Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Hang Seng Indexes should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.With the major capping changes scheduled to be completed at the June rebalance tomorrow, there could be up to 8 inclusions at the September review while still keeping the one-way index turnover lower than 5%. The actual number of inclusions could be lower to spread the turnover over the next few reviews.We see <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a>, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> as higher probability inclusions in the index, while there is a lower probability of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> and <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> being included in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.<a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> could be added to increase the coverage of Group 5 where Utilities are a part. This is less of a priority though with the market cap coverage of the group in excess of 60% as compared to the other groups that are much lower.There may not be any deletions at the current time. If the Index Committee decides to delete stocks, the two names most at risk are <a href="https://www.smartkarma.com/entities/china-life-insurance-co-ltd-9f877d22-7cf7-4b00-b525-cec71139f369" target="_blank" data-smartkarma-citation="entities:5794:1" rel="noopener">China Life Insurance Co H (2628 HK)</a> and <a href="https://www.smartkarma.com/entities/hengan-intl-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan Intl Group (1044 HK)</a>.These changes will increase the market cap coverage of the index from 60.1% to 64.3% and the turnover coverage from 53.75% to 57.75%. One-way index turnover is estimated at 4.79% and would result in a one-way trade of HK$9.2bn.

Hang Seng Indexes should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the Hong Kong Hang Seng Index (HSI INDEX).With the major capping changes scheduled to be completed at the June rebalance tomorrow, there could be up to 8 inclusions at the September review while still keeping the one-way index turnover lower than 5%. The actual number of inclusions could be lower to spread the turnover over the next few reviews.We see JD Health (6618 HK), Hansoh Pharmaceutical (3692 HK), Smoore International (6969 HK), Fosun International (656 HK) and Evergrande Property Services (6666 HK) as higher probability inclusions in the index, while there is a lower probability of JD.com Inc. (9618 HK), Nongfu Spring (9633 HK) and Xinyi Glass Holdings (868 HK) being included in the Hong Kong Hang Seng Index (HSI INDEX).China Gas Holdings (384 HK) could be added to increase the coverage of Group 5 where Utilities are a part. This is less of a priority though with the market cap coverage of the group in excess of 60% as compared to the other groups that are much lower.There may not be any deletions at the current time. If the Index Committee decides to delete stocks, the two names most at risk are China Life Insurance Co H (2628 HK) and Hengan Intl Group (1044 HK).These changes will increase the market cap coverage of the index from 60.1% to 64.3% and the turnover coverage from 53.75% to 57.75%. One-way index turnover is estimated at 4.79% and would result in a one-way trade of HK$9.2bn.

HSI Index Rebalance Preview: Potential Inclusions in September

Event-Driven

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:<ul>
<li>Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>To have a more balanced representation of the Hong Kong stock market, the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.</li>
<li>To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.</li>
<li>There will be 20-25 'Hong Kong companies' in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and this number will be evaluated at least every 2 years.</li>
<li>All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as well.</li>
</ul>There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

Hang Seng Indexes have announced the conclusions of the market consultation on the "Proposal to enhance the Hang Seng Index as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market".The main changes to the index are:
Increase the number of constituents to 80 by mid-2022 and ultimately to have 100 stocks in the Hong Kong Hang Seng Index (HSI INDEX). 
To have a more balanced representation of the Hong Kong stock market, the Hong Kong Hang Seng Index (HSI INDEX) constituents will be selected from seven Industry Groups. The target is to achieve a market cap coverage of not less than 50% for each Industry Group.
To provide flexibility for the timely addition of new listings, the listing history requirement will be lowered to 3 months.
There will be 20-25 'Hong Kong companies' in the Hong Kong Hang Seng Index (HSI INDEX) and this number will be evaluated at least every 2 years.
All index constituents, including Secondary Listings and WVR Securities, will be subject to a weighting cap of 8%. The 8% cap will be applied to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as well.
There is no mention of the tranched inclusion of stocks in the index. This leads us to believe that 5 stocks (net) could be included in the index at each review, starting in June 2021 and concluding in June 2022.With a change in the Industry groups and a reduction in the target coverage (in terms of market cap) from 80% to 50% for each Industry group, we refresh our list of potential inclusions into and exclusions from the index.

