Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Hong Kong Alpha portfolio gained 0.46 % in February resulting in a 2.99% underperformance to its benchmark. The portfolio has outperformed HK indexes by 53% to 75% since inception 10/1/24.</li>
<li>Hong Kong Alpha has generated 63% of its return from alpha and has a Sharpe ratio of 1.71 since inception. The portfolio's annualized mean excess return is 24%.</li>
<li>At the end of February, we reduced positions in the technology sector and added positions in the energy and building materials sectors.</li>
</ul>


Hong Kong Alpha portfolio gained 0.46 % in February resulting in a 2.99% underperformance to its benchmark. The portfolio has outperformed HK indexes by 53% to 75% since inception 10/1/24.
Hong Kong Alpha has generated 63% of its return from alpha and has a Sharpe ratio of 1.71 since inception. The portfolio's annualized mean excess return is 24%.
At the end of February, we reduced positions in the technology sector and added positions in the energy and building materials sectors.


HONG KONG ALPHA PORTFOLIO: (February 2026)

<ul>
<li>Hong Kong had a strong January performance which saw a continuation of material sector outperformance.  China saw ETF outflows as the National Team sole and margin requirements were tightened.</li>
<li>Hong Kong's market continues to enjoy net inflows with the most active IPO market in the world.  </li>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a> share price is under pressure ahead of its lockup expiration on March 1st.  The HVAC supplier's share price has declined by 30% since its IPO.
</li>
</ul>


Hong Kong had a strong January performance which saw a continuation of material sector outperformance.  China saw ETF outflows as the National Team sole and margin requirements were tightened.
Hong Kong's market continues to enjoy net inflows with the most active IPO market in the world.  

Aux Electric (2580 HK) share price is under pressure ahead of its lockup expiration on March 1st.  The HVAC supplier's share price has declined by 30% since its IPO.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (February 22)

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Since 2025, four H-share IPOs of the A-shares have been trading below their listing price.  They are either of slow growth or a light HA discount.</li>
<li>
<a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-company-ltd" target="_blank" data-smartkarma-citation="entities:44279:1" rel="noopener">Foshan Haitian (3288 HK)</a> and <a href="https://www.smartkarma.com/entities/kin-yat-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13688:1" rel="noopener">Fibocom Wireless (638 HK)</a> are burdened by slow earnings, while <a href="https://www.smartkarma.com/entities/seres-group" target="_blank" data-smartkarma-citation="entities:45945:1" rel="noopener">Seres Group (9927 HK)</a> and <a href="https://www.smartkarma.com/entities/car-inc" target="_blank" data-smartkarma-citation="entities:942:1" rel="noopener">Joyson Electronics (699 HK)</a> are weighted down by light discount. </li>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-longcheer-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:36881:1" rel="noopener">Shanghai Longcheer Technology (603341 CH</a><a target="_blank" rel="noopener"> )</a>'s H-share IPO appears attractive, while <a href="https://www.smartkarma.com/entities/muyuan-foods" target="_blank" data-smartkarma-citation="entities:45241:1" rel="noopener">Muyuan Foods (MUYUAN HK)</a> may need a steeper discount given its weaker earnings.</li>
</ul>


Since 2025, four H-share IPOs of the A-shares have been trading below their listing price.  They are either of slow growth or a light HA discount.

Foshan Haitian (3288 HK) and Fibocom Wireless (638 HK) are burdened by slow earnings, while Seres Group (9927 HK) and Joyson Electronics (699 HK) are weighted down by light discount. 

Shanghai Longcheer Technology (603341 CH )'s H-share IPO appears attractive, while Muyuan Foods (MUYUAN HK) may need a steeper discount given its weaker earnings.


HK Strategy: What to Avoid in the H-Share IPO of A-Shares?

