In today’s briefing:
- ETFs in Stock Connect: List Announced; Effective 4 July
- HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan
- Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium
- Buying the Most Unloved Asian Market
ETFs in Stock Connect: List Announced; Effective 4 July
- CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
- There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
- Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.
HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Bilibili (9626 HK) will replace Sunac China Holdings (1918 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 July.
- While Bilibili (9626 HK)‘s index inclusion is a surprise, the impact from passive fund trading is not a lot. Nothing much one can do on Sunac China Holdings (1918 HK).
- The Hang Seng China Enterprises Index (HSCEI INDEX) will drop 16.12 points at the close on 8 July. Something for traders to watch out for over the next week.
Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan
- Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
- Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
- Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China’s MSCI China (MCHI-US) and China Internet (KWEB-US).
Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium
- 30 June was the review cutoff date for the next rebalance of the FTSE All-World/All-Cap Index, HSI INDEX, HSCEI INDEX, HSTECH INDEX, HSCI Index, PCOMP INDEX and the LQ-45 Index.
- Bilibili (9626 HK) replaces Sunac China Holdings (1918 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 July.
- There were big inflows to iShares MSCI China (ETF) (MCHI US) during the week while the largest outflow was from the Tracker Fund of Hong Kong Ltd (2800 HK).
Buying the Most Unloved Asian Market
- Korea is a market we have been shorting from the summer of 2021 and just turned long near compelling physical support.
- Closed short positions from 366 and 353 for gains of 20% and 15%. A rally opportunity should open up if the global cycle gets a few lifts in July.
- 300 price support from 2020-21 previous highs and lows makes for a natural platform for short covering that may lead to a move to 324/328 where noted retracements lie.
Before it’s here, it’s on Smartkarma
