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

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> and <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a> will be added to 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</a> at the close on 1 December taking the number of index constituents to 82.</li>
<li>Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise - that could take place at the next rebalance.</li>
<li>Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> and selling in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC (5 HK)</a>. </li>
</ul>



Li Auto (2015 HK) and WuXi AppTec (2359 HK) will be added to the Hang Seng at the close on 1 December taking the number of index constituents to 82.
Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise - that could take place at the next rebalance.
Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in Alibaba (9988 HK) and selling in Tencent (700 HK) and HSBC (5 HK). 


Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2023.</li>
<li>The index changes for the December 2023 rebalance will be announced in mid-November (17 Nov) and implemented in early-December (with effect from 4 Dec).</li>
<li>Although the Hang Seng index has a highly subjective constituent selection process and index changes are somewhat unpredictable, we will continue sharing our thoughts for each quarterly review.</li>
</ul>


In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
The index changes for the December 2023 rebalance will be announced in mid-November (17 Nov) and implemented in early-December (with effect from 4 Dec).
Although the Hang Seng index has a highly subjective constituent selection process and index changes are somewhat unpredictable, we will continue sharing our thoughts for each quarterly review.


Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Consistent to our preview, Samsonite 3Q revenue/adjusted net profit kicked in at US$958mn/126mn, up +21.2%/93.9% YoY.</li><li>The results were mainly driven by 29.3% TUMI brand sales, with China strength, on a regional basis, continued to outpace the average.</li><li>Gross margin of 59.6% and adjusted EBITDA margin of 20.3% both reached record highs. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consistent to our preview, Samsonite 3Q revenue/adjusted net profit kicked in at US$958mn/126mn, up +21.2%/93.9% YoY.The results were mainly driven by 29.3% TUMI brand sales, with China strength, on a regional basis, continued to outpace the average.Gross margin of 59.6% and adjusted EBITDA margin of 20.3% both reached record highs. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Samsonite (1910 HK) – 3Q Rev/NP +21%/94%; Low-Teen Growth for 2024E

<ul>
<li>The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.</li>
<li>Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a> a high probability inclusion candidate.</li>
<li>We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.</li>
</ul>


The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.


Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

<ul><li>In contrary to a normalised quarter that we expect for Prada (1913 HK, BUY), we forecast Samsonite to extend its strength from 1H and report 3Q revenue/adj EBITDA of US$950/180mn (+20%/+36%).</li><li>We envisage this will be much driven by an intact global travel demand during summer holiday, which effectively manifested into luggage and bags sell-through.</li><li>By region, we look for revenue in North America/Europe/APAC to grow by 7%/35%+/20%+ to US$310/330/260mn. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In contrary to a normalised quarter that we expect for Prada (1913 HK, BUY), we forecast Samsonite to extend its strength from 1H and report 3Q revenue/adj EBITDA of US$950/180mn (+20%/+36%).We envisage this will be much driven by an intact global travel demand during summer holiday, which effectively manifested into luggage and bags sell-through.By region, we look for revenue in North America/Europe/APAC to grow by 7%/35%+/20%+ to US$310/330/260mn. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Samsonite (1910 HK) – 3Q Preview: Rev/Adj EBITDA +20%/36%

United States

Samsonite Group S.A. is a global leader in the lifestyle bag industry, specializing in the design, manufacture, sourcing, and distribution of luggage, business and computer bags, outdoor and casual bags, and travel accessories under various brands including Samsonite, Tumi, and American Tourister. The company was founded in 1910 in Denver, Colorado, and its registered office is in Luxembourg.

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Samsonite (1910 HK)

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