HSI Market Consultation: BIG Changes Coming

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

<div><a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> is looking to raise US$231m in its primary placement to fund capacity expansion and working capital. </div><div>This is the third deal in the stock for this year and this one comes hot on the heals of the lock-up expiring from the previous primary raising.</div><div>We have covered some of the earlier deals in:</div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/compose/insight/35618/Xinyi%20Solar%20(968%20HK)%20-%20Rapid%20growth%20set%20to%20continue%20-%20take%20the%20deal" target="_blank" rel="noopener">Xinyi Solar (968 HK) - Rapid growth set to continue - take the deal</a></li>
<li><a href="https://www.smartkarma.com/insights/xinyi-solar-968-hk-policy-support-remains-strong-momentum-likely-to-continue-take-the-deal" target="_blank" rel="noopener">Xinyi Solar (968 HK) - policy support remains, strong momentum likely to continue - take the deal</a></li>
<li><a href="https://www.smartkarma.com/insights/xinyi-solar-placement-past-deals-have-done-well-improvement-in-sentiment-should-help" target="_blank" rel="noopener">Xinyi Solar Placement - Past Deals Have Done Well, Improvement in Sentiment Should Help</a></li>
<li><a href="https://www.smartkarma.com/insights/xinyi-solar-placement-share-price-run-up-and-past-deals-indicate-that-discount-might-not-be-enough" target="_blank" data-smartkarma-citation="insights:35618" rel="noopener">Xinyi Solar Placement - Share Price Run-Up and past Deals Indicate that Discount Might Not Be Enough</a></li>
<li><a href="https://www.smartkarma.com/insights/xinyi-solar-placement-opportunistic-raise-but-outlook-remains-strong" target="_blank" rel="noopener">Xinyi Solar Placement - Opportunistic Raise but Outlook Remains Strong</a></li>
</ul></div>

Xinyi Solar Holdings (968 HK) is looking to raise US$231m in its primary placement to fund capacity expansion and working capital. This is the third deal in the stock for this year and this one comes hot on the heals of the lock-up expiring from the previous primary raising.We have covered some of the earlier deals in:
Xinyi Solar (968 HK) - Rapid growth set to continue - take the deal
Xinyi Solar (968 HK) - policy support remains, strong momentum likely to continue - take the deal
Xinyi Solar Placement - Past Deals Have Done Well, Improvement in Sentiment Should Help
Xinyi Solar Placement - Share Price Run-Up and past Deals Indicate that Discount Might Not Be Enough
Xinyi Solar Placement - Opportunistic Raise but Outlook Remains Strong


Xinyi Solar Placement - Ultra-Strong Momentum but Its Highly Volatile

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. In the past 7 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a> (HKD 41.5 million worth of buybacks), <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a> (HKD 32.8 million worth of buybacks), <a href="https://www.smartkarma.com/entities/viva-biotech-holdings" target="_blank" data-smartkarma-citation="entities:27850:1" rel="noopener">Viva Biotech Holdings (1873 HK)</a>  (HKD 11.3 million worth of buybacks). In the past 30 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/china-renaissance-holdings-l" target="_blank" data-smartkarma-citation="entities:27365:1" rel="noopener">China Renaissance Holdings (1911 HK)</a> (HKD 98.0 million worth of buybacks), <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> (HKD 65.3 million worth of buybacks), <a href="https://www.smartkarma.com/entities/logan-property-holdings-co-l" target="_blank" data-smartkarma-citation="entities:7381:1" rel="noopener">Logan Property Holdings (3380 HK)</a> (HKD 49.0 million worth of buybacks). In the past 90 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> (HKD 989.4 million worth of buybacks), <a href="https://www.smartkarma.com/entities/jacobson-pharma" target="_blank" data-smartkarma-citation="entities:23579:1" rel="noopener">Jacobson Pharma (2633 HK)</a> (HKD 127.6 million worth of buybacks), <a href="https://www.smartkarma.com/entities/bosideng-intl-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng Intl Hldgs (3998 HK)</a> (HKD 124.9 million worth of buybacks). In the past 365 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 2,914.3 million worth of buybacks), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (HKD 1,125.6 million worth of buybacks), <a href="https://www.smartkarma.com/entities/e-house-china-enterprise-hol" target="_blank" data-smartkarma-citation="entities:12154:1" rel="noopener">E House China Holdings (2048 HK)</a> (HKD 839.0 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. In the past 7 days, the top 3 companies that repurchased the most shares from the market were Fosun International (656 HK) (HKD 41.5 million worth of buybacks), Link REIT (823 HK) (HKD 32.8 million worth of buybacks), Viva Biotech Holdings (1873 HK)  (HKD 11.3 million worth of buybacks). In the past 30 days, the top 3 companies that repurchased the most shares from the market were China Renaissance Holdings (1911 HK) (HKD 98.0 million worth of buybacks), Xinyi Glass Holdings (868 HK) (HKD 65.3 million worth of buybacks), Logan Property Holdings (3380 HK) (HKD 49.0 million worth of buybacks). In the past 90 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corp (1810 HK) (HKD 989.4 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 127.6 million worth of buybacks), Bosideng Intl Hldgs (3998 HK) (HKD 124.9 million worth of buybacks). In the past 365 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 2,914.3 million worth of buybacks), Tencent Holdings (700 HK) (HKD 1,125.6 million worth of buybacks), E House China Holdings (2048 HK) (HKD 839.0 million worth of buybacks). 

