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

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>A big structural change to underpin consumer demand goes unnoticed</li>
<li>Efforts to prop up retail sales this year have had the desired effect</li>
<li>We change up the members of the original consumer basket</li>
</ul>


A big structural change to underpin consumer demand goes unnoticed
Efforts to prop up retail sales this year have had the desired effect
We change up the members of the original consumer basket


Low Bar, High Bounce: China’s Consumer Comeback

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>The consumption trend in Apr 2025 improved MoM across most sub-sectors compared to Mar 2025.</li><li>Numbers during the 2025 5-1 holidays either maintained this trend or further improved, mainly thanks to: 1) a low base, 2) improving weather conditions, 3) longer holidays compared to last year, and 4) fairly robust inbound tourism growth.</li><li>By subsector, apparel and tourism-hotel outperformed our expectations, sportswear and home appliances met expectations, while catering lagged behind. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The consumption trend in Apr 2025 improved MoM across most sub-sectors compared to Mar 2025.Numbers during the 2025 5-1 holidays either maintained this trend or further improved, mainly thanks to: 1) a low base, 2) improving weather conditions, 3) longer holidays compared to last year, and 4) fairly robust inbound tourism growth.By subsector, apparel and tourism-hotel outperformed our expectations, sportswear and home appliances met expectations, while catering lagged behind. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Consumer Discretionary - Constructive trend in S-R but cautious in L-R

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 analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 11th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent, China Mobile, Innovent Bio, Zijin Mining.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 11th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent, China Mobile, Innovent Bio, Zijin Mining.


HK Connect Flows Weekly (Sep 11th): Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>During Hong Kong's market correction during November, we noticed that the Put/Call spread stayed below 1 and the skew moved to its lowest level in 3 years both bullish signals.</li>
<li>
<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings (9987 HK)</a> share price had a golden cross breakout on December 3, as the casual dining sector in China shows growth going into next year.
</li>
<li>
<a href="https://www.smartkarma.com/entities/miniso-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:36659:1" rel="noopener">MINISO Group Holding (9896 HK)</a> had a breakout from a falling wedge pattern relative to MXEF.  The gap up in the share price and momentum signals confirms the uptrend.
</li>
</ul>


During Hong Kong's market correction during November, we noticed that the Put/Call spread stayed below 1 and the skew moved to its lowest level in 3 years both bullish signals.

Yum China Holdings (9987 HK) share price had a golden cross breakout on December 3, as the casual dining sector in China shows growth going into next year.


MINISO Group Holding (9896 HK) had a breakout from a falling wedge pattern relative to MXEF.  The gap up in the share price and momentum signals confirms the uptrend.



Technically Speaking, Breakouts and Breakdowns: HONG KONG (DECEMBER 5)

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>The Rmb6trn of the new debt swap quota may disappoint the market given the lack of one-time direct stimulus. However, the underlying implications should not be overlooked.</li>
<li>A better balance sheet and savings in interest expenses will free up the resources of local governments, benefiting <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> and <a href="https://www.smartkarma.com/entities/china-everbright-environment-group-limited" target="_blank" data-smartkarma-citation="entities:15946:1" rel="noopener">China Everbright Environment (257 HK)</a>. </li>
<li>Shanghai has immediately rolled out consumption coupon distribution, which is positive for companies in the restaurant, travel, movies, and sports sectors. </li>
</ul>


The Rmb6trn of the new debt swap quota may disappoint the market given the lack of one-time direct stimulus. However, the underlying implications should not be overlooked.
A better balance sheet and savings in interest expenses will free up the resources of local governments, benefiting China Communications Construction (1800 HK) and China Everbright Environment (257 HK). 
Shanghai has immediately rolled out consumption coupon distribution, which is positive for companies in the restaurant, travel, movies, and sports sectors. 


China & HK Strategy: Stock Ideas on China's Debt Swap Plan

China

ANTA Sports designs, develops, manufactures, and markets professional sports products, including footwear, apparel, and accessories. The company operates a multi-brand portfolio that includes ANTA, FILA (in China), DESCENTE, KOLON SPORT, and JACK WOLFSKIN, and is the largest shareholder of Amer Sports. It was founded in 1991 and is headquartered in Jinjiang, Fujian, China.

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ANTA Sports (2020 HK)

Low Bar, High Bounce: China’s Consumer Comeback

One of the members of our consumer basket, China Duty Free $1880, is up 16% today and 28% since we published, highlighting the asymmetric nature of...

Rikki Malik

Consumer Discretionary - Constructive trend in S-R but cautious in L-R

Numbers during the 2025 5-1 holidays either maintained this trend or further improved, mainly thanks to: 1) a low base, 2) improving weather...

CMB International

HK Connect Flows Weekly (Sep 11th): Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent,...

Ke Yan, CFA, FRM

Technically Speaking, Breakouts and Breakdowns: HONG KONG (DECEMBER 5)

Hong Kong show decreased volatility and increased mainland buying continue since the US election. YUM China share price broke out (golden...

David Mudd

China & HK Strategy: Stock Ideas on China's Debt Swap Plan

China's new debt swap quota will benefit local governments and infrastructure companies. Shanghai's consumption coupon distribution is positive for...

Osbert Tang, CFA

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