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>Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.</li>
<li>There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.</li>
<li>The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.</li>
</ul>


Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.


CSI500 Index Rebalance Preview: Positioned for Outperformance

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Through its 43.58% ownership in lithium carbonate producer Lanke Lithium Industry, <a href="https://www.smartkarma.com/entities/keda-industrial-group-co-ltd" target="_blank" data-smartkarma-citation="entities:20691:1" rel="noopener">Keda Industrial Group (600499 CH)</a> is well placed to benefit from the increase in lithium demand.</li>
<li>Lanke's capacity has recently been upgraded to 30,000 tonnes. Also, Keda is adding capacity to its own integrated anode materials factory in Fujian to capture the ever-rising demand. </li>
<li>Overseas ceramic business will see solid growth from key markets in Africa as Keda raises capacity by 65% by FY23. The stock's valuations are inexpensive relative to peers. </li>
</ul>


Through its 43.58% ownership in lithium carbonate producer Lanke Lithium Industry, Keda Industrial Group (600499 CH) is well placed to benefit from the increase in lithium demand.
Lanke's capacity has recently been upgraded to 30,000 tonnes. Also, Keda is adding capacity to its own integrated anode materials factory in Fujian to capture the ever-rising demand. 
Overseas ceramic business will see solid growth from key markets in Africa as Keda raises capacity by 65% by FY23. The stock's valuations are inexpensive relative to peers. 


Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the monthly Shanghai/Shenzhen northbound Connect flows with our data engine.</li>
<li>Northbound connected recorded inflow of USD 2.7bn in May, led by financisl, utilities and energy sector.</li>
<li>We highlight inflows into CMB, Yangtze Power, Yili, Longi, and Industrial bank, as well as outflows from CATL, Conch, Haitian, Zijin and Tinci. </li>
</ul>


We analyze the monthly Shanghai/Shenzhen northbound Connect flows with our data engine.
Northbound connected recorded inflow of USD 2.7bn in May, led by financisl, utilities and energy sector.
We highlight inflows into CMB, Yangtze Power, Yili, Longi, and Industrial bank, as well as outflows from CATL, Conch, Haitian, Zijin and Tinci. 


Northbound Flows Monthly (May): CMB, Yangtze Power, Yili

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.

Technical Analysis

<ul>
<li>The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).</li>
<li>As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.</li>
<li>Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.</li>
</ul>


The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).
As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.
Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.


Buying Metals/Mining and Consumer Staples

MSCI Emerging Markets Index / Technical Analysis

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

Overweight EM Vs. EAFE; Dollar Weakness Continues

China

Sinomine Resource Exploration Company Limited is a geological engineering service company. The Company's services include solid mineral exploration, foundation construction and engineering services.

Sinomine Resource Exploration (002738 CH)

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Sinomine Resource Exploration (002738 CH)

CSI500 Index Rebalance Preview: Positioned for Outperformance

There could be 50 changes to the index in December. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade...

Brian Freitas

Keda Industrial (600499 CH): Lithium Play Backed by Multi-Pronged Growth Strategies

Keda is a relatively undervalued play on growing lithium demand. In addition to investment in lithium carbonate producer Lanke Lithium, it is also...

Osbert Tang, CFA

Northbound Flows Monthly (May): CMB, Yangtze Power, Yili

Northbound stock connect recorded inflows of $2.7bn in May. We highlight inflows into CMB, Yangtze Power, Yili, Longi, Industrial bank, as well as...

Ke Yan, CFA, FRM

Buying Metals/Mining and Consumer Staples

Commodity prices remain in a secular bull market, and now even gold is joining the rally. This is bullish for global metals/mining stocks (precious...

Vermilion Research

Overweight EM Vs. EAFE; Dollar Weakness Continues

Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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