Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.</p><p>In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.</p><table class="table table-striped"><tbody>
<tr>
<td><p>Sector</p></td>
<td style="text-align: right;"><p>Last<br>Week</p></td>
<td style="text-align: right;"><p>Previous<br>Week</p></td>
<td style="text-align: right;"><p>3wks<br>Ago</p></td>
<td style="text-align: right;"><p>4wks<br>Ago</p></td>
</tr>
<tr>
<td><p>Consumer</p></td>
<td style="text-align: right;"><p>-  1.20%</p></td>
<td style="text-align: right;"><p>+ 2.55%</p></td>
<td style="text-align: right;"><p>+ 2.32%</p></td>
<td style="text-align: right;"><p>-  2.62%</p></td>
</tr>
<tr>
<td><p>Energy</p></td>
<td style="text-align: right;"><p>+ 1.43%</p></td>
<td style="text-align: right;"><p>-  1.64%</p></td>
<td style="text-align: right;"><p>+ 1.98%</p></td>
<td style="text-align: right;"><p>-  0.59%</p></td>
</tr>
<tr>
<td><p>Financials &amp; Real Estate</p></td>
<td style="text-align: right;"><p>+ 0.10%</p></td>
<td style="text-align: right;"><p>+ 0.29%</p></td>
<td style="text-align: right;"><p>+ 0.62%</p></td>
<td style="text-align: right;"><p>-  1.73%</p></td>
</tr>
<tr>
<td><p>Health Care &amp; Info Tech</p></td>
<td style="text-align: right;"><p>+ 1.45%</p></td>
<td style="text-align: right;"><p>-  1.52%</p></td>
<td style="text-align: right;"><p>+ 2.29%</p></td>
<td style="text-align: right;"><p>-  0.27%</p></td>
</tr>
<tr>
<td><p>Industrials</p></td>
<td style="text-align: right;"><p>+ 0.26%</p></td>
<td style="text-align: right;"><p>-  0.62%</p></td>
<td style="text-align: right;"><p>+ 2.48%</p></td>
<td style="text-align: right;"><p>-  1.30%</p></td>
</tr>
<tr>
<td><p>Materials</p></td>
<td style="text-align: right;"><p>+ 3.08%</p></td>
<td style="text-align: right;"><p>-  0.57%</p></td>
<td style="text-align: right;"><p>+ 2.66%</p></td>
<td style="text-align: right;"><p>-  0.95%</p></td>
</tr>
<tr>
<td><p>Utilities</p></td>
<td style="text-align: right;"><p>+ 0.99%</p></td>
<td style="text-align: right;"><p>+ 0.25%</p></td>
<td style="text-align: right;"><p>+ 1.06%</p></td>
<td style="text-align: right;"><p>-  2.45%</p></td>
</tr>
<tr>
<td><p>Sector Average</p></td>
<td style="text-align: right;"><p>+ 0.87%</p></td>
<td style="text-align: right;"><p>-  0.18%</p></td>
<td style="text-align: right;"><p>+ 1.92%</p></td>
<td style="text-align: right;"><p>-  1.41%</p></td>
</tr>
</tbody></table><p>This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. </p><div class="content-highlight"><p>There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. </p></div><div><div><h3>The H/A Spread Market</h3></div></div><div>
<p>The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/832/original/Screenshot+2021-02-20+at+5.17.17+PM.png?1613812651" class="editor-image img-responsive" data-smartkarma-image-id="189832"></figure></section><hr>
</div><div><div><h3>Consumer Sector</h3></div></div><div>
<p>The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. </p>
<p><a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> taking its place moving 2.4% in the two weeks and 10.7% in four.</p>
</div><div class="content-highlight">
<p>Two weeks ago, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades gained an average of 1.67% in spread terms on the week.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/833/original/Screenshot+2021-02-20+at+5.28.45+PM.png?1613813350" class="editor-image img-responsive" data-smartkarma-image-id="189833"></figure></section><p>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</p>

Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.

