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

Event-Driven

<ul>
<li>The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.</li>
<li>There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.</li>
<li>Capping will result in passives buying <a href="https://www.smartkarma.com/entities/kuaishou-technology" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 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 (9618 HK)</a> while selling <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>.</li>
</ul>


The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.
There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Capping will result in passives buying Kuaishou Technology (1024 HK) and JD.com (9618 HK) while selling Meituan (3690 HK) and Tencent (700 HK).


Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

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

Rikki Malik

Cross Asset Strategy

<ul>
<li>A monthly review of how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


June Themes and Thematic Portfolio Review

Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>After an explosive rally in April, the <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</a> has been in a downtrend since mid-May, many are wondering where the index is headed next.</li>
<li>July 2024, based on our seasonal pattern analysis, does not have a great chance to close higher (it could, but the odds are not good). </li>
<li>If the index goes down in the next 2 weeks, buy the 17600-17300 price area.</li>
</ul>


After an explosive rally in April, the Hang Seng Index has been in a downtrend since mid-May, many are wondering where the index is headed next.
July 2024, based on our seasonal pattern analysis, does not have a great chance to close higher (it could, but the odds are not good). 
If the index goes down in the next 2 weeks, buy the 17600-17300 price area.


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.</li>
<li>Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.</li>
<li>As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.</li>
</ul>


The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
Henlius' share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
As usual, Fosun doesn't consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.


Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

<ul>
<li>The main Japanese indices have been moving sideways this year</li>
<li>Continued weakness in the JPY has diminished returns in USD terms</li>
<li>Technically the market has similar weak underlying breadth as the US market</li>
</ul>


The main Japanese indices have been moving sideways this year
Continued weakness in the JPY has diminished returns in USD terms
Technically the market has similar weak underlying breadth as the US market


Revisiting the Japanese Market – Time to Increase Allocations?

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 Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

There could be 3 changes for the HSIII in September. The passive buying on the adds is small while selling on the deletes is much larger. Lock-up...

Brian Freitas

June Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

EQD | Will the HSI Keep Falling In July?

Will the HSI's downtrend continue in July? There is uncertainty about the index's direction, could go lower in July, but consider buying the 17600...

Nico Rosti

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

Revisiting the Japanese Market – Time to Increase Allocations?

Japanese indices have been stagnant due to a weak JPY and share a technically weak underlying breadth as the US market.

Rikki Malik

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

There could be 3 changes for the HSIII in September. The passive buying on the adds is small while selling on the deletes is much larger. Lock-up...

Brian Freitas

June Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

EQD | Will the HSI Keep Falling In July?

​Will the HSI's downtrend continue in July? There is uncertainty about the index's direction, could go lower in July, but consider buying the 17600...

Nico Rosti

Shanghai Henlius Biotech Privatization (2696.HK) - The Offer Price Is Disappointing

The ​Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Xinyao (Criss) Wang

Revisiting the Japanese Market – Time to Increase Allocations?

​Japanese indices have been stagnant due to a weak JPY and share a technically weak underlying breadth as the US market.

Rikki Malik

Will the HSI's downtrend continue in July? There is uncertainty about the index's direction, could go lower in July, but consider buying the 17600...

The Cancellation Price is 50% lower than Henlius's IPO price, causing losses for long-term players. Remaining public will provide good returns....

Japanese indices have been stagnant due to a weak JPY and share a technically weak underlying breadth as the US market.