Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

Beijing-Shanghai High Speed Ra / Index Rebalance

Beijing-Shanghai High Speed Ra (601816 CH)

<ul>
<li>SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.</li>
<li>In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.</li>
<li>There have been some changes to the SSE 180 expected ADDs/DELs lists since our last insight.</li>
</ul>


SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
There have been some changes to the SSE 180 expected ADDs/DELs lists since our last insight.


Quiddity Leaderboard SSE50/180 Dec 24: US$1.6bn+ One-Way; Some Changes to Expectations.

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

China Resources Medical Holdings / Equity Bottom-Up

China Resources Medical Holdings (1515 HK)

<ul>
<li>Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.</li>
<li>After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.</li>
<li>China Resources Medical's profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.</li>
</ul>


Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.
After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.
China Resources Medical's profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.


China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

<ul>
<li>SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.</li>
<li>In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.</li>
<li>We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.</li>
</ul>


SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.


Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. / Equity Bottom-Up

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd.

<ul>
<li>The National Health Commission and eight other departments issued “<em>Opinions on strengthening the capacity building of critical care medical services</em>”. New policy catalysts in the medical device sector arrives.</li>
<li>Current valuations of weight-loss drug companies have “large bubble”, which have basically priced in all the potential of GLP-1s even based on optimistic assumptions. We advise investors to be rational.</li>
<li>The price of core raw materials is showing a continuous upward trend, which will inevitably cause certain difficulties for Pientzehuang’s performance growth in 2024. Valuation has more downside ahead.</li>
</ul>


The National Health Commission and eight other departments issued “Opinions on strengthening the capacity building of critical care medical services”. New policy catalysts in the medical device sector arrives.
Current valuations of weight-loss drug companies have “large bubble”, which have basically priced in all the potential of GLP-1s even based on optimistic assumptions. We advise investors to be rational.
The price of core raw materials is showing a continuous upward trend, which will inevitably cause certain difficulties for Pientzehuang’s performance growth in 2024. Valuation has more downside ahead.


China Healthcare Weekly (May12)-Policy Catalyst in Medical Device, GLP-1 Overvaluation, Pientzehuang

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

<ul>
<li>With the review period nearing completion, 6 stocks are in inclusion zone and 9 are in deletion zone. However, there can be a maximum of 5 changes at a review.</li>
<li>We estimate a one-way turnover of 7.1% at the June rebalance leading to a one-way trade of CNY 9.9bn (US$1.37bn). Index arb balances should increase the impact on the stocks.</li>
<li>The potential inclusions (of which four are Financials) have continued to outperform the mixed bag of potential deletions. With pretty big impact on the deletes, expect further divergence.</li>
</ul>


With the review period nearing completion, 6 stocks are in inclusion zone and 9 are in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 7.1% at the June rebalance leading to a one-way trade of CNY 9.9bn (US$1.37bn). Index arb balances should increase the impact on the stocks.
The potential inclusions (of which four are Financials) have continued to outperform the mixed bag of potential deletions. With pretty big impact on the deletes, expect further divergence.


SSE50 Index Rebalance Preview: Financials Continue to Outperform

China

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. manufactures and markets Chinese traditional medicines, including Pientzehuang, Pientzehuang capsules, Pientzehuang lozenge, cough syrup, and other related products.

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Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)

Quiddity Leaderboard SSE50/180 Dec 24: US$1.6bn+ One-Way; Some Changes to Expectations.

There could be US$1.4bn and US$240mn one-way flows, respectively, for the SSE 50 and SSE 180 December 2024 rebalances. Around 70% of the reference...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...

Xinyao (Criss) Wang

Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers

We see 5 changes for the SSE 50 index and 18 changes for the SSE 180 index. There are four more months for the reference period to end and our...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (May12)-Policy Catalyst in Medical Device, GLP-1 Overvaluation, Pientzehuang

New policy catalysts in medical device sector arrives.Current valuation of weight-loss drug companies have “big bubble”.Due to China's de...

Xinyao (Criss) Wang

SSE50 Index Rebalance Preview: Financials Continue to Outperform

There could be 5 changes for the SSE50 in June. Estimated one-way turnover is 7.1% leading to a one-way trade of CNY 9.9bn (US$1.37bn). The...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Leaderboard SSE50/180 Dec 24: US$1.6bn+ One-Way; Some Changes to Expectations.

There could be US$1.4bn and US$240mn one-way flows, respectively, for the SSE 50 and SSE 180 December 2024 rebalances. Around 70% of the reference...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (Jun.30) - TCM Companies Witness Soaring Costs, Rising Stars in ADC, 1515.HK

​Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...

Xinyao (Criss) Wang

Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers

We see 5 changes for the SSE 50 index and 18 changes for the SSE 180 index. There are four more months for the reference period to end and our...

Janaghan Jeyakumar, CFA

China Healthcare Weekly (May12)-Policy Catalyst in Medical Device, GLP-1 Overvaluation, Pientzehuang

New policy catalysts in medical device sector arrives.Current valuation of weight-loss drug companies have “big bubble”.Due to China's de...

Xinyao (Criss) Wang

SSE50 Index Rebalance Preview: Financials Continue to Outperform

There could be 5 changes for the SSE50 in June. Estimated one-way turnover is 7.1% leading to a one-way trade of CNY 9.9bn (US$1.37bn). The...

Brian Freitas

Investors should watch for rising TCM raw material prices. Chinese pharmaceutical companies are rising in ADC.Caution with China Resources...