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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Hang Seng China Enterprises Index / Event-Driven

Since we published our earlier Insight, the HSCEI dividends futures expiring in December 2020 have sold-off around 7% mainly driven by a 4% weakening in the CNYHKD FX rate and a 7% drop in the HSCEI index.In this Insight, we update our estimates taking into account the HSCEI constituents half yearly results and the upcoming index rebalances and conclude that the dividend futures are still pricing in a degree of pessimism. The risk/reward is skewed in favour of buying the 2020 dividend futures at these levels in anticipation of a reversion back towards our estimated fair value derived from fundamentals.

Since we published our earlier Insight, the HSCEI dividends futures expiring in December 2020 have sold-off around 7% mainly driven by a 4% weakening in the CNYHKD FX rate and a 7% drop in the HSCEI index.In this Insight, we update our estimates taking into account the HSCEI constituents half yearly results and the upcoming index rebalances and conclude that the dividend futures are still pricing in a degree of pessimism. The risk/reward is skewed in favour of buying the 2020 dividend futures at these levels in anticipation of a reversion back towards our estimated fair value derived from fundamentals.

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

We want to outline probable downside targets given increasing risk of a military response out of China once the HSI is back below 25,000 pivotal macro support. 25k base line support halted the decline in 2018 but trend indicators warn of a sustained move below 25,000 and may not hold secondary support at 24,000. Downside support and projection levels show a higher frequency of being met given weak seasonality into September/October and increasing HK demonstration tensions.Weekly MACD that demonstrates downside cyclicality that would threaten the 24,000 physical support (old price highs).USD/CNH triangulation is set to push higher with targets at 7.18 and 7.37.A hedge option in an event where the stock exchange were to be closed rests with shorting the US ETF (EWH) with projection at 20.30 and critical price support at 19.60.

We want to outline probable downside targets given increasing risk of a military response out of China once the HSI is back below 25,000 pivotal macro support. 25k base line support halted the decline in 2018 but trend indicators warn of a sustained move below 25,000 and may not hold secondary support at 24,000. Downside support and projection levels show a higher frequency of being met given weak seasonality into September/October and increasing HK demonstration tensions.Weekly MACD that demonstrates downside cyclicality that would threaten the 24,000 physical support (old price highs).USD/CNH triangulation is set to push higher with targets at 7.18 and 7.37.A hedge option in an event where the stock exchange were to be closed rests with shorting the US ETF (EWH) with projection at 20.30 and critical price support at 19.60.

iShares FTSE/Xinhua A50 China / Technical Analysis

We touch on key pivots for the global cycle in the NDX (recent highs) and laid out in our recent insight <a href="https://www.smartkarma.com/insights/spx-set-up-mirrors-september-2018" target="_blank" data-smartkarma-citation="insights:29247">SPX Set up Mirrors September 2018</a> . The SPX RSI pattern mirrors the late 2018 cycle with higher confidence break down signal unfolding today.With China a crowded long bet, we noted non confirmation in many of our technical sets on recent highs with buy volumes tapering off and divergences building.China A shares have broken some key tactical supports that set up a draw down to test macro pivot support at A50 12,000.We believe that at least 70% of a trade deal has been baked into current prices. An unwind of this bet would hit markets hard with some key chart levels to focus on.

We touch on key pivots for the global cycle in the NDX (recent highs) and laid out in our recent insight SPX Set up Mirrors September 2018 . The SPX RSI pattern mirrors the late 2018 cycle with higher confidence break down signal unfolding today.With China a crowded long bet, we noted non confirmation in many of our technical sets on recent highs with buy volumes tapering off and divergences building.China A shares have broken some key tactical supports that set up a draw down to test macro pivot support at A50 12,000.We believe that at least 70% of a trade deal has been baked into current prices. An unwind of this bet would hit markets hard with some key chart levels to focus on.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally. These ongoing improvements further cement our positive overall outlook, and we continue to believe that global equities (MSCI ACWI) are poised for additional strength moving forward. In our April International Strategy, we highlight various themes which lead to our overall positive outlook, along with areas within the world's markets where we see immediate opportunity.

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally. These ongoing improvements further cement our positive overall outlook, and we continue to believe that global equities (MSCI ACWI) are poised for additional strength moving forward. In our April International Strategy, we highlight various themes which lead to our overall positive outlook, along with areas within the world's markets where we see immediate opportunity.

Global Ex-U.S. Equity Strategy: Positive Outlook Intact; Remain Overweight China

FTSE China A50 Index / Technical Analysis

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.Tencent is exhibiting upside momentum deterioration amid divergence.We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.Tencent is exhibiting upside momentum deterioration amid divergence.We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

Baking in a Trade Deal and China Fade the Fact Levels

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)

HSCEI Dividends - Buy the Dip

Since we published our earlier Insight, the HSCEI dividends futures expiring in December 2020 have sold-off around 7% mainly driven by a 4%...

Brian Freitas

Hong Kong Event Downside Support/Target

We want to outline probable downside targets given increasing risk of a military response out of China once the HSI is back below 25,000 pivotal...

Thomas Schroeder

China Game over Support Breaks

We touch on key pivots for the global cycle in the NDX (recent highs) and laid out in our recent insight SPX Set up Mirrors September 2018 . The...

Thomas Schroeder

Global Ex-U.S. Equity Strategy: Positive Outlook Intact; Remain Overweight China

Incremental technical developments continue to be of the bullish variety as more and more countries/regions begin to participate in the rally....

Vermilion Research

Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout...

Thomas Schroeder