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>The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange. </li>
<li>The ChiNext 50 index is a <em>subset</em> of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.</li>
<li>In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of ChiNext and ChiNext 50 rebalance baskets.</li>
</ul>


The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange. 
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of ChiNext and ChiNext 50 rebalance baskets.


Quiddity Primer for ChiNext & ChiNext 50 Index Rebalance Events

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

<ul>
<li>Back in February last year, the Aussie Treasurer <a href="https://www.legislation.gov.au/F2023N00026/asmade/text" target="_blank" rel="noopener">prohibited</a> Yuxiao Fund from buying an additional 9.92% in <strong><a href="https://www.smartkarma.com/entities/northern-minerals-ltd" target="_blank" data-smartkarma-citation="entities:20445:1" rel="noopener">Northern Minerals (NTU AU)</a></strong> which would have increased its stake to 19.9%.</li>
<li>On the <a href="https://announcements.asx.com.au/asxpdf/20231121/pdf/05xl2d4q74m61v.pdf" target="_blank" rel="noopener">20th November 2023</a>, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis <a href="https://announcements.asx.com.au/asxpdf/20240527/pdf/063yqlgvx8zbll.pdf" target="_blank" rel="noopener">resigned his post</a> and the EGM cancelled.</li>
<li>The Aussie Treasurer has <a href="https://www.legislation.gov.au/F2024N00475/latest/text" target="_blank" rel="noopener">now made orders</a> requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days. </li>
</ul>


Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days. 


Northern Minerals (NMI AU): Chinese Investors Forced To Exit

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/albemarle-corp" target="_blank" data-smartkarma-citation="entities:7678:1" rel="noopener">Albemarle Corp (ALB US)</a> will replace <a href="https://www.smartkarma.com/entities/ioneer-ltd" target="_blank" data-smartkarma-citation="entities:10264:1" rel="noopener">ioneer (INR AU)</a> in the <a href="https://www.smartkarma.com/entities/vaneck-rare-earth-strategic-me" target="_blank" data-smartkarma-citation="entities:32320:1" rel="noopener">VanEck Rare Earth/Strategic Me (REMX US)</a> at the close on 15 December.</li>
<li>Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4% and in a one-way trade of US$50m.</li>
<li>The mainland China stocks in the index have been the biggest laggards and this rebalance will reduce their weight in the index significantly.</li>
</ul>



Albemarle Corp (ALB US) will replace ioneer (INR AU) in the VanEck Rare Earth/Strategic Me (REMX US) at the close on 15 December.
Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4% and in a one-way trade of US$50m.
The mainland China stocks in the index have been the biggest laggards and this rebalance will reduce their weight in the index significantly.


MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added

<ul>
<li>There is one add and two deletes for the MVIS Global Rare Earth/Strategic Metals Index at the September rebalance. Plus there are free float and capping changes.</li>
<li>One way turnover is estimated at 11.1% and will result in a one-way trade of US$58m. There are a few stocks with over 0.5 days of ADV to trade.</li>
<li>The inclusion of <a href="https://www.smartkarma.com/entities/sociedad-quimica-y-minera-de-chile-sa" target="_blank" data-smartkarma-citation="entities:27977:1" rel="noopener">Sociedad Quimica y Minera de Chile (SQM US)</a> and deletion of <a href="https://www.smartkarma.com/entities/zhejiang-huayou-cobalt-co-ltd" target="_blank" data-smartkarma-citation="entities:25048:1" rel="noopener">Zhejiang Huayou Cobalt (603799 CH)</a> are surprises.</li>
</ul>


There is one add and two deletes for the MVIS Global Rare Earth/Strategic Metals Index at the September rebalance. Plus there are free float and capping changes.
One way turnover is estimated at 11.1% and will result in a one-way trade of US$58m. There are a few stocks with over 0.5 days of ADV to trade.
The inclusion of Sociedad Quimica y Minera de Chile (SQM US) and deletion of Zhejiang Huayou Cobalt (603799 CH) are surprises.


MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover

<ul>
<li>There are 3 inclusions for the MVIS Global Rare Earth/Strategic Metals Index at the June rebalance. Plus there are free float and capping changes.</li>
<li>One way turnover is estimated at 10.6% and will result in a one-way trade of US$66m. There are a few stocks with over 0.5 days of ADV to trade.</li>
<li>
<a href="https://www.smartkarma.com/entities/yunnan-chihong-zinc-germanium-co-ltd" target="_blank" data-smartkarma-citation="entities:1779:1" rel="noopener">Yunnan Chihong Zinc&amp;Germanium Co, Ltd. (600497 CH)</a> was not added to the index while <a href="https://www.smartkarma.com/entities/ioneer-ltd" target="_blank" data-smartkarma-citation="entities:10264:1" rel="noopener">ioneer Ltd (INR AU)</a> has avoided deletion in June.</li>
</ul>


There are 3 inclusions for the MVIS Global Rare Earth/Strategic Metals Index at the June rebalance. Plus there are free float and capping changes.
One way turnover is estimated at 10.6% and will result in a one-way trade of US$66m. There are a few stocks with over 0.5 days of ADV to trade.

Yunnan Chihong Zinc&amp;Germanium Co, Ltd. (600497 CH) was not added to the index while ioneer Ltd (INR AU) has avoided deletion in June.


MVIS Global Rare Earth/​​​​Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes

China

Maanshan Iron and Steel Company Limited manufactures and markets iron and steel products which can be divided into four categories, wire rods, steel section, medium or thick steel plates, and train wheels and tires.  The production process mainly comprises coking, sintering, iron smelting, steel smelting, and steel rolling.

Shandong Humon Smelting Co., Ltd. is mainly engaged in mining, concentration and smelting of gold, and the manufacture of chemical industry.

