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 June rebalance of the <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet ETF (KWEB US)</a> will take place at the close of trading today.</li>
<li>There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.</li>
<li>The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.</li>
</ul>


The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.


KWEB Index Rebalance: Few Changes at the Close Today

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.</li>
<li>In our earlier note in 2022, <a href="https://www.smartkarma.com/insights/tencent-investee-selldown-the-us-120bn-global-overhang" target="_blank" data-smartkarma-citation="insights:81153" rel="noopener">Tencent Investee Selldown - The US$120bn Global Overhang</a>, we had looked at its overall investment portfolio.</li>
<li>With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how. </li>
</ul>


Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.
In our earlier note in 2022, Tencent Investee Selldown - The US$120bn Global Overhang, we had looked at its overall investment portfolio.
With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how. 


Tencent Investee Selldown - JD.com Done, Meituan Done, Two More Still Left

<ul>
<li>There are no 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 are some free float changes and a bunch of capping changes.</li>
<li>Estimated one-way turnover is 3.2% leading to a one-way trade of HK$3bn (US$384m). There are 3 stocks with over 1 day of ADV to trade.</li>
<li>
<a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com (9961 HK)</a> has over 1x ADV to buy from <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)</a> trackers. The stock is also an add to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI)</a>.</li>
</ul>


There are no constituent changes for the Hang Seng Tech Index (HSTECH INDEX) in June but there are some free float changes and a bunch of capping changes.
Estimated one-way turnover is 3.2% leading to a one-way trade of HK$3bn (US$384m). There are 3 stocks with over 1 day of ADV to trade.

Trip.com (9961 HK) has over 1x ADV to buy from Hang Seng Tech Index (HSTECH) trackers. The stock is also an add to the Hong Kong Hang Seng Index (HSI).


HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 31st.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Tencent, Meituan, Bilibili, Lenovo, Kingsoft, China Construction Bank.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 31st.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Tencent, Meituan, Bilibili, Lenovo, Kingsoft, China Construction Bank.


Hong Kong Connect Flows (Mar 31st): Tencent, Meituan, Bilibili, Lenovo, Kingsoft, CCB

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 Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">IQIYI Inc (IQ US)</a> aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.</li>
<li>The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. </li>
<li>The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. </li>
</ul>



IQIYI Inc (IQ US) aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.
The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. 
The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. 


IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

China

China Literature Limited is an investment holding company primarily engaged in operating online literature platforms, providing literary content, and producing television series and films. It offers online reading services, copyright commercialization, writer cultivation and brokerage, and operates text work reading. The company is headquartered in Shanghai, People's Republic of China, and was founded in 2002.

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China Literature (772 HK)

KWEB Index Rebalance: Few Changes at the Close Today

The KWEB ETF rebalances at the close today. There are 2 adds & 1 delete. There will be capping changes and funding flows across the other index...

Brian Freitas

Tencent Investee Selldown - JD.com Done, Meituan Done, Two More Still Left

Tencent has been distributing shares in some of its investments over the past two years. In this note, we look at which of its remaining investee...

Sumeet Singh

HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade

Estimated one-way turnover is 3.2% leading to a one-way trade of HK$3bn (US$384m). There are 3 stocks with over 1 day of ADV to trade. Trip.com is...

Brian Freitas

Hong Kong Connect Flows (Mar 31st): Tencent, Meituan, Bilibili, Lenovo, Kingsoft, CCB

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Tencent, Meituan, Bilibili, Lenovo, Kingsoft, China...

Ke Yan, CFA, FRM

IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin...

Arun George

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