Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.</li>
<li>In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.</li>
<li>We currently expect 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500. Some of these names are different from what we had in our September 2024 <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-csi-300-500-dec-24-massive-increase-in-aums-causes-flow-expectations-to-soar" target="_blank" rel="noopener">insight</a>.</li>
</ul>


CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
We currently expect 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500. Some of these names are different from what we had in our September 2024 insight.


Quiddity Leaderboard CSI 300/​​500 Dec 24: Some Changes to Exp ADDs/DELs; Large Flow Expectations

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

Jiangxi Special Electric Motor A / Event-Driven

<ul>
<li>Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.</li>
<li>There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.</li>
<li>The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.</li>
</ul>


Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.


CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/qilu-expressway-co-ltd" target="_blank" data-smartkarma-citation="entities:27431:1" rel="noopener">Qilu Expressway Co Ltd (1576 HK)</a> is an expressway operator with the concession rights to construct and operate the Jihe Expressway, the Deshang Expressway and the Shennan Expressway. Revenue is derived primarily from tolls collected from users of the expressways. Qilu listed its H-shares on 19 July 2018 at HK$2.50 per H-share to raise net proceeds of HK$1,172.12 million ($151 million). Due to the completion of the merger by absorption of Qilu Transportation by Shandong Hi-Speed Group on 16 November 2020, Shandong Hi-Speed Group and Shandong Hi-Speed Investment owned 38.93% and 5.19% of the outstanding shares. Subsequently, public shareholders accounted for 19.81% of the outstanding shares, which falls below the minimum public float requirement. To date, Shandong Hi-Speed Group has failed to address the minimum public float requirement by its fulfilling its plan to dispose of its H-shares to independent third parties.Today, Qilu entered a trading halt pending the release of an announcement pursuant to the Code on Takeovers and Mergers. Subsequently, Qilu disclosed that <a href="https://www.smartkarma.com/entities/shandong-hi-speed-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7178:1" rel="noopener">Shandong Hi Speed Co Ltd A (600350 CH)</a> intends to acquire the 778.5 million domestic shares (86.50% of domestic shares, 38.93% of outstanding shares) held by Shandong Hi-Speed Group. Post-completion, Qilu’s direct controlling shareholder will be changed from Shandong Hi-Speed Group to Shandong Hi-Speed which may trigger a mandatory general offer for all the shares under Rule 26.1 of the Takeovers code, unless it is granted a waiver from the Executive. Notably, Shandong Hi-Speed and Shandong Hi-Speed Group will jointly seek a waiver from the Executive.<div class="content-highlight">We note that on 20 August 2020, Shandong Hi-Speed Group was granted a waiver from a mandatory general offer by the Executive in relation to the merger by absorption of Qilu Transportation by Shandong Hi-Speed Group. We think that the Executive will grant a similar waiver for the proposed share acquisition. In combination with ongoing challenges to satisfy the minimum public float requirement, we would not chase the shares. </div>

Qilu Expressway Co Ltd (1576 HK) is an expressway operator with the concession rights to construct and operate the Jihe Expressway, the Deshang Expressway and the Shennan Expressway. Revenue is derived primarily from tolls collected from users of the expressways. Qilu listed its H-shares on 19 July 2018 at HK$2.50 per H-share to raise net proceeds of HK$1,172.12 million ($151 million). Due to the completion of the merger by absorption of Qilu Transportation by Shandong Hi-Speed Group on 16 November 2020, Shandong Hi-Speed Group and Shandong Hi-Speed Investment owned 38.93% and 5.19% of the outstanding shares. Subsequently, public shareholders accounted for 19.81% of the outstanding shares, which falls below the minimum public float requirement. To date, Shandong Hi-Speed Group has failed to address the minimum public float requirement by its fulfilling its plan to dispose of its H-shares to independent third parties.Today, Qilu entered a trading halt pending the release of an announcement pursuant to the Code on Takeovers and Mergers. Subsequently, Qilu disclosed that Shandong Hi Speed Co Ltd A (600350 CH) intends to acquire the 778.5 million domestic shares (86.50% of domestic shares, 38.93% of outstanding shares) held by Shandong Hi-Speed Group. Post-completion, Qilu’s direct controlling shareholder will be changed from Shandong Hi-Speed Group to Shandong Hi-Speed which may trigger a mandatory general offer for all the shares under Rule 26.1 of the Takeovers code, unless it is granted a waiver from the Executive. Notably, Shandong Hi-Speed and Shandong Hi-Speed Group will jointly seek a waiver from the Executive.We note that on 20 August 2020, Shandong Hi-Speed Group was granted a waiver from a mandatory general offer by the Executive in relation to the merger by absorption of Qilu Transportation by Shandong Hi-Speed Group. We think that the Executive will grant a similar waiver for the proposed share acquisition. In combination with ongoing challenges to satisfy the minimum public float requirement, we would not chase the shares. 

