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

Shenton Research

Shenton 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.

Index Rebalance

<ul>
<li>We screen HK stocks ahead of the HSCI September 2026 half-yearly review, with 44 ADD candidates and 26 DELETE candidates.</li>
<li>ADD candidates are mostly new listings and prior constituents, including seven A+H names already in Connect.</li>
<li>DELETE candidates include 21 MV DELETEs, three retention-line borderline names, and two velocity cases.</li>
</ul>


We screen HK stocks ahead of the HSCI September 2026 half-yearly review, with 44 ADD candidates and 26 DELETE candidates.
ADD candidates are mostly new listings and prior constituents, including seven A+H names already in Connect.
DELETE candidates include 21 MV DELETEs, three retention-line borderline names, and two velocity cases.


HSCI / HK Connect Sep 2026 Rebalance Forecast

Founder of Antler Capital

Stanley Tsai, CFA

Thematic (Sector/Industry)

In the spirit of the long-awaited UEFA Euro 2020, we present our inaugural "China Financials: Silver Linings Playbook", which summarizes our views on the names that are best positioned to navigate an environment of progressively slower credit growth, tighter liquidity and rising defaults. 
Our screen consists of 100+ stocks in the A/H share universe, as well as a select number of international / non-traditional names that have significant exposures to China's financial system. We have a preference for larger-cap and liquid names, which are then filtered by our opinions on their fundamentals, value, momentum and recent trading volumes. We also try to make our selections versatile and less vulnerable to single-factor movements.
Each player's position on the pitch and the team formation itself convey incremental information about our thoughts on the sector's performance over a three to six-month horizon. To the extent possible, we intend to update our ideas on a periodic basis. This provides a feedback loop with our other ongoing research on the industry.
However, our team selections are not investment recommendations. Instead, they are meant to give structure to our analysis. The playbook allows us to articulate our views on the sector in a timely, concise manner. Our objective is to ensure we don't throw the baby out with the bathwater as sentiments on the sector remain bleak.
With that out of the way, the following is our starting XI. We will dive deeper into our rationale for our selections in the remainder of this insight (Exhibit 1).
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 726.047px;">Exhibit 1: China Financials | Silver Linings Playbook</td>
</tr>
<tr>
<td style="width: 726.047px;">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/768/original/image_768460236451623962508577.png?1623962508" class="editor-image img-responsive" data-smartkarma-image-id="213768"></figure>

Source: Our analysis
</td>
</tr>
</tbody>
</table>
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In the spirit of the long-awaited UEFA Euro 2020, we present our inaugural "China Financials: Silver Linings Playbook", which summarizes our views on the names that are best positioned to navigate an environment of progressively slower credit growth, tighter liquidity and rising defaults. 
Our screen consists of 100+ stocks in the A/H share universe, as well as a select number of international / non-traditional names that have significant exposures to China's financial system. We have a preference for larger-cap and liquid names, which are then filtered by our opinions on their fundamentals, value, momentum and recent trading volumes. We also try to make our selections versatile and less vulnerable to single-factor movements.
Each player's position on the pitch and the team formation itself convey incremental information about our thoughts on the sector's performance over a three to six-month horizon. To the extent possible, we intend to update our ideas on a periodic basis. This provides a feedback loop with our other ongoing research on the industry.
However, our team selections are not investment recommendations. Instead, they are meant to give structure to our analysis. The playbook allows us to articulate our views on the sector in a timely, concise manner. Our objective is to ensure we don't throw the baby out with the bathwater as sentiments on the sector remain bleak.
With that out of the way, the following is our starting XI. We will dive deeper into our rationale for our selections in the remainder of this insight (Exhibit 1).



Exhibit 1: China Financials | Silver Linings Playbook





Source: Our analysis




Related Insights
China Macro: Consumers Remain on the Sidelines, as Their Home Equity Grows 
Glut and Famine: We Might See Snow in China This Summer 
China Macro: PPI Peaks, while CPI Eases Tightening Fears 
China Macro: Exports Disappoint, but It's Still Early in the Game 
Glut and Famine: China's Monetary Conditions a Notch Tighter in May 
ICBC: The Bond Identity | A Zero-Growth Dividend Discount Story 
BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

China Financials: Silver Linings Playbook

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

Victory Giant Technology (HuiZhou) / Index Rebalance

Victory Giant Technology (HuiZhou) (2476 HK)

<ul>
<li>There could be 55 potential inclusions and 14 potential deletions for the Hang Seng Composite Index in September. There are more stocks that are close on market cap/liquidity.</li>
<li>A lot of the potential adds are very recently listed stocks that have a limited trading history. The low free float could lead to price spikes in the stocks.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


There could be 55 potential inclusions and 14 potential deletions for the Hang Seng Composite Index in September. There are more stocks that are close on market cap/liquidity.
A lot of the potential adds are very recently listed stocks that have a limited trading history. The low free float could lead to price spikes in the stocks.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect (Sep 2026): Adds Outnumber Deletes as IPOs Dominate

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*High Court Ruling: The United Kingdom High Court ruled on a test case brought forth by the Financial Conduct Authority (FCA) indicates that the "COVID-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover". The decision on th Business Interruption (BI) case against the insurance industry is mostly in favorable to policyholders; and *Asia-Pac To Follow: As many countries in Asia-Pacific are Common Law nations, High Court rulings such as this have a tendency to set precedent. It also wouldn’t be a surprise to see significant capital raises given the challenges to solvency.

