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>We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.</li>
<li>There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Xunfei Healthcare Technology / Equity Capital Markets

<ul>
<li>Medical industry characteristics are the seriousness of diagnosis/treatment and the irreversibility of the process, which are the difficulties in implementing technology. The value that AI can provide is limited. </li>
<li>Xunfei’s business model is not To C, but To G (government) model. It’s not possible for SOE customers to pay high price for Xunfei’s AI model/products, leading to questionable profitability.</li>
<li>Pre-IPO valuation has reached RMB8.4 billion. Without sustainable growth and stable profitability, valuation/liquidity of Xunfei after listing wouldn’t be good. We think Xunfei’s valuation could be similar to Yidu Tech.</li>
</ul>


Medical industry characteristics are the seriousness of diagnosis/treatment and the irreversibility of the process, which are the difficulties in implementing technology. The value that AI can provide is limited. 
Xunfei’s business model is not To C, but To G (government) model. It’s not possible for SOE customers to pay high price for Xunfei’s AI model/products, leading to questionable profitability.
Pre-IPO valuation has reached RMB8.4 billion. Without sustainable growth and stable profitability, valuation/liquidity of Xunfei after listing wouldn’t be good. We think Xunfei’s valuation could be similar to Yidu Tech.


Pre-IPO Xunfei Healthcare Technology (PHIP Updates) - Profitability Are Always the Pain Points

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

China Merchants China Direct Investments / Equity Bottom-Up

China Merchants China Direct Investments (133 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> (CMCDI) has (belatedly) published notices of two extraordinary general meetings, both of which will take place on 29 November 2024. </li>
<li>
<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1108/2024110800011.pdf" target="_blank" rel="noopener">One</a> is for the renewal of the investment management agreement (IMA) for another three years, to be held at 10am. </li>
<li>The <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1108/2024110800021.pdf" target="_blank" rel="noopener">second EGM</a>, requisitioned by Argyle Street Management, to be held at 11am, calls for a one-year IMA term limit, and the removal of Elizabeth Kan as an executive director. </li>
</ul>



China Merchants China Direct Investments (133 HK) (CMCDI) has (belatedly) published notices of two extraordinary general meetings, both of which will take place on 29 November 2024. 

One is for the renewal of the investment management agreement (IMA) for another three years, to be held at 10am. 
The second EGM, requisitioned by Argyle Street Management, to be held at 11am, calls for a one-year IMA term limit, and the removal of Elizabeth Kan as an executive director. 


<ul>
<li>On the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0927/2024092701187.pdf" target="_blank" rel="noopener">27th September</a>, <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a> (CMCDI) teased a share buyback and a special dividend. But as of today. no firm details have been forthcoming. </li>
<li>CMCDI has also now offered to reduce management fees by 25 basis points in the new management agreement, which will be voted on  by independent shareholders in November/December.</li>
<li>This concession does not go far enough. Especially when 45% of the management fees are received by founder Victor Chu. </li>
</ul>


On the 27th September, China Merchants China Direct Investments (133 HK) (CMCDI) teased a share buyback and a special dividend. But as of today. no firm details have been forthcoming. 
CMCDI has also now offered to reduce management fees by 25 basis points in the new management agreement, which will be voted on  by independent shareholders in November/December.
This concession does not go far enough. Especially when 45% of the management fees are received by founder Victor Chu. 


CMCDI (133 HK): Concessions Don't Go Far Enough

Event-Driven

China Merchants China Direct Investments / Event-Driven

<ul>
<li>Argyle Street Management (ASM), a 9.01% shareholder in <a href="https://www.smartkarma.com/entities/china-merchants-china-direct-investments" target="_blank" data-smartkarma-citation="entities:6862:1" rel="noopener">China Merchants China Direct Investments (133 HK)</a>, has been (very) publicly angling for change in this closed-end fund. <a href="https://unlockvaluechinamerchants.com/" target="_blank" rel="noopener">Here</a> is their website.</li>
<li>The core issue is CMCDI's P/NAV ratio of 0.41x compared to closed-end fund peers of 0.8x-0.9x. </li>
<li>CMCDI has finally responded to ASM's overtures with the prospect of a share buyback and a special dividend. But details are thin on the ground. </li>
</ul>


Argyle Street Management (ASM), a 9.01% shareholder in China Merchants China Direct Investments (133 HK), has been (very) publicly angling for change in this closed-end fund. Here is their website.
The core issue is CMCDI's P/NAV ratio of 0.41x compared to closed-end fund peers of 0.8x-0.9x. 
CMCDI has finally responded to ASM's overtures with the prospect of a share buyback and a special dividend. But details are thin on the ground. 


CMCDI (133 HK)'s Proposals Light On Detail

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Xunfei Healthcare Technology (XHT HK)

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

There could be 89 changes for the HSCI in March. That could result in 73 changes to the Southbound Stock Connect list and also have implications...

Brian Freitas

Pre-IPO Xunfei Healthcare Technology (PHIP Updates) - Profitability Are Always the Pain Points

Challenges in implementing AI technology in medical industry will lead to low value. Xunfei's To G model faces profitability issues. High...

Xinyao (Criss) Wang

CMCDI (133 HK)'s EGM Double-Header

If shareholders want exposure to CMB and iFlytek, they can buy directly, as opposed to a heavily discounted illiquid name. CMCDI's large NAV...

David Blennerhassett

CMCDI (133 HK): Concessions Don't Go Far Enough

If small, illiquid names, with a activism angle are your bent, get involved in this deep valued closed-end fund around here.

David Blennerhassett

CMCDI (133 HK)'s Proposals Light On Detail

If small, illiquid names, with a activism angle are your bag, get involved. Expect the investment management fee vote later this year to get voted...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

There could be 89 changes for the HSCI in March. That could result in 73 changes to the Southbound Stock Connect list and also have implications...

Brian Freitas

Pre-IPO Xunfei Healthcare Technology (PHIP Updates) - Profitability Are Always the Pain Points

​Challenges in implementing AI technology in medical industry will lead to low value. Xunfei's To G model faces profitability issues. High...

Xinyao (Criss) Wang

CMCDI (133 HK)'s EGM Double-Header

If shareholders want exposure to CMB and iFlytek, they can buy directly, as opposed to a heavily discounted illiquid name. CMCDI's large NAV...

David Blennerhassett

CMCDI (133 HK): Concessions Don't Go Far Enough

If small, illiquid names, with a activism angle are your bent, get involved in this deep valued closed-end fund around here.

David Blennerhassett

CMCDI (133 HK)'s Proposals Light On Detail

If small, illiquid names, with a activism angle are your bag, get involved. Expect the investment management fee vote later this year to get voted...

David Blennerhassett

Challenges in implementing AI technology in medical industry will lead to low value. Xunfei's To G model faces profitability issues. High...