高盛：预计沪深300今年回报率19%高配A股

GoldmanSachs

PortfolioStrategy

Research

9January2024|11:36PMHKT

ChinaMusings

2024Kickoff(Part2):Makingmoneyinachallengingmarket

2023wasanotherdifficultyearforChinesestocksinwhichMSClChinaandCSI300

KingerLau,CFA

+852-2978-1224|kingerlau@

registeredthethirdconsecutiveyearofnegativeannualreturns,correcting13%

GoldmanSachs(Asia)L.L.C.

and11%respectivelyandlaggingmostequitypeersglobally.

5m-8t8h91M19e|mFohy.moe@GoldmanSachs(Singapore)Pte

Plentyoflessonscouldbelearnedfromtheextendeddowntrend,andonekey

SiFu,Ph.D.

takeawayfromthepastyearisthattherearewaystomakemoneyevenina

+852-2978-0200|si.fu@GoldmanSachs(Asia)L.L.C.

sustainedbearmarket,akintotheexperiencesfromJapan'slostdecades.Inthis

KevinWang,CFA

ChinaMusings,werefreshourkeyimplementationideasthatcutacross

+852-2978-2446|kevin.wang@GoldmanSachs(Asia)L.L.C.

differentdimensionsintheequityuniversefor2024.

Marketreturns:Weforecast17%and19%potentialpricereturnsforMSCl

ChinaandCSl300for2024,predicatedon~10%earningsgrowthrealizationand

effectivepolicydelivery.StayingOverweightonAsharesandMarketweighton

OffshoreChinawithintheregiontostart2024.

Indices:ThetacticalprospectsmighthavebrightenedforAshares,and

small/midcapstherelookattractive.

Sectors:FundamentallypositiveonTMT,HardwareTech,Staples,andHealthcare

Equipment;CautiousonBanksandproperty-relatedcohorts.

Themes:BuyChinaRebalancingPortfolioastheeconomicandequitymarket

landscapeevolves.Selecthigh-qualitySOEsmaycontinuetooutperform.

ChineseLittleGiantsremainasecularinvestmenttheme.

■Factors:GrowthandValuearenotmutuallyexclusivestrategies;weliketheintersectionofandselectopportunitiesinboth.

■Styles:Cashreturns(dividendsandbuybacks)shouldgainmoretractionastheUSratecycleinflects.

Derivatives:ChinaAoutperformancetocapitalizethehighfundingvalueoflong

positions;inexpensiveindexcallstohedgetherighttailriskifChinabounces.

Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertificationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/he

9January2024

2

ChinaMusings

GoldmanSachs

Marketreturns:Earnings-dependentupside

Weforecast17%and19%potentialpricereturnsforMSClChinaandCSl300in2024,atthe69thand62thpercentilerelativetothepast30-yearrange.Ourtargetsimplythatthebenchmarkindexescouldavoidsettinganunfavorablerecordoffallingfouryearsinarow,unprecedentedinthemodernhistoryoftheequitymarket

datingbackto1994.

■ThepotentialgainsarepredicatedonourexpectationthatlistedChinacorporatescouldgrowprofitsbyaround8%-10%in2024,whichwilllikelybeanecessaryconditionforvaluationstofindthefloorandsetthestageforsubsequentrecoveryonstabilizinggrowthexpectations.

■Thatsaid,withoureconomiststrimmingtheirinflationforecastsfornextyearandmacrogrowthdatastayingmixedinDecember,wehaveloweredour2024EPSgrowthforecastforMSClChina/CSI300from10%/11%to8%/9%,both8ppbelowconsensusestimates.Theearningsdownwardadjustmentsreflectthehighlevelofmacrouncertainty(andtheresultinghighfairvaluevariancetoourcentralforecasts)andalsocontributetoourreduced12mindextargetof63and3900forMSClChinaandCSl300,downfrom66and4200,respectively,whenwelaunchedour2024OutlookinmidNovember.

■Inall,werecommendstayingOverweightChinaAowingtoitslowersensitivitytogeopoliticalandliquidityfactors,moreelevatedERPanditsbettersectoralignmentwithpolicytailwindsandChina'slong-termgrowthobjectives.Toexpressourviewsinamoredifferentiatedandtargetedmanner,weareMarketweightonOffshoreChinatostarttheyeardespiteitscycle-lowvaluationsandinvestorpositioning

consideringalikelyvolatileforeignportfolioflowbackdropinthelead-uptotheUSelectioncycle.

