In today’s briefing:
- STAR50 Index Rebalance: Dear Index Committee…
- SSE50 Index Rebalance: Some Large Impact Changes
- CSI300 Index Rebalance: Big Sector Shift with 28 Changes
- Harding Loevner Global Equity Fund Q1 2022 Letter
- Dongzheng’s Potential MGO Price from SAIC at HK$1.2430
STAR50 Index Rebalance: Dear Index Committee…
- The index committee has continued to use a 6 month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in June.
- One way turnover is estimated at 8.56% and will result in a one-way trade of CNY 3,496m. Passive trackers will need to trade between 2-6 days ADV on the adds/deletes.
- The inclusions have outperformed the deletions and the CSI500 Index since the end of the review period with all inclusions moving higher over the period.
SSE50 Index Rebalance: Some Large Impact Changes
- There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. The impact is pretty chunky on a few deletions.
- Apart from the passive assets tracking the index, there are some liquid index futures and the impact on the stocks will be larger than just the headline numbers.
- The adds underperformed the deletes in March and April but have come roaring back in May. Playing the trade via long/short pairs could provide better risk adjusted returns.
CSI300 Index Rebalance: Big Sector Shift with 28 Changes
- There are 28 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
- We had forecast nearly all the changes, though the index committee seems to have used discretion in deciding not to add three Distillers to the index, leading to other changes.
- There’s a large sector skew with Industrials, Information Technology and Materials stocks taking 17 more spots in the index, while Health Care and Financials lose 9 and 5 spots respectively.
Harding Loevner Global Equity Fund Q1 2022 Letter
- Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
- Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
- China-based WuXi Biologics illustrates the perfect storm of macro issues pressuring the share prices of our rapidly growing companies.
- As questions mount whether globalization has reached a tipping point, companies are taking full advantage of the many advances occurring across the industrial automation landscape— propelling leadingp roviders of “Industry 4.0” solutions onto favorable growth paths.
Dongzheng’s Potential MGO Price from SAIC at HK$1.2430
- The potential MGO price is HK$1.2430 per H Share vs Dongzheng Automotive Finance (2718 HK)’s previously noted HK$1.294 per H Share due to the change in RMB/HK$ rates.
- The completion procedures for the auction will take place within six months. Approvals have low risk as the SAIC Motor (600104 CH)’s controlling shareholder is owned by the Shanghai SASAC.
- At the last close and for a 1 November completion, the gross and annualised spread to the MGO price is 5.3% and 12.7%, respectively.
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