Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

Beijing Wantai Biological Phar / Index Rebalance

Beijing Wantai Biological Phar (603392 CH)

<ul>
<li>CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.</li>
<li>We expect five ADDs/DELs for the CSI Medical Service index during the upcoming index rebal  event based on the latest available data.</li>
<li>Nearly 95% of the reference period is now complete. We currently estimate one-way flow to be US$301mn.</li>
</ul>


CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
We expect five ADDs/DELs for the CSI Medical Service index during the upcoming index rebal  event based on the latest available data.
Nearly 95% of the reference period is now complete. We currently estimate one-way flow to be US$301mn.


Quiddity Leaderboard CSI Medical Dec26: Expectations Have Changed; US$301mn One-Way

<ul>
<li>CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.</li>
<li>In this insight, we take a look at the potential ADDs and DELs for the semiannual index rebal event in December 2026.</li>
<li>We expect 5 ADDs/DELs and we currently estimate one-way flow to be US$408mn.</li>
</ul>


CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
In this insight, we take a look at the potential ADDs and DELs for the semiannual index rebal event in December 2026.
We expect 5 ADDs/DELs and we currently estimate one-way flow to be US$408mn.


Quiddity Leaderboard CSI Medical Dec26: US$408mn One-Way Flows; 5 ADDs/DELs Expected

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.</li>
<li>If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.</li>
<li>For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. </li>
</ul>


China’s GDP growth target of 5% for 2023 is a "deliberate decision".Chinese authorities may have seen potential downside risks of economy and hope to restore the credibility of growth target.
If investors fantasize about low interest rates would continue in the future, they could be disappointed. This means that investors' strategies and mentality may need to be changed in time.
For China healthcare, the expansion of high-quality medical resources in grassroots markets would be a big opportunity, involving reform of State-owned Enterprise-run hospitals and increasing market penetration of medical device/TCM. 


China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

<ul>
<li>China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.</li>
<li>We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.</li>
<li>
<em> The Outline</em> is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  </li>
</ul>


China issued the “Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035)”, where some statements are different from those in the  "14th Five-year Plan" and the 20th National Congress report.
We analyzed our interpretation and speculated the “wind direction” behind the difference in statements, so as to identify some possible changes in China healthcare industry in 2023.

 The Outline is not only in line with the adjustment of COVID policies,but also highly relevant to the major contradictions/changes in internal and external situations. Investors need to follow the trend.  


Identify New Directions of China Healthcare in 2023 – Major Changes In Highest Level Policy Document

<ul>
<li>The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.</li>
<li>In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.</li>
<li>We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.</li>
</ul>


The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.
In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.
We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.


Presentation for Webinar: China Healthcare - Outlook and Opportunities in 2023

China

Sonoscape Medical Corp. manufactures medical equipment. The Company develops, produces, and sells ultrasound diagnostic systems, transducers, and other medical equipment products. Sonoscape Medical serves customers worldwide.

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Sonoscape Medical Corp (300633 CH)

Quiddity Leaderboard CSI Medical Dec26: Expectations Have Changed; US$301mn One-Way

There are three index members failing the liquidity test by narrow margins and they should be monitored until the end of the reference period.

Janaghan Jeyakumar, CFA

Quiddity Leaderboard CSI Medical Dec26: US$408mn One-Way Flows; 5 ADDs/DELs Expected

Most of the expected ADDs/DELs could have more than 1x ADV to trade during the December 2026 index rebal event. Although the reference period is...

Janaghan Jeyakumar, CFA

China's 2023 Government Work Report in 14th NPC - The Highlights and the Outlook

We analyzed our interpretation on China's 2023 Government Work Report in 14th NPC, including GDP growth, CPI, fiscal/monetary policy, valuation...

Xinyao (Criss) Wang

Identify New Directions of China Healthcare in 2023 – Major Changes In Highest Level Policy Document

China issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), where some statements have changed, leading to the change...

Xinyao (Criss) Wang

Presentation for Webinar: China Healthcare - Outlook and Opportunities in 2023

We're bullish on China healthcare in 2023 due to increasing household expenditure in “Long COVID” effect and the rebound of non-COVID medical...

Xinyao (Criss) Wang

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52-week Range

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