Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>The review period for the March rebalance of the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index</a> ended on 31 December. The changes will be announced on 18 February and implemented on 4 March.</li>
<li>
<a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> is a potential inclusion, replacing <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> though both names are very close to the cutoffs.</li>
<li>Changes in the free-float adjustment factors could result in no change to the index, while there is an outside chance of <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili (9626 HK)</a> being included in the index.</li>
</ul>


The review period for the March rebalance of the Hang Seng China Enterprises Index ended on 31 December. The changes will be announced on 18 February and implemented on 4 March.

Xinyi Solar Holdings (968 HK) is a potential inclusion, replacing Evergrande Property Services (6666 HK) though both names are very close to the cutoffs.
Changes in the free-float adjustment factors could result in no change to the index, while there is an outside chance of Bilibili (9626 HK) being included in the index.


HSCEI Index Rebalance Preview (March 2022): One Potential Change with Caveats

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Dec 24.</li>
<li>Top short increases and decreases were tabulated for one week and four week period.</li>
<li>We highlight short interest increases in GCL-Poly, XPeng, and Beigene.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Dec 24.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short interest increases in GCL-Poly, XPeng, and Beigene.


HK Short Interest: GCL-Poly, XPeng, Beigene

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>With the 2021 futures expiring in 2 weeks, the focus now shifts to the HSCEI dividend futures expiring in 2022 where we see a fair value of 240.76 DIPS.</li>
<li>The current market is trading very close to our fair value for 2022 but there are a lot of potential catalysts that could result in a big move lower.</li>
<li>There are fewer catalysts for the 2022 futures to move higher. The regulatory changes in China plus the HFCAA could lead to the 2023 futures trading cheaper to 2022.</li>
</ul>


With the 2021 futures expiring in 2 weeks, the focus now shifts to the HSCEI dividend futures expiring in 2022 where we see a fair value of 240.76 DIPS.
The current market is trading very close to our fair value for 2022 but there are a lot of potential catalysts that could result in a big move lower.
There are fewer catalysts for the 2022 futures to move higher. The regulatory changes in China plus the HFCAA could lead to the 2023 futures trading cheaper to 2022.


HSCEI Dividend Futures: 2022 Close to Fair; Sell 22/23 Steepener

China Specialist, Auto and Industrial Specialist

Victoria Li

Equity Bottom-Up

<ul>
<li>Share performance of XPEV.US has been hit by market's fear on Chinese stocks' delisting in US market.  Xpeng's share price fell from US$55 to US$43.8 in three trading days.</li>
<li>We believe it's a good timing for US investors to switch to 9868.HK from XPEV.US, as HK share performance was hurt as well and has brought a great buying opportunity.</li>
<li>Fundamentally, Xpeng's monthly delivery hit a new high in Nov. Lately, EV batteries shortage is hitting Xpeng and may lead to lower than expected monthly delivery. Buy opportunity.</li>
</ul>


Share performance of XPEV.US has been hit by market's fear on Chinese stocks' delisting in US market.  Xpeng's share price fell from US$55 to US$43.8 in three trading days.
We believe it's a good timing for US investors to switch to 9868.HK from XPEV.US, as HK share performance was hurt as well and has brought a great buying opportunity.
Fundamentally, Xpeng's monthly delivery hit a new high in Nov. Lately, EV batteries shortage is hitting Xpeng and may lead to lower than expected monthly delivery. Buy opportunity.


Xpeng: Buying Opportunity on Dual Short-Term Headwinds

Thematic (Sector/Industry)

<ul>
<li>China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions from regional Covid lockdown/restrictions</li>
<li>Xpeng ranked No.1 among EV brands by delivering 15,613 new cars in November. P5 delivery is ramming up.</li>
<li>Zeekr 001 delivered 2,012 new cars in November, in line with latest market expectation.</li>
</ul>


China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions from regional Covid lockdown/restrictions
Xpeng ranked No.1 among EV brands by delivering 15,613 new cars in November. P5 delivery is ramming up.
Zeekr 001 delivered 2,012 new cars in November, in line with latest market expectation.


China

XPeng Inc. designs, produces, and distributes electric vehicles. The Company designs, develops, manufactures and markets smart smart electric vehicles, as well as finance, parts, and maintenance services. XPeng serves customers in China.

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XPeng (9868 HK)

HSCEI Index Rebalance Preview (March 2022): One Potential Change with Caveats

Xinyi Solar could replace Evergrande Property Services in the HSCEI at the March rebalance. Changes in the FAF for the stocks could either mean no...

Brian Freitas

HK Short Interest: GCL-Poly, XPeng, Beigene

We highlight week-on-week short interest increases in GCL-Poly (3800 HK), XPeng (9868 HK), and Beigene (6160 HK) in the latest HK SFC short...

Ke Yan, CFA, FRM

HSCEI Dividend Futures: 2022 Close to Fair; Sell 22/23 Steepener

The HSCEI 2022 dividend futures are trading close to fair but there are a lot more negative catalysts that will have a bigger impact than positive...

Brian Freitas

Xpeng: Buying Opportunity on Dual Short-Term Headwinds

We believe it's a good timing for US investors to switch to 9868.HK from XPEV.US, as HK share performance was hurt as well and has brought a great...

Victoria Li

China Auto: Another Weak Month

China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions...

Victoria Li

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