Exhibit1:Weforecasta12mMSClChinatargetat63,implying17%upsidefromcurrentlevels

Source:MSCl,FactSet,GoldmanSachsGlobalInvestmentResearch

Exhibit2:Weforecast12mCSl300targetat3900,implying19%upsidefromcurrentlevels

Source:CSI.Bloomberg.GoldmanSachsGlobalInvestmentResearch

ChinaMusings

GoldmanSachs

Indices:ThetacticalprospectsforAshareshavebrightened

InOctober2023,weconstructeda"marketrotationmodel"withnineselected

macroandmarketfactorstohelpforecasttacticalreturndifferentialsbetweenA-andH-sharesonanex-antebasis.ThemodelcurentlysuggeststhatAshares

couldleadHsharesby5ppinthenext3months,witharound70%(conditional)probabilityofAoutperformingHbasedonoption-marketpricing.

■ThemaindriversofthepotentialoutperformanceofAvsHare:1)anarrowinggapbetweenSouth-andNorthboundflowsinthepastmonth,whichhashistoricallyfavoredAoverH;2)aflatteningearningsgrowthaccretionslopeforOffshoreChina;and,3)incrementallymoresupportivemonetaryconditionsindomesticChinawhererateshavefallentocyclelowsandpolicycouldeasefurtherperGSeconomic

forecasts.

■Applyingthetop-downmodeltomajorChinaindices,wenotethatSTAR50and

CSI1000couldperformthebestinthenextthreemonthsaccordingtothemodelresults,whileMSClChinaandHSCEIwouldprobablylagthemostonarelative

basis.ThesuggestedleadershipofA-sharesmall/midcapsisalsosupportedbytheirtroughvaluationsand,fromamacroperspective,theirpositivereturnprofileina

policylooseningenvironment.

Exhibit3:OurmodelindicatesthatAsharescouldoutpaceHsharesinthenext3months,witharound70%probability

Source:GoldmanSachsGlobalInvestmentResearch

Exhibit5:OurmodelsuggeststhatA-sharesmall/midcapscouldoutperformotherkeybenchmarksinthenext3months

Source:Wind,FactSet,GoldmanSachsGlobalInvestmentResearch

Exhibit4:LiquidityfactorsmaycontributetothepotentialA-shareoutperformanceoverH

Source:GoldmanSachsGlobalInvestmentResearch

Exhibit6:Empirically,small/midcapstendtotradewellwhenmacropoliciesease

Source:Wind,GoldmanSachsGlobalInvestmentResearch

9January20243

9January2024

4

ChinaMusings

GoldmanSachs

Sectors:Likingboth"soft"and"hard"tech

Overweights

(Online)Retailing:Thesectorremainsakeyavenueforustotradeforourpreferredthemes,notablymass-marketconsumption,"goingglobal",andAl/techupgrade.

Mid-teenearningsgrowthatdecade-lowvaluations(9.4x,-1.8s.d.)suggeststousthatagreatdealofmacroandmicrorisksarealreadyintheprice.Wewouldlookforsubsectorsorcompaniesthatcculddisproportionatelybenefitfromtherisingads

techtrend,consumptiondowntrading,andspecificcapitalmarketevents(e.g.spinoffs,index/Southboundinclusion)totradeforintra-sectoralpha.

Media/entertainment:Therecentselloffamidrenewedregulatorytightening

concernsseemsoverdoneandthenewgamespipelinelooksrobustthisyear

However,industrycompetitionwilllikelyintensifyandmonetizationpressuresarebuildinginvariousentertainmentverticals,andhencelargeplatformcompanieswithmorediversifiedbusinesslinesappearbetterpositioned.

Techhardware:Volumegrowthfortechproductsgloballyacrosstheconsumerandcorporatesegmentswilllikelyimprovethisyearondepletedinventory(restocking),andcontinuingsupplychaincapexarounddisruptivetechnologies(e.g.Al).Wefavorselectsmartphone/PCcomponentmakersthatmightbenefitfromspecificnew

productcycles.

■HealthcareEquipmentandServices:Industryfundamentalscouldnormalizethis

yearafteradisruptive2023duetotheanti-corruptioncampaign,supporting

mid-teenearningsgrowthforthesector.Valuationsarestillmeaningfullybelow

mid-cyclelevelsandthesectorhaslaggedotherhealthcaresubsectors.Import

substitutionandoverseasexpansionaredifferentiatingfactorstoidentifypotentialoutperformerswithintheindustry.

F&B:Withthesectortradingatalmost2s.d.belowhistoricalvaluationlevels,webelievetherisk/rewardlooksattractive,especiallyforinvestorswholookto

re-engagetheChinaconsumerstoryinalow-betafashion.Polarizationisthekeythemewithinthesector,withpremiumbrandsstillbeingabletoraiseprices,and

valuebrandsgainingshareonmorecautiousconsumerspending.Atthesub-categorylevel,ouranalystslikebeer,frozenfood,anddiary.

Underweights

Banks:FurtherNIMcompressionislikelyinarate-cutcycle,andassetquality(NPL)pressuresshouldcontinue,notablyproperty-relatedloansintheportfolio.Systemloangrowthcouldremainstable(~11%)butmainlydrivenbygovernmentfundingneeds.Significantreturndownsidefromherelooksunlikelyon3xconsensus2024PEand0.3xP/Bbutwewouldemphasizedividendsecuritytomonetizethe

decade-lowvaluationsandhighexpectedcashreturnsinbanksequities.

Energy:Thesectoroutperformedlastyearonhighoilprices(geopoliticalhedge)andtoalesserextent,SOEreformexcitement.However,realizeddomesticoilprices

havelaggedtheinternationalspotprices,henceweighingonthesector's

GoldmanSachs

ChinaMusings

beta/returntocommoditypricesingeneral.GivenourCommodityteam'sforecastofaprice-rangebetweenUS$77-85/bblforBrentinthenext2years(nowat76),we'dfocusonupstreamplayersinthevaluechainthatarecomparativelylesssensitivetodomesticpolicy

Materials:Property-andtraditionalinfra-relatedmetaldemandisstillgoingthroughthedowncycleandselectEV-andrenewable-focusedrawmaterialsarefacing

(over)supplyissues.Whilethebroaddemandstoryremainsdownbeat,idiosyncraticopportunitiesexist:Cementduetothegovernment'sfocusonwatersewage

projects,andcoppergivencontinuedgreencapex.

■Property:In2024,nationwidehousingsalescoulddrop5%yoy(36%fromthepeakin2021)onouranalysts'forecast,mostlydrivenbyvolumecontractionbutstable

ASPintheprimarymarket.Theriskisinthesecondarymarketwherealong-termbenchmarktorentalyieldanalysisimplies30%+ASPcorrectionrisk,suggesting

thatmoreactivegovernmentinterventionwouldbebeneficial.Completionswill

likelyoutperformotherpropertysub-cycles(newsstarts,landandhousingsales)althoughthegapsmightnarrowoncontinuedcashflowpressuresbydevelopers.Despitetheiroutsizedinfluencesontherealeconomy,developers,onastandalonebasis,onlyaccountfor2%oftheindexweight.We'dstillpreferSOEdevelopers

withstrongbalancesheetsbutinvestorsshouldbepreparedforavolatilepricingregimeforsmaller,distressedPOEdevelopersonpolicynewsandexpectations.

Exhibit7:Weareoverweightboth"hard"and"soft"techsectors

Allocation

MXCNindustry

groups

WeightinMXCN(%)

23-25E

EPS

CAGR

24EP/E24EP/B(X)(X)

24EPEG

Return

sensitivitytopolley%ile

ranking)*

Retum

sensitivityCAlgrowth

alle

rankinglA

to

Valuation

2-SCoreAAA

Overseas

FeweliUeaxposUre

AAAA

MF

Posltioning(bp)AAAAA

Overweight

Media

20.0

17%13.52.10.8

58%

8%

-1.87%

Retailing

15.8

15%9.41.50.6

47%

24%

-192%

FoodBev

4.5

23%15.73.10.8

21%

64%

-1.94%

TechHardware

4.1

21%15.71.70.6

11%

92%

0.040%

HCEquip&Svcs

1.0

20%12.5140.7

36%

1.35%

Marketweight

ConsumerSvcs

6.5

30%17.02.20.

95%

84%

0.42%

Autos

5.5

114%22.71.90.3

58%

68%

-0.816%

PharmaBiotech

4.6

33%27.62.50.6

11%

40%

1.319%

nsurance

3.6

19%4.50.50.3

21%

80%

-1.30%

CapitalGoods

3.2

15%石0.70.4

79%

56%

111%

ConsumerDurables

2.1

19%2.40.6

5%

20%

1.935%

Ufiities

2.5

12%7.50.90.6

32%

16%

-1.84%

DivFinancials

2.0

16%7.80.60.5

58%

88%

D.53%

Transportation

1.8

10%9.60.90.6

74%

44%

-0.735%

Semis

1.6

17%11.11.20.3

79%

96%

-0.833%

Underweight

Banks

10.2

7%3.0.30.

47%

32%

-1.36%

172

Materials

3.2

26%9.51.00.4

32%

76%

0.611%

Energy

3.3

3%6.30.77

32%

2%

0722%

RealEstate

2.6

15%9.10.70.9

79%

52%

0.50%

Telecom

0.3

19%12.40.60.4

28%

0.90%

s.,arcdh,ensreig5seiitnpaovleirygasisri,itrrographydatain2022;’AAAAbasedan7

Source:FactSet,MSCl,Factiva,GoldmanSachsGloballinvestmentResearch

9January20245

GoldmanSachsChinaMusings

Themes:Chinarebalancingisunderway

InthereportwherewecomparedChinanowvsJapaninthe80s/90s,weidentified10keyequitylessonsfromJapanduringitslostdecades,whichleadusto

believethatmass-marketconsumernames,selectexporters,andthethemesofAl,NewInfra,andgovernanceleadersinChinacoulddowellastheeconomy

rebalances.Aggregatingthesethemes,weareabletohighlight40GSBuy-ratednamesfrom24sub-industriestoformourChinaRebalancingPortfolio,whichweviewasalpha-generatingastheChinagrowthstoryevolves.

■Selecthigh-qualitystate-ownedenterprises(SOEs),whichwedefineasthosethathavegeneratedrelativelyhighROEswithhealthybalancesheets,invested

moreaggressivelyinR&D,deliveredhighdividendstoshareholders,andembracedmanagementincentiveplans,couldtradewellagainstthebroaderlistedSOE

universeasinvestorsseekpolicyalignmentandendorsement,andhigh/stablecashreturnsinadifficultenvironment.

■Forstrategic,long-termholdings,westillbelievethatinvestorscouldfindpotentialmultibaggeropportunitiesinourChineseLittleGiantsuniverseasChinamovesupthevalue-addedcurveandlookstonurturenationalchampionsandraise

self-sufficiencyinvarioustechnology-focusedsectors.

Exhibit8:KeythematicunderpinningstotheChinarebalancingstory

ChinaRebalancingPortfolio

Ruralconsumption

upgrade,GuoChao,post-95consumptionpatterns,andthesingle'seconomy

Hardware,

Semiconductor,and

Applications

Adaptive,innovative,and

competitiveonaglobalscale

Cashreturnproxies

"LittleGiants"

Technologyupgradeandinnovation

(dividends,buybacks)and

managementincentives

Source:GoldmanSachsGlobalInvestmentResearch

9January20246

GoldmanSachs

Exhibit9:Divergingperformanceamongthekeythemeswelikein2023

GSChinaThemesPerformancein2023

Source:FactSet,MSCl,GoldmanSachsGlobalInvestmentResearch

ChinaMusings

Exhibit10:OurChinaRebalancingPortfolioisquitewelldiversifiedacrossindustries

Note:Theportfolioweightsarecalculatedbasedonthelistedmarketcap,andthe

weightofasinglestockiscappedat5%.

Source:FactSet.GoldmanSachsGloballnvestmentResearch

Exhibit11:TheunderlyingconstituentsofGSChinaRebalancingPortfolio

Legend

Mass-marketbutUniqueConsumption

GoingGlobal

LittleGiants

Renewables&NewInfra

Ticker

Gics

Sub-ndrsty

Negh

Kay

themes

Nam

ThBuybacksinuuced

pansinpastpastsyearsP8

3YaaE

ctedmency

ItdR

Cap

bn

EMADVT

smn

EFE

A)

PSCAGR

E

CHINAREBALANCINGPORTFOLIO

700HK

Tencent

InteractiveMedia&Svcs5.0%/)

288.0

HKD

350

719

14

6

PDDUW

PDD

BrpadineReta5.0%

47.6

USD

196

90

20

32

B*

BABAUN

Alibaba

BroadlineRetal5.0%

72.9

US

85

349

NTESUW

NetEase

IhteractiveHomeEntertainment5.0%

901

USD

58

143

3690HK

Meituan

Restaurants

5.0%

HKD

1810HK

Xiaomi

Technology

Hardware

5.0%

HKD

601138CG

Foxconn

ElecronicManutfacturingSvcs

5.0%

Y

BIDUUW

Baidu

IhteractiveMedia&Svcs

5.0%

175USp

002475CS

LuxsharePrecision

ElectronicComp

5.0%

Y

1211HKBYDAutomobileManufacturers4.6%204.8HKD201

000651CSGreeElectric

HouseholdAppliances

4.1%

2.(

Y

TCOMUW

T

Hotels

Resorts

4.0%

USD

2020HKANTASport

Appare

4.0%

69.HKD

27HK

Galaxy

Entertainment

Cashos&Gaming

3.7%

HK

600887CGYiliIndustnia

PackagedFoods8Meals

3.7%

26.2

CY

YUMCUNYumChinaRestaurants2.7%40.USD7

688036CGShenzhenTranssion

TechnologyHardware

2.4%

31.7

2313HK

Shenzhou

Int1

Apparel

Goods

Access.&Luxury

2.3%

HKD

002050CSSanhuaIntelligentControlsIhdusrialMachinery&Comp2.2%26CN

291HKCRBeerBrewert2.0%29HKC

HTHTUW

HWorld

HotelsResort

1.6%

S

300014CS

EYEEnergy

ElechicalComp&Equip

1.6%

39.CY

08

XPEVUN

Xpeng

AutomobileManutacturen

1.6%

2899HKZijinMiningGold1.5%

688008CG

MontageTech

Semiconductors

.4%

54

6690HK

HaierSmartHome

HouseholdAppliances

1.3%

HK□

600588CG

YonyouNetworkTech

ApplcationSoftware

1.2%

Y

600745CGWingtechTechElecronicManufacturingSvcs1.1%38.AN

MNSOUN

MINISO

BroadineRetai

1.1%

603659CG

PuallaiNewEnergy

SpecialtyChemicals

0.9%

RNY

BZUW

Kanzhun

IhteractiveMedia&Svcs

0.9%

5USL

688188CGFriendessElectronicsElectronicEquip0.8%

002821CSAsymchemLaboratoriesPharmaceuticals0.8%

688777CGSupconTech

Elecronic

Equip

0.7%

39

CNY

603290CG

StarPowerSemiconductor

Semiconductors

0.6%

Y

603345CG

AnjoyFoods

PackagedFoods8Meals

0.6%

.6ENY

688234CG

SICC

SemiMateriaks8Egui

0.6%

50CY80

002074CS

GotionHigh-Tech

ElecricalComp&Equip

0.6%

20.2Y

002557CS

ChachaFood

PackagedFoods&Meats

0.4%

32Y

688187CG

TimesElectric

Heavy

Transport

Equip

0.2%

33

NY

werage

A?greme

NotesPricesasofJan8,2024;ValuationitemsareVB/E/Sconsensus.GSRatings:B=Buy,and*indicatestheAsinPaaAshareswtnforeignownershipreaching

30%Imtamexcuded.CompaniesunderUSinvestmentrestridionsareexcluded

Source:FactSet,VB/E/S,GoldmanSachsGloballnvestmentResearch

9January20247

GoldmanSachs

ChinaMusings

Factors:GrowthandValuearenotmutuallyexclusiveinChina

■Generally,GrowthtendstoleadValuewhentheeconomyimprovesandfinancial

conditionsloosen,andviceversa.Assuch,onGSeconomicforecasts,2024doesn'tseemtobetheyearforsignificantfactortilttoeitherextreme.Infact,wecontinuetobelievetheGrowthvsValuedivideisfarfromabinarydecision,andinvestorscouldfindstrongalphaopportunitiesinbothcategories.

OnGrowth,asdetailedhere,afterclassifyingallMSClChinaindexconstituents(766stocks)into4thematicearningsgroups—Secular,Cyclical,Stable,andPre-profit—wenotethatSecularandStableGrowthhavelaggedinthepastyearandtheirgrowthprospectsseemunder-appreciatedbythemarketwhileCyclicalGrowthlooksfairlypricedpostitsrecentoutperformance.

