In today’s briefing:
- The Impact of DRGs Policy on China Medical System
- STAR50 Index Rebalance: Dear Index Committee…
- SSE50 Index Rebalance: Some Large Impact Changes
- Dabur India Ltd (DABUR IN) | Some Things Never Change
- CSI300 Index Rebalance: Big Sector Shift with 28 Changes
The Impact of DRGs Policy on China Medical System
- DRGs will become the main form of medical insurance payment, which will bring huge impact on all parties (hospitals, physicians, patients, companies) and fundamentally change the existing medical environment.
- DRGs would force hospitals/doctors to cure patients within specified time and amount of cost, which would promote the improvement of technology with differentiated innovation that truly drives clinical benefits.
- Overall, investors are advised to pay attention to related opportunities but also prepare for the potential risks in advance.
STAR50 Index Rebalance: Dear Index Committee…
- The index committee has continued to use a 6 month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in June.
- One way turnover is estimated at 8.56% and will result in a one-way trade of CNY 3,496m. Passive trackers will need to trade between 2-6 days ADV on the adds/deletes.
- The inclusions have outperformed the deletions and the CSI500 Index since the end of the review period with all inclusions moving higher over the period.
SSE50 Index Rebalance: Some Large Impact Changes
- There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. The impact is pretty chunky on a few deletions.
- Apart from the passive assets tracking the index, there are some liquid index futures and the impact on the stocks will be larger than just the headline numbers.
- The adds underperformed the deletes in March and April but have come roaring back in May. Playing the trade via long/short pairs could provide better risk adjusted returns.
Dabur India Ltd (DABUR IN) | Some Things Never Change
- Dabur India Ltd (DABUR IN) is over-exposed to rural India where the recovery is uncertain and slow.
- Channel feedback with regards to relationships with distributors and the company’s strategic direction has been poor.
- A weak operating environment coupled with a weak on-ground execution suggests underperformance may continue.
CSI300 Index Rebalance: Big Sector Shift with 28 Changes
- There are 28 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
- We had forecast nearly all the changes, though the index committee seems to have used discretion in deciding not to add three Distillers to the index, leading to other changes.
- There’s a large sector skew with Industrials, Information Technology and Materials stocks taking 17 more spots in the index, while Health Care and Financials lose 9 and 5 spots respectively.
Before it’s here, it’s on Smartkarma
