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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.</p><p>The June review will see the inclusion of stocks that were newly listed from 1 January to 31 March and meet the criteria for joining the index.</p><p>Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.</p><div><p>There are a lot of stocks that will join the HSCI and will subsequently be included as a part of the Southbound Stock Connect program - these stocks could be bought by mainland investors and could outperform their peers and the market.</p></div><div><p>There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list while some stocks will be deleted from the HSCI but maintained in Stock Connect since they have listed A-shares.</p></div><div><p>Read on for more details and the stocks affected by the changes.</p></div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.The June review will see the inclusion of stocks that were newly listed from 1 January to 31 March and meet the criteria for joining the index.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.There are a lot of stocks that will join the HSCI and will subsequently be included as a part of the Southbound Stock Connect program - these stocks could be bought by mainland investors and could outperform their peers and the market.There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list while some stocks will be deleted from the HSCI but maintained in Stock Connect since they have listed A-shares.Read on for more details and the stocks affected by the changes.

HSCI Index Rebalance and Stock Connect: Potential Changes in June and September

<p>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.</p><p>For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.</p><p>Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.</p><p>Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.</p><p>Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.</p><p>We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.</p>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p><a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>, Hong Kong's largest listed REIT, has not avoided the uncertainties generated by COVID-19.</p>
<p>Its current P/B of 0.75x compares to its five-year average of 0.94x. Shares are down 28% yoy - which were impacted by localised protests - and down 18% YTD. This compares with 35% and 25% respectively for REIT peers.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/679/original/image_94931558221588734063822.png?1588734065" class="editor-image img-responsive" data-smartkarma-image-id="131679"></figure>
<div style="text-align: left;" class="content-caption">Source: CapIQ</div>
<p>Retail accounts for 74.6% of Link's HK$224bn portfolio, the majority situated in Hong Kong.</p>
<p>Hong Kong just recorded a decline of 42% yoy in retail sales in March as various measures brought tourism to a standstill.</p>
<p>Link has diversified its portfolio into an office development project in Kowloon, a shopping mall in Australia - its first foray - and additional shopping malls in China. </p>
<p>Further diversification is needed - and expected.</p>

Link REIT (823 HK), Hong Kong's largest listed REIT, has not avoided the uncertainties generated by COVID-19.
Its current P/B of 0.75x compares to its five-year average of 0.94x. Shares are down 28% yoy - which were impacted by localised protests - and down 18% YTD. This compares with 35% and 25% respectively for REIT peers.

Source: CapIQ
Retail accounts for 74.6% of Link's HK$224bn portfolio, the majority situated in Hong Kong.
Hong Kong just recorded a decline of 42% yoy in retail sales in March as various measures brought tourism to a standstill.
Link has diversified its portfolio into an office development project in Kowloon, a shopping mall in Australia - its first foray - and additional shopping malls in China. 
Further diversification is needed - and expected.

Equity Analyst, LightStream Research

Chacko Jacob

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>In our earlier report, we covered <a href="https://www.smartkarma.com/entities/27159" target="_blank" data-smartkarma-citation="entities:27159:1">MTG Co Ltd (7806 JP)</a> 's product and geographic segments and arrived at an initial conclusion that the company’s current business model was not a sustainable one in the long-run. In this report, we will focus on the company’s growth prospects for the next two years and its relative valuation based on the offer price range. </p>
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<h2><strong>We Would Subscribe</strong></h2>
<p>Based on our analysis, we think the company could see upside risk in the days' post issue. MTG's brands offer niche…</p>
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In our earlier report, we covered MTG Co Ltd (7806 JP) 's product and geographic segments and arrived at an initial conclusion that the company’s current business model was not a sustainable one in the long-run. In this report, we will focus on the company’s growth prospects for the next two years and its relative valuation based on the offer price range. 

We Would Subscribe
Based on our analysis, we think the company could see upside risk in the days' post issue. MTG's brands offer niche…


MTG IPO Preview II: Powered By Celebrities

Luxembourg

L'Occitane International S.A. designs, manufactures, and retails natural and organic ingredient-based beauty and well-being products, including skincare, haircare, body care, fragrances, and makeup. The company operates a portfolio of premium beauty brands such as L'Occitane en Provence, ELEMIS, and Sol de Janeiro. It is headquartered in Luxembourg City, Luxembourg, and was founded in 2000.

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L'Occitane International (973 HK)

HSCI Index Rebalance and Stock Connect: Potential Changes in June and September

A look at the potential changes to the HSCI at the June & September reviews and stocks that could be included in/excluded from Stock Connect. These...

Brian Freitas

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

There are 36 inclusions/ 29 exclusions for the Hang Seng Composite Index. 9 stocks will be deleted from the Stock Connect Buy list & there are a...

Brian Freitas

Link REIT: Options Amidst Retail Pain

Link REIT (823 HK), Hong Kong's largest listed REIT, has not avoided the uncertainties generated by COVID-19. Its current P/B of 0.75x compares to...

David Blennerhassett

MTG IPO Preview II: Powered By Celebrities

In our earlier report, we covered MTG Co Ltd (7806 JP) 's product and geographic segments and arrived at an initial conclusion that the company’s...

Chacko Jacob

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