Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Last evening post market close in Hong Kong, Hang Seng Indexes released an <a href="https://www.hsi.com.hk/static/uploads/contents/en/news/indexChgNotice/20201030T100000.pdf" target="_blank" rel="noopener">index notice</a> announcing a new Fast Entry rule for the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a>.As one can imagine, this is being done solely to ensure the early inclusion of <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> in the index. Index investors would then look at buying index futures and other derivatives on the HSCEI to play the upside. The early inclusion could also help the HSCEI to catch up with other China focused indices, where it has been a laggard for some time now.<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a>'s Fast Entry into the index will also mean that one stock needs to be deleted, though from the index rules it is not very clear if that would happen at the regular index review in December 2020 or March 2021.In this Insight, we take a look at the impact of <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a>'s inclusion in the HSCEI on the stock and what it means for the other stocks in the index.

Last evening post market close in Hong Kong, Hang Seng Indexes released an index notice announcing a new Fast Entry rule for the Hang Seng China Enterprises Index (HSCEI INDEX).As one can imagine, this is being done solely to ensure the early inclusion of Ant Group (6688 HK) in the index. Index investors would then look at buying index futures and other derivatives on the HSCEI to play the upside. The early inclusion could also help the HSCEI to catch up with other China focused indices, where it has been a laggard for some time now.Ant Group (6688 HK)'s Fast Entry into the index will also mean that one stock needs to be deleted, though from the index rules it is not very clear if that would happen at the regular index review in December 2020 or March 2021.In this Insight, we take a look at the impact of Ant Group (6688 HK)'s inclusion in the HSCEI on the stock and what it means for the other stocks in the index. 

Ant Group: Everyone Wants a Piece of The Action - HSCEI Fast Entry

Event-Driven

The <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">SSE STAR 50 (STAR50 INDEX)</a> (short for 'The Science and Technology Innovation Board 50 Index') was first published on 23 July this year. The index is free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market. The STAR50 Index has outperformed its peers and has narrowly underperformed the Chinext Index on a year to date basis.
Four asset managers were approved by the CSRC to launch ETFs on the <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">SSE STAR 50 (STAR50 INDEX)</a> and they raised CNY 20bn (CNY 5bn each), the maximum allowed, in one day. Total subscriptions were around CNY 100bn.
With a relatively large AUM benchmarked to a volatile index with volatile stocks, plus a lot of large listings coming through, there will be some interesting moves in stocks at the upcoming December rebalance. The index methodology specifies that there cannot be more than 5 inclusions and exclusions in a single review, and we will hit that number very easily. In the absence of the 5 name change limit, we would have had close to 12 inclusions and exclusions. With the 5 name changes, the one-way turnover will be in excess of 22%.
<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial (1051260D CH)</a> could be included in the index at the December review. If it is not included in December, then its a sure inclusion in the March 2021 review.

The SSE STAR 50 (STAR50 INDEX) (short for 'The Science and Technology Innovation Board 50 Index') was first published on 23 July this year. The index is free float market cap weighted and is made up of the 50 largest stocks based on full market cap that are listed on the STAR Market. The STAR50 Index has outperformed its peers and has narrowly underperformed the Chinext Index on a year to date basis.
Four asset managers were approved by the CSRC to launch ETFs on the SSE STAR 50 (STAR50 INDEX) and they raised CNY 20bn (CNY 5bn each), the maximum allowed, in one day. Total subscriptions were around CNY 100bn.
With a relatively large AUM benchmarked to a volatile index with volatile stocks, plus a lot of large listings coming through, there will be some interesting moves in stocks at the upcoming December rebalance. The index methodology specifies that there cannot be more than 5 inclusions and exclusions in a single review, and we will hit that number very easily. In the absence of the 5 name change limit, we would have had close to 12 inclusions and exclusions. With the 5 name changes, the one-way turnover will be in excess of 22%.
Ant Financial (1051260D CH) could be included in the index at the December review. If it is not included in December, then its a sure inclusion in the March 2021 review.

STAR Board: STAR50 Index - The December Rebalance Is Going to Be BIG

China and US Equity Analyst

Roger Xie

Cross Asset Strategy

China is taking another step to reform the NASDAQ-style ChiNext board at Shenzhen Stock Exchange, which hosts some of the world’s fastest growing technology and pharmaceutical A-shares. Last week, the securities regulator reveals the most anticipated IPO registration system reform at ChiNext board and begins to seek public opinion till May 27. We expect the final version of the reform measure will be rolled out in 1H this year. China A-share IPO process is long being plagued by its central control by regulator and lack of market pricing mechanism. The new proposal, if executed successfully, would remove the major bottleneck of IPO applications and market-based pricing, which serves as the positive catalyst for China A-share. We have been bullish on A-share <a href="https://www.smartkarma.com/entities/ftse-china-a50-index" target="_blank" rel="noopener" data-smartkarma-citation="entities:22905:1">FTSE China A50 Index (XIN9I INDEX)</a> for ample liquidity and favorable reform progress.

China is taking another step to reform the NASDAQ-style ChiNext board at Shenzhen Stock Exchange, which hosts some of the world’s fastest growing technology and pharmaceutical A-shares. Last week, the securities regulator reveals the most anticipated IPO registration system reform at ChiNext board and begins to seek public opinion till May 27. We expect the final version of the reform measure will be rolled out in 1H this year. China A-share IPO process is long being plagued by its central control by regulator and lack of market pricing mechanism. The new proposal, if executed successfully, would remove the major bottleneck of IPO applications and market-based pricing, which serves as the positive catalyst for China A-share. We have been bullish on A-share FTSE China A50 Index (XIN9I INDEX) for ample liquidity and favorable reform progress. 

