Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<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>In this insight, we take a look at our final expectations of index changes and the resultant capping flows for HSTECH index rebal event in March 2026.</li>
<li>We expect no index changes but we estimate there to be roughly US$840mn in one-way flows in March 2026.</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.
In this insight, we take a look at our final expectations of index changes and the resultant capping flows for HSTECH index rebal event in March 2026.
We expect no index changes but we estimate there to be roughly US$840mn in one-way flows in March 2026.


Quiddity Leaderboard HSTECH Mar26: Final Ranks; US$840mn One-Way

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 review period for the March rebalance of 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</a> ended on 31 December, the changes will be announced on 13 February and implemented on 6 March.</li>
<li>No constituent changes will result in a one-way turnover of 1.9% resulting in a round-trip trade of HK$12bn (U$1.5bn).</li>
<li>There is a low probability of <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> and <a href="https://www.smartkarma.com/entities/chery-automobile-co-ltd" target="_blank" data-smartkarma-citation="entities:39918:1" rel="noopener">Chery Automobile (9973 HK)</a> being considered for index inclusion.</li>
</ul>


The review period for the March rebalance of the Hang Seng TECH Index ended on 31 December, the changes will be announced on 13 February and implemented on 6 March.
No constituent changes will result in a one-way turnover of 1.9% resulting in a round-trip trade of HK$12bn (U$1.5bn).
There is a low probability of Geely Auto (175 HK) and Chery Automobile (9973 HK) being considered for index inclusion.


HSTECH Index Rebalance Preview: Changes If Index Universe Is Expanded

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO (NIO US)</a> is a Chinese premium electric vehicle manufacturer listed on three exchanges. </li>
<li>NIO’s Q4 deliveries guidance was below expectations, and sales momentum is on a declining trend. Sustainably hitting its 20% gross margin target and achieving breakeven in 2026 seems a stretch.  </li>
<li>NIO’s valuation is stretched, trading at a material premium to the median EV/Sales and growth-adjusted EV/Sales multiples of Chinese EV peers. </li>
</ul>



NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed on three exchanges. 
NIO’s Q4 deliveries guidance was below expectations, and sales momentum is on a declining trend. Sustainably hitting its 20% gross margin target and achieving breakeven in 2026 seems a stretch.  
NIO’s valuation is stretched, trading at a material premium to the median EV/Sales and growth-adjusted EV/Sales multiples of Chinese EV peers. 


2026 High Conviction: Short NIO (NIO US/9866 HK)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Event-Driven

<ul>
<li>Back on the 22nd August 2025, SOE-backed <strong><a href="https://www.smartkarma.com/entities/dongfeng-motor-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:910:1" rel="noopener">Dongfeng Motor (489 HK)</a></strong> announced a privatisation; together with a concurrent listing of its EV arm, VOYAH. The two proposals are interconditional.</li>
<li>In its October <a href="https://www1.hkexnews.hk/app/sehk/2025/107757/documents/sehk25100202720.pdf" target="_blank" rel="noopener">application proof</a>, VOYAH turned a profit in 7M25.  The market <em>was</em> implying a price-to-trailing-sales of 1.5x for VOYAH, versus the basket average of 2.1x. It's now ~1.2x.</li>
<li>Key PRC reg approvals (Mofcom/NDRC/SAFE) remain outstanding. Meanwhile, a basket of peers are down 21% since the dual proposals were announced. And their average price-to-trailing-sales are down to 1.7x. </li>
</ul>


Back on the 22nd August 2025, SOE-backed Dongfeng Motor (489 HK) announced a privatisation; together with a concurrent listing of its EV arm, VOYAH. The two proposals are interconditional.
In its October application proof, VOYAH turned a profit in 7M25.  The market was implying a price-to-trailing-sales of 1.5x for VOYAH, versus the basket average of 2.1x. It's now ~1.2x.
Key PRC reg approvals (Mofcom/NDRC/SAFE) remain outstanding. Meanwhile, a basket of peers are down 21% since the dual proposals were announced. And their average price-to-trailing-sales are down to 1.7x. 


Dongfeng (489 HK): Revisiting VOYAH's Spin-Off Valuation

<ul>
<li>The December rebalance of the Hang Seng family of indices will use today's closing prices to cap the index constituent weights.</li>
<li>The net round-trip trade across all stocks across the five indices is estimated at HK$50bn (US$6.4bn). There is size to trade in a lot of stocks.</li>
<li>
<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi (1810 HK)</a> is the biggest buy due to HSIII Index inclusion and capping, while <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> is the biggest capping sell.</li>
</ul>


The December rebalance of the Hang Seng family of indices will use today's closing prices to cap the index constituent weights.
The net round-trip trade across all stocks across the five indices is estimated at HK$50bn (US$6.4bn). There is size to trade in a lot of stocks.

Xiaomi (1810 HK) is the biggest buy due to HSIII Index inclusion and capping, while Alibaba (9988 HK) is the biggest capping sell.


HSI, HSCEI, HSTECH, HSIII, HSBIO Index Rebalance: US$6.4bn of Flows Post Capping (Dec 2025)

China

Chery Automobile is a Chinese automobile manufacturer that designs, develops, manufactures, and sells passenger vehicles, automotive parts, and components. It offers internal combustion engines and new energy vehicles under brands such as CHERY, JETOUR, EXEED, iCAR, and LUXEED. The company is headquartered in Wuhu, Anhui, China, and was founded in 1997.

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Chery (9973 HK)

Quiddity Leaderboard HSTECH Mar26: Final Ranks; US$840mn One-Way

Based on our latest estimates, we see one-way flow of US$840mn which translates to a turnover of 1.8%. Currently, we do not expect any index changes.

Janaghan Jeyakumar, CFA

HSTECH Index Rebalance Preview: Changes If Index Universe Is Expanded

No constituent changes expected but capping leads to big flows. Low probability of 2 stocks being added after meeting the Autonomous criterion and...

Brian Freitas

2026 High Conviction: Short NIO (NIO US/9866 HK)

4Q deliveries guidance was below expectations, and the sales momentum is declining. Breakeven targets are likely to be pushed out. The valuation is...

Arun George

Dongfeng (489 HK): Revisiting VOYAH's Spin-Off Valuation

There's been a lot of enthusiasm for HK spin-offs of late, such as Zijin Mining and MINISO. I'm not convinced Dongfeng Motor deserves similar...

David Blennerhassett

HSI, HSCEI, HSTECH, HSIII, HSBIO Index Rebalance: US$6.4bn of Flows Post Capping (Dec 2025)

The Dec rebalance of the HSI, HSCEI, HSTECH, HSIII, HSHKBIO indices will use today's closing prices for capping. The round-trip trade across the...

Brian Freitas

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