In today’s briefing:
- HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
- CIMC Enric (3899 HK): One More Spin-Off Progressing
- China’s Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower
- China Consumption Weekly (1 Jan 2024): Tencent, NetEase, Alibaba, JD.com, PDD
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
- Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
- With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
- Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.
CIMC Enric (3899 HK): One More Spin-Off Progressing
- CIMC Enric Holdings (3899 HK) has applied for its liquid food segment, under CLTP, to be quoted on the NEEQ. Subsequently, it plans to be listed on the BSE.
- The move will not only provide an additional funding channel for this business but also enhance the valuations of CIMC Enric. BSE’s IPOs have historically performed very well.
- Upon successful listing, the attributable market cap of its two listed subsidiaries will be greater than its current market cap. This means its clean energy business is free.
China’s Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower
- China’s outbound tourism recovery started much later than others in the region
- In particular, Taiwan & Korea began ramping outbound travel earlier (in Q222)
- As destinations, Thailand & Vietnam recovered early, but now lag HK’s growth
China Consumption Weekly (1 Jan 2024): Tencent, NetEase, Alibaba, JD.com, PDD
- The authorities granted licenses to 105 new domestic games and promised to review the game law draft.
- Alibaba is restructuring its main business unit, Taobao-Tmall, to reach flexibility.
- Both Alibaba and JD.com changed their refund policies to follow PDD.
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