standalone basis. And potentially a take-private candidate. 
More below the fold.
</div>

Civil-aviation and defense play Avichina Industry &amp; Tech H (2357 HK) is trading at a steep 68% discount to NAV. The implied stub, netting off listed holdings, is also at a multi-year low.
In the 2020 interim report, AviChina stated:

During the first half of 2020, with the strategic goal of building an aviation power in the new era in all respects, the Company has been dedicated to becoming a flagship company to provide high-tech aviation products and services for both military and civil purposes.


The Fifth Plenum
China concluded a four-day meeting, known as the fifth plenum, on the 29th October, in which the 14th five-year plan and the development goals for 2035 were discussed.
One of the key goals from the communique of the plenum was to turn the People‘s Liberation Army into a modern military force (one on par with the US) by 2027 - in time to mark the centennial founding of the PLA. 
Concurrent with China's "dual circularity" development - discussed in China's Dual Circulation: Hedged Integration - wherein China will primarily depend on “domestic circulation” buttressed by external resources or “international circulation”, timing appears favourable for Chinese defense stocks.
Put another way: why provide spending transparency in a sensitive industry via a listed vehicle? At this multiyear low discount to NAV, AviChina is cheap on a standalone basis. And potentially a take-private candidate. 
More below the fold.


AviChina (2357 HK): Buy The Modern Army Narrative

Emerging markets PM, economist, CFA charterholder

Mark A. DeWeaver, PhD, CFA

AviChina Industry & Technology H / Equity Bottom-Up

On Tuesday (August 8), President Trump ratcheted up his anti-North Korea rhetoric to a new level, taking time out from a holiday at his Bedminster, NJ golf club to threaten the worker’s paradise with “fire and fury.” (See <a href="https://www.smartkarma.com/insights/trump-s-thundering-tweets-take-korea-to-the-brink-of-war" target="_blank" data-smartkarma-citation="insights:11910">Trump’s Thundering Tweets Take Korea to the Brink of War</a> for an excellent analysis of this development.) It seems the North’s propaganda machine, which has been fantasizing for years about drowning Seoul in a “sea of fire,” has met its match at last. But does this actually…

On Tuesday (August 8), President Trump ratcheted up his anti-North Korea rhetoric to a new level, taking time out from a holiday at his Bedminster, NJ golf club to threaten the worker’s paradise with “fire and fury.” (See Trump’s Thundering Tweets Take Korea to the Brink of War for an excellent analysis of this development.) It seems the North’s propaganda machine, which has been fantasizing for years about drowning Seoul in a “sea of fire,” has met its match at last. But does this actually…

Chinese Defense Stocks Point to Tempest in Teapot, Not "Fire and Fury"

China

AVIC Helicopter Co., Ltd. designs, develops, manufactures, and sells helicopters, airplane parts, and aviation-related products.  The Company also manufactures auto parts.

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Avic Helicopter Co Ltd A (600038 CH)

China Aerospace & Defense Industry: Ways to Play the Rise in Defense Spending

China's 7.2% YoY increase in defense spending budget will filter through to the business prospects of AviChina and AVIC Shenyang, given the rise in...

Osbert Tang, CFA

Singapore’s China Index Begins 2021 with 7% Gain

The FTSE ST China Index generated a 7.1% gain last week, following a 7.4% total return in 2020. The Index is comprised of the 17 stocks of the...

Singapore Exchange Ltd (SGX)

STAR Board: CSI300 Index Rebalance: Rule Change Sees STAR Board Stocks Included

There are 26 inclusions/exclusions from the CSI300 index with a one way turnover of 3.87%. An expansion of the universe has 4 STAR Board stocks...

Brian Freitas

AviChina (2357 HK): Buy The Modern Army Narrative

One would think the "modern army" maxim will catalyse companies such as AviChina (2357 HK). That is positive. But why subject capex to outside...

David Blennerhassett

Chinese Defense Stocks Point to Tempest in Teapot, Not "Fire and Fury"

On Tuesday (August 8), President Trump ratcheted up his anti-North Korea rhetoric to a new level, taking time out from a holiday at his Bedminster,...

Mark A. DeWeaver, PhD, CFA

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52-week Range

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