In this briefing:
- Stock Short Ideas Within an Index Long Environment
- HSCEI Dividends – Better Results Increase Expected Fair Value
Positioning is quickly shifting to more index net longs and we are on the hunt for stock shorts in Asia given the more bullish Q4 seasonality and the SPX breakout signal. US equities do face breadth hurdles in core underperform sectors and part of a near term pullback game plan but we are assuming the DJI will clear 27,400, Russell will clear 1,600 and XLI 81 in due course. This would provide bull energy for Asian indices.
The following represent some interesting short stock set ups that show deteriorating buy volumes into critical resistance points. HKEX (388 HK) , Sun Hung Kai Properties (16 HK)Henderson Land Development (12 HK)Catcher Technology (2474 TT)Celltrion Pharm (068760 KS)Mezzion Pharma (140410 KS)
Since we published our earlier Insight, the HSCEI dividends futures expiring in December 2020 have moved up 1.9% mainly driven by strong Q3 results led by Chinese insurers, a slightly stronger CNY and a marginally higher HSCEI. Open Interest in the 2020 dividend futures contract has continued to increase as prices push higher.
In this Insight, we look at the Q3 results of companies that announced quarterly results and estimate nine month EPS for non-reporting companies based on their half yearly results and operational statistics/data for the July to September period where provided.
We find that the 2020 dividend futures are trading below our bottom up fair value and provide a 3.7% upside from current prices.