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 subset 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 look at our final expectations for the ADDs and DELs for the December 2023 and their flow implications.</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 look at our final expectations for the ADDs and DELs for the December 2023 and their flow implications.


Quiddity Leaderboard ChiNext & ChiNext 50: Final 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

Wuhan Jingce Electronic Group / Event-Driven

<ul>
<li>Nearing the end of the review period, we forecast 8 changes for the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index (SZ399006 INDEX)</a> and 5 changes for the ChiNext 50 Index in December.</li>
<li>Given stock selection uses liquidity as a major input, the impact of passive trading will be much larger on the deletions as compared to the additions.</li>
<li>The potential adds have outperformed the potential deletes, but relative performance has been drifting lower over the last few months. There are stocks that will have flows from other indices.</li>
</ul>


Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
Given stock selection uses liquidity as a major input, the impact of passive trading will be much larger on the deletions as compared to the additions.
The potential adds have outperformed the potential deletes, but relative performance has been drifting lower over the last few months. There are stocks that will have flows from other indices.


ChiNext/​​​ChiNext50 Index Rebalance Preview: Sector Rotation Continues

<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 subset 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 look at the names leading the race to become ADDs and DELETEs in the December 2023 Rebalance.</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 look at the names leading the race to become ADDs and DELETEs in the December 2023 Rebalance.


Quiddity Leaderboard ChiNext & ChiNext 50: A Potential Basket Trade

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<ul>
<li>Revised guidance with 17.6% higher sales that caused a 40% increase in operating profit and an increase in EPS by 344% by 1H 2022.</li>
<li>Spin off its Korean subsidiary by this August for up to KRW 900 bn or USD 692 million or almost as big as <a href="https://www.smartkarma.com/entities/w-scope-corp" target="_blank" data-smartkarma-citation="entities:8597:1" rel="noopener">W Scope Corp (6619 JP)</a>currently. </li>
<li>The company is trading at a 65% PBR discount to its Chinese peers which are bigger but less growth catalysts. Don't sell too early. </li>
</ul>


Revised guidance with 17.6% higher sales that caused a 40% increase in operating profit and an increase in EPS by 344% by 1H 2022.
Spin off its Korean subsidiary by this August for up to KRW 900 bn or USD 692 million or almost as big as W Scope Corp (6619 JP)currently. 
The company is trading at a 65% PBR discount to its Chinese peers which are bigger but less growth catalysts. Don't sell too early. 


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>While a more cautious outlook is appropriate, as long as $77 holds (the September lows) we are constructive and would be buyers on a pullback. A move below $77 would start to get very concerning, and would leave $75 and the 200-day MA as last-ditch support. Considering the recent pullback we want to be sticking with areas that have continued to outperform in spite of recent broad market weakness. For that we look to the following leadership Sectors: <strong>Technology, Consumer Discretionary, Manufacturing, Materials, and Transportation</strong></p>

While a more cautious outlook is appropriate, as long as $77 holds (the September lows) we are constructive and would be buyers on a pullback. A move below $77 would start to get very concerning, and would leave $75 and the 200-day MA as last-ditch support. Considering the recent pullback we want to be sticking with areas that have continued to outperform in spite of recent broad market weakness. For that we look to the following leadership Sectors: Technology, Consumer Discretionary, Manufacturing, Materials, and Transportation

China

Hangzhou Oxygen Plant Group Co.,Ltd. manufactures industrial gas machinery products. The Company produces air separation equipment, small-scale air separation equipment, liquefied nitrogen wash cold boxes, liquefied natural gas separation equipment, and other products. Hangzhou Oxygen Plant Group markets its products worldwide.

Zhejiang Longsheng Group Co., Ltd. manufactures a variety of dyes including high intensity and rapid-dying Lonsperse Dye. The Company sells its products domestically and exports worldwide.

Zhejiang Longsheng Group Co., (600352 CH)

Hengyi Petrochemical Co., Ltd. manufactures polyester and other petrochemical products.

Zhejiang Weixing New Building Materials Co.,Ltd. develops, manufactures and sells plastic pipes.  The Company's products include poly propylene random (PPR) pipe, polyethylene (PE) pipe, high density polyethylene (HDPE) pipe, and polybutene (PB) pipe.

Zhejiang Weixing New Bldg Mtls (002372 CH)

Luxi Chemical Group Co., Ltd. manufactures and markets a variety of fertilizers and other chemical products.  The Company's products include urea,  synthetic ammonia, and ammonium acid carbonate.

Shandong Sinocera Functional Material Company Limited manufactures and sells high purity, nano-scale barium titanate powder and MLCC formula powder. The Company's main product is MLCC ceramic powder.

Shandong Sinocera Functional Material (300285 CH)

Inner Mongolia Yuan Xing Energy Co., Ltd. manufactures and markets natural alkali chemicals.  The Company's products include methanol, dimethyl formamide, synthetic ammonia, urea, formaldehyde, dimethyl ether, soda ash, bicarbonate, and other related chemicals.

China Hainan Rubber Industry Group Co.,Ltd. Produces, cultivates, process and sales natural rubber.  The Company's sector also includes E-commerce services, software development, agricultural cultivation, fertilizer sales, land leases, land development, livestock, and aquaculture industries.

