In today’s briefing:
- HSCI Index Rebalance Preview and Stock Connect (Sep 2025): Plenty of Recent IPOs Could Be Added
- STAR50/STAR100 Index Rebalance Preview: Outright Changes & Migrations
- UK Structurally Unemployed
- Doosan Corp (000150 KS): Global Index Inclusion & A Relative Value Trade
- Netease Cloud Music (9899 HK): Stock Up; Short Interest Up; Global Index Inclusion
- Vishal Mega Mart (VMM IN): Increased Float & Global Index Inclusion
- StubWorld: CKH (1 HK) – Expect Near-Term Weakness If Exclusivity Ends Without Resolution
- A/H Premiums & Recent Listings Performance-Changing Trends but Quality Matters More than the Premium
- Quiddity Leaderboard ASX Sep25: Exp ADDs Down Vs Exp DELs Since Methodology Change; Time to Reverse?
- Meitu (1357 HK): AI-Driven Global Index Inclusion
HSCI Index Rebalance Preview and Stock Connect (Sep 2025): Plenty of Recent IPOs Could Be Added
- We see 28 potential and close adds and 34 potential and close deletes for the Hang Seng Composite Index in September. Some of the stocks are close on market cap/liquidity.
- A lot of the potential adds are very recently listed stocks that have a limited trading history. The low free float could lead to price spikes in the stocks.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
STAR50/STAR100 Index Rebalance Preview: Outright Changes & Migrations
- Nearing the end of the review period, we forecast 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index in September.
- We estimate turnover of 1% for the SSE STAR50 (STAR50 INDEX) and 3.6% for the STAR100 Index. The estimated round-trip trade is CNY 5bn (US$700m).
- Near term performance for the SSE STAR50 (STAR50 INDEX) changes has been great, while the performance of the outright STAR100 Index changes has been far from satisfactory.
UK Structurally Unemployed
- Higher employment taxes can entirely explain the fall in payrolls as the tax wedge hits its highest since 1987, raising our structural unemployment rate estimate by 0.48pp.
- That could understate the structural shift amid a substantial drop in the threshold, rise in the minimum wage (jobs ban) and benefit rates. Some will go ‘inactive’ on disability.
- The unemployment rate must rise more than its natural rate to deliver disinflationary pressure sustainably. Our structural estimates suggest it won’t break excess inflation.
Doosan Corp (000150 KS): Global Index Inclusion & A Relative Value Trade
- A doubling of the stock price over the last 3 months could lead to Doosan Corp (000150 KS) being included in a global index in August.
- Doosan Corp (000150 KS) has outperformed its peers over the last few months and now trades at a huge valuation premium to its peer group.
- The stock is 17% off its recent highs and that provides an opportunity for a relative value trade heading into the index inclusion event.
Netease Cloud Music (9899 HK): Stock Up; Short Interest Up; Global Index Inclusion
- Cloud Village (9899 HK)‘s stock price has doubled over the last quarter and the increased market cap should lead to global index inclusion in August.
- Short interest in Cloud Village (9899 HK) is at an all-time high and has increased in lockstep with the stock price.
- Cloud Village (9899 HK) has outperformed Tencent Music Entertainment Group (1698 HK) and now trades at much higher valuations. A pair trade looks attractive here.
Vishal Mega Mart (VMM IN): Increased Float & Global Index Inclusion
- An increase in the stock price and free float should result in Vishal Mega Mart (VMM IN)‘s inclusion in a global index in August.
- Estimated passive buying is 191m shares (US$312m; 5.8x ADV; 15.4x delivery volume) at the close of trading on 26 August.
- The index inclusion could take the stock higher in the short-term but buyers in the June placement could be looking for an exit.
StubWorld: CKH (1 HK) – Expect Near-Term Weakness If Exclusivity Ends Without Resolution
- CK Hutchison Holdings (1 HK)‘s delicate dance continues as it juggles U.S and Beijing politics; and its fiduciary duty to shareholders, as the Blackrock exclusivity long stop date looms.
- In a double dose of StubWorld this week, preceding my comments on CKH – and CK Infrastructure Holdings (1038 HK) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
A/H Premiums & Recent Listings Performance-Changing Trends but Quality Matters More than the Premium
- With a spate of A/H listings already done in the first half and a lot more in the pipeline, we look at some of the trends from the recent listings.
- In this note, we will also talk about how the A/H premiums have moved since our last note in March 2025.
- Overall, recent A/H listings have somewhat reversed the trend of past A/H listings not doing much in the near term, with a few exceptions.
Quiddity Leaderboard ASX Sep25: Exp ADDs Down Vs Exp DELs Since Methodology Change; Time to Reverse?
- In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the September 2025 index rebal event.
- Currently, a market consultation is being conducted and there could be several significant changes made to the index selection process.
- The official index changes will be announced after the close on Friday 5th September 2025.
Meitu (1357 HK): AI-Driven Global Index Inclusion
- Meitu Inc (1357 HK)‘s stock price has more than tripled over the last few months and the significantly higher market cap should lead to global index inclusion in August.
- Shorts covered a lot in 2024 and that has continued this year as the stock price has moved higher.
- Meitu Inc (1357 HK) has outperformed its peers significantly and there could be a pullback in the stock following index inclusion.
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