The Largest Index in Asia Has a Unique Quality: Taking Stock

(Bloomberg) -- From Australia up to Japan and across to India, Asia's $9 trillion benchmark stock index already trades through plenty of time zones in the region, but here's an interesting quirk: A sizable chunk of the group doesn't even start trading until long after most investors have gone home.

Internet giants Alibaba Group Holding Ltd. and Baidu Inc. headline a group of almost two dozen MSCI Asia Pacific Index members, many of them based in China, that trade in the U.S. The companies have a combined market value of more than $790 billion, accounting for about a 5 percent weighting in the benchmark -- enough to have an impact on the overall direction of the gauge while most traders in the region are in bed.

Case in point: Once New York came online, the gauge finished off Tuesday little changed after trading down as much as 0.6 percent during Asian hours. That was thanks to strong quarterly results from Shanghai-based travel booking site Ctrip.com International Ltd.

Its American Depositary Receipts surged 20 percent in the U.S., the best one-day performance since October 2015, on trading that was more than eight times its daily average over the past three months, according to data compiled by Bloomberg. The rally sparked at least seven analyst upgrades.

Another member of the Asia Pacific contingent, live streaming platform YY Inc., also jumped 13 percent for its biggest gain since November 2017 as fourth-quarter revenue beat estimates. Benchmark analyst Fawne Jiang maintained her buy rating, noting opportunities in both game live streaming and e-sports markets.

The situation underscores the intense competition for listings between exchanges in Asia and attractive alternate venues overseas, particularly in New York.

Hong Kong Exchanges & Clearing Ltd. has been aggressive in its attempts to attract major technology company listings back to the region, including pushing through the biggest change to its initial public offering rules in two decades last year to allow dual-class share structures. The change came several years after the exchange lost out on the Alibaba listing in 2014.

Also Read: China's Tech Giants Seek More From Hong Kong Despite IPO Changes

There are risks to this strategy, especially for investors concerned the rights of shareholders will be compromised the more exchanges bend to the will of prospective listings. Dual-class share structures, popular with U.S. tech giants such as Facebook Inc. and Google parent Alphabet Inc., are one way for company founders or a small ownership group to maintain control while holding a minority of stock.

And it isn't just Chinese tech companies. Singapore-based Internet company Sea Ltd., operator of Southeast Asia's biggest gaming platform, sold 60 million ADRs to raise $1.35 billion in a U.S. share sale, the company said in a statement Wednesday.

In the meantime, Asia investors have yet another reason to carry on sleeping with one eye open.

Stock-Market Summary

• MSCI Asia Pacific Index little changed
• Japan's Topix index down 0.2%; Nikkei 225 down 0.6%
• Hong Kong's Hang Seng Index up 0.3%; Hang Seng China Enterprises little changed; Shanghai Composite up 1.6%; CSI 300 up 0.8%
• Taiwan's Taiex index up 0.5%
• South Korea's Kospi index down 0.2%; Kospi 200 down 0.2%
• Australia's S&P/ASX 200 up 0.7%; New Zealand's S&P/NZX 50 up 0.2%
• India's S&P BSE Sensex Index up 0.3%; NSE Nifty 50 up 0.3%
• Singapore's Straits Times Index little changed; Malaysia's KLCI little changed; Philippine Stock Exchange Index up 2%; Jakarta Composite up 0.2%; Thailand's SET down 0.5%; Vietnam's VN Index up 0.2%
• S&P 500 e-mini futures down 0.2% after index closed down 0.1% in last session

To contact the reporter on this story: Eric Lam in Hong Kong at elam87@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Divya Balji, Cecile Vannucci

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