Haohua Chemical Science & Technology Co., Ltd. offers engineering technology services. The Company provides engineering project construction technology development, engineering consulting, engineering designing, engineering contracting, and other services. Haohua Chemical Science & Technology also produces chemical manufacturing.

Haohua Chemical Science & Tech (600378 CH)

Hubei Xingfa Chemicals Group Co., Ltd. manufactures and markets phosphoric chemicals. The Company's products include yellow phosphorus, trisodium phosphate, Calgon, and other related chemical products.

Hubei Xingfa Chemicals Group Co. (600141 CH)

MITSUBISHI GAS CHEMICAL COMPANY, INC. produces chemical products such as xylene and methanol.  The Company also manufactures engineering plastics and specialty chemicals.

NOF CORPORATION is a diversified chemical producer whose products include processed oil/fats, explosives and other chemical products. The Company has manufacturing/sales subsidiaries in US, Indonesia and China.

Incitec Pivot Limited is a fertilizer manufacturer and supplier, and also a supplier for explosives products and services. The Company has operations throughout the United States, Canada, Mexico and Australia.

Castrol (India) Limited manufactures and markets automotive and industrial lubricants and specialty products. The Company's products include lubricating oils, greases and brake fluids. The Company also manufactures cable filling compounds, jellies, waxes and other items.

Kumho Petrochemical Co., Ltd. manufactures synthetic rubbers, synthetic resins, and rubber chemicals.  The Company's products include styrene butadiene, acrylonitrile butadiene, polystyrene, expandable polystyrene, and antioxidant.  Kumho Petrochemical provides construction, transportation, and financial services through its subsidiaries.

Quaker Chemical Corporation produces, develops, and markets custom-formulated chemical specialty products.  The Company also provides fluid management services for manufacturers around the world, primarily in the steel, automotive, and can industries.

Huntsman Corporation manufactures differentiated and commodity chemical products.  The Company markets a broad range of chemical products and formulations to a diversified group of consumer and industrial customers. Huntsman's products are used in a range of applications, including those in adhesives, aerospace, automotive, construction products, and consumer products.

SKC Co., Ltd. manufactures a variety of films, including polyester films, silicon coated films, and inkjet films.  The Company also produces chemical products, such as propylene oxide, propylene glycol, and styrene monomer. In addition, SKC provides materials for photovoltaic.

TOKYO OHKA KOGYO CO., LTD. manufactures photoresist for semiconductors.  The Company also manufactures printing materials and semiconductor-assembling machines.

Minerals Technologies Inc. is a resource- and technology-based organization that develops and produces performance-enhancing minerals, mineral-based, and synthetic mineral products.  The Company offers its products to the paper, steel, polymer, and other manufacturing industries on a worldwide basis.

Shenzhen Capchem Technology Co.,Ltd. develops, manufactures and sells electronic chemicals.  The Company's products include electric capacitor chemicals and lithium ion battery chemicals.

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Shenzhen Capchem Technology (300037 CH)

Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

I expect 4 ADDs/DELs for the ChiNext index and 4 ADDs/DELs for the ChiNext 50 index. Over the next 2 months, the expected ChiNext and ChiNext 50...

Janaghan Jeyakumar, CFA

ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues

There could be 8 changes for the Chinext and 5 for the Chinext50. Impact is higher on the deletions. The IT sector gains index spots while...

Brian Freitas

Quiddity Leaderboard ChiNext & ChiNext 50: A Potential Basket Trade

I see 5 changes for the ChiNext 50 index and 9 changes for the ChiNext index. I expect the ChiNext and ChiNext 50 Expected ADDs to outperform the...

Janaghan Jeyakumar, CFA

W Scope (6619): Don't Sell Too Early

However, the recent increase in earnings estimate will be the new catalyst that investors should consider holding their remaining shares in W Scope...

Henry Soediarko

Cautiously Optimistic on Global Equities

We are constructive on global equities and would be buyers on a pullback. A move below $77 would start to get very concerning, and would leave $75...

Vermilion Research

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52-week Range

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Quiddity Leaderboard ChiNext & ChiNext 50: Final Expectations

I expect 4 ADDs/DELs for the ChiNext index and 4 ADDs/DELs for the ChiNext 50 index. Over the next 2 months, the expected ChiNext and ChiNext 50...

Janaghan Jeyakumar, CFA

ChiNext/​​​ChiNext50 Index Rebalance Preview: Sector Rotation Continues

There could be 8 changes for the Chinext and 5 for the Chinext50. Impact is higher on the deletions. The IT sector gains index spots while...

Brian Freitas

Quiddity Leaderboard ChiNext & ChiNext 50: A Potential Basket Trade

I see 5 changes for the ChiNext 50 index and 9 changes for the ChiNext index. I expect the ChiNext and ChiNext 50 Expected ADDs to outperform the...

Janaghan Jeyakumar, CFA

W Scope (6619): Don't Sell Too Early

However, the recent increase in earnings estimate will be the new catalyst that investors should consider holding their remaining shares in W Scope...

Henry Soediarko

Cautiously Optimistic on Global Equities

We are constructive on global equities and would be buyers on a pullback. A move below $77 would start to get very concerning, and would leave $75...

Vermilion Research

ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues