Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best. </li>
<li>Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have <em>ever</em> had. By a long ways.</li>
<li>This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.</li>
</ul>


AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best. 
Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have ever had. By a long ways.
This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.


A/H Premium Tracker (To 28 Feb 2025):  AH Premia Continue to Fall; Expect Widening

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>With the review cutoff done, there could be two changes for the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">iShares China Large-Cap (FXI) (FXI US)</a> in March.</li>
<li>
<a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> and <a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a> are expected to replace <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">China Tourism Group Duty Free (1880 HK)</a> and <a href="https://www.smartkarma.com/entities/china-coal-energy-co-h" target="_blank" data-smartkarma-citation="entities:383:1" rel="noopener">China Coal Energy Co H (1898 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a> has broken out to new highs (possibly on short covering) while <a href="https://www.smartkarma.com/entities/china-coal-energy-co-h" target="_blank" data-smartkarma-citation="entities:383:1" rel="noopener">China Coal Energy Co H (1898 HK)</a> continues to sell off.</li>
</ul>


With the review cutoff done, there could be two changes for the iShares China Large-Cap (FXI) (FXI US) in March.

Guotai Junan Securities (2611 HK) and ZTE Corp H (763 HK) are expected to replace China Tourism Group Duty Free (1880 HK) and China Coal Energy Co H (1898 HK). 

ZTE Corp H (763 HK) has broken out to new highs (possibly on short covering) while China Coal Energy Co H (1898 HK) continues to sell off.


FXI Rebalance Preview: Two Sets of Changes as ZTE Breaks Out, China Coal Dumps

<ul>
<li>This past week saw SOUTHBOUND Connect clear HK$800bn of gross value traded, and net value was near recent highs at +HK$51bn. Consumer and finance names continue to be the rage.</li>
<li>Notable is the HUGE back-and-forth. If HK$800bn traded and SOUTHBOUND only bought HK$51bn, HK$375bn was round-tripped for short-term purposes.</li>
<li>That is twice the "excess" traded seen for the past year. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> saw US$14bn traded but net buying was US$121mm. </li>
</ul>


This past week saw SOUTHBOUND Connect clear HK$800bn of gross value traded, and net value was near recent highs at +HK$51bn. Consumer and finance names continue to be the rage.
Notable is the HUGE back-and-forth. If HK$800bn traded and SOUTHBOUND only bought HK$51bn, HK$375bn was round-tripped for short-term purposes.
That is twice the "excess" traded seen for the past year. Tencent (700 HK) saw US$14bn traded but net buying was US$121mm. 


HK Connect SOUTHBOUND Flows (To 21 Feb 2025); Another HUGE Jump in Value Traded, Consumer Still Bid

<ul>
<li>There was a HUGE jump in value traded this week - HK$655bn vs ~$300bn for 5-days of trading the last several weeks.</li>
<li>
<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> was the big buy with net buying 7 of 8 days post-CNY and a huge end of week. Tencent was sold.</li>
<li>There appears to be a flight to Chinese equities by foreigners and SB are taking part with risk-on style trading. Watch Hang Seng rebal news this week!</li>
</ul>


There was a HUGE jump in value traded this week - HK$655bn vs ~$300bn for 5-days of trading the last several weeks.

Alibaba Group Holding (9988 HK) was the big buy with net buying 7 of 8 days post-CNY and a huge end of week. Tencent was sold.
There appears to be a flight to Chinese equities by foreigners and SB are taking part with risk-on style trading. Watch Hang Seng rebal news this week!


HK Connect SOUTHBOUND Flows (To 14 Feb 2025); HUGE Jump in Value Traded, Consumer Names Get a Bid

<ul>
<li>Nearing the end of the review period, we expect two changes for the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">iShares China Large-Cap (FXI) (FXI US)</a> ETF in March.</li>
<li>
<a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> is a high probability add while <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">China Tourism Group Duty Free (1880 HK)</a> is a high probability delete.</li>
<li>
<a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a> is a potential inclusion currently and could replace <a href="https://www.smartkarma.com/entities/china-coal-energy-co-h" target="_blank" data-smartkarma-citation="entities:383:1" rel="noopener">China Coal Energy Co H (1898 HK)</a> as long as it stays in inclusion zone.</li>
</ul>


Nearing the end of the review period, we expect two changes for the iShares China Large-Cap (FXI) (FXI US) ETF in March.

Guotai Junan Securities (2611 HK) is a high probability add while China Tourism Group Duty Free (1880 HK) is a high probability delete.

ZTE Corp H (763 HK) is a potential inclusion currently and could replace China Coal Energy Co H (1898 HK) as long as it stays in inclusion zone.


FXI Rebalance Preview: GTJA, ZTE In; CTG, China Coal Out

China

ZTE Corporation is a Chinese technology company specializing in telecommunications equipment, networking solutions, and mobile devices. It offers a wide range of products including wireless and wireline networks, optical transmission systems, data communication gear, and smartphones under brands like Axon and Nubia. ZTE was founded in 1985 and is headquartered in Shenzhen, Guangdong, China.

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ZTE (763 HK)

A/H Premium Tracker (To 28 Feb 2025): AH Premia Continue to Fall; Expect Widening

AH Premia are again at a 5yr low. Liquid Hs outperform illiquids with wider spreads. Trades are getting crowded. Biggest slew of recommendations in...

Travis Lundy

FXI Rebalance Preview: Two Sets of Changes as ZTE Breaks Out, China Coal Dumps

GTJA and ZTE could replace CTG Duty Free and China Coal in the FXI ETF in March. Alibaba and Tencent will be sold on capping, Meituan bought. ZTE...

Brian Freitas

HK Connect SOUTHBOUND Flows (To 21 Feb 2025); Another HUGE Jump in Value Traded, Consumer Still Bid

SOUTHBOUND volumes have popped significantly. Lots of day-trading. Still-strong net buying. Tech/Consumer and Finance are still the big net buys.

Travis Lundy

HK Connect SOUTHBOUND Flows (To 14 Feb 2025); HUGE Jump in Value Traded, Consumer Names Get a Bid

SOUTHBOUND traded HUGE volumes this past week as the main 3 Hang Seng indices outperformed their A-share main indices quite dramatically, again....

Travis Lundy

FXI Rebalance Preview: GTJA, ZTE In; CTG, China Coal Out

There could be 2 changes for the FXI in March with Guotai Junan and ZTE replacing CTG and China Coal. There will be capping flows for Alibaba,...

Brian Freitas

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