Qilu Expressway’s Largest Shareholder Seeks Another MGO Waiver

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

<a href="https://www.smartkarma.com/entities/qilu-expressway-co-ltd" target="_blank" data-smartkarma-citation="entities:27431:1" rel="noopener">Qilu Expressway Co Ltd (1576 HK)</a> is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200112.pdf" target="_blank" rel="noopener">suspended</a> "pursuant to the Code on Takeovers and Mergers".
<div>
Back on the 30 April, the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly <a href="http://www.csrc.gov.cn/pub/zjhpublic/zjh/202004/t20200430_374847.htm" target="_blank" rel="noopener">announced</a> a new pilot for Chinese infrastructure real estate investment trusts (or C-REITs), a directive to fund infrastructure projects such as highways and airports.
</div>
<div>
In my insight <a href="https://skr.ma/z1xjh" target="_blank" rel="noopener">Chinese Expressways: A Step In The REIT Direction</a>, I discussed the nine toll roads listed in Hong Kong, including Qilu, to ascertain which company may pilot this new policy.  
</div>
Located in East China and operational for 3+ years, Qilu ticks the location box and operational duration policy focus under the NDRC/CSRC directive. Is this the first "REIT" candidate?
Or is the suspension due to a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0713/2020071300003.pdf" target="_blank" rel="noopener">restructuring</a> with the Shandong Hi-Speed Group?
More below the fold.

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers".

Back on the 30 April, the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly announced a new pilot for Chinese infrastructure real estate investment trusts (or C-REITs), a directive to fund infrastructure projects such as highways and airports.


In my insight Chinese Expressways: A Step In The REIT Direction, I discussed the nine toll roads listed in Hong Kong, including Qilu, to ascertain which company may pilot this new policy.  

Located in East China and operational for 3+ years, Qilu ticks the location box and operational duration policy focus under the NDRC/CSRC directive. Is this the first "REIT" candidate?
Or is the suspension due to a restructuring with the Shandong Hi-Speed Group?
More below the fold.

Qilu Expressway: C-REIT Pilot Or Restructuring?

Thematic (Sector/Industry)

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a <a href="http://www.csrc.gov.cn/newsite/zjhxwfb/xwdd/202004/t20200430_374845.html" target="_blank" rel="noopener">notice</a> in April on establishing a pilot program to promote Infrastructure Real Estate Investment Trust Funds (REITs).The focus will be on supporting key areas such as Beijing-Tianjin-Hebei, Yangtze River Economic Belt, Xiong'an New Area, Guangdong, Hong Kong, Macao and The Great Bay Area, Hainan and the Yangtze River Delta and on industries such as warehousing logistics, toll roads and other transportation facilities, water and electrical heating and other municipal projects, urban sewage waste treatment, solid waste and waste treatment and other pollution control projects.In this Insight, following on from <a href="https://www.smartkarma.com/profiles/osbert-tang-cfa" target="_blank" data-smartkarma-citation="accounts:3879" rel="noopener">Osbert Tang, CFA</a>'s <a href="https://www.smartkarma.com/insights/china-infrastructure-reits-first-look-on-h-share-toll-road-sector" target="_blank" rel="noopener">Insight</a>, we put together a tradeable basket on toll road names listed in Hong Kong and China.

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a pilot program to promote Infrastructure Real Estate Investment Trust Funds (REITs).The focus will be on supporting key areas such as Beijing-Tianjin-Hebei, Yangtze River Economic Belt, Xiong'an New Area, Guangdong, Hong Kong, Macao and The Great Bay Area, Hainan and the Yangtze River Delta and on industries such as warehousing logistics, toll roads and other transportation facilities, water and electrical heating and other municipal projects, urban sewage waste treatment, solid waste and waste treatment and other pollution control projects.In this Insight, following on from Osbert Tang, CFA's Insight, we put together a tradeable basket on toll road names listed in Hong Kong and China.

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

China

Shandong Hi-speed Co Ltd. operates and maintains toll roads, bridges, tunnels, and other infrastructure facilities.  The Company operates the Jiqing Highway, the Taiqu Road, the Jinan-Huanghe Bridge, the Pingyin Bridge, and the Binzhou Bridge. Shandong Hi-speed also retails petroleum products.

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Shandong Hi Speed Co Ltd A (600350 CH)

Quiddity Leaderboard CSI 300/500 Dec 24: Some Changes to Exp ADDs/DELs; Large Flow Expectations

We estimate for one-way flows of US$3.5bn and US$3.9bn for CSI 300 and CSI 500 respectively. The reference period for ADDs/DELs selection ends on...

Janaghan Jeyakumar, CFA

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

We forecast 50 changes a side at the June rebal leading to a one-way turnover of 11.47% & in a one-way trade of CNY 10bn. The potential adds have...

Brian Freitas

Qilu Expressway’s Largest Shareholder Seeks Another MGO Waiver

We think that the Executive will grant a similar waiver for the proposed share acquisition. Along with the challenges to satisfy the minimum public...

Arun George

Qilu Expressway: C-REIT Pilot Or Restructuring?

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers". Back on the 30 April, the China...

David Blennerhassett

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Leaderboard CSI 300/​​500 Dec 24: Some Changes to Exp ADDs/DELs; Large Flow Expectations

We estimate for one-way flows of US$3.5bn and US$3.9bn for CSI 300 and CSI 500 respectively. The reference period for ADDs/DELs selection ends on...

Janaghan Jeyakumar, CFA

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

We forecast 50 changes a side at the June rebal leading to a one-way turnover of 11.47% & in a one-way trade of CNY 10bn. The potential adds have...

Brian Freitas

Qilu Expressway’s Largest Shareholder Seeks Another MGO Waiver

We think that the Executive will grant a similar waiver for the proposed share acquisition. Along with the challenges to satisfy the minimum public...

Arun George

Qilu Expressway: C-REIT Pilot Or Restructuring?

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers". Back on the 30 April, the China...

David Blennerhassett

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a...

Brian Freitas

Quiddity Leaderboard CSI 300/500 Dec 24: Some Changes to Exp ADDs/DELs; Large Flow Expectations