Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.</li>
<li>This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up. </li>
<li>Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.</li>
</ul>


The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.
This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up. 
Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.


HSTECH June 2024 Rebal - No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

Zijin Mining Group Co Ltd H / Event-Driven

<ul>
<li>The HSCEI is well-known and well-followed but sees less passive tracking than you might expect. Quiddity teammember Janaghan had expected up to two ADDs and two DELETEs.</li>
<li>We got one ADD and one DELETE instead as <a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> was "saved" from deletion by a FFW/FAF increase. </li>
<li>Relatively smaller flows here at 3% one-way with the big flows on the name changes.</li>
</ul>


The HSCEI is well-known and well-followed but sees less passive tracking than you might expect. Quiddity teammember Janaghan had expected up to two ADDs and two DELETEs.
We got one ADD and one DELETE instead as SenseTime Group (20 HK) was "saved" from deletion by a FFW/FAF increase. 
Relatively smaller flows here at 3% one-way with the big flows on the name changes.


HSCEI June 2024 Rebal - Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

<ul>
<li>The Hang Seng Index benchmark has been expected to see an increase in names and flows to Healthcare. We have only one ADD (IT/tech) and one DELETE.</li>
<li>But the headlined DELETE candidate in <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-for-hang-seng-index-jun-24-could-country-garden-services-get-deleted" target="_blank" rel="noopener">the most recent Quiddity Leaderboard</a> was chosen to be deleted. And the ADD one of our top two.</li>
<li>Flows are somewhat restrained at capping flows, small name change flows, and then a few FFW/FAF changes to be about 1.9% one-way flows in total.</li>
</ul>


The Hang Seng Index benchmark has been expected to see an increase in names and flows to Healthcare. We have only one ADD (IT/tech) and one DELETE.
But the headlined DELETE candidate in the most recent Quiddity Leaderboard was chosen to be deleted. And the ADD one of our top two.
Flows are somewhat restrained at capping flows, small name change flows, and then a few FFW/FAF changes to be about 1.9% one-way flows in total.


HSI June 2024 Rebal - BYD Electronics (285) ADDed, Cogard Svcs (6098) DELETEd, and Capping Flows

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>Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.</li>
<li>Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.</li>
<li>China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.</li>
</ul>


Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was "quite possible" the lows were in.
Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.
China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.


Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;</li>
<li>Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. </li>
<li>We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.</li>
</ul>


Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;
Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. 
We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.


[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

HSTECH June 2024 Rebal - No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

Quiddity did not expect any name changes to the HSTECH index in June 2024 but we expected big flows because of significant capping impact, mostly...

Travis Lundy

HSCEI June 2024 Rebal - Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

The HSCEI Index sees one add and one delete. The ADD of Zijin was expected. Quiddity expected Xinyi Solar to be deleted, and Sensetime too, but it...

Travis Lundy

HSI June 2024 Rebal - BYD Electronics (285) ADDed, Cogard Svcs (6098) DELETEd, and Capping Flows

Hang Seng rebals are usually difficult to predict because the whims and fancies of the index committee are tough to know. We got the DELETE right....

Travis Lundy

Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Bullish Outlook Intact $ACWI; EM and China Continue to Lead; U.S. Dollar (DXY), WTI Crude Oil, and Gasoline Prices Rolling Over; Buys in: Comms,...

Vermilion Research

[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.

Blue Lotus Research Institute

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HSTECH June 2024 Rebal - No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

Quiddity did not expect any name changes to the HSTECH index in June 2024 but we expected big flows because of significant capping impact, mostly...

Travis Lundy

HSCEI June 2024 Rebal - Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

The HSCEI Index sees one add and one delete. The ADD of Zijin was expected. Quiddity expected Xinyi Solar to be deleted, and Sensetime too, but it...

Travis Lundy

HSI June 2024 Rebal - BYD Electronics (285) ADDed, Cogard Svcs (6098) DELETEd, and Capping Flows

Hang Seng rebals are usually difficult to predict because the whims and fancies of the index committee are tough to know. We got the DELETE right....

Travis Lundy

Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners

Bullish Outlook Intact $ACWI; EM and China Continue to Lead; U.S. Dollar (DXY), WTI Crude Oil, and Gasoline Prices Rolling Over; Buys in: Comms,...

Vermilion Research

[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value

​Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.

Blue Lotus Research Institute

Tencent's C1Q24 revenue and profit in-line with estimates, boosted by advertising and better-margin revenue mix, leading to raised TP of HK$450.