Hong Kong Buyback Weekly: Fosun Intl, Link REIT, Viva Biotech

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. In the past 7 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> (HKD 35.2 million worth of buybacks), <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharm" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">Yichang Hec Changjiang Pharm (1558 HK)</a> (HKD 20.2 million worth of buybacks), <a href="https://www.smartkarma.com/entities/consun-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:1261:1" rel="noopener">Consun Pharmaceutical (1681 HK)</a> (HKD 14.1 million worth of buybacks). There were 34 companies that repurchased shares in the market. These repurchases amounted to HKD 147.6 million.In the past 30 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/bosideng-intl-hldgs-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng Intl Hldgs (3998 HK)</a> (HKD 124.9 million worth of buybacks), <a href="https://www.smartkarma.com/entities/jacobson-pharma" target="_blank" data-smartkarma-citation="entities:23579:1" rel="noopener">Jacobson Pharma (2633 HK)</a> (HKD 90.6 million worth of buybacks), <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> (HKD 65.3 million worth of buybacks). In the past 90 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> (HKD 1,014.4 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 127.6 million worth of buybacks), Bosideng International Holdings Limited (3998 HK) (HKD 124.9 million worth of buybacks). In the past year, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 3,114.2 million worth of buybacks), <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (HKD 1,125.6 million worth of buybacks), <a href="https://www.smartkarma.com/entities/e-house-china-enterprise-hol" target="_blank" data-smartkarma-citation="entities:12154:1" rel="noopener">E House China Holdings (2048 HK)</a> (HKD 832.0 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xinyi Glass Holdings (868 HK) (HKD 35.2 million worth of buybacks), Yichang Hec Changjiang Pharm (1558 HK) (HKD 20.2 million worth of buybacks), Consun Pharmaceutical (1681 HK) (HKD 14.1 million worth of buybacks). There were 34 companies that repurchased shares in the market. These repurchases amounted to HKD 147.6 million.In the past 30 days, the top 3 companies that repurchased the most shares from the market were Bosideng Intl Hldgs (3998 HK) (HKD 124.9 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 90.6 million worth of buybacks), Xinyi Glass Holdings (868 HK) (HKD 65.3 million worth of buybacks). In the past 90 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corp (1810 HK) (HKD 1,014.4 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 127.6 million worth of buybacks), Bosideng International Holdings Limited (3998 HK) (HKD 124.9 million worth of buybacks). In the past year, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 3,114.2 million worth of buybacks), Tencent Holdings (700 HK) (HKD 1,125.6 million worth of buybacks), E House China Holdings (2048 HK) (HKD 832.0 million worth of buybacks). 

Hong Kong Buyback Weekly: Xingyi Glass, Yichang HEC, Consun Pharma

Hong Kong

Xinyi Glass is a leading integrated glass manufacturer specializing in high-quality float glass, automobile glass, and energy-saving architectural glass. The company also produces automobile rubber and plastic components. It was founded in 1988 and is headquartered in Hong Kong, China.

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Xinyi Glass (868 HK)

HSI Index Rebalance Preview: Potential Inclusions in September

There could be 8 additions to the HSI at the September review to take the index members up to 66. Turnover will be less than 5% and there are a lot...

Brian Freitas

HSI Market Consultation: BIG Changes Coming

Hang Seng Indexes has announced the conclusions of the market consultation and the HSI is going to look different in a years time. Financials see a...

Brian Freitas

Xinyi Solar Placement - Ultra-Strong Momentum but Its Highly Volatile

Xinyi Solar Holdings (968 HK) is looking to raise US$231m. This is the third deal in the stock for this year and this one comes hot on the heals of...

Sumeet Singh

Hong Kong Buyback Weekly: Fosun Intl, Link REIT, Viva Biotech

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top...

Ke Yan, CFA, FRM

Hong Kong Buyback Weekly: Xingyi Glass, Yichang HEC, Consun Pharma

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top...

Ke Yan, CFA, FRM

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