Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>A stealth bull market is underway in Chinese bank shares </li>
<li>Banks are well positioned to benefit as the economy grows and interest rates rise</li>
<li>Value remains in the sector despite the  move up in share prices</li>
</ul>


A stealth bull market is underway in Chinese bank shares 
Banks are well positioned to benefit as the economy grows and interest rates rise
Value remains in the sector despite the  move up in share prices


Who Is Crazy Enough to Buy a Chinese Bank?

Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>The <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI INDEX</a> has been defying gravity, recently. It is up more than 30% from its most recent low.</li>
<li>In our previous, <a href="https://www.smartkarma.com/insights/hsi-to-find-strong-support-between-18-8k-and-17-5k-long-term-uptrend-set-to-restart" target="_blank" rel="noopener">Jan. 11th insight</a> we highlighted very precisely the support zone (18.8k-17.5k) from where the index was poised to resume its rally (the bottom was printed at 18671).</li>
<li>
Our models are currently indicating a very overbought condition. Leveraging the information relayed by <a href="https://www.smartkarma.com/profiles/gaudenz-schneider" target="_blank" data-smartkarma-citation="accounts:66501" rel="noopener">Gaudenz Schneider</a> in a recent insight, we think a "HSI PUT" could make sense here. </li>
</ul>


The HSI INDEX has been defying gravity, recently. It is up more than 30% from its most recent low.
In our previous, Jan. 11th insight we highlighted very precisely the support zone (18.8k-17.5k) from where the index was poised to resume its rally (the bottom was printed at 18671).

Our models are currently indicating a very overbought condition. Leveraging the information relayed by Gaudenz Schneider in a recent insight, we think a "HSI PUT" could make sense here. 


The HSI PUT: Hedging Strategies for an Overextended Rally

Derivatives and Quantitative Strategist

Gaudenz Schneider

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> put options show concentrated positioning at the 19,000 and 20,000 strike levels.</li>
<li>Traders continue to establish new positions approximately 15%-20% below current market levels, suggesting protection against major market corrections rather than minor pullbacks. The focus is on near-term risk.</li>
<li>Implied volatility has remained stable at 25-30% over the past two weeks, consistent with a broadly sideways movement in the index itself.</li>
</ul>



Hang Seng Index (HSI INDEX) put options show concentrated positioning at the 19,000 and 20,000 strike levels.
Traders continue to establish new positions approximately 15%-20% below current market levels, suggesting protection against major market corrections rather than minor pullbacks. The focus is on near-term risk.
Implied volatility has remained stable at 25-30% over the past two weeks, consistent with a broadly sideways movement in the index itself.


Hang Seng Index (HSI): Trends in PUT Strikes and Open Interest Visualized in Animation and Charts

<ul>
<li>Market traders of <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> call options maintain significant holdings in lower strikes, with notable concentration at the 20,000 strike level.</li>
<li>Open interest data reveals significant increase in open interest for 25,000 and 26,000 strike calls since late February, reflecting active trading as traders built new positions.</li>
<li>Despite increased trading activity and changes in market positioning, implied volatility has remained stable at 25-30% over the past two weeks, reflecting a consistent market sentiment.</li>
</ul>


Market traders of Hang Seng Index (HSI INDEX) call options maintain significant holdings in lower strikes, with notable concentration at the 20,000 strike level.
Open interest data reveals significant increase in open interest for 25,000 and 26,000 strike calls since late February, reflecting active trading as traders built new positions.
Despite increased trading activity and changes in market positioning, implied volatility has remained stable at 25-30% over the past two weeks, reflecting a consistent market sentiment.


Hang Seng Index (HSI): Trends in CALL Strikes and Open Interest Visualized in Animation and Charts

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>The March rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI INDEX</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a> and HSIII indices will use today's closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.</li>
<li>The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).</li>
<li>
<a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan</a> ,  <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu</a>, <a href="https://www.smartkarma.com/entities/horizon-robotics-inc" target="_blank" data-smartkarma-citation="entities:35637:1" rel="noopener">Horizon Robotics</a>, <a href="https://www.smartkarma.com/entities/industrial-and-commercial-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC</a>, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene</a>, <a href="https://www.smartkarma.com/entities/kuaishou-technology" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology</a> and <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank</a> are the largest buys. <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</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi</a>, <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC</a>, <a href="https://www.smartkarma.com/entities/zhongan-online-p-c-insurance-c" target="_blank" data-smartkarma-citation="entities:23681:1" rel="noopener">ZhongAn Online</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent </a>are the largest sells.</li>
</ul>


The March rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today's closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The gross round-trip trade across all stocks across the four indices is estimated at HK$41.1bn (US$5.3bn). The net round-trip trade is HK$37.3bn (US$4.8bn).

Meituan ,  JD.com, Baidu, Horizon Robotics, ICBC, BeiGene, Kuaishou Technology and China Construction Bank are the largest buys. Alibaba, Xiaomi, HSBC, ZhongAn Online and Tencent are the largest sells.


HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

China

China Construction Bank Corporation provides a comprehensive range of commercial banking products and services to individuals and corporate customers. The Bank's business consists of three principal business segments: corporate banking, personal banking, and treasury operations. China Construction Bank also services infrastructure loans, residential mortgage, and bank cards.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Construction Bank H (939 HK)

Who Is Crazy Enough to Buy a Chinese Bank?

Chinese bank shares are experiencing a stealth bull market. Value and drivers still remain in the sector despite the negativity on the economy

Rikki Malik

The HSI PUT: Hedging Strategies for an Overextended Rally

The HSI Index is defying gravity, up over 30% from its recent lows, but our models suggest it is very overbought, indicating a potential...

Nico Rosti

Hang Seng Index (HSI): Trends in PUT Strikes and Open Interest Visualized in Animation and Charts

Traders are heavily positioned in Hang Seng Index put options at 19,000 and 20,000 strike levels, indicating protection against major market...

Gaudenz Schneider

Hang Seng Index (HSI): Trends in CALL Strikes and Open Interest Visualized in Animation and Charts

Traders of Hang Seng Index call options maintain significant holdings at lower strikes. Increased interest in 25,000 and 26,000 strikes

Gaudenz Schneider

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

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

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Who Is Crazy Enough to Buy a Chinese Bank?

​Chinese bank shares are experiencing a stealth bull market. Value and drivers still remain in the sector despite the negativity on the economy

Rikki Malik

The HSI PUT: Hedging Strategies for an Overextended Rally

​The HSI Index is defying gravity, up over 30% from its recent lows, but our models suggest it is very overbought, indicating a potential...

Nico Rosti

Hang Seng Index (HSI): Trends in PUT Strikes and Open Interest Visualized in Animation and Charts

​Traders are heavily positioned in Hang Seng Index put options at 19,000 and 20,000 strike levels, indicating protection against major market...

Gaudenz Schneider

Hang Seng Index (HSI): Trends in CALL Strikes and Open Interest Visualized in Animation and Charts

Traders of Hang Seng Index call options maintain significant holdings at lower strikes. Increased interest in 25,000 and 26,000 strikes

Gaudenz Schneider

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$5.3bn of Flows Post Capping (Mar 2025)

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

Brian Freitas

Chinese bank shares are experiencing a stealth bull market. Value and drivers still remain in the sector despite the negativity on the economy

The HSI Index is defying gravity, up over 30% from its recent lows, but our models suggest it is very overbought, indicating a potential...

Traders are heavily positioned in Hang Seng Index put options at 19,000 and 20,000 strike levels, indicating protection against major market...