Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>HK Alpha portfolio gained 2.22% in September, outperforming its benchmark by 5.36%. Since inception, the portfolio has outperformed HK indexes by 66% to 93%. HK ALPHA is up 14.35% YTD.</li>
<li>The Sharpe ratio stands at 1.22, compared with a benchmark of 0.56 since inception. This higher Sharpe ratio is driven by excess alpha, which represents more than 50% of returns.</li>
<li>The portfolio gained in the healthcare and energy sectors in August, while exposure to materials and communication services dragged on performance.</li>
</ul>


HK Alpha portfolio gained 2.22% in September, outperforming its benchmark by 5.36%. Since inception, the portfolio has outperformed HK indexes by 66% to 93%. HK ALPHA is up 14.35% YTD.
The Sharpe ratio stands at 1.22, compared with a benchmark of 0.56 since inception. This higher Sharpe ratio is driven by excess alpha, which represents more than 50% of returns.
The portfolio gained in the healthcare and energy sectors in August, while exposure to materials and communication services dragged on performance.


HONG KONG ALPHA PORTFOLIO: (September 2026)

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>While the HSI lost 5.1% YTD, the bottom-most 5 constituents were down an average of 45.8%. As we approach the year-end, we examine whether there is room for performance revival.</li>
<li>
<a href="https://www.smartkarma.com/entities/trip-com-group-ltd-aaf6a428-6d9d-4e25-80e7-18533df0745e" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> is the best bet, as the anti-monopoly penalty is now behind it. The sell-off has also moderated, suggesting the market is refocusing on the merits.</li>
<li>
<a href="https://www.smartkarma.com/entities/laopu-gold-co-ltd-class-h" target="_blank" data-smartkarma-citation="entities:44036:1" rel="noopener">Laopu Gold (6181 HK)</a> has a significant PER compression, leaving room for a rebound. However, the risk is more in a potential earnings downgrade. </li>
</ul>


While the HSI lost 5.1% YTD, the bottom-most 5 constituents were down an average of 45.8%. As we approach the year-end, we examine whether there is room for performance revival.

Trip.com Group (9961 HK) is the best bet, as the anti-monopoly penalty is now behind it. The sell-off has also moderated, suggesting the market is refocusing on the merits.

Laopu Gold (6181 HK) has a significant PER compression, leaving room for a rebound. However, the risk is more in a potential earnings downgrade. 


Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.</li>
<li>In this insight, we take a look at the potential ADDs and DELs for the semiannual index rebal event in December 2026.</li>
<li>We expect 5 ADDs/DELs and we currently estimate one-way flow to be US$408mn.</li>
</ul>


CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
In this insight, we take a look at the potential ADDs and DELs for the semiannual index rebal event in December 2026.
We expect 5 ADDs/DELs and we currently estimate one-way flow to be US$408mn.


Quiddity Leaderboard CSI Medical Dec26: US$408mn One-Way Flows; 5 ADDs/DELs Expected

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our global intermediate-term outlook remains bullish on MSCI ACWI (in place since our 5/14/25 Compass). We also remain near-term bullish on MSCI ACWI since our 4/23/26 Int’l Compass.</li>
<li>Value areas of the market are underperforming while Technology and A.I. areas are starting to dominate again.</li>
<li>On ACWI-US, we want to see $156.50 support hold on any pullback (the breakout level) in order to remain near-term bullish, while major support is at $151.50.</li>
</ul>


Our global intermediate-term outlook remains bullish on MSCI ACWI (in place since our 5/14/25 Compass). We also remain near-term bullish on MSCI ACWI since our 4/23/26 Int’l Compass.
Value areas of the market are underperforming while Technology and A.I. areas are starting to dominate again.
On ACWI-US, we want to see $156.50 support hold on any pullback (the breakout level) in order to remain near-term bullish, while major support is at $151.50.


Concerns Mounting as MSCI ACWI Tests Base Support. Buys in Tech, Services, Financials, Healthcare

<ul>
<li>October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> next month.   </li>
<li>Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. </li>
<li>November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.</li>
</ul>


October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the Hang Seng Index (HSI INDEX) next month.   
Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. 
November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.


HK Strategy: The Forthcoming Black October?

China

WuXi AppTec is a global contract research, development, and manufacturing organization (CRDMO) for the pharmaceutical and life sciences industries. It provides integrated, end-to-end services including chemistry drug CRDMO, biology discovery, preclinical testing, and clinical research services for various therapeutic modalities. The company was founded in 2000 and is headquartered in Shanghai, China.

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WuXi AppTec (2359 HK)

HONG KONG ALPHA PORTFOLIO: (September 2026)

We made mid-month changes in the portfolio yesterday. We sold 148, 6185, 3696, 3759, 669 and 2268. We added 322, 2319, 1579, 6186, 9633, 2688,...

David Mudd

HK Strategy: Losers Turn Winners?

As we approach year-end, the laggards this year may potentially revive given their underperformance. Trip.com appears to be best positioned, while...

Osbert Tang, CFA

Quiddity Leaderboard CSI Medical Dec26: US$408mn One-Way Flows; 5 ADDs/DELs Expected

Most of the expected ADDs/DELs could have more than 1x ADV to trade during the December 2026 index rebal event. Although the reference period is...

Janaghan Jeyakumar, CFA

Concerns Mounting as MSCI ACWI Tests Base Support. Buys in Tech, Services, Financials, Healthcare

Concerns Mounting as MSCI $ACWI Tests Base Support. Actionable Themes: Technology, Services, Financials, and Health Care

Vermilion Research

HK Strategy: The Forthcoming Black October?

With the HSI losing 2.5% so far today (the first trading day of Oct), it will be interesting to boomerang this Insight. Based on historical...

Osbert Tang, CFA

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