In today’s briefing:
- HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
- Thoughts on Capturing the 7% Doosan Swap Spread
HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
- J&T Global Express (1519 HK) and New Oriental Education (9901 HK) will replace JD Logistics (2618 HK) and SenseTime (20 HK) in the HSCEI at the close on 6 September.
- The inclusion of J&T Global Express (1519 HK) is a big surprise and the stock could move higher over the next couple of weeks.
- The non-inclusion of PICC Property & Casualty H (2328 HK) is another surprise since we had the stock highly ranked in the universe.
Thoughts on Capturing the 7% Doosan Swap Spread
- Consider a two-phase strategy: go long on Bobcat spot and short futures until November 1. If Robotics’ price drops significantly, close the setup.
- If things go well, close the Bobcat futures short before November 1 and hold an unhedged Bobcat long until the listing date on November 25.
- Hold an unhedged long position during this trading suspension period because cancellation risk will be gone and Robotics may get stable inflows from MSCI inclusion.
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