Sector
Last Week
Previous Week
3wks Ago
4wks Ago


Consumer
-  1.20%
+ 2.55%
+ 2.32%
-  2.62%


Energy
+ 1.43%
-  1.64%
+ 1.98%
-  0.59%


Financials &amp; Real Estate
+ 0.10%
+ 0.29%
+ 0.62%
-  1.73%


Health Care &amp; Info Tech
+ 1.45%
-  1.52%
+ 2.29%
-  0.27%


Industrials
+ 0.26%
-  0.62%
+ 2.48%
-  1.30%


Materials
+ 3.08%
-  0.57%
+ 2.66%
-  0.95%


Utilities
+ 0.99%
+ 0.25%
+ 1.06%
-  2.45%


Sector Average
+ 0.87%
-  0.18%
+ 1.92%
-  1.41%

This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. The H/A Spread Market
The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. 

Consumer Sector
The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. 
BYD (1211 HK) saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with Fuyao Glass Industry Group (3606 HK) taking its place moving 2.4% in the two weeks and 10.7% in four.

Two weeks ago, I recommended staying long the Great Wall Motor (2333 HK), and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades gained an average of 1.67% in spread terms on the week.
For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group Holding (BABA US)</a> plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press reports. Alibaba is hoping to take advantage of an anticipated record sales on Singles Day to push ahead with its Hong Kong listing hearing. If the listing hearing is successful, the deal could price as soon as the end of the week.</p><div class="content-highlight"><p>If successful, Alibaba will be the largest company to have a secondary listing in Hong Kong with a primary listing in the US. Alibaba will likely price its H-shares at a discount to its ADRs to entice investors to participate in the secondary listing. Our analysis suggests that Alibaba pricing its H-shares at a 1.5% to 3.0% discount to its ADRs would be reasonable.</p></div>

Alibaba Group Holding (BABA US) plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press reports. Alibaba is hoping to take advantage of an anticipated record sales on Singles Day to push ahead with its Hong Kong listing hearing. If the listing hearing is successful, the deal could price as soon as the end of the week.If successful, Alibaba will be the largest company to have a secondary listing in Hong Kong with a primary listing in the US. Alibaba will likely price its H-shares at a discount to its ADRs to entice investors to participate in the secondary listing. Our analysis suggests that Alibaba pricing its H-shares at a 1.5% to 3.0% discount to its ADRs would be reasonable.

Alibaba HK Listing: Thoughts on the Premium/Discount to the ADRs

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<p>In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. </p><p>We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well as between USD 1 billion and USD 5 billion. </p><p>In this insight, we will highlight the consecutive three weeks of net outflow from the A-share market. We highlight the inflows into <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1">Foshan Haitian Flavouring &amp; Food (603288 CH)</a>, a leading culinary ingredient manufacturer, in contrast to the outflows from <a href="https://www.smartkarma.com/entities/1553" target="_blank" data-smartkarma-citation="entities:1553:1">Kweichow Moutai Co Ltd A (600519 CH),</a> a leading premium hard liquor manufacturer.</p>

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well as between USD 1 billion and USD 5 billion. In this insight, we will highlight the consecutive three weeks of net outflow from the A-share market. We highlight the inflows into Foshan Haitian Flavouring &amp; Food (603288 CH), a leading culinary ingredient manufacturer, in contrast to the outflows from Kweichow Moutai Co Ltd A (600519 CH), a leading premium hard liquor manufacturer.

