Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>*Poor Results See No Signs Of Near-Term Abatement: </em></strong>Singapore Exchange (SGX.SP) [SGX] reported FY 1H21 results of SGD 240.4 mn, declining SGD 18.2 mn (7.0%) HOH. Excluding the SGD 15.6 mn in gains primarily attributed to non-cash fair value on its BidFX acquisition, SGX’core operating result would have declined SGD 33.9 mn (13.1%) over the period; and</p><p>*<strong><em>Derivatives Challenges Led By Taiwan: </em></strong>The largest semi-annual results delta was attributed to derivatives, which declined SGD 33.6 mn or 12.2%. SGX ceased trading of MSCI Taiwan futures contracts on October 30, 2020 with their move to the Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx]. Until recently, 99.8% of the Taiwan index futures volumes has were held by SGX, but its dominant market share position is beginning to crack. As time passes, we will get an idea of how much volume of the Taiwan index futures will remain with MSCI indices and move to HKEx which has significant implications for SGX's lucrative A50 contract.</p>

*Poor Results See No Signs Of Near-Term Abatement: Singapore Exchange (SGX.SP) [SGX] reported FY 1H21 results of SGD 240.4 mn, declining SGD 18.2 mn (7.0%) HOH. Excluding the SGD 15.6 mn in gains primarily attributed to non-cash fair value on its BidFX acquisition, SGX’core operating result would have declined SGD 33.9 mn (13.1%) over the period; and*Derivatives Challenges Led By Taiwan: The largest semi-annual results delta was attributed to derivatives, which declined SGD 33.6 mn or 12.2%. SGX ceased trading of MSCI Taiwan futures contracts on October 30, 2020 with their move to the Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx]. Until recently, 99.8% of the Taiwan index futures volumes has were held by SGX, but its dominant market share position is beginning to crack. As time passes, we will get an idea of how much volume of the Taiwan index futures will remain with MSCI indices and move to HKEx which has significant implications for SGX's lucrative A50 contract.

China and US Equity Analyst

Roger Xie

Cross Asset Strategy

<ul>
<li>China mainland funds have accelerated their capital deployment in Hong Kong market in the new year. According to data provider Wind, the fund inflow to Hong Kong has exceeded RMB 150 billion in first three weeks of January. Since the Hong Kong-China Stock Connect program kicked off in 2014, the accumulated funds from China to Hong Kong have reached RMB 1.66 trillion. We estimate the annual fund inflow to Hong Kong market could be as high as RMB 600 billion in next 5 years.</li>
<li>The accelerated fund inflow underscored the attractiveness of Hong Kong market in several aspects. 1) Hong Kong market overall valuation is cheaper than China A-share. For dual-list A and H-shares, Hong Kong listed H-shares are traded at average 35% discount to their A-share peers. 2) Liquidity at both China and Hong Kong market remains abundant. The data analytics firm EPFR reported that there are 20 weeks of consecutive fund inflow to Hong Kong market. 3) <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> has transformed itself to a capital raising and trading venue for China new economy companies. And these particular sectors have become favorite for China domestic funds.</li>
<li>The top-10 holdings of Hong Kong-listed companies for China funds are: <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> , <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> , <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK) , </a><a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a><a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener"> </a>, <a href="https://www.smartkarma.com/entities/yihai-int-l-holding-ltd" target="_blank" data-smartkarma-citation="entities:22803:1" rel="noopener">Yihai Int’L Holding (1579 HK)</a> , <a href="https://www.smartkarma.com/entities/kingdee-international-sftwr" target="_blank" data-smartkarma-citation="entities:37:1" rel="noopener">Kingdee International Software (268 HK)</a> , <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> , <a href="https://www.smartkarma.com/entities/kingsoft-corp-ltd" target="_blank" data-smartkarma-citation="entities:492:1" rel="noopener">Kingsoft Corp (3888 HK)</a> , <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a> , <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> </li>
</ul>


China mainland funds have accelerated their capital deployment in Hong Kong market in the new year. According to data provider Wind, the fund inflow to Hong Kong has exceeded RMB 150 billion in first three weeks of January. Since the Hong Kong-China Stock Connect program kicked off in 2014, the accumulated funds from China to Hong Kong have reached RMB 1.66 trillion. We estimate the annual fund inflow to Hong Kong market could be as high as RMB 600 billion in next 5 years.
The accelerated fund inflow underscored the attractiveness of Hong Kong market in several aspects. 1) Hong Kong market overall valuation is cheaper than China A-share. For dual-list A and H-shares, Hong Kong listed H-shares are traded at average 35% discount to their A-share peers. 2) Liquidity at both China and Hong Kong market remains abundant. The data analytics firm EPFR reported that there are 20 weeks of consecutive fund inflow to Hong Kong market. 3) HKEX (388 HK) has transformed itself to a capital raising and trading venue for China new economy companies. And these particular sectors have become favorite for China domestic funds.
The top-10 holdings of Hong Kong-listed companies for China funds are: Tencent Holdings (700 HK) , Meituan (3690 HK) , Wuxi Biologics (2269 HK) , HKEX (388 HK) , Yihai Int’L Holding (1579 HK) , Kingdee International Software (268 HK) , Xinyi Solar Holdings (968 HK) , Kingsoft Corp (3888 HK) , Country Garden Services Holdings (6098 HK) , Xiaomi Corp (1810 HK) 


China Equity Strategy: Domestic Funds Rush to Deploy Capital in Hong Kong Market

<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> December ADT (Average Daily Turnover) re-accelerated strongly, delivering amazing 86% year-over-year growth in the month. The outperformance is helped by the rising global equity markets and strong IPO listings in Hong Kong. For the year 2020, HKEx ADT has accelerated the year-over-year growth rate to 49%, which is one the best trading volume years recently. In 2020, HKEx stock price rose 68%, outperforming Hang Seng Index down 3%. We believe HKEx momentum will continue in 2021.</li>
<li>We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021. <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> will benefit from this secular trend in several ways: 1) Hong Kong market becomes de facto choice for China new economy companies for IPO and fund raising; 2) HKEx Northbound trading has become an increasing important factor as the gateway to invest in China A-share; 3) MSCI index products will continue to gain market share. We forecast Securities ADT of HK$240bn in FY 21 (Hong Kong and Stock Connect Northbound) and raise HKEx TP HKD 500. </li>
<li>HKEx announced that Calvin Tai Chi Kin has replaced Charles Li Xiaojia as its new interim Chief Executive, effective from 1st January 2021. Calvin Tai Chi Kin, a financial industry veteran, has been named HKEx' Interim CEO since last September. He will take over Charles Li Xiaojia’s responsibilities and continue his role as Co-President and Chief Operating Officer of HKEx. <p>Calvin brings a wealth of experience of more than thirty-five years to his new position. According to the media, several candidates have been considered by HKEx, but the final decision on HKEx CEO has not been reached. </p>
</li>
</ul>



HKEX (388 HK) December ADT (Average Daily Turnover) re-accelerated strongly, delivering amazing 86% year-over-year growth in the month. The outperformance is helped by the rising global equity markets and strong IPO listings in Hong Kong. For the year 2020, HKEx ADT has accelerated the year-over-year growth rate to 49%, which is one the best trading volume years recently. In 2020, HKEx stock price rose 68%, outperforming Hang Seng Index down 3%. We believe HKEx momentum will continue in 2021.
We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021. HKEX (388 HK) will benefit from this secular trend in several ways: 1) Hong Kong market becomes de facto choice for China new economy companies for IPO and fund raising; 2) HKEx Northbound trading has become an increasing important factor as the gateway to invest in China A-share; 3) MSCI index products will continue to gain market share. We forecast Securities ADT of HK$240bn in FY 21 (Hong Kong and Stock Connect Northbound) and raise HKEx TP HKD 500. 
HKEx announced that Calvin Tai Chi Kin has replaced Charles Li Xiaojia as its new interim Chief Executive, effective from 1st January 2021. Calvin Tai Chi Kin, a financial industry veteran, has been named HKEx' Interim CEO since last September. He will take over Charles Li Xiaojia’s responsibilities and continue his role as Co-President and Chief Operating Officer of HKEx. Calvin brings a wealth of experience of more than thirty-five years to his new position. According to the media, several candidates have been considered by HKEx, but the final decision on HKEx CEO has not been reached. 



