Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

<ul>
<li>Tencent’s stock price has risen by 35% since our last buy rating. Downgrade to Hold.</li>
<li>Our EPS estimate for 2025 is 12% over the market consensus.</li>
<li>We believe both revenue growth and margin will improve in the coming 4Q24 results.</li>
</ul>


Tencent’s stock price has risen by 35% since our last buy rating. Downgrade to Hold.
Our EPS estimate for 2025 is 12% over the market consensus.
We believe both revenue growth and margin will improve in the coming 4Q24 results.


Tencent (700 HK): Risen 35% Since Our Last Buy, Good Preview for 4Q24

Derivatives and Quantitative Strategist

Gaudenz Schneider

Event-Driven

<ul>
<li>During yesterday's Option expiration day, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> experienced an intra-day swing of 4.1%.</li>
<li>Trading in the afternoon oscillated around the prominent 500 strike level. Around 66% of calls and 2% of puts expired in the money.</li>
<li>Volume was lower than in the preceding days; a total of 38 million shares were traded, with the morning session accounting for 53% of the volume.</li>
</ul>


During yesterday's Option expiration day, Tencent (700 HK) experienced an intra-day swing of 4.1%.
Trading in the afternoon oscillated around the prominent 500 strike level. Around 66% of calls and 2% of puts expired in the money.
Volume was lower than in the preceding days; a total of 38 million shares were traded, with the morning session accounting for 53% of the volume.


Tencent (700 HK): Expiry-Day Recap; Intra-Day Swing of 4.1%.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> stock options expiring on Thursday, February 27, show a concentration of approximately 40,000 open contracts at the 500 strike price, currently at the money. 
</li>
<li>The open interest at the 500 strike may increase volatility and trading activity near expiry if the stock price hovers around 500, possibly leading to amplified intraday price swings.</li>
<li>At the last monthly expiry in January the stock experienced intraday price swings of 2.5%.</li>
</ul>



Tencent (700 HK) stock options expiring on Thursday, February 27, show a concentration of approximately 40,000 open contracts at the 500 strike price, currently at the money. 

The open interest at the 500 strike may increase volatility and trading activity near expiry if the stock price hovers around 500, possibly leading to amplified intraday price swings.
At the last monthly expiry in January the stock experienced intraday price swings of 2.5%.


Tencent - 27 Feb Options Expiry: Potentially Volatile Session Due to 500 Strike Open Interest

Equity Derivatives

<ul>
<li>This Insight analyses <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility context are provided.</li>
<li>These traders tailor structures to risk budgets and take calculated bets. Diagonal call spreads are popular, many self-financing (0% premium). This strategy can play the 18 March earnings date.
</li>
<li>Call spreads can indicate where bullish traders see limits to the upside. The most bullish trade suggests a peak of up to 710 HKD by the end of March.</li>
</ul>


This Insight analyses Tencent (700 HK)tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility context are provided.
These traders tailor structures to risk budgets and take calculated bets. Diagonal call spreads are popular, many self-financing (0% premium). This strategy can play the 18 March earnings date.

Call spreads can indicate where bullish traders see limits to the upside. The most bullish trade suggests a peak of up to 710 HKD by the end of March.


Tencent (700 HK): Top Trades: Strategies That Stand Out

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>The U.S. Department of Defense has designated <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> as a Chinese Military Company. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd-69366efb-cf6b-404d-a0e4-c6b9b2e128dc" target="_blank" data-smartkarma-citation="entities:17:1" rel="noopener">Tencent Holdings (ADR) (TCEHY US)</a> shares were down nearly 8% overnight.</li>
<li>There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.</li>
<li>If added to the NS-CMIC list, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> will be deleted from global indexes and there will be HUGE passive selling from these trackers.</li>
</ul>


The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.


Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent (700 HK)

Tencent (700 HK): Risen 35% Since Our Last Buy, Good Preview for 4Q24

Tencent’s stock price has risen by 35% since our last buy rating. However, we believe both revenue growth and margin will improve in following...

Ming Lu

Tencent (700 HK): Expiry-Day Recap; Intra-Day Swing of 4.1%.

Tencent (700 HK) saw a 4.1% swing on option expiration day, with trading around the 500 strike level and majority of calls expiring in the money....

Gaudenz Schneider

Tencent - 27 Feb Options Expiry: Potentially Volatile Session Due to 500 Strike Open Interest

Tencent (700 HK) stock options expiring 27 Feb show a concentration of open contracts at the 500 strike price, potentially leading to increased...

Gaudenz Schneider

Tencent (700 HK): Top Trades: Strategies That Stand Out

Analysis of option strategies for Tencent (700 HK) on the Hong Kong Exchange in the context of upcoming earnings. Bullish traders eyeing a...

Gaudenz Schneider

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

The U.S. DoD has designated Tencent as a Chinese Military Company. The stock is not on the NS-CMIC list yet and could be added later. Addition to...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tencent (700 HK): Risen 35% Since Our Last Buy, Good Preview for 4Q24

Tencent’s stock price has risen by 35% since our last buy rating. However, we believe both revenue growth and margin will improve in following...

Ming Lu

Tencent (700 HK): Expiry-Day Recap; Intra-Day Swing of 4.1%.

​Tencent (700 HK) saw a 4.1% swing on option expiration day, with trading around the 500 strike level and majority of calls expiring in the money....

Gaudenz Schneider

Tencent - 27 Feb Options Expiry: Potentially Volatile Session Due to 500 Strike Open Interest

​Tencent (700 HK) stock options expiring 27 Feb show a concentration of open contracts at the 500 strike price, potentially leading to increased...

Gaudenz Schneider

Tencent (700 HK): Top Trades: Strategies That Stand Out

​Analysis of option strategies for Tencent (700 HK) on the Hong Kong Exchange in the context of upcoming earnings. Bullish traders eyeing a...

Gaudenz Schneider

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

The U.S. DoD has designated Tencent as a Chinese Military Company. The stock is not on the NS-CMIC list yet and could be added later. Addition to...

Brian Freitas

Tencent (700 HK) saw a 4.1% swing on option expiration day, with trading around the 500 strike level and majority of calls expiring in the money....

Tencent (700 HK) stock options expiring 27 Feb show a concentration of open contracts at the 500 strike price, potentially leading to increased...

Analysis of option strategies for Tencent (700 HK) on the Hong Kong Exchange in the context of upcoming earnings. Bullish traders eyeing a...