HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>State Council's announcement of China 14th 5-year Tourism Industry Development Plan recently should see positive policies and supportive measures to be rolled out over the medium term. </li>
<li>
<a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>, <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a>, <a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel International Investment (308 HK)</a> and <a href="https://www.smartkarma.com/entities/haichang-ocean-park-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11396:1" rel="noopener">Haichang Ocean Park (2255 HK)</a> are some key beneficiaries.</li>
<li>We believe <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> will benefit from the recovery of international air passenger as the Plan highlights the importance of promoting inbound/outbound tourism after the pandemic.</li>
</ul>


State Council's announcement of China 14th 5-year Tourism Industry Development Plan recently should see positive policies and supportive measures to be rolled out over the medium term. 

Fosun Tourism (1992 HK), China Tourism Group Duty Free Corp Ltd (601888 CH), China Travel International Investment (308 HK) and Haichang Ocean Park (2255 HK) are some key beneficiaries.
We believe Air China Ltd (H) (753 HK) will benefit from the recovery of international air passenger as the Plan highlights the importance of promoting inbound/outbound tourism after the pandemic.


Beneficiaries of China's 14th 5-Year Tourism Industry Development Plan

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

Anker Innovations Technology / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anker-innovations-technology-co-ltd-af2d0155-cc59-4895-b0bb-f09346c5fd0c" target="_blank" data-smartkarma-citation="entities:50274:1" rel="noopener">Anker Innovations Technology (668 HK)</a> (AIT), a global consumer electronics company, raised around US$680m in its H-share listing.</li>
<li>AIT sells products across three major product lines — smart charging and power storage, smart home and innovation, and smart audio and video.</li>
<li>We have looked at the past performance and valuations in our previous note. In this note, we talk about the trading dynamics.</li>
</ul>



Anker Innovations Technology (668 HK) (AIT), a global consumer electronics company, raised around US$680m in its H-share listing.
AIT sells products across three major product lines — smart charging and power storage, smart home and innovation, and smart audio and video.
We have looked at the past performance and valuations in our previous note. In this note, we talk about the trading dynamics.


Aequitas: Anker Innovations Technology A/H Trading - Cheap Valuation but Weakish Demand

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>, one of the standout domestic holdings within the Health Care sector, followed by <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> and <a href="https://www.smartkarma.com/entities/luxshare-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:12310:1" rel="noopener">Luxshare Precision Industry (002475 CH)</a> .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by Jiangsu Hengrui Medicine (600276 CH), one of the standout domestic holdings within the Health Care sector, followed by China Tourism Group Duty Free Corp Ltd (601888 CH) and Luxshare Precision Industry (002475 CH) .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

China's Next Generation:  Diversifying Away from Tencent and Alibaba.

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

<div>With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.</div>

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.

With more than half of the double festival holidays of China have now passed, we took an on-the-ground check for the business in the Golden Week. A walk along the Nanjing Road Pedestrian Walk in Shanghai with visits to various retail stores showed that consumption has witnessed a good, but not yet full, recovery.
We stopped by mobile phone, sportswear, jewellery and high-end luxury stores, and saw that mobile phone stores are witnessing the best customer patronage. Based on our visits, we observed that: 1.) Apple store (<a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a>) is doing better than Huawei, 2.) Nike and Adidas (<a href="https://www.smartkarma.com/entities/topsports-international" target="_blank" data-smartkarma-citation="entities:28153:1" rel="noopener">Topsports International (6110 HK)</a>) &gt; FILA (<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>) and <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a>, 3.) <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> &gt; Lao Miao (<a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a>) and 4.) high-end luxury goods are in good demand, and this is positive to <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> and <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a>. Read on for pictures and more details.

With more than half of the double festival holidays of China have now passed, we took an on-the-ground check for the business in the Golden Week. A walk along the Nanjing Road Pedestrian Walk in Shanghai with visits to various retail stores showed that consumption has witnessed a good, but not yet full, recovery.
We stopped by mobile phone, sportswear, jewellery and high-end luxury stores, and saw that mobile phone stores are witnessing the best customer patronage. Based on our visits, we observed that: 1.) Apple store (Apple Inc (AAPL US)) is doing better than Huawei, 2.) Nike and Adidas (Topsports International (6110 HK)) &gt; FILA (Anta Sports Products (2020 HK)) and Li Ning Co Ltd (2331 HK), 3.) Chow Tai Fook Jewellery (1929 HK) &gt; Lao Miao (Fosun International (656 HK)) and 4.) high-end luxury goods are in good demand, and this is positive to Hang Lung Properties (101 HK) and China Tourism Group Duty Free Corp Ltd (601888 CH). Read on for pictures and more details.

China on the Ground: Hey, How's Your Golden Week?

China

China Tourism Group Duty Free Corporation Limited engages in sales of duty free goods and tax goods. The Company sells tobacco, wine and spirits, perfume, cosmetics, fashion and accessories, watches, jewelry, food, luggage products,and other products. China Tourism Group Duty Free also engages in investment and development of tourism destination commercial complexes.

China Tourism Group Duty Free Corp Ltd (601888 CH)

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China Tourism Group Duty Free Corp Ltd (601888 CH)

Beneficiaries of China's 14th 5-Year Tourism Industry Development Plan

China's 14th 5-year Tourism Development Plan are positive to many players in the tourism industry. We expect more favourable policies and...

Osbert Tang, CFA

Aequitas: Anker Innovations Technology A/H Trading - Cheap Valuation but Weakish Demand

Anker Innovations Technology (668 HK) (AIT), a global consumer electronics company, raised around US$680m in its H-share listing. In this note, we...

Sumeet Singh

China's Next Generation: Diversifying Away from Tencent and Alibaba.

China exposure is becoming more concentrated in a small number of large cap stocks. We identify the next generation of China stocks by analyzing...

Steven Holden

China Macro and Geopolitical Briefing

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and...

JL Warren Capital

China on the Ground: Hey, How's Your Golden Week?

With more than

Osbert Tang, CFA

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