HKEx (388.HK): A Blockbuster Year 2020; Becoming Regional Leader in Years Ahead; Raise TP to HK$500

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>, <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> and <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a>, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 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 (HK) (9618 HK)</a>. Shorts increased on Communication Services, Energy and Consumer Staples, and decreased on Information Technology, Financials and Consumer Discretionary.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/change-inc" target="_blank" data-smartkarma-citation="entities:27414:1" rel="noopener">Change Inc (3962 JP)</a>, <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>, <a href="https://www.smartkarma.com/entities/renova-inc" target="_blank" data-smartkarma-citation="entities:26753:1" rel="noopener">RENOVA Inc (9519 JP)</a> and <a href="https://www.smartkarma.com/entities/shimamura-co-ltd" target="_blank" data-smartkarma-citation="entities:15213:1" rel="noopener">Shimamura (8227 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/bridgestone-corp" target="_blank" data-smartkarma-citation="entities:8914:1" rel="noopener">Bridgestone Corp (5108 JP)</a>. Sectorally, shorts increased on Utilities and Communication Services, while decreasing on Consumer Discretionary, Consumer Staples, Information Technology and Industrials.</p></div><div><p>In Korea, there were short positions put on in <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-uplus-corp" target="_blank" data-smartkarma-citation="entities:1113:1" rel="noopener">LG Uplus Corp (032640 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a> and <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a>, <a href="https://www.smartkarma.com/entities/richwave-technology-corp" target="_blank" data-smartkarma-citation="entities:18629:1" rel="noopener">Richwave Technology (4968 TT)</a> and <a href="https://www.smartkarma.com/entities/pan-jit-international-inc" target="_blank" data-smartkarma-citation="entities:12501:1" rel="noopener">Pan Jit International (2481 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on ICBC (H) (1398 HK), China Mobile (941 HK), CNOOC Ltd (883 HK) and BYD (1211 HK) while there was short covering on Xiaomi Corp (1810 HK), Xinyi Solar Holdings (968 HK), HKEX (388 HK) and JD.com (HK) (9618 HK). Shorts increased on Communication Services, Energy and Consumer Staples, and decreased on Information Technology, Financials and Consumer Discretionary.In Japan, stocks that saw the most shorts were Change Inc (3962 JP), Advantest Corp (6857 JP), RENOVA Inc (9519 JP) and Shimamura (8227 JP) while shorts decreased on Honda Motor (7267 JP), Kao Corp (4452 JP), Canon Inc (7751 JP) and Bridgestone Corp (5108 JP). Sectorally, shorts increased on Utilities and Communication Services, while decreasing on Consumer Discretionary, Consumer Staples, Information Technology and Industrials.In Korea, there were short positions put on in KT Corp (030200 KS), Samsung Electronics (005930 KS), LG Uplus Corp (032640 KS) and Kakao Corp (035720 KS). Stocks in Taiwan that saw the highest increase in shorts were TSMC (2330 TT), Largan Precision (3008 TT), Pegatron Corp (4938 TT) and Asustek Computer (2357 TT) while shorts were covered on Evergreen Marine Corp (2603 TT), Walsin Technology (2492 TT), Richwave Technology (4968 TT) and Pan Jit International (2481 TT). 

