Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.</li>
<li>In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.</li>
<li>We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.</li>
</ul>


The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.


Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels

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>The review period for the December rebalance of the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> ended on 30 September.</li>
<li>We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).</li>
<li>If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.</li>
</ul>


The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.


HSTECH Index Rebalance Preview: $800m Round-Trip Trade

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>ZhongAn reported FY23 results with net profit attributable to shareholders turning positive to RMB4.1bn, from a net loss of RMB1.1bn in 2022.</li><li>Excluding the oneoff gain on disposal of ZA International at RMB3.78bn, the insurer recorded RMB 294mn net profit, in line with consensus.</li><li>We see multiple highlights in the results: 1) domestic P&amp;C growth momentum continued driven by digital lifestyle with premiums +33.1% YoY in 2H23 despite macro uncertainties; 2) revenue from domestic technology export rose 73% YoY to RMB504mn by riding the wave of Digital China; 3) ZA Bank breakeven was on track, with the bank’s net revenue +42.9% YoY and NIM +10bps to 1.94% on the back of a lower loan-to-deposit ratio at 46% (vs 2022: 53%). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZhongAn reported FY23 results with net profit attributable to shareholders turning positive to RMB4.1bn, from a net loss of RMB1.1bn in 2022.Excluding the oneoff gain on disposal of ZA International at RMB3.78bn, the insurer recorded RMB 294mn net profit, in line with consensus.We see multiple highlights in the results: 1) domestic P&amp;C growth momentum continued driven by digital lifestyle with premiums +33.1% YoY in 2H23 despite macro uncertainties; 2) revenue from domestic technology export rose 73% YoY to RMB504mn by riding the wave of Digital China; 3) ZA Bank breakeven was on track, with the bank’s net revenue +42.9% YoY and NIM +10bps to 1.94% on the back of a lower loan-to-deposit ratio at 46% (vs 2022: 53%). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZhongAn (6060 HK) - Digital Lifestyle Leading Growth

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> announced in-specie dividends of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> (US$15bn+) in 2021 and <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> (US$20bn) in 2022.</li>
<li>With the <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.</li>
</ul>



Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.

Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.


Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

<ul><li>Zhong An came out with a net profit turnaround at RMB2.21mn in 1H23 from a restated net loss of RMB6.36mn compared to the last first-half, thanks to an increase in total investment income.</li><li>Such rise was driven by RMB573mn net gain on fair value changes in onshore insurance funds and a continuously improving CoR, further down to 95.8% with claim and expense ratios both declined (-0.6pct/- 0.1pct) year-over-year.</li><li>This result was aligned to the earnings alert the company released a week ago informing its 1H23 earnings were no less than RMB200mn.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Zhong An came out with a net profit turnaround at RMB2.21mn in 1H23 from a restated net loss of RMB6.36mn compared to the last first-half, thanks to an increase in total investment income.Such rise was driven by RMB573mn net gain on fair value changes in onshore insurance funds and a continuously improving CoR, further down to 95.8% with claim and expense ratios both declined (-0.6pct/- 0.1pct) year-over-year.This result was aligned to the earnings alert the company released a week ago informing its 1H23 earnings were no less than RMB200mn.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZhongAn (6060 HK) – Strong Investment and UW Profits Drive 1H23 Earnings Turnaround

China

ZhongAn Online is China's first online-only insurance company, providing internet insurance services and insurance information technology services. It offers personalized products across health, digital life, consumer finance, and automotive ecosystems, and also provides IT consulting and digital banking services. The company was founded in 2013 and is headquartered in Shanghai, China.

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ZhongAn Online (6060 HK)

Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels

The top inflow name and top outflow name are both expected to have more than 7x ADV to trade. We estimate one-way flow to be around US$380mn but...

Janaghan Jeyakumar, CFA

HSTECH Index Rebalance Preview: $800m Round-Trip Trade

We do not forecast any constituent changes for the HSTECH index in December. Capping changes will lead to a one-way turnover of 2.15% and a round...

Brian Freitas

ZhongAn (6060 HK) - Digital Lifestyle Leading Growth

ZhongAn reported FY23 results with net profit attributable to shareholders turning positive to RMB4.1bn, from a net loss of RMB1.1bn in 2022.

CMB International

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

Tencent could make it a hat-trick of special in-specie dividend distributions. After JD.com and Meituan, Kuaishou could be next. Or it could be...

Brian Freitas

ZhongAn (6060 HK) – Strong Investment and UW Profits Drive 1H23 Earnings Turnaround

This result was aligned to the earnings alert the company released a week ago informing its 1H23 earnings were no less than RMB200mn.

CMB International

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