Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

Suzhou Novosense Microelectron / Index Rebalance

<ul>
<li>STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.</li>
<li>In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.</li>
<li>I currently expect three changes for the STAR 50 index in March 2024.</li>
</ul>


STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
I currently expect three changes for the STAR 50 index in March 2024.


Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

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

<ul>
<li>The announcement of the inclusion of <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber Technologies (UBER US)</a> in the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX</a> was a big one last week. There were announcements for some other indices too.</li>
<li>There are many indices in China that will be rebalanced at the close on Friday, the biggest being the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300</a>, <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500</a>, <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50</a>, <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50</a> and <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KWEB US</a>.</li>
<li>Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.</li>
</ul>


The announcement of the inclusion of Uber Technologies (UBER US) in the S&amp;P 500 INDEX was a big one last week. There were announcements for some other indices too.
There are many indices in China that will be rebalanced at the close on Friday, the biggest being the CSI 300, CSI 500, STAR50, SSE50 and KWEB US.
Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.


Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

Hygon Information Technology C / Index Rebalance

<ul>
<li>There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.</li>
<li>This is yet another index inclusion for <a href="https://www.smartkarma.com/entities/hygon-information-technology-c" target="_blank" data-smartkarma-citation="entities:36366:1" rel="noopener">Hygon Information Technology C (688041 CH)</a> - the stock continues to move higher on expected passive buying over the next two weeks.</li>
<li>Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.</li>
</ul>


There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
This is yet another index inclusion for Hygon Information Technology C (688041 CH) - the stock continues to move higher on expected passive buying over the next two weeks.
Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.


CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul>
<li>Texas Instruments (TI) reported in-line 3Q23 results but weaker 4Q23 guidance.</li>
<li>3Q revenue declined 14% YoY to US$4.5bn and EPS dropped 25% YoY, mainly due to weakness across segments except auto business.</li>
<li>Looking into 4Q23E, mgmt. expects industrial segment weakness to broaden and post-pandemic recovery in China is weaker-than-expected, while automotive growth will continue. </li>
</ul>
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Texas Instruments (TI) reported in-line 3Q23 results but weaker 4Q23 guidance.
3Q revenue declined 14% YoY to US$4.5bn and EPS dropped 25% YoY, mainly due to weakness across segments except auto business.
Looking into 4Q23E, mgmt. expects industrial segment weakness to broaden and post-pandemic recovery in China is weaker-than-expected, while automotive growth will continue. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Implications of Texas Instruments 3Q23: Weaker Industrial, Destocking and Slower China Recovery

<ul><li>We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.</li><li>Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.</li><li>Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Semi Field Trip Takeaways

China

3Peak Incorporated. manufactures and distributes electronics components. The Company produces signal chain analog chips, power management analog chips, linears, converters, interfaces, amplifiers, comparators, and other products. 3Peak supplies its products in information communication, industrial control, medical health, household appliances, and mother fields.

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3peak (688536 CH)

Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

The three STAR 50 expected ADDs have so far outperformed the three expected DELs by ~12% since 15th January 2024 (ADDs: -10.4%; DELs: -22.4%). The...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon

There are 3 changes for the CNI Semiconductor Chips Index. Hygon has been added, making it yet another index inclusion. The adds have started to...

Brian Freitas

Implications of Texas Instruments 3Q23: Weaker Industrial, Destocking and Slower China Recovery

3Q revenue declined 14% YoY to US$4.5bn and EPS dropped 25% YoY, mainly due to weakness across segments except auto business.

CMB International

China Technology – Semi Field Trip Takeaways

Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials...

CMB International

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