HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The HSI has already recovered to 2.2% above the pre-"reciprocal tariff" level, and the top 10 best-performing constituents have registered an average return of 15.6%.</li>
<li>Despite so, there are still 40 under-performing stocks, with 32 of them remain in the negative zone with an average of 4.8% loss. </li>
<li>Among them, <a href="https://www.smartkarma.com/entities/zto-express-cayman-inc" target="_blank" data-smartkarma-citation="entities:33488:1" rel="noopener">ZTO Express Cayman (2057 HK)</a>, <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing APAC (1876 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a>, and <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> look well-positioned to catch up.</li>
</ul>


The HSI has already recovered to 2.2% above the pre-"reciprocal tariff" level, and the top 10 best-performing constituents have registered an average return of 15.6%.
Despite so, there are still 40 under-performing stocks, with 32 of them remain in the negative zone with an average of 4.8% loss. 
Among them, ZTO Express Cayman (2057 HK), Budweiser Brewing APAC (1876 HK), BYD Electronics (285 HK), and Meituan (3690 HK) look well-positioned to catch up.


HK Strategy: What Are Some of the HSI Laggards to Pick Up?

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>On 12 May, China and the US issued a joint statement that the US and China will lower tariffs for 90 days by 14 May, with the US reducing its tariff from 145% to 30% and China reducing its tariff from 125% to 10%.</li><li>Overall, we believe this is a further relief on China technology supply chain after the US CBP’s exemption from reciprocal tariffs for 20 product categories on 11 Apr (our note).</li><li>Overall, we believe consumer technology (esp. Apple supply chain) with high US revenue exposure will benefit most from the China-US tariff deal. </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.

On 12 May, China and the US issued a joint statement that the US and China will lower tariffs for 90 days by 14 May, with the US reducing its tariff from 145% to 30% and China reducing its tariff from 125% to 10%.Overall, we believe this is a further relief on China technology supply chain after the US CBP’s exemption from reciprocal tariffs for 20 product categories on 11 Apr (our note).Overall, we believe consumer technology (esp. Apple supply chain) with high US revenue exposure will benefit most from the China-US tariff deal. 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.

Technology - Implications of China-US Tariff Reduction

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

<ul>
<li>Trump whipping up interest in all things AI and data center over his state visit to Saudi.</li>
<li>Pharma giving back yesterdays rebound with risks remaining over Trump's planned pricing cuts.</li>
<li>Kokusai Electric may continue moving higher post-numbers  as a potential NKY225 inclusion candidate.</li>
</ul>


Trump whipping up interest in all things AI and data center over his state visit to Saudi.
Pharma giving back yesterdays rebound with risks remaining over Trump's planned pricing cuts.
Kokusai Electric may continue moving higher post-numbers  as a potential NKY225 inclusion candidate.


Japan Morning Connection: US Opening Doors to Greater UAE/Saudi Chip Sales Driving Tech and Semis

<ul><li>Apple (AAPL US, NR) reported in-line FY2Q25 (CY1Q25) results and also provided the framework for tariff impact for the next quarter.</li><li>Overall, FY2Q revenue of US$95.4bn (+5% YoY) and EPS of US$1.65 (+8% YoY) were largely in-line with market expectations, thanks to better iPhone/iPad/Mac sales (+2%/15%/7% YoY) and services GPM, offsetting weakness of sales in China (-2% YoY) and wearables (-5% YoY).</li><li>For FY3Q25E, mgmt. guided revenue growth of “low- to mid-single digit” and GPM of 45.5%-46.5%, including impact of US$900mn tariff-related costs (20% on China imports). </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.

Apple (AAPL US, NR) reported in-line FY2Q25 (CY1Q25) results and also provided the framework for tariff impact for the next quarter.Overall, FY2Q revenue of US$95.4bn (+5% YoY) and EPS of US$1.65 (+8% YoY) were largely in-line with market expectations, thanks to better iPhone/iPad/Mac sales (+2%/15%/7% YoY) and services GPM, offsetting weakness of sales in China (-2% YoY) and wearables (-5% YoY).For FY3Q25E, mgmt. guided revenue growth of “low- to mid-single digit” and GPM of 45.5%-46.5%, including impact of US$900mn tariff-related costs (20% on China imports). 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.

