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>
<a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy</a>, <a href="https://www.smartkarma.com/entities/cgn-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:58:1" rel="noopener">CGN Power</a> and <a href="https://www.smartkarma.com/entities/china-coal-energy-co-h" target="_blank" data-smartkarma-citation="entities:383:1" rel="noopener">China Coal Energy</a> are buys, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer</a>, <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics</a> are sells for the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">iShares China Large-Cap (FXI) (FXI US)</a> in March.</li>
<li>Shorts have been spiking in <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke (2202 HK)</a> while there has been covering in <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy (1171 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a>. </li>
<li>There has been an increase in cumulative excess volume on all the adds and deletes over the last few months. There could be more over the next week.</li>
</ul>



Yankuang Energy, CGN Power and China Coal Energy are buys, China Resources Beer, China Vanke and Wuxi Biologics are sells for the iShares China Large-Cap (FXI) (FXI US) in March.
Shorts have been spiking in China Vanke (2202 HK) while there has been covering in Yankuang Energy (1171 HK), China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK). 
There has been an increase in cumulative excess volume on all the adds and deletes over the last few months. There could be more over the next week.


HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd-49b9d808-e8c9-4049-a85a-5380de9f21ad" target="_blank" data-smartkarma-citation="entities:35558:1" rel="noopener"></a>YTD, <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> has seen its share price weak, but we believe focus should not be on the poor FY22 result and the moderate 1Q23 generation growth.</li>
<li>Based on 5.5-6.5GW planned capacity expansion in FY23, this will mean a solid growth of 17.7-20.9% YoY. Coupled with efficiency improvement, we expect a sharp rebound in FY23 profit.</li>
<li>With impairment on Ukraine mostly made and reversal of exchange and trading losses, there will be a big swing in bottom line. We welcome the improvement in cash flow too.</li>
</ul>



YTD, China Longyuan Power (916 HK) has seen its share price weak, but we believe focus should not be on the poor FY22 result and the moderate 1Q23 generation growth.
Based on 5.5-6.5GW planned capacity expansion in FY23, this will mean a solid growth of 17.7-20.9% YoY. Coupled with efficiency improvement, we expect a sharp rebound in FY23 profit.
With impairment on Ukraine mostly made and reversal of exchange and trading losses, there will be a big swing in bottom line. We welcome the improvement in cash flow too.


China Longyuan (916 HK): We Stay on the Bull Camp

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>AI is poised to drive a large increase in power consumption on the mainland.  Data demand from generative AI necessitates more data centers and consequently more power.</li>
<li>China energy consumption is at the beginning of a super cycle as AI becomes integral to everyday corporate and eventually personal lives.</li>
<li>China's clean energy names will benefit from the China's energy strategy as its power needs from data centers surge.</li>
</ul>


AI is poised to drive a large increase in power consumption on the mainland.  Data demand from generative AI necessitates more data centers and consequently more power.
China energy consumption is at the beginning of a super cycle as AI becomes integral to everyday corporate and eventually personal lives.
China's clean energy names will benefit from the China's energy strategy as its power needs from data centers surge.


China Power International / Equity Bottom-Up

<ul>
<li>The Rmb10.8bn acquisition of clean energy assets from parent by <a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> is positive in raising its clean energy proportion to over 70% of total capacity.</li>
<li>The drop in share price reflects concerns about elevation of gearing and the need for potential equity funding. However, even all equity financing scenario will only dilute EPS by 1%.</li>
<li>We think its earnings quality will improve, balance sheet will be enhanced and profitability will be raised. Its 1H23 positive profit alert also showed a recovery in operational performance. </li>
</ul>


The Rmb10.8bn acquisition of clean energy assets from parent by China Power International (2380 HK) is positive in raising its clean energy proportion to over 70% of total capacity.
The drop in share price reflects concerns about elevation of gearing and the need for potential equity funding. However, even all equity financing scenario will only dilute EPS by 1%.
We think its earnings quality will improve, balance sheet will be enhanced and profitability will be raised. Its 1H23 positive profit alert also showed a recovery in operational performance. 


China Power International (2380 HK): A Major Move to Raise Clean Energy Exposure

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>SOUTHBOUND was again a net buyer, for HK$7.3bn this week, on smallish two-way volumes. Major buying was mostly SOEs.</li>
<li>The more I watch, the more I think the last few months have had serious national team buying of banks and energy, perhaps ahead of shareholder return policy changes.</li>
<li>But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows - national team and otherwise.</li>
</ul>


SOUTHBOUND was again a net buyer, for HK$7.3bn this week, on smallish two-way volumes. Major buying was mostly SOEs.
The more I watch, the more I think the last few months have had serious national team buying of banks and energy, perhaps ahead of shareholder return policy changes.
But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows - national team and otherwise.


HK Connect SOUTHBOUND Flows (To 12 Jul 2024); Slower Flows Gross and Net (Buy), Still SOEs

China

Huaneng Power International, Inc. develops, constructs, owns and operates coal-fired power plants throughout China. It also builds gas-fired, hydroelectric and wind power generation in China and owns Tuas Power which controls power generation facilities in Singapore.

