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>With one trading day left in the review period, we expect one change with <a href="https://www.smartkarma.com/entities/china-merchants-securities-co-4f5d644c-0051-426f-9706-eaa74b0ba280" target="_blank" data-smartkarma-citation="entities:22738:1" rel="noopener">China Merchants Securities Co Ltd (H) (6099 HK)</a> replacing <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy Group (1171 HK)</a> in December.</li>
<li>Capping will result in selling for <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and buying in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a>. </li>
<li>Short interest has jumped on both stocks, but the increase is far higher in <a href="https://www.smartkarma.com/entities/china-merchants-securities-co-4f5d644c-0051-426f-9706-eaa74b0ba280" target="_blank" data-smartkarma-citation="entities:22738:1" rel="noopener">China Merchants Securities Co Ltd (H) (6099 HK)</a> compared to <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy Group (1171 HK)</a>. </li>
</ul>


With one trading day left in the review period, we expect one change with China Merchants Securities Co Ltd (H) (6099 HK) replacing Yankuang Energy Group (1171 HK) in December.
Capping will result in selling for Meituan (3690 HK) and buying in Tencent (700 HK) and Alibaba Group Holding (9988 HK). 
Short interest has jumped on both stocks, but the increase is far higher in China Merchants Securities Co Ltd (H) (6099 HK) compared to Yankuang Energy Group (1171 HK). 


FXI Rebalance Preview: One Change in December as Shorts Spike

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>
<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

KraneShares CSI China Internet ETF / Event-Driven

<ul>
<li>Nearly US$140bn has flowed into mainland China listed ETFs year to date and there have been big creations in the last few weeks as stocks have surged.</li>
<li>97% of all inflows are in ETFs benchmarked to the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI300</a>, CSI1000, <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI500</a>, <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50</a>, <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext</a> and <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50</a> indices. But over US$4bn has gone into other ETFs in the last week.</li>
<li>The large ETF inflows over the last few weeks has led to index rebalance strategies underperforming in China. But that should reverse from now to rebalance implementation.</li>
</ul>


Nearly US$140bn has flowed into mainland China listed ETFs year to date and there have been big creations in the last few weeks as stocks have surged.
97% of all inflows are in ETFs benchmarked to the CSI300, CSI1000, CSI500, SSE50, ChiNext and STAR50 indices. But over US$4bn has gone into other ETFs in the last week.
The large ETF inflows over the last few weeks has led to index rebalance strategies underperforming in China. But that should reverse from now to rebalance implementation.


China ETF Inflows & Implications: YTD Inflows Nearing US$150bn

China

iShares China Large-Cap ETF is an exchange-traded fund incorporated in the USA. The ETF tracks the FTSE China 50 Index, investing in large cap stocks. Its investments are focused in the financial, oil and gas, technology and communications sectors. The ETF uses a representative sampling indexing strategy, investing at least 90% of its assets in the securities of the underlying index.

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iShares China Large-Cap (FXI) (FXI US)

FXI Rebalance Preview: One Change in December as Shorts Spike

China Merchants Sec could replace Yankuang Energy in the ETF in Dec. There is over 1x ADV to sell in Yankuang. Capping will lead to selling in...

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

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

China ETF Inflows & Implications: YTD Inflows Nearing US$150bn

Nearly US$150bn has flowed into mainland China ETFs year to date. 97% of that has gone into ETFs tracking headline indices, but there has been...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

FXI Rebalance Preview: One Change in December as Shorts Spike

China Merchants Sec could replace Yankuang Energy in the ETF in Dec. There is over 1x ADV to sell in Yankuang. Capping will lead to selling in...

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

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

China ETF Inflows & Implications: YTD Inflows Nearing US$150bn

Nearly US$150bn has flowed into mainland China ETFs year to date. 97% of that has gone into ETFs tracking headline indices, but there has been...

Brian Freitas

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