■ChinahasarguablybecomeaValuemarket,with25%/45%ofindexmarketcapand24%/40%ofconstituentscurrentlytradingbelowbook/lessthan10xfP/E.

However,alargeportionofthemarketcapresidesinBanksandDeveloperswhosefundamentalsaresignificantlychallenged.Alternatively,investorsmightlookto

extractvaluefromattractivelypricedcompanieswithhealthybalancesheets,

positiveoperatingcashflows,andarelativelyconcentratedshareholdingprofileviapotentialprivatizationcandidates.

Exhibit12:Growthisn'taunifiedconceptCyclicalgrowthhastradedwellasoflatewhileSeculargrowthhasfurtherslid

Source:FactSet,GoldmanSachsGlobalInvestmentResearch

Exhibit14:SignificantretracementoftheoutperformanceofGrowthvs.Valuesince2021

Source:MSCl,FactSet,GoldmanSachsGlohalInvestmentResearch

9January2024

Exhibit13:VeryskewedsectorrepresentationintheGrowthandValueuniverse

Source:MSCl,FactSet,GoldmanSachsGlobalInvestmentResearch

Exhibit15:ThegrowthpartofthemarketisattractivelypricedbyPEGratio

Source:MSCl,FactSet,GoldmanSachsGloballnvestmentResearch

8

GoldmanSachs

ChinaMusings

Styles:Focusoncashreturnsastheratecycleinflects

Dividend-orientedstrategieshavebeenabrightspotintheequitymarketsoverthepast2years.Lookingahead,buyinghigh-yieldingstocksalsosyncswellwithour

economists'viewthattheUSrate-cutcyclewillbegininMarchthisyear,with

potentially5,25bpscutstobedeliveredbytheFedin2024.LowerUSratesshouldimprovetherelativeattractivenessofdividendreturnsinOffshoreChina,whichlookexpensivelypricedvsUSbondyieldsatpresent.

■However,withthe"high-yield"universeinChinalargelycomprising

property-linkedsectorsthatarevulnerabletoprofit/dividenddeliveryrisks,we'demphasizeourSecuredDividendBasketandDividendGrowthBasketwhere

infrastructurenamesandutilitycompaniesareselectedforinvestorswholooktoaddcashincomesandreturnstability/visibilitytotheirportfolio.

■Besidesdividends,cash-richChinesecompanies,partlyencouragedbyregulators,areincreasingbuybackstosupportsharepricesandreturncashto

shareholders,amountingtoUS$42bnin2023inthewholeA/H-listeduniverse.OurfilteredGSBuy-ratednameswithrelativelystrongdividendgrowthandsecurity,andannouncedbuybackshavedropped1%in2023intotalreturns,outperformingthebenchmarkby11ppandofferinganaggregatedividend/buybackyieldof6.6%/2.5%.

Exhibit16:TheattractivenessofdividendopportunitiesinOffshoreChinacouldimproveifUSratesbegintofall

Source:MSCl,CSI,Wind,FactSet,IBES,GoldmanSachsGlobalInvestmentResearch

Exhibit18:Dividendpayoutsandbuybacksrepresented28%ofcashusageforMXCNcompanies

Source:FactSet,GoldmanSachsGlobalInvestmentResearch

Exhibit17:Corporaterepurchasesreachedall-timehighsin4023,pushingthefullyear2023totalbuybackstoUSS42bn

AsofDec31,2023

Source:Wind,HKEx,GoldmanSachsGlobalInvestmentResearch

Exhibit19:Cash-returnstrategyperformedrelativelywellin2023,andthemomentumhasstrengthenedsofarin2024

Source:FactSetGoldmanSachsGlobalInvestmentResearch

9January20249

9January2024

10

GoldmanSachs

ChinaMusings

Derivatives:Sensibleoptionstohave

■GettingpaidtogolongAshares:AnuniquedynamicexistsinAshareswhich

providestheopportunityforinvestorswhoaccessindexorsingle-stockexposuressynthetically(viaderivatives)tobenefitfromthefundingvalueofthelonginventorytheycreate.ThefundingvaluemonetizationistypicallydonethroughaTRSformatwhereinvestorsgetpaidoutperformanceonthefundingleg,oroptionswherethepremiumischeapenedbythedeeplydiscountedforward.Thefundingvalueis

createdbytheimbalancebetweendemandandsupplythrough2mainchannels:a)aphysicallendingmarketisunavailableforoffs