HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.</li>
<li>
<a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a>, while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. </li>
<li>Based on the gearing level, floating rate proportion, and YTD performance, <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> and <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> are the two potential best bets.</li>
</ul>


With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.

Sands China (1928 HK), while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. 
Based on the gearing level, floating rate proportion, and YTD performance, New World Development (17 HK) and Hang Lung Properties (101 HK) are the two potential best bets.


HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

<ul>
<li>With the HSI surging 21.2% since 24 Sep and many stocks have even doubled, the strategy in the HK and China markets will move to chase the laggards.</li>
<li>Among the underperforming HSI constituents, <a href="https://www.smartkarma.com/entities/china-resources-power-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5385:1" rel="noopener">China Resources Power (836 HK)</a> and <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> are the better candidates to pick up performance. </li>
<li>For HSCEI, <a href="https://www.smartkarma.com/entities/zijin-mining-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:6358:1" rel="noopener">Zijin Mining Group Co Ltd H (2899 HK)</a> and <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua Energy Co H (1088 HK)</a> have lagged but their stories are interesting and should regain momentum.</li>
</ul>


With the HSI surging 21.2% since 24 Sep and many stocks have even doubled, the strategy in the HK and China markets will move to chase the laggards.
Among the underperforming HSI constituents, China Resources Power (836 HK) and China Mobile (941 HK) are the better candidates to pick up performance. 
For HSCEI, Zijin Mining Group Co Ltd H (2899 HK) and China Shenhua Energy Co H (1088 HK) have lagged but their stories are interesting and should regain momentum.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>When property advisors (JLL, Knight Frank, CBRE etc) debate the bottom of Hong Kong's office/retail market, such commentary is often infused with cautious optimism. </li>
<li>And for good reason, as vacancies increase, and rents soften.</li>
<li>Recent press articles and anecdotal evidence suggests market uncertainty lingers, prompting  landlords to (further) assess their stance on rents.</li>
</ul>


When property advisors (JLL, Knight Frank, CBRE etc) debate the bottom of Hong Kong's office/retail market, such commentary is often infused with cautious optimism. 
And for good reason, as vacancies increase, and rents soften.
Recent press articles and anecdotal evidence suggests market uncertainty lingers, prompting  landlords to (further) assess their stance on rents.


Hong Kong Property: In Need Of A Good Story

<ul>
<li>Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> are massive laggards YTD.</li>
<li>As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. </li>
</ul>


Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.

Li Auto (2015 HK), Link REIT (823 HK), China Mengniu Dairy Co (2319 HK), Hang Lung Properties (101 HK) and Galaxy Entertainment Group (27 HK) are massive laggards YTD.
As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. 


HK Strategy: Where Are the Short-Term Opportunities?

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of HSI in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI, LI AUTO, BEONE MEDICINES.</li>
</ul>


We analysed the earning revision of component stocks of HSI in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI, LI AUTO, BEONE MEDICINES.


HSI Index Earning Revision (Aug): XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI

Hong Kong

Henderson Land Development is a leading property developer with core businesses in property development, property investment, project management, construction, property management, and financial services. The company creates high-quality new homes and commercial developments, including city landmarks such as The Henderson and the International Finance Centre complex in Hong Kong, and World Financial Centre (WFC) in Beijing. It was founded in 1976 and is headquartered in Hong Kong.

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Henderson Land Development (12 HK)

HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

With the Fed hinting at a slower rate cut path, the beneficiaries mentioned in this Insight will turn to suffer more. The names with the highest...

Osbert Tang, CFA

China & HK Strategy: What to Grab?

Hong Kong and China markets are seeing a surge, prompting a shift towards chasing underperforming stocks like CR Power and China Mobile in HSI,...

Osbert Tang, CFA

Hong Kong Property: In Need Of A Good Story

Upgrading and flight-to-quality in the office space has the affect of lifting occupancy in new projects; however such activity largely foreshadows...

David Blennerhassett

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

HSI Index Earning Revision (Aug): XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI

We analyzed HSI's consensus for Aug 2026 and highlighted changes of EPS in XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI, LI...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

With the Fed hinting at a slower rate cut path, the beneficiaries mentioned in this Insight will turn to suffer more. The names with the highest...

Osbert Tang, CFA

China & HK Strategy: What to Grab?

​Hong Kong and China markets are seeing a surge, prompting a shift towards chasing underperforming stocks like CR Power and China Mobile in HSI,...

Osbert Tang, CFA

Hong Kong Property: In Need Of A Good Story

Upgrading and flight-to-quality in the office space has the affect of lifting occupancy in new projects; however such activity largely foreshadows...

David Blennerhassett

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

HSI Index Earning Revision (Aug): XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI

We analyzed HSI's consensus for Aug 2026 and highlighted changes of EPS in XINYI SOLAR, Kuaishou, CK HUTCHISON, PING AN, CHINA LIFE, XIAOMI, LI...

Ke Yan, CFA, FRM

Hong Kong and China markets are seeing a surge, prompting a shift towards chasing underperforming stocks like CR Power and China Mobile in HSI,...