Technology - Apple FY2Q25 Read-Through: IPhone/China Weakness and US$900mn Tariff Cost

<ul><li>Nvidia (NVDA, NR) disclosed that the U.S. government informed on April 9 that H20 chips will require a license for export to China and other D:5 countries, and the new requirement will be in place indefinitely.</li><li>Driven by DeepSeek’s lowcost AI models since late Jan, we see accelerated deployments of H20 servers in China, and several server ODM/component suppliers also guided strong order demand from Chinese CSPs for H20-related products.</li><li>In terms of impact, we estimate Nvidia’s inventory writedown of US$5.5bn implies US$14bn sales (GPM 60%), 1.1mn H20 chips (ASP US$12.5k) and 138k H20 AI servers (8 chips/ server). </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.

Nvidia (NVDA, NR) disclosed that the U.S. government informed on April 9 that H20 chips will require a license for export to China and other D:5 countries, and the new requirement will be in place indefinitely.Driven by DeepSeek’s lowcost AI models since late Jan, we see accelerated deployments of H20 servers in China, and several server ODM/component suppliers also guided strong order demand from Chinese CSPs for H20-related products.In terms of impact, we estimate Nvidia’s inventory writedown of US$5.5bn implies US$14bn sales (GPM 60%), 1.1mn H20 chips (ASP US$12.5k) and 138k H20 AI servers (8 chips/ server). 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.

Technology - Implications of Nvidia H20 export restriction for AI server/component supply chain

China

BYD Electronic International Co., Ltd. researches, develops, manufactures handset components such as handset casings and handset keypads and modules for handset manufacturers.  The Company also provides assembly services comprising assembly service and PCB assembly service to global handset manufacturers.

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BYD Electronics (285 HK)

HK Strategy: What Are Some of the HSI Laggards to Pick Up?

HSI has rebounded above pre-reciprocal tariff levels, with top stocks up 15.6%. However, 32 stocks remain negative, with ZTO Express, Budweiser...

Osbert Tang, CFA

Technology - Implications of China-US Tariff Reduction

Overall, we believe this is a further relief on China technology supply chain after the US CBP’s exemption from reciprocal tariffs for 20 product...

CMB International

Japan Morning Connection: US Opening Doors to Greater UAE/Saudi Chip Sales Driving Tech and Semis

Trump's visit to Saudi Arabia sparks interest in AI and data centers, Pharma stocks drop after rebound, Kokusai Electric may rise further as...

Andrew Jackson

Technology - Apple FY2Q25 Read-Through: IPhone/China Weakness and US$900mn Tariff Cost

Apple (AAPL US, NR) reported in-line FY2Q25 (CY1Q25) results and also provided the framework for tariff impact for the next quarter.

CMB International

Technology - Implications of Nvidia H20 export restriction for AI server/component supply chain

In terms of impact, we estimate Nvidia’s inventory writedown of US$5.5bn implies US$14bn sales (GPM 60%), 1.1mn H20 chips (ASP US$12.5k) and 138k...

CMB International

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HK Strategy: What Are Some of the HSI Laggards to Pick Up?

​HSI has rebounded above pre-reciprocal tariff levels, with top stocks up 15.6%. However, 32 stocks remain negative, with ZTO Express, Budweiser...

Osbert Tang, CFA

Technology - Implications of China-US Tariff Reduction

Overall, we believe this is a further relief on China technology supply chain after the US CBP’s exemption from reciprocal tariffs for 20 product...

CMB International

Japan Morning Connection: US Opening Doors to Greater UAE/Saudi Chip Sales Driving Tech and Semis

​Trump's visit to Saudi Arabia sparks interest in AI and data centers, Pharma stocks drop after rebound, Kokusai Electric may rise further as...

Andrew Jackson

Technology - Apple FY2Q25 Read-Through: IPhone/China Weakness and US$900mn Tariff Cost

Apple (AAPL US, NR) reported in-line FY2Q25 (CY1Q25) results and also provided the framework for tariff impact for the next quarter.

CMB International

Technology - Implications of Nvidia H20 export restriction for AI server/component supply chain

In terms of impact, we estimate Nvidia’s inventory writedown of US$5.5bn implies US$14bn sales (GPM 60%), 1.1mn H20 chips (ASP US$12.5k) and 138k...

CMB International

HSI has rebounded above pre-reciprocal tariff levels, with top stocks up 15.6%. However, 32 stocks remain negative, with ZTO Express, Budweiser...

Trump's visit to Saudi Arabia sparks interest in AI and data centers, Pharma stocks drop after rebound, Kokusai Electric may rise further as...