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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.

China AH Premium: Trade Ideas As We Near Previous Highs

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-8108'>Hopson Development</a></li><li><a href='#lucror-entity-3121'>Lippo Karawaci</a></li><li><a href='#lucror-entity-5582'>Modernland Realty</a></li><li><a href='#lucror-entity-384'>Yanzhou Coal Mining Co H</a></li><li><a href='#lucror-entity-7817'>Zoomlion Heavy Industry H</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Hopson DevelopmentLippo KarawaciModernland RealtyYanzhou Coal Mining Co HZoomlion Heavy Industry H

Morning Views Asia: Hopson Development, Lippo Karawaci, Modernland Realty, Yanzhou Coal Mining Co H

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

China's issuance of special purpose bonds (SPB) reached a record of Rmb2.4trn in 1H20, an overwhelming 73% YoY growth. At least 59% of the proceeds are to be invested in infrastructure and related sectors, with transport infrastructure being the largest category with a 26% share. In our view, such massive investment will support the earnings of the construction related companies in 2H20 when such funds filter through to the real economy in the form of end-product demand.We expect the construction materials, infrastruture construction companies and construction machinery sectors to benefit from such investments. Many of these stocks have underperformed the market sharply YTD and are trading at depressed valuations of single-digit or even low single-digit levels. In our view, potential earnings upside will serve as a catalyst for a catch up in their share prices over the next six months.

China's issuance of special purpose bonds (SPB) reached a record of Rmb2.4trn in 1H20, an overwhelming 73% YoY growth. At least 59% of the proceeds are to be invested in infrastructure and related sectors, with transport infrastructure being the largest category with a 26% share. In our view, such massive investment will support the earnings of the construction related companies in 2H20 when such funds filter through to the real economy in the form of end-product demand.We expect the construction materials, infrastruture construction companies and construction machinery sectors to benefit from such investments. Many of these stocks have underperformed the market sharply YTD and are trading at depressed valuations of single-digit or even low single-digit levels. In our view, potential earnings upside will serve as a catalyst for a catch up in their share prices over the next six months. 

China Infrastructure: Record Special Purpose Bonds Issuance to Drive Construction Sectors in 2H20

Following the recent string of high-profile fraud scandals, from Luckin Coffee in China to Wirecard in Germany, our In-Focus section this month deals with our framework for discerning fraud in Asian companies. We also give an overview of common techniques used to manipulate financial information in Asian markets, and present case studies of alleged or confirmed fraud drawn from our coverage universe. The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.

  Following the recent string of high-profile fraud scandals, from Luckin Coffee in China to Wirecard in Germany, our In-Focus section this month deals with our framework for discerning fraud in Asian companies. We also give an overview of common techniques used to manipulate financial information in Asian markets, and present case studies of alleged or confirmed fraud drawn from our coverage universe.   The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. 

Asia HY Monthly - Framework For Discerning Fraud In Asian Companies - Lucror Analytics

The Asia HY Trade Recommendations report for the month of June includes a summary of our recommendations. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Recommendations report for the month of June includes a summary of our recommendations. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Recommendations - June 2020 - Lucror Analytics

China

Zoomlion Heavy Industry Science and Technology Co., Ltd.manufactures and markets construction machinery.  The Company's products include concrete machinery, cranes, road machinery, drilling equipment, and other heavy construction equipment.  Zoomlion also produces environmental machinery and satellite navigation products.

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Zoomlion Heavy Industry S A (000157 CH)

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Morning Views Asia: Hopson Development, Lippo Karawaci, Modernland Realty, Yanzhou Coal Mining Co H

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

China Infrastructure: Record Special Purpose Bonds Issuance to Drive Construction Sectors in 2H20

China's issuance of special purpose bonds (SPB) reached a record of Rmb2.4trn in 1H20, an overwhelming 73% YoY growth. At least 59% of the proceeds...

Osbert Tang, CFA

Asia HY Monthly - Framework For Discerning Fraud In Asian Companies - Lucror Analytics

Following the recent string of high-profile fraud scandals, from Luckin Coffee in China to Wirecard in Germany, our In-Focus section this month...

Lucror Analytics

Asia HY Trade Recommendations - June 2020 - Lucror Analytics

The Asia HY Trade Recommendations report for the month of June includes a summary of our recommendations. The report also features relative-value...

Lucror Analytics

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