Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The Hang Seng Internet &amp; IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).</li>
<li>In this insight, we take a look at the December 2026 index capping flows.</li>
<li>We have also presented our index change expectations for the next semiannual index review which will take place in March 2027.</li>
</ul>


The Hang Seng Internet &amp; IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
In this insight, we take a look at the December 2026 index capping flows.
We have also presented our index change expectations for the next semiannual index review which will take place in March 2027.


Quiddity Leaderboard HSIII Dec26/Mar27: Two ADDs/DELs Expected in Mar27, Third Change Possible

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

SHEIN Global Holdings / Equity Capital Markets

<ul>
<li>In the context of low growth visibility and high trade risks, a valuation decline does not mean that SHEIN’s stock is cheap, or a valuation reversal is certain to occur.</li>
<li>Investors need to focus on whether there’s a turning point in 26H2.In short term, SHEIN‘s more suitable as an event-driven trading target rather than a core position for long-term holding.</li>
<li>SHEIN’s long-term value depends on whether it can complete the transformation from "cross-border direct mail retailer" to "localized fulfillment platform".Then, valuation logic would shift from "risk discount" to "platform premium".</li>
</ul>


In the context of low growth visibility and high trade risks, a valuation decline does not mean that SHEIN’s stock is cheap, or a valuation reversal is certain to occur.
Investors need to focus on whether there’s a turning point in 26H2.In short term, SHEIN‘s more suitable as an event-driven trading target rather than a core position for long-term holding.
SHEIN’s long-term value depends on whether it can complete the transformation from "cross-border direct mail retailer" to "localized fulfillment platform".Then, valuation logic would shift from "risk discount" to "platform premium".


SHEIN Global Holdings (625 HK) - The Decline in Valuation May Not Have Ended Yet

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

<ul>
<li>Meeting the Fast Entry threshold for inclusion, <a href="https://www.smartkarma.com/entities/shein-global-holdings-limited" target="_blank" data-smartkarma-citation="entities:55372:1" rel="noopener">SHEIN Global Holdings (625 HK)</a> will be added to the <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet ETF (KWEB US)</a> at the close on 9 October.</li>
<li>The stock is down 32% from its IPO price, and the passive buying could provide a short-term boost to the stock price.</li>
<li>There could be more index inclusions for the stock between December and March but watch out for the big unlock at the end of February.</li>
</ul>


Meeting the Fast Entry threshold for inclusion, SHEIN Global Holdings (625 HK) will be added to the KraneShares CSI China Internet ETF (KWEB US) at the close on 9 October.
The stock is down 32% from its IPO price, and the passive buying could provide a short-term boost to the stock price.
There could be more index inclusions for the stock between December and March but watch out for the big unlock at the end of February.


KWEB Ad Hoc Index Rebalance: SHEIN (625 HK) Will Be Added Tomorrow

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The recent surge in Eurozone sovereign yields, particularly for France, has created pressure on the outlook for some HK-listed companies. </li>
<li>While the 100 largest companies generated an average of only 6% of revenue from Europe, 10 companies derived over 20%.</li>
<li>
<a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison (1 HK)</a> group, <a href="https://www.smartkarma.com/entities/shein-global-holdings-limited" target="_blank" data-smartkarma-citation="entities:55372:1" rel="noopener">SHEIN Global (625 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corporation-class-b" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/lenovo-group-limited" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-biologics-cayman-inc" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> group, and <a href="https://www.smartkarma.com/entities/cosco-shipping-holdings-co-ltd-class-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">COSCO SHIPPING Holdings (1919 HK)</a> are the top. </li>
</ul>


The recent surge in Eurozone sovereign yields, particularly for France, has created pressure on the outlook for some HK-listed companies. 
While the 100 largest companies generated an average of only 6% of revenue from Europe, 10 companies derived over 20%.

CK Hutchison (1 HK) group, SHEIN Global (625 HK), Xiaomi (1810 HK), Lenovo (992 HK), Wuxi Biologics (2269 HK) group, and COSCO SHIPPING Holdings (1919 HK) are the top. 


HK Strategy: Exposure to Europe - Who Are at Risk?

Equity Long-Short

Mo Aziz

Equity Bottom-Up

<ul>
<li>1H26 results show a reported-vs-adjusted profit gap: headline net income +112% YoY vs. adjusted net income -55.6%, as fulfilment costs rise 6.3pp of revenue.</li>
<li>Our 2 Sept ACCUMULATE call got the risk framework right — recap math, cost escalation, governance concentration — but wrong on price: float thesis, not fundamentals, was the miss.</li>
<li>We maintain BULLISH but with a lower Fair Value of US$25bn/HK$45.4/share, based on FY26E Adj. EBIT US$950m x 11x EV/EBIT plus ~US$14.2bn net cash.</li>
</ul>


1H26 results show a reported-vs-adjusted profit gap: headline net income +112% YoY vs. adjusted net income -55.6%, as fulfilment costs rise 6.3pp of revenue.
Our 2 Sept ACCUMULATE call got the risk framework right — recap math, cost escalation, governance concentration — but wrong on price: float thesis, not fundamentals, was the miss.
We maintain BULLISH but with a lower Fair Value of US$25bn/HK$45.4/share, based on FY26E Adj. EBIT US$950m x 11x EV/EBIT plus ~US$14.2bn net cash.


Shein (625 HK): 1H26 Results Review = Not Great!

Hong Kong

SHEIN Global Holdings Limited manufactures and distributes apparel products. The Company produces casual wear, loungewear, swimwear, sports apparel, and formal dress products. SHEIN Global Holdings conducts businesses in Mainland China and Hong Kong.

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SHEIN Global Holdings (625 HK)

Quiddity Leaderboard HSIII Dec26/Mar27: Two ADDs/DELs Expected in Mar27, Third Change Possible

We continue to see two ADDs/DELs for HSIII in March 2027. One more potential ADD remains close to the addition border and if it outperforms other...

Janaghan Jeyakumar, CFA