Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>A cyclical bull market in Chinese stocks provide a good opportunity in the sector</li>
<li>Similar upside potential as the brokers but with less volatility</li>
<li>Insurance products still have a low level of penetration in China</li>
</ul>


A cyclical bull market in Chinese stocks provide a good opportunity in the sector
Similar upside potential as the brokers but with less volatility
Insurance products still have a low level of penetration in China


Insurance Sector as a Leveraged Play on the Chinese Revival

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>Although the H-share securities companies have retreated significantly from their peaks, there are still "fats" in their share prices in the near term, relative to the market turnover.</li>
<li>
<a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a> looks vulnerable given its high valuations, low H-A share discount, limited correction from its peak, and significant rebound from the trough.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-securities-co-4f5d644c-0051-426f-9706-eaa74b0ba280" target="_blank" data-smartkarma-citation="entities:22738:1" rel="noopener">China Merchants Securities (6099 HK)</a> appears exposed though valuations are not high. It has the best YTD performance and rebound from the trough, and its H-A share discount is light.   </li>
</ul>


Although the H-share securities companies have retreated significantly from their peaks, there are still "fats" in their share prices in the near term, relative to the market turnover.

Citic Securities (H) (6030 HK) looks vulnerable given its high valuations, low H-A share discount, limited correction from its peak, and significant rebound from the trough.

China Merchants Securities (6099 HK) appears exposed though valuations are not high. It has the best YTD performance and rebound from the trough, and its H-A share discount is light.   


China Strategy: Screening the H-Share Securities Companies

Equity Bottom-Up

China International Capital Corporation / Equity Bottom-Up

China International Capital Corporation (3908 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-international-capital-corp-ltd-class-h" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">CICC (3908 HK)</a> has received CSRC approval for its merger with <a target="_blank" rel="noopener">Cinda Securities (601059 CH)</a> and <a target="_blank" rel="noopener">Dongxing Securities (601198 CH)</a>, but its share price has fallen. </li>
<li>Concerns about EPS dilution are valid, as CDS' and DXS' 1H26 earnings are weaker than CICC's. However, amid increased industry consolidation, the merger is strategically important.</li>
<li>CICC now sits at 0.57x 12-month forward P/B, just the average since 2021. We expect the merger to enhance book value, and H-shareholders will benefit more. </li>
</ul>



CICC (3908 HK) has received CSRC approval for its merger with Cinda Securities (601059 CH) and Dongxing Securities (601198 CH), but its share price has fallen. 
Concerns about EPS dilution are valid, as CDS' and DXS' 1H26 earnings are weaker than CICC's. However, amid increased industry consolidation, the merger is strategically important.
CICC now sits at 0.57x 12-month forward P/B, just the average since 2021. We expect the merger to enhance book value, and H-shareholders will benefit more. 


CICC (3908 HK): CSRC's Approval of the Merger

Cross Asset Strategy

<ul>
<li>A monthly review of how the markets and our themes are currently performing</li>
<li>Analysing what went wrong and what went right in stocks and sectors</li>
<li>Highlighting positions added or removed from the thematic investment portfolio</li>
</ul>


A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio


September Themes and Thematic Portfolio Review

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 analyzed the changes in margin trading positions of A-share stocks as of Sep 4th. The aggregated net margin trading position is USD353,626m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in CHINA MINSHENG BANKING, PING AN INSURANCE, INDUSTRIAL BANK, BANK OF BEIJING, HAOHUA CHEMICAL SCIENCE &amp; TECHNOLOGY.</li>
</ul>


We analyzed the changes in margin trading positions of A-share stocks as of Sep 4th. The aggregated net margin trading position is USD353,626m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in CHINA MINSHENG BANKING, PING AN INSURANCE, INDUSTRIAL BANK, BANK OF BEIJING, HAOHUA CHEMICAL SCIENCE &amp; TECHNOLOGY.


A-Share Margin Trading Weekly (Sep 4th): CHINA MINSHENG BANKING, PING AN INSURANCE, INDUSTRIAL BANK

China

CITIC Securities is a leading Chinese full-service investment bank providing a wide range of financial services including underwriting, brokerage, asset management, wealth management, and investment advisory. The company also offers services in securities, funds, futures, foreign exchange, and commodities. It was founded in October 1995 and is headquartered in Shenzhen, China.

Price Gauge
52-week Range	0.00 - 0.00
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CITIC Securities (6030 HK)

Insurance Sector as a Leveraged Play on the Chinese Revival

Chinese stocks in a cyclical bull market offer a promising opportunity especially in the insurance sector due to a reversal of trends and a low...

Rikki Malik

CICC (3908 HK): CSRC's Approval of the Merger

The market has concerns about the merger's EPS dilution for CICC. However, it is strategically important. Also, CICC's 0.57x 12-month forward P/B...

Osbert Tang, CFA

September Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Insurance Sector as a Leveraged Play on the Chinese Revival

​Chinese stocks in a cyclical bull market offer a promising opportunity especially in the insurance sector due to a reversal of trends and a low...

Rikki Malik

China Strategy: Screening the H-Share Securities Companies

​H-share securities companies still have room for corrections despite recent retreats, with Citic Securities and China Merchants Securities looking...

Osbert Tang, CFA

CICC (3908 HK): CSRC's Approval of the Merger

The market has concerns about the merger's EPS dilution for CICC. However, it is strategically important. Also, CICC's 0.57x 12-month forward P/B...

Osbert Tang, CFA

September Themes and Thematic Portfolio Review

We review overall market performance, our investment themes, highlighting additions and substractions in the thematic portfolio.

Rikki Malik

A-Share Margin Trading Weekly (Sep 4th): CHINA MINSHENG BANKING, PING AN INSURANCE, INDUSTRIAL BANK

We analyzed A-share margin trading positions report for the past week and highlighted CHINA MINSHENG BANKING, PING AN INSURANCE, INDUSTRIAL BANK,...

Ke Yan, CFA, FRM

Chinese stocks in a cyclical bull market offer a promising opportunity especially in the insurance sector due to a reversal of trends and a low...

H-share securities companies still have room for corrections despite recent retreats, with Citic Securities and China Merchants Securities looking...