In today’s briefing:
- Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises
- HSTECH Index Rebalance: ASMPT (522 HK) Replaces Ping An Healthcare (1833 HK)
- Hang Seng Index Sep24 Rebal – No Name Changes, Some Capping, 1% One-Way Flow – Total 0️⃣🍔
- Hang Seng Index (HSI) Rebalance: Meh (Or Will We Ever Get to 100 Stocks?)
- Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation
- Sep24 HSTECH Index Rebal – ASMPT (522 HK) ADDed as Expected, After Post-Earnings Fall
- Wasion (3393): Profit Alert and OBOR Beneficiary
- Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
- Long 6920 Lasertec Corp | Short 6525 Kokusai Electric
- Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: US$417mn One-Way; Some Changes to Expectations
Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises
- There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
- Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
- Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.
HSTECH Index Rebalance: ASMPT (522 HK) Replaces Ping An Healthcare (1833 HK)
- As expected, ASM Pacific Technology (522 HK) will replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 6 September.
- Estimated one-way turnover at the rebalance is 3.2% resulting in a round-trip trade of HK$6.5bn. Passives need to buy over 7x ADV in ASM Pacific Technology (522 HK).
- Positioning appears light in both stocks. Expect ASM Pacific Technology (522 HK) to move up and Ping An Healthcare and Technol (1833 HK) to move lower near-term.
Hang Seng Index Sep24 Rebal – No Name Changes, Some Capping, 1% One-Way Flow – Total 0️⃣🍔
- The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
- This time? We get nothing. No name changes. Some capping flows. 6 FAF changes.
- Minimal flows on the HSI rebalance to be effective on 9 September.
Hang Seng Index (HSI) Rebalance: Meh (Or Will We Ever Get to 100 Stocks?)
- In a surprise (maybe should not have been!), there are no constituent changes for the Hang Seng Index (HSI INDEX) in September. However, there are float and capping changes.
- Estimated one-way turnover is 1% and estimated round-trip trade is HK$3.73bn (US$478m). There are no stocks with over +/-0.5x ADV to trade but flows could add to/offset other index flows.
- We remain at 82 index constituents and the road to 100 constituents appears to be a long drawn out torturous one. At this glacial pace, could be an eternity away.
Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation
- Berkshire Hathaway Inc Cl B (BRK/B US) held over 5% of Apple (AAPL US). Nearly half of that was sold in the June quarter to take the holding to 2.63%.
- Berkshire’s selling should result in an increase in Apple (AAPL US)‘s free float in the S&P 500 INDEX (SPX INDEX) and other related indices.
- There will also be large buying in Apple (AAPL US) from the Technology Select Sector SPDR (XLK US) ETF if the proposals in the market consultation are implemented.
Sep24 HSTECH Index Rebal – ASMPT (522 HK) ADDed as Expected, After Post-Earnings Fall
- HSTECH sees one ADD, one DELETE and several capping and re-capping actions. One of the re-caps is already an un-recap (i.e. a new capping), to be updated.
- The ADD is ASM Pacific Technology (522 HK), as expected, with significant ADV impact to buy. The DELETE is Ping An Healthcare and Technol (1833 HK), also a big sell.
- Across the three major indices, Alibaba Group Holding (9988 HK) is the big dollar sell and HSTECH changes are the biggies in terms of ADV impact.
Wasion (3393): Profit Alert and OBOR Beneficiary
- 1H 24 net profit is expected to grow by 54%, a similar amount to FY 23 with a consistent message that revenue growth helps and cost control is in place.
- Wasion Group Holdings (3393 HK) benefits from the One Belt One Road policy as many of the EM countries do not have smart power meters yet.
- Wasion’s holding on Willfar Information Technology (688100 CH) is worth around USD 970 million, double the current market capitalization of Wasion.
Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
- TSMC: +16.3% Premium; Can Continue to Consider Shorting the Spread Here
- UMC: +0.7% Premium; Wait for Higher Levels Again Before a Fresh Short
- ASE: +4.6% Premium; Breakdown of Spread Could Persist Since History Indicates It’s Now a Normal Level
Long 6920 Lasertec Corp | Short 6525 Kokusai Electric
- Long Lastertec after a solid set of numbers and the easing of concerns raised by the recent Scorpion Capital short sellers report.
- Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement in September.
- This was previously seen as a dangerous short due to its high outstanding short interest, although it has now unwound to almost zero.
Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: US$417mn One-Way; Some Changes to Expectations
- The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
- The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
- In this insight, we have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.
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