SDIC Power Holdings Co Ltd . generates thermal electric and hydroelectric power. The electric power generated by the Company are supplied to Gansu area.

GD Power Development Co., Ltd. generates and distributes electric power and heat throughout China.  The Company also invests in new energy development and environmental protection projects.

Sichuan Chuantou Energy Co., Ltd. invests in electric power projects through its subsidiaries, the Company also develops and manufactures cable, railroad control systems and other automation equipment.

Zhejiang Zheneng Electric Power Co., Ltd. supplies electric power through operating thermal power generation.  The Company also involves in the research and development of electric power, power and energy-saving technology development, technical consulting, sales of energy-saving products, electrical engineering and asset management.

Zhejiang Zheneng Electric Power A (600023 CH)

China National Nuclear Power Co., Ltd. is a nuclear energy power producer. The Company invests in, constructs, manages and operates nuclear power plants throughout China.

China National Nuclear Power C (601985 CH)

Huaneng Lancang River Hydropower Inc. provides hydropower generation services. The Company offers electricity transmission, electricity distribution, power transformation, and other related services. Huaneng Lancang River Hydropower also provides clean energy development services.

Huaneng Lancang River Hydropow (600025 CH)

Huadian Power International Corporation Limited generates and sells electricity which is all fed into the Shandong Provincial Grid operated by Shandong Electric Power (Group) Corporation (SEPCO), the immediate holding company of the Company.  The Company also sells heat.

China Longyuan Power Group Corp Ltd designs, develops, manages, and operates wind farms.  The Company also sells the electricity generated by the wind farms.

Guangxi Guiguan Electric Power Co.,Ltd. operates power generation businesses. The Company provides hydroelectric power and other power products. Guangxi Guiguan Electric Power also produces thermal power, wind power, and other power products.

JSW Energy Limited generates power by using Corex gas and coal. The Company, through its subsidiary, also operates lignite thermal power plant in Rajasthan and has a capacity to produce 3,140 megawatts of electricity. JSW is also present in the power trading and transmission businesses.

NRG Energy, Inc. owns and operates a diverse portfolio of power-generating facilities, primarily in the United States.  The Company's operations include energy production and cogeneration facilities, thermal energy production, and energy resource recovery facilities.

EDP Renovaveis SA designs, develops, manages and operates power plants. The Company generates electricity using renewable energy sources mostly wind energy.

RWE Aktiengesellschaft is a globally active energy company. The Company generates and trades electricity. RWE has a capacity of about 10 gigawatts based on renewable sources, as well as gas fleet and an internationally active energy trading business. RWE serves clients in Europe, Asia-Pacific, and the United States.

Gulf Energy Development Public Company Limited produces and sells electricity and steam. The Company manages a portfolio of gas-fired and renewable power projects, as well as supplies steam and chilled water. Gulf Energy Development serves customers in Thailand.

Vistra Corp. provides utility services. The Company generates energy. Vistra Corp serves customers worldwide.

Adani Power Ltd is a power project development company. The Company develops, operates and maintains power projects in India.

Meridian Energy Ltd. operates as a state-owned electricity generator. The Company produces hydro-electric power and supplies electricity to residential, business, and rural customers. Meridian Energy provides services throughout New Zealand.

China Resources Power Holdings Company Limited is a power generation company. The Company invests, develops, owns, and operates coal-fired power plants in China.

CGN Power Co., Ltd. operates and manages nuclear power generating stations. The Company sells all of the electricity from its stations, manages, oversees the construction of nuclear power stations, and provides technical research plus develops support services. CGN Power has stations in Guangdong, Fujian and Liaoning, and is a subsidiary of China General Nuclear Power Corporation.

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CGN Power (1816 HK)

FXI Rebalance: Three Buys. Three Sells

There are 3 buys, 3 sells for the FXI in March. Two stocks have over 1x ADV to buy and cumulative excess volume has increased on all stocks. Trades...

Brian Freitas

China Longyuan (916 HK): We Stay on the Bull Camp

Capacity expansion of 17.7-20.9% YoY, coupled with efficiency improvement will mean sharp rebound in FY23 profit. Reduction in impairment and...

Osbert Tang, CFA

CHINA: Do You Like AI? BUY Utilities!

AI is creating an opportunity to benefit from the surge in power needs of China. Rapid growth in data centers to power AI will benefit China power...

David Mudd

China Power International (2380 HK): A Major Move to Raise Clean Energy Exposure

CPI's Rmb10.8bn acquisition from its parent will make clean energy reach 70% of total capacity. The move will enhance earnings by 10% and an all...

Osbert Tang, CFA

HK Connect SOUTHBOUND Flows (To 12 Jul 2024); Slower Flows Gross and Net (Buy), Still SOEs

SOUTHBOUND net flows this past week were lower than has been the case in past weeks, but were positive every day, and have been positive 23 weeks...

Travis Lundy

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