In today’s briefing:
- ETFs in Stock Connect: List Announced; Effective 4 July
- HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
- Tianqi Lithium H Share Listing: AH Discount Views
- Toshiba (6502) Ownership Structure – “Hostage to Toshiba” Larger Than Real World Float
- MTR (66): Open or Closed?
ETFs in Stock Connect: List Announced; Effective 4 July
- CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
- There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
- Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.
HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
- We do not expect any inclusions or exclusions for the Hang Seng Tech Index (HSTECH INDEX) at the September rebalance.
- Float and capping changes will lead to a one-way turnover of 6.5% and that will result in a one-way trade of HK$4,913m.
- SenseTime Group (20 HK) will have the largest buying flow due a potential increase in free float. The stock is also a potential inclusion to the HSCEI INDEX in September.
Tianqi Lithium H Share Listing: AH Discount Views
- Sichuan Tianqi Lithium Industries, Inc (002466 CH) has upped its targeted H Share raise from US$1.0-1.5 billion to US$1.5–2.0 billion. The listing will kick off on Thursday.
- In Tianqi Lithium H Share Listing: Riding the Wave, we noted that Tianqi is well-placed to leverage the high lithium prices to deliver growth, margin and cash generation.
- In this note, we examine the likely discount that Sichuan Tianqi Lithium Industries, Inc. (TIANQI HK) will offer its H Shares in comparison to the A Shares.
Toshiba (6502) Ownership Structure – “Hostage to Toshiba” Larger Than Real World Float
- Every year, the yukashoken hokokusho shows a breakdown of share ownership by owner category. It only happens once a year for most companies.
- It is a crucial input to knowing where the shares are and how people are positioned. It also shows who and how big is Real World Float.
- This year’s data shows a surprisingly small change year-on-year for Foreign Active Ownership, which is the biggest category. A little musical chairs, but no chairs removed.
MTR (66): Open or Closed?
- HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive.
- The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price.
- Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now.
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