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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

After outperforming its global peers over the last year, 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> has had a big drawdown that has brought its performance closer to its peers. Today's drop has closed the gap even further.With a backdrop of heightened US-China tensions, increased regulatory pressure from the State Administration for Market Regulation (SAMR) and an increased focus on monopolies (or perceived monopolies), investors have been happy to sell first given the gains they were sitting on, plus the valuation premium.With valuations now lining up with their global peers, Hang Seng Indexes has announced that the China Securities Regulatory Commission (CSRC) had approved 7 ETFs and 1 Index Fund that will track 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>. The mainland ETFs could garner a large amount of assets quickly given that most index members are household names. Additionally, stocks like <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</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 (9888 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> are not eligible for Southbound Stock Connect and the ETFs will offer investors access to those names.With 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> (or the "NASDAQ of the East" as it is called) underperforming the <a href="https://www.smartkarma.com/entities/nasdaq-100-stock-index" target="_blank" data-smartkarma-citation="entities:26197:1" rel="noopener">Nasdaq-100 Stock Index (NDX INDEX)</a> (of the West) over the last few months, there could be an opportunity to buy 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> futures and hedge with <a href="https://www.smartkarma.com/entities/nasdaq-100-stock-index" target="_blank" data-smartkarma-citation="entities:26197:1" rel="noopener">Nasdaq-100 Stock Index (NDX INDEX)</a> futures.

After outperforming its global peers over the last year, the Hang Seng Tech Index (HSTECH INDEX) has had a big drawdown that has brought its performance closer to its peers. Today's drop has closed the gap even further.With a backdrop of heightened US-China tensions, increased regulatory pressure from the State Administration for Market Regulation (SAMR) and an increased focus on monopolies (or perceived monopolies), investors have been happy to sell first given the gains they were sitting on, plus the valuation premium.With valuations now lining up with their global peers, Hang Seng Indexes has announced that the China Securities Regulatory Commission (CSRC) had approved 7 ETFs and 1 Index Fund that will track the Hang Seng Tech Index (HSTECH INDEX). The mainland ETFs could garner a large amount of assets quickly given that most index members are household names. Additionally, stocks like Alibaba Group (9988 HK), Baidu (9888 HK) and JD.com Inc. (9618 HK) are not eligible for Southbound Stock Connect and the ETFs will offer investors access to those names.With the Hang Seng Tech Index (HSTECH INDEX) (or the "NASDAQ of the East" as it is called) underperforming the Nasdaq-100 Stock Index (NDX INDEX) (of the West) over the last few months, there could be an opportunity to buy the Hang Seng Tech Index (HSTECH INDEX) futures and hedge with Nasdaq-100 Stock Index (NDX INDEX) futures.

Hang Seng TECH Index: How Much Lower Can It Go? CSRC Approves 7 ETFs

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Hang Seng China Enterprises Index / Technical Analysis

China A shares remains a bullish bet on dips and able to weather speed bumps in the global cycle.Our HK short is meeting downside targets where we want to layer out of our short and into a long for a tactical bounce cycle but the macro picture remains dim.Taiwan call to transition from long to short at the top of the rising wedge is unfolding. We like building a short into the outlined top zone. Taiwan was the next line to short/roll over following leads in Nikkei, HK, India.Weakening signals and breadth splinters in Asia a warning for a bigger cycle peak brewing in the global cycle.

China A shares remains a bullish bet on dips and able to weather speed bumps in the global cycle.Our HK short is meeting downside targets where we want to layer out of our short and into a long for a tactical bounce cycle but the macro picture remains dim.Taiwan call to transition from long to short at the top of the rising wedge is unfolding. We like building a short into the outlined top zone. Taiwan was the next line to short/roll over following leads in Nikkei, HK, India.Weakening signals and breadth splinters in Asia a warning for a bigger cycle peak brewing in the global cycle.

Hong Kong Short Reduce - Taiwan Add to Short on Strength

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.

Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.