<ul>
<li>The materials, healthcare, and tech sectors are leading the Hong Kong market out of its consolidation pattern, with January shaping up to be one of the best in years.</li>
<li>China and Hong Kong ETF flows were the strongest in Asia during 2025 posting significant inflows throughout the year although Korea had the most significant increase at 600%.</li>
<li>
<a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> share price plunged after it announced an investigation into its monopolistic business practices. <a href="https://www.smartkarma.com/entities/haidilao-international-holding" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao International Holding (6862 HK)</a> shares jumped after the founder returned as CEO.
</li>
</ul>


The materials, healthcare, and tech sectors are leading the Hong Kong market out of its consolidation pattern, with January shaping up to be one of the best in years.
China and Hong Kong ETF flows were the strongest in Asia during 2025 posting significant inflows throughout the year although Korea had the most significant increase at 600%.

Trip.com Group (9961 HK) share price plunged after it announced an investigation into its monopolistic business practices. Haidilao International Holding (6862 HK) shares jumped after the founder returned as CEO.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (January 14)

<ul>
<li>The Hong Kong Alpha portfolio outperformed its benchmark and all Hong Kong indexes in 2025 with an overall gain of 48.41%.  The portfolio achieved a Sharpe ratio of 1.86.</li>
<li>Alpha generation represented 59% of the portfolio's gains in 2025.  Most of this came from the materials, healthcare, and energy sectors.  HKALPHA had low exposure to the real estate sector.</li>
<li>As the Hong Kong market ends its consolidation, we added tech exposure at the end of the year and reduced underperforming positions in mostly in the utility sector.</li>
</ul>


The Hong Kong Alpha portfolio outperformed its benchmark and all Hong Kong indexes in 2025 with an overall gain of 48.41%.  The portfolio achieved a Sharpe ratio of 1.86.
Alpha generation represented 59% of the portfolio's gains in 2025.  Most of this came from the materials, healthcare, and energy sectors.  HKALPHA had low exposure to the real estate sector.
As the Hong Kong market ends its consolidation, we added tech exposure at the end of the year and reduced underperforming positions in mostly in the utility sector.


HONG KONG ALPHA PORTFOLIO: (December 2025)

China

Chifeng Jilong Gold Mining Co., Ltd. is primarily engaged in the exploration, mining, beneficiation, and sale of gold and other non-ferrous metals such as zinc, lead, copper, and molybdenum. The company also operates in polymetallic mining and comprehensive resource recycling, including waste electrical and electronic product dismantling. It is headquartered in Beijing, China, and was founded in 1998.

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

Chifeng Jilong Gold Mining (6693 HK)

HONG KONG ALPHA PORTFOLIO: (February 2026)

The war, which launched at the beginning of the month, is now into its second week and its economic effects are being reflected in global markets....

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (February 22)

Hong Kong had a strong January performance which saw a continuation of material sector outperformance. China saw ETF outflows as the National Team...

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (January 14)

Trip.com Group (9961 HK) price plunged after it announced an investigation into its monopolistic business practices. Haidilao International Holding...

David Mudd

HONG KONG ALPHA PORTFOLIO: (December 2025)

We have made several mid-month adjustments to the portfolio. We sold Sinofert (297), ENN Energy (2688) and Power Assets (6). We added positions in...

David Mudd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HONG KONG ALPHA PORTFOLIO: (February 2026)

The war, which launched at the beginning of the month, is now into its second week and its economic effects are being reflected in global markets....

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (February 22)

Hong Kong had a strong January performance which saw a continuation of material sector outperformance. China saw ETF outflows as the National Team...

David Mudd

HK Strategy: What to Avoid in the H-Share IPO of A-Shares?

​Four H-share IPOs of A-shares since 2025 are trading below the listing price due to slow growth or a light discount. Meanwhile, Shanghai Longcheer...

Osbert Tang, CFA

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (January 14)

Trip.com Group (9961 HK) price plunged after it announced an investigation into its monopolistic business practices. Haidilao International Holding...

David Mudd

HONG KONG ALPHA PORTFOLIO: (December 2025)

We have made several mid-month adjustments to the portfolio. We sold Sinofert (297), ENN Energy (2688) and Power Assets (6). We added positions in...

David Mudd

Four H-share IPOs of A-shares since 2025 are trading below the listing price due to slow growth or a light discount. Meanwhile, Shanghai Longcheer...