China index rebalancing to trigger US$48 billion in passive flows, Goldman Sachs estimates

China's planned rebalancing of indexes is expected to trigger an estimated US$48 billion in two-way passive investment flows, according to Goldman Sachs, as major indexes undergo semi-annual adjustments later this month. 

Beneficiaries from potential net inflows include Huagong Tech, Yuanjie Semiconductor Technology and Hua Hong Semiconductor (1347), the Wall Street bank said. 

Here are some details:

* The China Securities Index Co and the Shenzhen Securities Information Co announced the semi-annual index review results for key CSI and CNI indexes after the market close on Friday.

* Constituents of large-cap index CSI 300, mid-cap index CSI 500 and small-cap index CSI 1000 will be adjusted at the close of trading on June 12, according to China Securities Index Co.

* Adjustments will also be made to indexes including the SSE 50, the SSE 180 and the STAR 50.

* The Shenzhen Securities Information Co said in a separate statement that constituents of the Shenzhen Component Index, ChiNext Index, Shenzhen 100 Index and ChiNext 50 Index will be adjusted on June 15. 

* "Overall, we expect the major CSI and CNI index rebalancing to generate over US$48 billion in gross two-way passive flows," Goldman said in a note.

* Among the companies expected to benefit the most from passive inflows are GigaDevice, VeriSilicon, Piotech, and Zhejiang Century Huatong, according to Goldman.

* On the other hand, stocks facing the largest passive outflows due to index deletions are expected to include Beijing-Shanghai High Speed Railway, Hengtong Optic-Electric Co, Shaanxi Coal and Haier Smart Home Co, the bank said.

* The index adjustments will increase the representation of information technology, telecommunications and industrial companies. 

* China Securities Index Co said the changes are intended to better align the benchmarks with China's national development priorities and strategic industries.

Reuters

𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗧𝗵𝗲 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱 𝗔𝗽𝗽 ↓