In today’s briefing:
- HSCEI Index Rebalance Preview: Four Sets of Changes from July to September
- China’s Evolving EV Industry
- Frasers Hospitality Trust Scheme Announced
- FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
- Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
HSCEI Index Rebalance Preview: Four Sets of Changes from July to September
- Sunac China Holdings (1918 HK) is still suspended from trading and could be deleted from the index in July and replaced by SenseTime Group (20 HK) or PetroChina (857 HK).
- SenseTime (20 HK) or PetroChina (857 HK), Great Wall (2333 HK) and Zhongsheng (881 HK) could replace Haidilao (6862 HK), CPIC (2601 HK) and Alibaba Health (241 HK) in September.
- There will be buying on SenseTime Group (20 HK) from HSCEI INDEX and HSTECH INDEX trackers. But there is also a big lock-up expiry on 29 June.
China’s Evolving EV Industry
- The EV market offers bright long term prospects supported by technological progress and government incentives, particularly in China.
- In the short term, surging raw material costs and supply bottlenecks are significant risks and could take longer to resolve than many suspect.
- We believe the high-end performance segment and low-end mini/city vehicle segments are most suitable for rapid EV penetration.
Frasers Hospitality Trust Scheme Announced
- This morning, Frasers Hospitality Trust (FHT SP) announced a Scheme Implementation Deed was signed for the S-REIT’s privatisation by its current sponsors TCC Group Investments Limited and Frasers Property Limited.
- The S$500mm borrowing mooted suggested S$0.69/unit; Scheme Consideration is S$0.70/unit in cash against the latest commissioned Adjusted NAV estimate of S$0.6519 (vs last NAV of S$0.6534/unit).
- The deal comes at an all-time high price, slightly exceeding the end-2019 price on a dividend-adjusted basis. This should be done, but it is worth thinking about how.
FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
- Between tightening regulations to government and regulatory support for the market to geopolitical issues, there has been a lot of market volatility and investor focus on China.
- Valuations of China focused indices are lower than those of other Developed and Emerging markets.
- Investors can use the SGX FTSE China A50 Index futures and the SGX FTSE China H50 Index futures to get exposure to the onshore and offshore China market.
Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
- Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
- Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
- We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).
Before it’s here, it’s on Smartkarma
