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

DZT Research

DZT 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 analyse the changes of A-H premium on 195 stocks over the last week. The average A-H premium was 83.0% as of Jul 17th.</li>
<li>The average A-H premium changed by -1.9ppt week-on-week, led by real estate, consumer staples, energy.</li>
<li>We highlight weekly changes in A-H premium for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.</li>
</ul>


We analyse the changes of A-H premium on 195 stocks over the last week. The average A-H premium was 83.0% as of Jul 17th.
The average A-H premium changed by -1.9ppt week-on-week, led by real estate, consumer staples, energy.
We highlight weekly changes in A-H premium for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.


A-H Premium Weekly (Jul 17th): Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining

Founder of Antler Capital

Stanley Tsai, CFA

Thematic (Sector/Industry)

<p>In the spirit of the long-awaited UEFA Euro 2020, we present our inaugural "China Financials: Silver Linings Playbook", which summarizes our views on the names that are best positioned to navigate an environment of progressively slower credit growth, tighter liquidity and rising defaults. </p>
<p><strong>Our screen consists of 100+ stocks in the A/H share universe, as well as a select number of international / non-traditional names that have significant exposures to China's financial system. </strong>We have a preference for larger-cap and liquid names, which are then filtered by our opinions on their fundamentals, value, momentum and recent trading volumes. We also try to make our selections versatile and less vulnerable to single-factor movements.</p>
<p><strong>Each player's position on the pitch and the team formation itself convey incremental information about our thoughts on the sector's performance over a three to six-month horizon. </strong>To the extent possible, we intend to update our ideas on a periodic basis. This provides a feedback loop with our other ongoing research on the industry.</p>
<p><strong>However, our team selections are not investment recommendations. </strong>Instead, they are meant to give structure to our analysis. The playbook allows us to articulate our views on the sector in a timely, concise manner. Our objective is to ensure we don't throw the baby out with the bathwater as sentiments on the sector remain bleak.</p>
<p><strong>With that out of the way, the following is our starting XI.</strong> We will dive deeper into our rationale for our selections in the remainder of this insight (Exhibit 1).</p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 726.047px;"><strong>Exhibit 1: China Financials | Silver Linings Playbook</strong></td>
</tr>
<tr>
<td style="width: 726.047px;">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/213/768/original/image_768460236451623962508577.png?1623962508" class="editor-image img-responsive" data-smartkarma-image-id="213768"></figure>
<p></p>
<p>Source: Our analysis</p>
</td>
</tr>
</tbody>
</table>
<p><strong>Related Insights</strong></p>
<p><a href="https://www.smartkarma.com/insights/china-macro-consumers-remain-on-the-sidelines-as-their-home-equity-grows" target="_blank" data-smartkarma-citation="insights:53210" rel="noopener">China Macro: Consumers Remain on the Sidelines, as Their Home Equity Grows</a> </p>
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In the spirit of the long-awaited UEFA Euro 2020, we present our inaugural "China Financials: Silver Linings Playbook", which summarizes our views on the names that are best positioned to navigate an environment of progressively slower credit growth, tighter liquidity and rising defaults. 
Our screen consists of 100+ stocks in the A/H share universe, as well as a select number of international / non-traditional names that have significant exposures to China's financial system. We have a preference for larger-cap and liquid names, which are then filtered by our opinions on their fundamentals, value, momentum and recent trading volumes. We also try to make our selections versatile and less vulnerable to single-factor movements.
Each player's position on the pitch and the team formation itself convey incremental information about our thoughts on the sector's performance over a three to six-month horizon. To the extent possible, we intend to update our ideas on a periodic basis. This provides a feedback loop with our other ongoing research on the industry.
However, our team selections are not investment recommendations. Instead, they are meant to give structure to our analysis. The playbook allows us to articulate our views on the sector in a timely, concise manner. Our objective is to ensure we don't throw the baby out with the bathwater as sentiments on the sector remain bleak.
With that out of the way, the following is our starting XI. We will dive deeper into our rationale for our selections in the remainder of this insight (Exhibit 1).



Exhibit 1: China Financials | Silver Linings Playbook





Source: Our analysis




Related Insights
China Macro: Consumers Remain on the Sidelines, as Their Home Equity Grows 
Glut and Famine: We Might See Snow in China This Summer 
China Macro: PPI Peaks, while CPI Eases Tightening Fears 
China Macro: Exports Disappoint, but It's Still Early in the Game 
Glut and Famine: China's Monetary Conditions a Notch Tighter in May 
ICBC: The Bond Identity | A Zero-Growth Dividend Discount Story 
BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

China Financials: Silver Linings Playbook

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 22nd.</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 Alibaba, China Life, China Mobile, PICC P&amp;C, SMIC, Tencent, Geely Automobile, Xiaomi, Meituan, AIA.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 22nd.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, China Life, China Mobile, PICC P&amp;C, SMIC, Tencent, Geely Automobile, Xiaomi, Meituan, AIA.