*High Court Ruling: The United Kingdom High Court ruled on a test case brought forth by the Financial Conduct Authority (FCA) indicates that the "COVID-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover". The decision on th Business Interruption (BI) case against the insurance industry is mostly in favorable to policyholders; and *Asia-Pac To Follow: As many countries in Asia-Pacific are Common Law nations, High Court rulings such as this have a tendency to set precedent. It also wouldn’t be a surprise to see significant capital raises given the challenges to solvency.  

Asian Insurers – High Court Ruling A Harbinger For Region

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system for what it always was - a low profit, weak capital generating, and highly geared sector which has been dangerously close to loss making for over a decade;* Solvency II Regime Not Capturing Risk:The Corona Crisis and monetary/fiscal response have created a perfect storm for insurers with negative risk-free rates and the spike in credit spreads well above 2008 GFC peak is a harbinger of investment default. The usefulness of Solvency II is being tested as ratios are supported by an Ultimate Forward Rate (UFR) which is increasingly at odds with economic reality, while the Volatility Adjustment (VA) is producing a perverse increase in headline ratios. The current environment introduces third party concerns with ratings agencies, credit defaults, and counterparties. Insurers can exhibit solvency ratio increases if corporate credit spreads rise; and  * Asia-Pacific Insurer Solidarity With Western Peer Likely: Global investors should understand the notion of solidarity in time of financial crisis. Europe’s bank and insurance regulator has each called for widespread dividend deferrals/eliminations of its financial institutions. We also fully anticipate solidarity amongst the Asia-Pacific financials with their Western peer. Whilst many of the Asia-Pacific insurers have already adopted some form of the European Solvency II regime, many have also purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to be outsized and challenge capital ratios. We anticipate similar actions with the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea.

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system for what it always was - a low profit, weak capital generating, and highly geared sector which has been dangerously close to loss making for over a decade;* Solvency II Regime Not Capturing Risk:The Corona Crisis and monetary/fiscal response have created a perfect storm for insurers with negative risk-free rates and the spike in credit spreads well above 2008 GFC peak is a harbinger of investment default. The usefulness of Solvency II is being tested as ratios are supported by an Ultimate Forward Rate (UFR) which is increasingly at odds with economic reality, while the Volatility Adjustment (VA) is producing a perverse increase in headline ratios. The current environment introduces third party concerns with ratings agencies, credit defaults, and counterparties. Insurers can exhibit solvency ratio increases if corporate credit spreads rise; and  * Asia-Pacific Insurer Solidarity With Western Peer Likely: Global investors should understand the notion of solidarity in time of financial crisis. Europe’s bank and insurance regulator has each called for widespread dividend deferrals/eliminations of its financial institutions. We also fully anticipate solidarity amongst the Asia-Pacific financials with their Western peer. Whilst many of the Asia-Pacific insurers have already adopted some form of the European Solvency II regime, many have also purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to be outsized and challenge capital ratios. We anticipate similar actions with the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea. 

China

China Reinsurance is a state-owned reinsurance company operating in China and internationally, offering property and casualty reinsurance, life and health reinsurance, primary property and casualty insurance, and asset management services. Its products include motor, property, agricultural, liability, life, health, and accident reinsurance, alongside multi-asset investment products. The company was founded in 1949 and is headquartered in Beijing, People's Republic of China.

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China Reinsurance (1508 HK)

HSCI / HK Connect Sep 2026 Rebalance Forecast

We forecast 44 ADD candidates and 26 DELETE candidates for the HSCI September review, with the announcement expected on 21 Aug 2026.

Ke Yan, CFA, FRM

China Financials: Silver Linings Playbook

Our Silver Linings Playbook outlines our views on the China financials names that are most likely to remain resilient in the face of macro...

Stanley Tsai, CFA

HSCI Index Rebalance Preview and Stock Connect (Sep 2026): Adds Outnumber Deletes as IPOs Dominate

There could be 80 changes for the HSCI in March. That could result in 70 changes to the Southbound Stock Connect list and also have implications...

Brian Freitas

Asian Insurers – High Court Ruling A Harbinger For Region

*High Court Ruling: The United Kingdom High Court ruled on a test case brought forth by the Financial Conduct Authority (FCA) indicates that the...

Thomas J. Monaco

Asian Insurers - Mea EIOPA

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system...

Thomas J. Monaco

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