Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>Focus solely on the local government debt swap which is bigger than expected</li>
<li>There is nothing new in policy direction but promises of more to come</li>
<li>The market action around the press conference shows the potential for upside surprises</li>
</ul>


Focus solely on the local government debt swap which is bigger than expected
There is nothing new in policy direction but promises of more to come
The market action around the press conference shows the potential for upside surprises


<ul>
<li>Expectation management of any stimulus package gives the potential to overdeliver</li>
<li>Recent economic data is surprising to the upside in China</li>
<li>Divergent investor viewpoints and Trump's win likely mean offshore markets will be more volatile than onshore</li>
</ul>


Expectation management of any stimulus package gives the potential to overdeliver
Recent economic data is surprising to the upside in China
Divergent investor viewpoints and Trump's win likely mean offshore markets will be more volatile than onshore


Much Ado About Nothing -Or Why the China Stimulus Package Doesn’t Matter as Much as Investors Think

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/horizon-robotics-inc" target="_blank" data-smartkarma-citation="entities:35637:1" rel="noopener">Horizon Robotics (1395186D CH)</a> is offering 1.355bn shares in its IPO at a price range of HK$3.73-3.99/share. With the overallotment option, the IPO could raise up to HK$6.2bn (US$801m).</li>
<li>Cornerstone investors will take up a third of the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.</li>
<li>Index inclusions will commence with the HSCI in March 2025 - however, as a stock with Weighted Voting Rights, inclusion in Southbound Stock Connect will only take place in May.</li>
</ul>



Horizon Robotics (1395186D CH) is offering 1.355bn shares in its IPO at a price range of HK$3.73-3.99/share. With the overallotment option, the IPO could raise up to HK$6.2bn (US$801m).
Cornerstone investors will take up a third of the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
Index inclusions will commence with the HSCI in March 2025 - however, as a stock with Weighted Voting Rights, inclusion in Southbound Stock Connect will only take place in May.


Horizon Robotics (9660 HK) IPO: Index Inclusion Possibility & Timelines

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-beverage" target="_blank" data-smartkarma-citation="entities:41984:1" rel="noopener">China Resources Beverage (CRB HK)</a> is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).</li>
<li>Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.</li>
<li>Index inclusions will commence with the HSCI in March 2025 - that will also result in Stock Connect inclusion. The next index inclusion will take place in June.</li>
</ul>



China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
Index inclusions will commence with the HSCI in March 2025 - that will also result in Stock Connect inclusion. The next index inclusion will take place in June.


China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025

<ul>
<li>The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.</li>
<li>Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).</li>
<li>The largest outflows are expected to be from <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> with inflows spread across the other index constituents.</li>
</ul>


The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.


Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December

China

The Hang Seng China Enterprises Index is a free-float capitalization-weighted index comprised of H-Shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index. The base value of this index is 2000 as of Jan 3, 2000. This index replaced the old HSCE index on Oct. 3, 2001.

Hang Seng China Enterprises Index (HSCEI INDEX)

Hang Seng China Enterprises Index (HSCEI INDEX)

NPC/MoF Press Conference- First Take

Local government debt swap surpasses expectations, but promises of more to come is giving some investors fatigue. Market action is promising

Rikki Malik

Much Ado About Nothing -Or Why the China Stimulus Package Doesn’t Matter as Much as Investors Think

Expectation management has been key as China's economic data surprises on the upside, but divergent investor views and Trump's win may lead to...

Rikki Malik

Horizon Robotics (9660 HK) IPO: Index Inclusion Possibility & Timelines

Horizon Robotics priced at the top end of the IPO range. Stock starts trading today and could move higher. With a large chunk of the IPO taken by...

Brian Freitas

China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025

Shares priced at HK$14.5 - the top end. Stock commences trading today. There is no immediate passive buying expected and the stock debut could be...

Brian Freitas

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December

No constituent changes but there will be capping flows. Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of...

Brian Freitas

NPC/MoF Press Conference- First Take

​Local government debt swap surpasses expectations, but promises of more to come is giving some investors fatigue. Market action is promising

Rikki Malik

Much Ado About Nothing -Or Why the China Stimulus Package Doesn’t Matter as Much as Investors Think

​Expectation management has been key as China's economic data surprises on the upside, but divergent investor views and Trump's win may lead to...

Rikki Malik

Horizon Robotics (9660 HK) IPO: Index Inclusion Possibility & Timelines

Horizon Robotics priced at the top end of the IPO range. Stock starts trading today and could move higher. With a large chunk of the IPO taken by...

Brian Freitas

China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025

Shares priced at HK$14.5 - the top end. Stock commences trading today. There is no immediate passive buying expected and the stock debut could be...

Brian Freitas

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December

No constituent changes but there will be capping flows. Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of...

Brian Freitas

Local government debt swap surpasses expectations, but promises of more to come is giving some investors fatigue. Market action is promising

Expectation management has been key as China's economic data surprises on the upside, but divergent investor views and Trump's win may lead to...