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

Shanghai United Imaging Health / Event-Driven

<ul>
<li>CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the <em>next </em>largest 500 names.</li>
<li>In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in December 2023.</li>
<li>Our latest estimates show that the combined one-way flow for CSI 300 and CSI 500 could be around US$2.8bn.</li>
</ul>


CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in December 2023.
Our latest estimates show that the combined one-way flow for CSI 300 and CSI 500 could be around US$2.8bn.


Quiddity Leaderboard CSI 300/​​500 Dec 23:  US$2.8bn One-Way; Might Be Time for a Basket Trade

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>The changes at the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225</a> September rebalance were announced on 4 September. The rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a> and HSCI was implemented on the same day.</li>
<li>The changes to the MVIS indices were announced on 8 September and will be implemented at the close on 15 September. The S&amp;P/ASX family will also rebalance on 15 September.</li>
<li>After a month and a half of big inflows to onshore China ETFs, there were small outflows from a lot of ETFs during the week.</li>
</ul>


The changes at the Nikkei 225 September rebalance were announced on 4 September. The rebalance of the HSI, HSCEI, HSTECH and HSCI was implemented on the same day.
The changes to the MVIS indices were announced on 8 September and will be implemented at the close on 15 September. The S&amp;P/ASX family will also rebalance on 15 September.
After a month and a half of big inflows to onshore China ETFs, there were small outflows from a lot of ETFs during the week.


Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, KOSDAQ150, Yuanta ETFs, MVA, MVW, SMH

<ul>
<li>Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.</li>
<li>We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.</li>
<li>The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.</li>
</ul>


Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.
The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.


CSI300 Index Rebalance Preview: 14 Potential Changes in December

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Resources Sanjiu Medical & Pharma / Equity Bottom-Up

<ul>
<li>For a considerable period of time, the industry has been speculating about when the large-scale VBP of TCM formula granules will officially begin. Now, here it comes. </li>
<li>Primary market and other financing except IPO in European and US biopharma industry shows a significant signal of recovery. However, IPOs remain stagnant. </li>
<li>We analyzed key points about China Resources Sanjiu. Sanjiu is expected to have better performance in 2023 than 2022, but we advise investors to allow a sufficient margin of safety.</li>
</ul>


For a considerable period of time, the industry has been speculating about when the large-scale VBP of TCM formula granules will officially begin. Now, here it comes. 
Primary market and other financing except IPO in European and US biopharma industry shows a significant signal of recovery. However, IPOs remain stagnant. 
We analyzed key points about China Resources Sanjiu. Sanjiu is expected to have better performance in 2023 than 2022, but we advise investors to allow a sufficient margin of safety.


China Healthcare Weekly (Aug.18) - TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu

Thematic (Sector/Industry)

<ul>
<li>By comparing medical insurance expenditure and income, as well as the pharmaceutical manufacturing revenues and profits for the same period, we find something interesting. </li>
<li>Due to COVID-19, the sales of TCM in 22Q4 and 23Q1 surged. But in 23Q2-Q4, people's demand could change. Therefore, the performance of related TCM company would also switch. </li>
<li>New generation weight loss drugs represented by Semaglutide would change the logic and supply-demand relationship of the entire market. This is a situation that investors need to be aware of.</li>
</ul>


By comparing medical insurance expenditure and income, as well as the pharmaceutical manufacturing revenues and profits for the same period, we find something interesting. 
Due to COVID-19, the sales of TCM in 22Q4 and 23Q1 surged. But in 23Q2-Q4, people's demand could change. Therefore, the performance of related TCM company would also switch. 
New generation weight loss drugs represented by Semaglutide would change the logic and supply-demand relationship of the entire market. This is a situation that investors need to be aware of.


China Healthcare Weekly (Jul.14)-TCM Demand Switch, 8% Benchmark Growth Rate, GLP-1 Change Game Rule

China

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd. manufactures and markets medicines, healthcare products, and medical instruments.  Through its subsidiaries, the Company also operates in pharmaceutical trading, printing, food manufacturing, real estate development, and provides medical services.

China Resources Sanjiu Medical & Pharma (000999 CH)

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China Resources Sanjiu Medical & Pharma (000999 CH)

Quiddity Leaderboard CSI 300/500 Dec 23: US$2.8bn One-Way; Might Be Time for a Basket Trade

The Names directly moving into CSI 300 and CSI 500 without previously being members of either of these indices could outperform the CSI 300 index...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, KOSDAQ150, Yuanta ETFs, MVA, MVW, SMH

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

Brian Freitas

CSI300 Index Rebalance Preview: 14 Potential Changes in December

There could be 14 changes for the CSI300 in Dec. We estimate one-way turnover of 1.93% and one-way trade of CNY 6.93bn. Materials lose the most...

Brian Freitas

China Healthcare Weekly (Aug.18) - TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu

China's first TCM formula granules VBP begins.Primary market financing in global biopharma industry rebound, but IPO remains weak.China Resources...

Xinyao (Criss) Wang

China Healthcare Weekly (Jul.14)-TCM Demand Switch, 8% Benchmark Growth Rate, GLP-1 Change Game Rule

8% could be a benchmark growth rate for future healthcare industry. People's TCM demand switch will lead to changes in TCM company's performance....

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Leaderboard CSI 300/​​500 Dec 23: US$2.8bn One-Way; Might Be Time for a Basket Trade

The Names directly moving into CSI 300 and CSI 500 without previously being members of either of these indices could outperform the CSI 300 index...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, KOSDAQ150, Yuanta ETFs, MVA, MVW, SMH

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

Brian Freitas

CSI300 Index Rebalance Preview: 14 Potential Changes in December

There could be 14 changes for the CSI300 in Dec. We estimate one-way turnover of 1.93% and one-way trade of CNY 6.93bn. Materials lose the most...

Brian Freitas

China Healthcare Weekly (Aug.18) - TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu

China's first TCM formula granules VBP begins.Primary market financing in global biopharma industry rebound, but IPO remains weak.China Resources...

Xinyao (Criss) Wang

China Healthcare Weekly (Jul.14)-TCM Demand Switch, 8% Benchmark Growth Rate, GLP-1 Change Game Rule

8% could be a benchmark growth rate for future healthcare industry. People's TCM demand switch will lead to changes in TCM company's performance....

Xinyao (Criss) Wang

Quiddity Leaderboard CSI 300/500 Dec 23: US$2.8bn One-Way; Might Be Time for a Basket Trade