In today’s briefing:
- HSI Dec23 Index Review/Flows – Li Auto & Wuxi Apptec IN, No Deletes; 100 Names a Distant Dream
- Hang Seng Tech Dec23 Index Review/Flows – No Name Changes, Some Big Capping Flows
- HSCEI Index Rebalance: Zhongsheng (881 HK) Uses Up Another Life
- A/H Premium Tracker (To 17 Nov): H up Vs A Despite SOUTHBOUND Net Selling; High Div SOEs Normalising
- HSCEI Dec23 Index Review/Flows – NO ADDs, No DELETEs; ~2.5% One Way
- HSCI Index Rebalance: Keep (3650 HK) & TUHU Car (9690 HK) Added
- HK Connect SOUTHBOUND (To 17 Nov 23); High-Div SOEs Pause, Tech + ETFs Break 16wk Inflow Streak
- Shenzhen Senior Tech GDR Listing – Early Look – Correction Leaves Its Valuation Palatable
- ZTO Express Q3: Margins Plunge Vs Q2 | Abandons Pursuit of Share Gains | Is There a New Strategy?
- WuXi XDC (2268.HK) – How Long Will the Rally Last?
HSI Dec23 Index Review/Flows – Li Auto & Wuxi Apptec IN, No Deletes; 100 Names a Distant Dream
- On Friday, Hang Seng Indices announced the changes to the benchmark Hang Seng Index, the index in the family with the largest AUM.
- Li Auto (2015 HK) and WuXi AppTec (2359 HK) are added. There are no deletions.
- I see 3.4% a side to trade and across the three major indices there are larger net flows, but few compelling ones given possible pre-positioning.
Hang Seng Tech Dec23 Index Review/Flows – No Name Changes, Some Big Capping Flows
- The Dec 23 review results for the Hang Seng Tech Index were announced on Friday 17 November after the close.
- There were no ADDs to or DELETEs from the index, in something of a surprise.
- The “big flow” on HS TECH is the downweight on Xiaomi Corp (1810 HK) due to sharp capping after significant outperformance since the August review.
HSCEI Index Rebalance: Zhongsheng (881 HK) Uses Up Another Life
- For a second review running, Zhongsheng Group (881 HK) has avoided being deleted from the Hang Seng China Enterprises Index (HSCEI INDEX).
- That means China Unicom Hong Kong (762 HK) misses out on index inclusion, but there is still hope for the next one.
- There does not appear to be any significant positioning on either stock and any large moves early in the coming week could be short lived.
A/H Premium Tracker (To 17 Nov): H up Vs A Despite SOUTHBOUND Net Selling; High Div SOEs Normalising
- The New and Better (16 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- Hs with H/A pairs outperform their As on average with higher-liquidity Hs outperforming more. High Premium As not seeing shrinking premia on average.
- SOUTHBOUND and NORTHBOUND were net sells overall. It looked like the combination of NORTHBOUND and SOUTHBOUND put on a long H short A in the non-bank financial sector.
HSCEI Dec23 Index Review/Flows – NO ADDs, No DELETEs; ~2.5% One Way
- The HSCEI Review for December 2023 was announced on Friday 17 November.
- There were no ADDs and no DELETEs, which was a bit of a surprise.
- There is about 2.8% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.
HSCI Index Rebalance: Keep (3650 HK) & TUHU Car (9690 HK) Added
- Keep Inc (3650 HK) and Tuhu Car (9690 HK) will be added to the Hang Seng Composite Index (HSCI) after the close of trading on 1 December.
- Keep (3650 HK) will be added to Southbound Stock Connect from the open on 4 December while Tuhu Car (9690 HK) will only be added to Stock Connect in April.
- There are lock-up expiries on both stocks, prior to or after inclusion in Stock Connect, and trading strategies will need to take that into account.
HK Connect SOUTHBOUND (To 17 Nov 23); High-Div SOEs Pause, Tech + ETFs Break 16wk Inflow Streak
- This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
- SOUTHBOUND flows the last several weeks clearly indicated a momentum move. The top net sells were all down. The top buys were all up. This week that trend moderated significantly.
- SOUTHBOUND breaks a 17-week inflow streak with HK$2.1bn of net outflows entirely driven, it appears, by relatively few accounts punting large size in local (HK-listed) ETFs
Shenzhen Senior Tech GDR Listing – Early Look – Correction Leaves Its Valuation Palatable
- Shenzhen Senior Technology-A (300568 CH) is looking to raise around US$275m in its upcoming Switzerland GDR listing. The bookrunner on the deal is Huatai International.
- As per media reports, the firm was earlier looking to raise between US$300-400m via a Swiss GDR issuance, having secured approval earlier to sell up to 128m A-shares.
- However, given its lackluster share price performance over the past year, the eventual deal size would be capped at around US$275m.
ZTO Express Q3: Margins Plunge Vs Q2 | Abandons Pursuit of Share Gains | Is There a New Strategy?
- Non-Core items boosted Q3 earnings, but core margins plunged vs Q2
- In a surprise move, ZTO has abandoned its aggressive pursuit of share
- Medium term growth is likely to slow, and pressure on margins remains
WuXi XDC (2268.HK) – How Long Will the Rally Last?
- WuXi XDC’s shares surged since IPO. Obviously, ADC industry is in a “honeymoon period”. The market is optimistic about ADC due to high certainty and growth visibility in short term.
- Pharmaceutical companies believe this platform would produce blockbuster products continuously. However, if there’s any “persuasive event” to change optimistic expectations on ADC, it’s time for investors to reconsider WuXi XDC.
- “Positive sentiment + non-falsifiable short-term logic” would indeed push WuXi XDC’s shares to a new high. As long as sales of major ADCs are in line with expectations, party continues.
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