In today’s briefing:
- HSCI Index Rebalance: Bloks (325 HK), Guming (1364 HK) & MIXUE (2097 HK) Added
- HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- (Mostly) Asia-Pac M&A: Webjet, Nippon Road, Nissin Corp, Sumi Mitsui Construction, ESR, Oneconnect
- China Healthcare Weekly (May.18) – Trump to Lower US Drug Prices, Thoughts on Hengrui’s IPO Pricing
HSCI Index Rebalance: Bloks (325 HK), Guming (1364 HK) & MIXUE (2097 HK) Added
- As expected, Bloks Group (325 HK), Guming Holdings (1364 HK) and Mixue Group (2097 HK) will be added to the Hang Seng Composite Index (HSCI) in June.
- The HSCI inclusion will result in the stocks being added to Southbound Stock Connect from the open of trading on 9 June and that could result in sizeable inflows.
- Use stock price spikes to trim positions in Bloks Group (325 HK) ahead of lock-up expiry in July, and in Guming Holdings (1364 HK) ahead of lock-up expiry in August.
HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?
- We had Pop Mart International (9992 HK) at the cusp of index inclusion. An increase in Postal Savings Bank of China (1658 HK)‘s FAF led to Pop Mart missing out.
- Estimated one-way turnover at the rebalance is 3.18% leading to a round-trip trade of HK$3.8bn (US$489m).
- There are large inflows for NetEase (9999 HK), Trip.com Group (9961 HK) and Baidu (9888 HK) due to a FAF methodology change for Secondary Listings.
(Mostly) Asia-Pac M&A: Webjet, Nippon Road, Nissin Corp, Sumi Mitsui Construction, ESR, Oneconnect
- I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
- Five new deals discussed on Smartkarma this week: Webjet Group (WJL AU), Nippon Road (1884 JP), Nissin Corp (9066 JP), Sumitomo Mitsui Construction (1821 JP), and Frasers Hospitality Trust (FHT SP).
- Key updates/news took place on: Avjennings Ltd (AVJ AU), PointsBet Holdings (PBH AU), ESR Group (1821 HK), and Oneconnect Financial Technology (6638 HK).
China Healthcare Weekly (May.18) – Trump to Lower US Drug Prices, Thoughts on Hengrui’s IPO Pricing
- Trump signed an executive order aimed at lowering prescription drug prices in the US, but the specific implementation may encounter obstacles. This is good news for China’s innovative drug assets.
- Under tariff/trade war, as long as the US does not issue any bill proposing to suspend the technology exchange, licensing-out business model of China biotech will not be substantially affected.
- Hengrui’s IPO in Hong Kong is not attractive from a fundamental perspective. However, the recent strong performance of Hengrui’s A-share has lifted investors’ sentiment, making them “interested” in this IPO.
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