Defensives Are Worth A Look; Hang Seng, Shanghai Comp, Nikkei 225, STOXX 50 Support Levels Holding

FTSE China A50 Index / Technical Analysis

<a href="https://www.smartkarma.com/entities/ftse-china-a50-index" target="_blank" data-smartkarma-citation="entities:22905:1" rel="noopener">FTSE China A50 Index (XIN9I INDEX)</a> kissed the lower pattern long support zone at 16,500 amid maturing bull divergence that sets the stage for a counter trend risk to the underside of broken trendline that will act as the next big upside target and short zone.A share exhibit the higher conviction long set up with HK still vulnerble to any SPX pullback (dip and rally the bias into late April).Hong Kong - Conviction rests with buying a swing lower near HSI 27,500 and HSCEI 10,500-600 or a breakout now as we challenge the HSI 29,200 pivot barrier with 29,500 the next hurdle.

FTSE China A50 Index (XIN9I INDEX) kissed the lower pattern long support zone at 16,500 amid maturing bull divergence that sets the stage for a counter trend risk to the underside of broken trendline that will act as the next big upside target and short zone.A share exhibit the higher conviction long set up with HK still vulnerble to any SPX pullback (dip and rally the bias into late April).Hong Kong - Conviction rests with buying a swing lower near HSI 27,500 and HSCEI 10,500-600 or a breakout now as we challenge the HSI 29,200 pivot barrier with 29,500 the next hurdle.

A50 Long Signal and Hurdles to Backswing Target

Event-Driven

The Ping An A-shares <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-china" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group Co Of China (601318 CH)</a> are trading at parity versus the H-shares <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>. This continues the cycle of premiums and discounts going back to 2015.The last time the A-shares traded at parity to the H-shares was in July last year. Since then, the premium of A-shares to H-shares touched a high of over 16% before moving lower to trade at parity again.With the Ping An A-shares trading at parity versus the H-shares, the risk/reward is attractive to setting up a premium expansion trade.In this Insight, we look at the historical premium for Ping An and compare it to the premium on the AH index and other large caps, and look at some catalysts that could lead to an expansion of the premium.

The Ping An A-shares Ping An Insurance Group Co Of China (601318 CH) are trading at parity versus the H-shares Ping An Insurance (H) (2318 HK). This continues the cycle of premiums and discounts going back to 2015.The last time the A-shares traded at parity to the H-shares was in July last year. Since then, the premium of A-shares to H-shares touched a high of over 16% before moving lower to trade at parity again.With the Ping An A-shares trading at parity versus the H-shares, the risk/reward is attractive to setting up a premium expansion trade.In this Insight, we look at the historical premium for Ping An and compare it to the premium on the AH index and other large caps, and look at some catalysts that could lead to an expansion of the premium.

Ping An A/H Premium: Nearing a Discount; Set Up for Expansion

Hong Kong

The Hang Seng Index is a free-float capitalization-weighted index of a selection of companies from the Stock Exchange of Hong Kong. The components of the index are divided into four subindices: Commerce and Industry, Finance, Utilities, and Properties. The index was developed with a base level of 100 as of July 31, 1964.

Hang Seng Index (HSI INDEX)

Hang Seng TECH Index: How Much Lower Can It Go? CSRC Approves 7 ETFs

The Hang Seng TECH Index has had a large drawdown over the last couple of months on regulatory pressure and stretched valuations. With new ETFs...

Brian Freitas

Hong Kong Short Reduce - Taiwan Add to Short on Strength

HK short is meeting downside targets to turn from short to long - tactical bounce cycle but the macro picture remains dim. Taiwan call to...

Thomas Schroeder

Defensives Are Worth A Look; Hang Seng, Shanghai Comp, Nikkei 225, STOXX 50 Support Levels Holding

A review of major global indexes reveals an absence of major breakdowns. We highlight opportunities within defensive Sectors (Real Estate, Consumer...

Vermilion Research

A50 Long Signal and Hurdles to Backswing Target

FTSE China A50 Index (XIN9I INDEX) kissed the lower pattern long support zone at 16,500 amid maturing bull divergence that sets the stage for a...

Thomas Schroeder

Ping An A/H Premium: Nearing a Discount; Set Up for Expansion

With the Ping An Insurance A-shares trading at parity to the H-shares, the risk/reward favours an AH Premium expansion trade. Watch for change in H...

Brian Freitas