China A-Share Strategy: Further Reform at Chinese-Style NASDAQ Exchange (ChiNext)

Founder-CEO & Chief Analyst, Real Estate Foresight

Robert Ciemniak

Founder-CEO & Chief Analyst

Real Estate Foresight

Since 2012, REF has been helping investors with market research, project due diligence, and strategy development. This has ranged from detailed assessments and estimates on distressed developers' project portfolios to market due diligence on specific projects to macro-level questions linked to demand for commodities. The unique combination of the housing markets and developer data from data partner China Index Academy in Beijing, primary research, and technology-powered alternative data collection from public sources result in a valuable content set used in REF analytics and reports.

Predictive Analytics for China Property

Macroeconomics

Over the period February 28, 2016, to August 24, 2017, we monitored publicly available online English language 'Western' news headlines from around 10 major mainstream sources, for anything related to China. Around 14,000 headlines later, we've now applied word frequency analysis techniques to see what these headlines tell us about this past year and what's been gaining or losing coverage since the July update (for some technical/background details see a footnote below).While this does not carry…

Over the period February 28, 2016, to August 24, 2017, we monitored publicly available online English language 'Western' news headlines from around 10 major mainstream sources, for anything related to China. Around 14,000 headlines later, we've now applied word frequency analysis techniques to see what these headlines tell us about this past year and what's been gaining or losing coverage since the July update (for some technical/background details see a footnote below).While this does not carry…

Media Coverage /​ Sentiment On China - What Got Hot, What Faded (July-August 2017)

Macro & Asian equity Technical Strategies, BBSP Asia

Federico D'Inca

Macro & Asian equity Technical Strategies

BBSP Asia

Technical Analysis

Bullish exit above 3-year congestion resistance with pull back at 1770 confirmed by Relative Strength Index (RSI). PREFERRED CASE Bullish above 1715, surpassing upside conf. 1850 validates rise to 2000 before 2130. Longer-term target at 2700.Should you have any questions and wish to speak with one of our analysts, please don’t hesitate to contact us. Equity Asia: + (65) 6735 3040 or <a href="mailto:asia@bbsp.sg" target="_blank">asia@bbsp.sg</a>Access to this document is restricted to the use of the intended recipient designated by BBSP and may not…

Bullish exit above 3-year congestion resistance with pull back at 1770 confirmed by Relative Strength Index (RSI). PREFERRED CASE Bullish above 1715, surpassing upside conf. 1850 validates rise to 2000 before 2130. Longer-term target at 2700.Should you have any questions and wish to speak with one of our analysts, please don’t hesitate to contact us. Equity Asia: + (65) 6735 3040 or asia@bbsp.sgAccess to this document is restricted to the use of the intended recipient designated by BBSP and may not…

Bullish Exit of 3 Year Corrective Structure

China

ChiNext is an independent market, offering a platform for the needs of enterprises engaged in independent innovation and other growing venture enterprises. The ChiNext board indices comprehensively and objectively reflect the overall price move of ChiNext board stocks. It is launched and released on 06/01/2010

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ChiNext Index (SZ399006 INDEX EQUITY)

Ant Group: Everyone Wants a Piece of The Action - HSCEI Fast Entry

Hang Seng Indexes has introduced a Fast Entry rule for the HSCEI which ensures the inclusion of Ant Group in the index after the close of trading...

Brian Freitas

STAR Board: STAR50 Index - The December Rebalance Is Going to Be BIG

The STAR50 index has seen a lot of interest following its launch in July with over CNY 20bn raised by 4 ETFs. We look at the index methodology, the...

Brian Freitas

Media Coverage / Sentiment On China - What Got Hot, What Faded (July-August 2017)

Over the period February 28, 2016, to August 24, 2017, we monitored publicly available online English language 'Western' news headlines from around...

Robert Ciemniak

Bullish Exit of 3 Year Corrective Structure

Bullish exit above 3-year congestion resistance with pull back at 1770 confirmed by Relative Strength Index (RSI). PREFERRED CASEBullish above...

BBSP Asia

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Ant Group: Everyone Wants a Piece of The Action - HSCEI Fast Entry

Hang Seng Indexes has introduced a Fast Entry rule for the HSCEI which ensures the inclusion of Ant Group in the index after the close of trading...

Brian Freitas

STAR Board: STAR50 Index - The December Rebalance Is Going to Be BIG

The STAR50 index has seen a lot of interest following its launch in July with over CNY 20bn raised by 4 ETFs. We look at the index methodology, the...

Brian Freitas

China A-Share Strategy: Further Reform at Chinese-Style NASDAQ Exchange (ChiNext)

China is taking another step to reform the NASDAQ-style ChiNext board at Shenzhen Stock Exchange, which hosts some of the world’s fastest growing...

Roger Xie

Media Coverage /​ Sentiment On China - What Got Hot, What Faded (July-August 2017)

Over the period February 28, 2016, to August 24, 2017, we monitored publicly available online English language 'Western' news headlines from around...

Robert Ciemniak

Bullish Exit of 3 Year Corrective Structure

Bullish exit above 3-year congestion resistance with pull back at 1770 confirmed by Relative Strength Index (RSI). PREFERRED CASEBullish above...

BBSP Asia

Media Coverage / Sentiment On China - What Got Hot, What Faded (July-August 2017)