Asia Short Interest: China Mobile, CNOOC, Xiaomi, JD, Change, KT, Samsung, TSMC, Largan

<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> November ADT (Average Daily Turnover) accelerated strongly, helped by the rising global equity markets. This in in contrast to usual weak seasonality in trading activities in Q4. For the first 11 months in 2020, HKEx ADT has reaccelerated the year-over-year growth rate to 46% , fueled by  IPO listings and investors' sanguine view on China. </li>
<li>HKEx had a busy month for the IPO market with 11 new listings in November. The most noticeable IPOs are New Oriental Education (9901.HK), GDS Holdings (9698.HK), Sunac Services (1516.HK) and RemeGen (9995.HK). We expect mega IPO and Chinese ADR homecoming to reshape the landscape of Hong Kong capital market. Year-to-date, HKEx has raised USD $47 billion in IPO market, and is on track to make the best record since 2010.</li>
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> also announced to launch HKEX Synapse, a new settlement acceleration platform for its landmark Stock Connect program. Using DAML smart contracts, HKEX Synapse will standardize and streamline the post-trade workflows of Northbound Stock Connect, maximizing efficiencies for market participants in a transparent, secure and reliable manner. This is the latest step that HKEx has adopted the new technology such as smart contracts, blockchain, and distributed ledger. We are bullish on HKEx to continue to drive innovation with blockchain technology.<br><br>
</li>
</ul>



HKEX (388 HK) November ADT (Average Daily Turnover) accelerated strongly, helped by the rising global equity markets. This in in contrast to usual weak seasonality in trading activities in Q4. For the first 11 months in 2020, HKEx ADT has reaccelerated the year-over-year growth rate to 46% , fueled by  IPO listings and investors' sanguine view on China. 
HKEx had a busy month for the IPO market with 11 new listings in November. The most noticeable IPOs are New Oriental Education (9901.HK), GDS Holdings (9698.HK), Sunac Services (1516.HK) and RemeGen (9995.HK). We expect mega IPO and Chinese ADR homecoming to reshape the landscape of Hong Kong capital market. Year-to-date, HKEx has raised USD $47 billion in IPO market, and is on track to make the best record since 2010.

HKEX (388 HK) also announced to launch HKEX Synapse, a new settlement acceleration platform for its landmark Stock Connect program. Using DAML smart contracts, HKEX Synapse will standardize and streamline the post-trade workflows of Northbound Stock Connect, maximizing efficiencies for market participants in a transparent, secure and reliable manner. This is the latest step that HKEx has adopted the new technology such as smart contracts, blockchain, and distributed ledger. We are bullish on HKEx to continue to drive innovation with blockchain technology.  



HKEx (388.HK): Trading Activities Accelerate to Year End

Hong Kong

Hong Kong Exchanges & Clearing Limited owns and operates the stock exchange, futures exchange, and their related clearing houses in Hong Kong.  The Company provides the trading platforms for a range of cash and derivatives products and the facilities for processing trades.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

HKEX (388 HK)

Singapore Exchange - Going South

SINGAPORE EXCHANGE: SGX FY 1H21 results declined 7.0% HOH. Excluding the BidFX gain, SGX’ core operating result would have declined 13.1%. SGX...

Thomas J. Monaco

China Equity Strategy: Domestic Funds Rush to Deploy Capital in Hong Kong Market

China mainland funds have accelerated their capital deployment in Hong Kong market in the new year. The fund inflow to Hong Kong has exceeded RMB...

Roger Xie

HKEx (388.HK): A Blockbuster Year 2020; Becoming Regional Leader in Years Ahead; Raise TP to HK$500

We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021and raise HKEx TP HKD 500.

Roger Xie

Asia Short Interest: China Mobile, CNOOC, Xiaomi, JD, Change, KT, Samsung, TSMC, Largan

The weekly short interest report looks at large moves across HK, Japan, Korea and Taiwan stocks and helps in determining market interest that could...

Brian Freitas

HKEx (388.HK): Trading Activities Accelerate to Year End

HKEX (388 HK) November ADT (Average Daily Turnover) accelerated strongly, helped by the rising global equity markets. This in in contrast to usual...

Roger Xie

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)