Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>China's National Team was steadily buying ETF's during and after the Third Plenum.  Southbound Connect Flows continue to be positive during July.</li>
<li>
<a href="https://www.smartkarma.com/entities/smoore-international-holdings" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International Holdings (6969 HK)</a> , <a href="https://www.smartkarma.com/entities/xinjiang-goldwind-science-technology-h" target="_blank" data-smartkarma-citation="entities:10112:1" rel="noopener">Xinjiang Goldwind Science &amp; Technology (2208 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>  benefited from positive news sentiment this week.</li>
<li>
<a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> and <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a> suffered on negative news, while <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> continued its pullback in concert with the retail food sector.</li>
</ul>


China's National Team was steadily buying ETF's during and after the Third Plenum.  Southbound Connect Flows continue to be positive during July.

Smoore International Holdings (6969 HK) , Xinjiang Goldwind Science &amp; Technology (2208 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK)  benefited from positive news sentiment this week.

Chow Tai Fook Jewellery (1929 HK) and ASM Pacific Technology (522 HK) suffered on negative news, while Meituan (3690 HK) continued its pullback in concert with the retail food sector.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a> is expected to replace <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technol" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technol (1833 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> at the September rebalance.</li>
<li>Constituent changes and capping changes will result in a one-way turnover of 3.7% and that will result in a round-trip trade of HK$7.8bn (US$1bn).</li>
<li>Short interest is near the lows on both stocks but there has been a recent tick higher for <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific Technology (522 HK)</a>.</li>
</ul>



ASM Pacific Technology (522 HK) is expected to replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the September rebalance.
Constituent changes and capping changes will result in a one-way turnover of 3.7% and that will result in a round-trip trade of HK$7.8bn (US$1bn).
Short interest is near the lows on both stocks but there has been a recent tick higher for ASM Pacific Technology (522 HK).


HSTECH Index Rebalance Preview: ASM Pacific (522) Could Replace Ping An Health (1833); US$1bn Trade

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.</li>
<li>The reference period for the September 2024 index rebal event is now complete. In this insight, we take a look at our final expectations for index changes.</li>
<li>Our current estimates suggest one-way flows due to index changes and capping could be around US$733mn but that could change by early September 2024.</li>
</ul>


The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The reference period for the September 2024 index rebal event is now complete. In this insight, we take a look at our final expectations for index changes.
Our current estimates suggest one-way flows due to index changes and capping could be around US$733mn but that could change by early September 2024.


Quiddity Leaderboard HSTECH Sep 24: Reference Period Over; One Change Likely; US$733mn One-Way

<ul>
<li>We do not forecast any constituent changes for the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> in June but there could be capping changes for 7 stocks.</li>
<li>Capping changes will result in a one-way turnover of 7.6% leading to a round-trip trade of US$2.4bn. 17 stocks will have over 0.5x ADV to trade from passive trackers.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> will have the largest inflow while there will be big outflows from <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. </li>
</ul>


We do not forecast any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June but there could be capping changes for 7 stocks.
Capping changes will result in a one-way turnover of 7.6% leading to a round-trip trade of US$2.4bn. 17 stocks will have over 0.5x ADV to trade from passive trackers.

Li Auto (2015 HK) will have the largest inflow while there will be big outflows from Meituan (3690 HK), Xiaomi Corp (1810 HK), JD.com (9618 HK) and Tencent (700 HK). 


HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June

<ul>
<li>With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> in June.</li>
<li>Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).</li>
</ul>


With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.

Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).


HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June

Hong Kong

ASMPT designs and manufactures machines and tools for the semiconductor and electronics assembly industries, including deposition, wafer separation, die attach, wire bonding, and advanced packaging solutions. It is a leading global supplier of hardware, software, and service solutions for intelligent factories, and also offers smart factory and intralogistics solutions. The company was founded in 1975 and is headquartered in Singapore.

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ASMPT (522 HK)

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)

China's National Team continued buying in the ETF market. Smoore International, Xinjiang Goldwind and Hisense had positive news sentiment, while...

David Mudd

HSTECH Index Rebalance Preview: ASM Pacific (522) Could Replace Ping An Health (1833); US$1bn Trade

ASMPT is down a LOT today following results that were weaker than expected and guidance that was lower than projected earlier. With potential...

Brian Freitas

Quiddity Leaderboard HSTECH Sep 24: Reference Period Over; One Change Likely; US$733mn One-Way

The expected ADD ASMPT could have 15 days of volume to buy while the expected DEL Ping An Healthcare could have 9 days of volume to sell.

Janaghan Jeyakumar, CFA

HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June

We do not forecast any constituent changes for the HSTECH in June but there could be capping changes for 7 stocks. Li Auto is the big buy; there...

Brian Freitas

HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June

We do not expect any constituent changes for the HSTECH Index in June. Capping changes will result in a one-way turnover of 5.3% leading to a round...

Brian Freitas

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