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/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a> could replace <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> at the June rebalance to be implemented on 10 June.</li>
<li>If <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> remains suspended, it could be deleted from the index and <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> could be added to the index.</li>
<li>Passive <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> trackers will need to buy around 2.45% of <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>'s real float. Short interest is over 17 days of ADV.</li>
</ul>



Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)'s real float. Short interest is over 17 days of ADV.


HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> shares from the <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> in-specie dividend settled on 25 March. That has increased the number of CCASS shares and the Hong Kong free float.</li>
<li>Given the large trading volumes in <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> on 25 March and 28 March, we expect most of the forced selling from the ADR allotment is done.</li>
<li>There will be selling in <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> from active investors and the overhang from the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> holding. Buying from HSI/HSCEI trackers in June could help a bit.</li>
</ul>



JD.com Inc. (9618 HK) shares from the Tencent (700 HK) in-specie dividend settled on 25 March. That has increased the number of CCASS shares and the Hong Kong free float.
Given the large trading volumes in JD.com Inc. (9618 HK) on 25 March and 28 March, we expect most of the forced selling from the ADR allotment is done.
There will be selling in JD.com Inc. (9618 HK) from active investors and the overhang from the Prosus (PRX NA) holding. Buying from HSI/HSCEI trackers in June could help a bit.


JD.com (9618 HK): Passive Hang Seng Buying in June

<ul>
<li>We do not expect there will be huge selling in <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> immediately. However, there will be an overhang on the stock in the near to medium term.</li>
<li>JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.</li>
<li>The big worry is the US$4bn of JD.com stock that <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus</a> will receive. It is likely they will look to sell and use the cash to buy back their own stock.</li>
</ul>


We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.


JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

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

<ul>
<li>HSI's short squeeze spike is due for a pullback to the 20,200 to 19,700 support. We liked layering into a short near 21,700-22,500 for a pullback.</li>
<li>RSI kissed the ideal sell barrier. Sell volumes on a slip as well as buy volumes on a reaction rise will shed light on participation/repositioning.</li>
<li>Short for a pullback with a second trade to buy the sub 20k zone for a reaction rise.</li>
</ul>


HSI's short squeeze spike is due for a pullback to the 20,200 to 19,700 support. We liked layering into a short near 21,700-22,500 for a pullback.
RSI kissed the ideal sell barrier. Sell volumes on a slip as well as buy volumes on a reaction rise will shed light on participation/repositioning.
Short for a pullback with a second trade to buy the sub 20k zone for a reaction rise.


<ul>
<li>HSI sliced below the 19,600 projection with the next level at 18,450 and the big dual lows from 2012 and 2016 at 18,100 and a big level to hold.</li>
<li>Sell volumes and sell momentum remain high, equating to more short term pain.</li>
<li>HK tech index break below 4,000 support set to test key lows from 2018 and 2019 as the levels to hold to avert new chart lows.</li>
</ul>


HSI sliced below the 19,600 projection with the next level at 18,450 and the big dual lows from 2012 and 2016 at 18,100 and a big level to hold.
Sell volumes and sell momentum remain high, equating to more short term pain.
HK tech index break below 4,000 support set to test key lows from 2018 and 2019 as the levels to hold to avert new chart lows.


Hong Kong

The Hang Seng Index is a free-float capitalization-weighted index of a selection of companies from the Stock Exchange of Hong Kong. The components of the index are divided into four subindices: Commerce and Industry, Finance, Utilities, and Properties. The index was developed with a base level of 100 as of July 31, 1964.

Hang Seng Index (HSI INDEX)

HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

Lenovo could replace Hansoh Pharma in the HSCEI in June. Sunac could be deleted if it remains suspended till 20 May, and Great Wall Motor added....

Brian Freitas

JD.com (9618 HK): Passive Hang Seng Buying in June

JD.com stock from Tencent's in-specie div has settled. The increase in CCASS shares & free float will bring in buying from HSI/HSCEI trackers in...

Brian Freitas

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

The JD.com shares from Tencent's in-specie dividend settle today. There will be immediate selling from the ADR depositaries, while Prosus' holding...

Brian Freitas

HSI Short for a Give Back

HSI's short squeeze spike is due for a pullback to the 20,200 to 19,700 support. We liked layering into a short near 21,700-22,500 for a pullback.

Thomas Schroeder

HSI 18,100 a Big Level

HSI sliced below the 19,600 projection with the next level at 18,450 and the big dual lows from 2012 and 2016 at 18,100 and a big level to hold.

Thomas Schroeder