Shanghai/​Shenzhen Connect Snippet: Moutai Out, Foshan Haitian In (2019-05-31)

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p>After hitting our core rally target at DXY 97 we have noted cracks in USD strength and transitioning into some USD short positions. More importantly we outlined USD/CNH weakness from our turn target at 6.94 with pressure mounting to break below 6.80 and press on the bigger 6.70 support. This sequence is a positive for metals (gold, copper and palladium) that is expected to lift linked assets this week and after a September draw down we see scope for metals to perform in October. WTI remains bullish in our work and leading the rally sequence.</p><p>We run through some stock long themes in Asia in a webcast.</p>

After hitting our core rally target at DXY 97 we have noted cracks in USD strength and transitioning into some USD short positions. More importantly we outlined USD/CNH weakness from our turn target at 6.94 with pressure mounting to break below 6.80 and press on the bigger 6.70 support. This sequence is a positive for metals (gold, copper and palladium) that is expected to lift linked assets this week and after a September draw down we see scope for metals to perform in October. WTI remains bullish in our work and leading the rally sequence.We run through some stock long themes in Asia in a webcast.

Metals Long Theme on Weak USD and China Bounce

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Equity Bottom-Up

Aluminum Corporation Of China / Equity Bottom-Up

<p><strong>PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:</strong></p><p>We raise our annual average <a href="https://www.smartkarma.com/entities/22876" target="_blank" data-smartkarma-citation="entities:22876:1">Coal (COAL COMDTY)</a> price forecasts by 10% after strong price gains of 12% in May.  China's anti-pollution campaigns have curbed coal production and resulted in regional shortages. However, looking beyond these recent bottlenecks we remain bearish on the outlook for growth in China's coal consumption and pricing due to Beijing's long-stated aim at reducing air pollution.</p><p>Additionally, we cut our annual average <a href="https://www.smartkarma.com/entities/22870" target="_blank" data-smartkarma-citation="entities:22870:1">Gold</a>…</p>

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains of 12% in May.  China's anti-pollution campaigns have curbed coal production and resulted in regional shortages. However, looking beyond these recent bottlenecks we remain bearish on the outlook for growth in China's coal consumption and pricing due to Beijing's long-stated aim at reducing air pollution.Additionally, we cut our annual average Gold…

Energy Drives Commodity Price Gains in May

China

Aluminum Corporation of China Limited manufactures aluminum products. The Company offers aluminum ores, aluminum, bauxite, coal, and other products. Aluminum of China serves coal mining, logistics, and other businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Aluminum of China (601600 CH)

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

H/A spreads have been reasonably volatile over the CNY period, but again they net narrowed over two weeks. There are still several sectors where...

Travis Lundy

Alibaba HK Listing: Thoughts on the Premium/Discount to the ADRs

Alibaba Group Holding (BABA US) plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press...

Arun George

Shanghai/Shenzhen Connect Snippet: Moutai Out, Foshan Haitian In (2019-05-31)

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and...

Ke Yan, CFA, FRM

Metals Long Theme on Weak USD and China Bounce

After hitting our core rally target at DXY 97 we have noted cracks in USD strength and transitioning into some USD short positions. More...

Thomas Schroeder

Energy Drives Commodity Price Gains in May

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains...

Charles Spencer

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

H/A spreads have been reasonably volatile over the CNY period, but again they net narrowed over two weeks. There are still several sectors where...

Travis Lundy

Alibaba HK Listing: Thoughts on the Premium/Discount to the ADRs

Alibaba Group Holding (BABA US) plans to launch a $10-15 billion secondary listing in Hong Kong on 11 November, Singles Day, according to press...

Arun George

Shanghai/​Shenzhen Connect Snippet: Moutai Out, Foshan Haitian In (2019-05-31)

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and...

Ke Yan, CFA, FRM

Metals Long Theme on Weak USD and China Bounce

After hitting our core rally target at DXY 97 we have noted cracks in USD strength and transitioning into some USD short positions. More...

Thomas Schroeder

Energy Drives Commodity Price Gains in May

PRICE FORECAST CHANGES - RAISING COAL; CUTTING GOLD:We raise our annual average Coal (COAL COMDTY) price forecasts by 10% after strong price gains...

Charles Spencer

Shanghai/Shenzhen Connect Snippet: Moutai Out, Foshan Haitian In (2019-05-31)