HK/China Equity Long-Short

Osbert Tang, CFA

Quantitative Analysis

<ul>
<li>"Buy the Worst" strategy returned 1.9% in 2022, sharply outperformed HSI's 15% drop. In the last two years, this strategy recorded massive aggregate outperformance of 41pp against HSI.</li>
<li>For 2023, we expect to switch into <a href="https://www.smartkarma.com/entities/country-garden-holdings-co" target="_blank" data-smartkarma-citation="entities:5225:1" rel="noopener">Country Garden (2007 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services (6098 HK)</a>, <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> and <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Industries (669 HK)</a>. </li>
<li>Aggressive investors can consider shorting 2022 best-performing portfolio of <a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a>, <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>, <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment (27 HK)</a>, <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua (1088 HK)</a> and <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom (762 HK)</a>. </li>
</ul>


"Buy the Worst" strategy returned 1.9% in 2022, sharply outperformed HSI's 15% drop. In the last two years, this strategy recorded massive aggregate outperformance of 41pp against HSI.
For 2023, we expect to switch into Country Garden (2007 HK), Sunny Optical (2382 HK), Country Garden Services (6098 HK), Geely Auto (175 HK) and Techtronic Industries (669 HK). 
Aggressive investors can consider shorting 2022 best-performing portfolio of Sands China (1928 HK), Haidilao (6862 HK), Galaxy Entertainment (27 HK), China Shenhua (1088 HK) and China Unicom (762 HK). 


"Buy the Worst" HSI Strategy: Big Win in 2022 and Let's See if It Can Sustain in 2023

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.

<ul>
<li>We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 23rd.</li>
<li>The average A-H premium changed by -1.6ppt weeok on week, led by consumer staples, communication services, energy and offset by information technology, real estate.</li>
<li>We highlight weekly changes in A-H premium for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao Glass, Shenhua, China Minsheng, Shanghai Junshi, Luoyang Glass.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 23rd.
The average A-H premium changed by -1.6ppt weeok on week, led by consumer staples, communication services, energy and offset by information technology, real estate.
We highlight weekly changes in A-H premium for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao Glass, Shenhua, China Minsheng, Shanghai Junshi, Luoyang Glass.


A-H Premium Weekly (Dec 23rd): Xinjiang Gold Wind, Haier Smart Home

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Haidilao International Holding / Index Rebalance

<ul>
<li>It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.</li>
<li>The coming week should be relatively quiet with the announcement of the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> changes expected.</li>
<li>There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index-etf" target="_blank" data-smartkarma-citation="entities:25:1" rel="noopener">Hang Seng H Share Index ETF</a> and outflows from <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong</a>.</li>
</ul>


It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.
The coming week should be relatively quiet with the announcement of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) changes expected.
There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to Hang Seng H Share Index ETF and outflows from Tracker Fund of Hong Kong.


Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

<ul>
<li>The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.</li>
<li>In our final weekly for the year, we look back at 2022 to see which stocks, countries, and currencies out and underperformed in the Global Emerging Markets.</li>
<li>We also look forward to 2023F to see what’s expected for the major GEM economies next year.  </li>
</ul>


The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
In our final weekly for the year, we look back at 2022 to see which stocks, countries, and currencies out and underperformed in the Global Emerging Markets.
We also look forward to 2023F to see what’s expected for the major GEM economies next year.  


Event-Driven

<ul>
<li>Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.</li>
<li>The changes could lead to an increase in the index weighting for <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> and the inclusion of <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> at the March rebalance.</li>
<li>The improved rankings for the Secondary and Dual Primary listings will lead to other changes to the index in March.</li>
</ul>


Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
The changes could lead to an increase in the index weighting for Li Auto (2015 HK) and the inclusion of XPeng (9868 HK) at the March rebalance.
The improved rankings for the Secondary and Dual Primary listings will lead to other changes to the index in March.


HSCEI: Index Handling Changes for Secondary & Dual-Primary Listings

China

China Shenhua Energy Company Limited is an integrated coal-based energy company focusing on the coal and power businesses in China.  The Company also owns and operates an integrated coal transportation network consisting of dedicated rail lines and port facilities.

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China Shenhua Energy Co H (1088 HK)

"Buy the Worst" HSI Strategy: Big Win in 2022 and Let's See if It Can Sustain in 2023

"Buy the Worst" strategy outperformed HSI by 16.9pp in 2022. For 2023, we expect to switch into Country Garden, Sunny Optical, Country Garden...

Osbert Tang, CFA

A-H Premium Weekly (Dec 23rd): Xinjiang Gold Wind, Haier Smart Home

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao...

Ke Yan, CFA, FRM

Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

GEM Weekly: 2022 Yearend Edition

In our final weekly for the year, we look back at 2022 to see which GEM stocks, countries, and currencies out and underperformed, and look forward...

Wium Malan, CFA

HSCEI: Index Handling Changes for Secondary & Dual-Primary Listings

Hang Seng Indexes has changed the index handling for Secondary and Dual Primary Listings. Xpeng could be added to the HSCEI in March replacing...

Brian Freitas

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52-week Range

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