HK Connect Flows Weekly (May 22nd): Alibaba, China Life, China Mobile, PICC P&C, SMIC, Tencent

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p><em>An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the spreads are trading within their own historical ranges.</em></p>
<div>
<h2>The Nitty-Gritty Details Follow</h2>
</div>
<p>There are five sets of data for now:<br>1.   HK-Shanghai Connect Southbound Turnover and Net Buying vs Indices and HKEx Turnover<br>2.   Top 20 Net Southbound buys and sells over the last 5 days<br>3.   H-Share/A-Share Discounts, Changes in Discount over 1 and 4 wks, Changes in Southbound Flow<br>4.   Southbound Flow as a % of Volume and Float on All Eligible Stocks<br>5.   H-Share/A-Share Sector Discount Ranges and Averages Charted Over the Last 12 months </p>
<div>
<h2>Historical Southbound Flows:  Outright &amp; vs HKEx Turnover</h2>
</div>
<p>Net Southbound outflows continued for the fourth month in a row as stock prices continue to fall (net Northbound flows are, on average, still positive, but the last two weeks have seen several net selling days).</p>
<div class="content-remarks">
<p>Note: The charts below show <em>only</em> HK-Shanghai Connect. The HK-Shenzhen Southbound data shows similar patterns in the short time it has been live, and total volumes are on the order of 1/3 the size of HK-Shanghai Connect. </p>
</div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/056/709/original/Screen%20Shot%202018-07-03%20at%2011.41.56%20AM.png?1530589373" class="editor-image img-responsive" data-smartkarma-image-id="56709"></figure>
<div style="text-align: left;" class="content-caption">data: Bloomberg, Travis Lundy</div>

An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the spreads are trading within their own historical ranges.

The Nitty-Gritty Details Follow

There are five sets of data for now: 1.   HK-Shanghai Connect Southbound Turnover and Net Buying vs Indices and HKEx Turnover 2.   Top 20 Net Southbound buys and sells over the last 5 days 3.   H-Share/A-Share Discounts, Changes in Discount over 1 and 4 wks, Changes in Southbound Flow 4.   Southbound Flow as a % of Volume and Float on All Eligible Stocks 5.   H-Share/A-Share Sector Discount Ranges and Averages Charted Over the Last 12 months 

Historical Southbound Flows:  Outright &amp; vs HKEx Turnover

Net Southbound outflows continued for the fourth month in a row as stock prices continue to fall (net Northbound flows are, on average, still positive, but the last two weeks have seen several net selling days).

Note: The charts below show only HK-Shanghai Connect. The HK-Shenzhen Southbound data shows similar patterns in the short time it has been live, and total volumes are on the order of 1/3 the size of HK-Shanghai Connect. 


data: Bloomberg, Travis Lundy

Quiddity Weekly H/A: Spread Monitor & Southbound Flows [Week to 29 Jun 2018]

Head of Research at Fusion Wealth Management Ltd

Michael McGaughy

<p>In my research and investing I stress three things: people, structure, and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap. </p><p>This note is actually not about any of that and instead just a quick one about bitcoin and how my initial skepticism may have been wrong.  I usually don’t write “macro” or ‘thought pieces’…</p>

In my research and investing I stress three things: people, structure, and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap. This note is actually not about any of that and instead just a quick one about bitcoin and how my initial skepticism may have been wrong.  I usually don’t write “macro” or ‘thought pieces’…

China

China Merchants Securities Co., Ltd. is a financial services company primarily engaged in securities businesses. It offers a broad range of services including brokerage and wealth management, investment banking, investment management, and investment and trading of various financial products. The company was founded in 1991 and is headquartered in Shenzhen, China.

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China Merchants Securities (6099 HK)

A-H Premium Weekly (Jul 17th): Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.

Ke Yan, CFA, FRM

China Financials: Silver Linings Playbook

Our Silver Linings Playbook outlines our views on the China financials names that are most likely to remain resilient in the face of macro...

Stanley Tsai, CFA

HK Connect Flows Weekly (May 22nd): Alibaba, China Life, China Mobile, PICC P&C, SMIC, Tencent

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Alibaba, China Life, China Mobile, PICC P&C, SMIC,...

Ke Yan, CFA, FRM

Quiddity Weekly H/A: Spread Monitor & Southbound Flows [Week to 29 Jun 2018]

An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the...

Travis Lundy

Bitcoin - The View From Lagos

In my research and investing I stress three things: people, structure, and value. I look for companies that are controlled and managed by quality...

Michael McGaughy

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