In today’s briefing:
- STAR50/STAR100 Index Rebalance: No Changes for STAR50; 4 Changes for STAR100
- Six Hang Seng Index Family Indices: Flows for Dec 6 Rebal
- KWEB Index Rebalance: 1 Add & 4 Deletes in December
- Quiddity CSI 300/500 Dec 24 Results: ~90% Hit Rate; Positive Start for the Trade
- HK Connect SOUTHBOUND Flows (To 29 Nov 2024); SB Trading Volumes Lower, Still Strong Net Buying Tech
- BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 29)
- [Kanzhun Ltd. (BZ US, BUY, TP US$17) Target Price Change]: Mark Down C4Q24 and 2025 on Weak Demand
- CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- SSE50/SSE180 Index Rebalance: Couple of Surprises; Seres Group’s Multiple Inclusions; US$3.2bn Trade
- A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More
STAR50/STAR100 Index Rebalance: No Changes for STAR50; 4 Changes for STAR100
- As forecast, there are no changes for the SSE STAR50 (STAR50 INDEX) in December while there are 4 changes for the STAR100 Index.
- There will be big outflows for Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) due to SSE STAR50 (STAR50 INDEX) capping. There will be selling from other index trackers too.
- Hainan Jinpan Smart Technology (688676 CH) had been ignored by the index committee at the September rebalance, so this inclusion in the STAR100 Index could come as a surprise.
Six Hang Seng Index Family Indices: Flows for Dec 6 Rebal
- In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
- The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
- By Quiddity calculations based on prices of 29 November’s close, there is one-way flow across these six indices of HK$15,894,690,433.49 to trade on 6 December. Roughly speaking.
KWEB Index Rebalance: 1 Add & 4 Deletes in December
- The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
- Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
- The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.
Quiddity CSI 300/500 Dec 24 Results: ~90% Hit Rate; Positive Start for the Trade
- The December 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 29th November 2024.
- There will be 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500.
- The CSI 300 and CSI 500 index rebal events could trigger US$4.5bn and US$3.8bn in one-way flows respectively.
HK Connect SOUTHBOUND Flows (To 29 Nov 2024); SB Trading Volumes Lower, Still Strong Net Buying Tech
- SOUTHBOUND gross trading activity dropped sharply again to the lowest in a few months but net SOUTHBOUND buying remains very strong, with big flows on tech.
- Most of the top names were tech names – both in gross and net buys. Only 1 tech name in top five net sells.
- Last week I said I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US. Continue.
BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 29)
- As Hong Kong market continues to consolidate, the consumer discretionary sector is leading in momentum and strength while the energy and materials sectors lag.
- Trip.com Group (9961 HK) , Trip.com (TCOM US) received BUY ratings after a strong 3Q24 announcement on revenue and earnings. China’s tourist numbers are projected to reach Pre-COVID levels soon.
- Yum China Holdings (9987 HK) , Yum China Holdings (YUMC US) received BUY ratings after initial success from its small store/franchising strategy. The company is actively returning capital to shareholders.
[Kanzhun Ltd. (BZ US, BUY, TP US$17) Target Price Change]: Mark Down C4Q24 and 2025 on Weak Demand
- Kanzhun, along with Kuaishou, Beike and PDD, are we call the “Macro Mauled Champions” (MMC). We suggest long term investors to accumulate;
- Weak industrial sector earnings in October bodes ill for manufacturing hiring into C4Q24 and we think may further extend to early 2025 recruiting season;
- We expect BZ to grow profit faster than revenues on cost savings, particularly on marketing and gain shares. We cut the TP from US$19 to US$17.
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
- There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
- Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.
SSE50/SSE180 Index Rebalance: Couple of Surprises; Seres Group’s Multiple Inclusions; US$3.2bn Trade
- There are 5 changes for the SSE50 Index (SSE50 INDEX) and 18 changes for the SSE180 Index that will be implemented at the close on 13 December.
- Seres Group (601127 CH) is an add to both indices, plus the CSI 300 Index, and passive trackers will need to buy over US$900m of the stock.
- The adds have outperformed the deletes with a lot of the outperformance coming in the last couple of months. Trim positions in the expected adds/deletes and build positions in surprises.
A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More
- Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech.
- Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.
- H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.
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