Shandong Iron and Steel Company Ltd. manufactures and markets steel materials. The Company produces pig iron, steel billets, cast iron, and related products.

Zhejiang Hailiang Company, Ltd. manufactures and distributes steel pipes and copper rods.

Sichuan Hongda Co Ltd manufactures zinc ingots and zinc oxide products as well as processes and produces chemical products.  The Company's chemical products include phosphamidon, ordinary super phosphates, calcium phosphates, potash fertilizers, and compound fertilizers.

Aluminum Corporation of China Limited, also known as Chalco, is a producer of alumina and primary aluminum in China. The Company refines bauxite into alumina and smelts alumina to produce primary aluminum.

Ningbo Boway Alloy Material Co., Ltd. develops, produces and sells nonferrous alloy rods and wire materials. The Company's main products are copper alloy rods and wires.

Jiangsu Yulong Steel Pipe Company Limited produces and sells welded steel pipes used in transportation pipelines and structural steel pipes. The Company's main products include spiral submerged arc welding steel pipe, straight seam high frequency welded steel pipes, rectangular high-frequency welded steel pipe and longitudinal submerged arc welding pipe.

Xinxing Ductile Iron Pipes Co., Ltd. manufactures and sells nodular cast iron pipes for gas and water suppliers.  The Company also operates in a steel and iron smelting business.

Xinxing Ductile Iron Pipes Co, Ltd. (000778 CH)

Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. mines, extracts, and refines lead and zinc products.  The Company, through its subsidiaries, produces aluminum windows and doors, and glass curtain walls.  Shenzhen Zhongjin also invests in merchandise trading, real estate, and taxi transportation businesses.

Tung Ho Steel Enterprise Corporation manufactures and markets steel rods, H-shaped steel frames, steel plates, and reinforcements.

Jai Balaji Industries Ltd. manufactures and distributes steel and allied products. The Company markets sponge and pig iron, alloy carbon, mild steel billets, wire rods, and other steel products. Jai Balaji Industries serves customers throughout India.

Genesis Minerals Limited is an Australian-based mineral exploration company. The Company acquires commercially significant mineral deposits that can be brought into production.

Godawari Power and Ispat Ltd. manufactures steel.  The Company produces steel billets.

AVZ Minerals Limited operates as a mineral exploration company. The Company acquires, develops, mines, and produces lithium, tin, tantalum, and other base metals. AVZ Minerals serves customers globally.

De Grey Mining Limited is an exploration and mining company focusing on zinc, gold, platinum, silver and base metals.

Welspun Corporation Ltd. is a one-stop service provider offering pipe solutions with a capability to manufacture line pipes, along with specialized coating, double jointing and bending. Welspun supplies pipe to most of the Fortune 100 Oil & Gas companies.

Red 5 Limited is a minieral exploration and development company. The Company's principal asset is the Siana Gold Project in the Philippines held under a Mineral Production Sharing Agreement by a Red5 Philippine compliant company. Red 5's second asset is the Mapawa MPSA, located north of Siana.

Century Iron & Steel Industrial Co Ltd manufactures and markets a variety of steel products.

Iluka Resources Limited is involved in the mining, concentration and separation of mineral sands and titanium minerals. The Company also produces ilmenite and other titani-ferrous concentrates, zircon, and synthetic rutile along with the exploration of coal. Iluka's products are exported throughout the world.

Shenghe Resources Holding Co Ltd engages in all types of industrial investments, including sales, integrated application and processing, technical advice in rare earth metals, sales and processing of new rare earth materials; sales in chemical materials, import and export of various goods and technology, etc.

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Shenghe Resources Holding (600392 CH)

Quiddity Primer for ChiNext & ChiNext 50 Index Rebalance Events

Going forward, Quiddity Leaderboard for ChiNext and ChiNext 50 indices will be published on a monthly basis to help readers track the developments...

Janaghan Jeyakumar, CFA

Northern Minerals (NMI AU): Chinese Investors Forced To Exit

I don't have a strong conviction either way on Northern Minerals here; but the expulsion of Yuxiao, an agitating presence, removes an overhang....

David Blennerhassett

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added

Albemarle will replace ioneer in the index. Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4%...

Brian Freitas

MVIS Global Rare Earth/Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover

One add, two deletes, float and capping changes will result in one-way turnover estimated at 11.1% resulting in a one-way trade of US$58m. There...

Brian Freitas

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes

There are 3 additions, float & capping changes for REMX in June. One way turnover is estimated at 10.6% resulting in a one-way trade of US$66m....

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

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Dividend (Yield)

Quiddity Primer for ChiNext & ChiNext 50 Index Rebalance Events

Going forward, Quiddity Leaderboard for ChiNext and ChiNext 50 indices will be published on a monthly basis to help readers track the developments...

Janaghan Jeyakumar, CFA

Northern Minerals (NMI AU): Chinese Investors Forced To Exit

I don't have a strong conviction either way on Northern Minerals here; but the expulsion of Yuxiao, an agitating presence, removes an overhang....

David Blennerhassett

MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added

Albemarle will replace ioneer in the index. Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4%...

Brian Freitas

MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover

One add, two deletes, float and capping changes will result in one-way turnover estimated at 11.1% resulting in a one-way trade of US$58m. There...

Brian Freitas

MVIS Global Rare Earth/​​​​Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes

There are 3 additions, float & capping changes for REMX in June. One way turnover is estimated at 10.6% resulting in a one-way trade of US$66m....

Brian Freitas

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added

MVIS Global Rare Earth/Strategic Metals Index Rebalance: One Add, Two Deletes & Big Turnover

MVIS Global Rare Earth/Strategic Metals Index Rebalance: Three Adds; Float & Capping Changes