Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.</li>
<li>Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.</li>
<li>Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). </li>
</ul>


A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.
Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land - net buying of SOEs, selling of tech.
Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai). 


HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Incorporated in Beijing in July 2014, <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> is a state-owned telecommunications company that provides telecommunications tower construction, tower maintenance, ancillary facilities management and related services in China. 
As at 31 December 2020, China Tower operated and managed 2.023 million tower sites and its total assets were RMB337.4 billion, and it was therefore commonly known as the world's largest telecommunications tower infrastructure service provider. 
Amid aggressive 5G rollout in China in 2020, <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> was initially poised to be a key beneficiary of the 5G secular growth story. Instead, its share price performance has significantly underperformed both the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> and its telecommunication tower infrastructure peers listed internationally over the past 12 to 18 months. 
This was attributed to <a href="https://asia.nikkei.com/Spotlight/5G-networks/Chinese-telecom-operators-cut-back-5G-network-construction" target="_blank" rel="noopener">weaker</a> than expected 5G-related demand for new towers, which was in turn due to a combination of factors, such as:
<ol>
<li>slower than expected 5G adoption;</li>
<li>China telecom operators, namely <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom (H) (728 HK)</a>, <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> and new entrant China Broadcast Network, striking partnerships to share network frequency bands; and </li>
<li>where possible, China telecom operators opting for co-location of base stations to save tower deployment capital expenditures. </li>
</ol>
In this Insight, we discuss if China Tower is past its trough and whether the upcoming tower lease negotiations in 2022 will become an overhang. Further, we address potential corporate governance concerns given that its major shareholders - that is, the Big 3 China telecom operators - are also its largest customers and therefore have considerable influence on China Tower's business decisions.

Incorporated in Beijing in July 2014, China Tower (788 HK) is a state-owned telecommunications company that provides telecommunications tower construction, tower maintenance, ancillary facilities management and related services in China. 
As at 31 December 2020, China Tower operated and managed 2.023 million tower sites and its total assets were RMB337.4 billion, and it was therefore commonly known as the world's largest telecommunications tower infrastructure service provider. 
Amid aggressive 5G rollout in China in 2020, China Tower (788 HK) was initially poised to be a key beneficiary of the 5G secular growth story. Instead, its share price performance has significantly underperformed both the Hong Kong Hang Seng Index (HSI INDEX) and its telecommunication tower infrastructure peers listed internationally over the past 12 to 18 months. 
This was attributed to weaker than expected 5G-related demand for new towers, which was in turn due to a combination of factors, such as:

slower than expected 5G adoption;
China telecom operators, namely China Telecom (H) (728 HK), China Unicom Hong Kong (762 HK), China Mobile (941 HK) and new entrant China Broadcast Network, striking partnerships to share network frequency bands; and 
where possible, China telecom operators opting for co-location of base stations to save tower deployment capital expenditures. 

In this Insight, we discuss if China Tower is past its trough and whether the upcoming tower lease negotiations in 2022 will become an overhang. Further, we address potential corporate governance concerns given that its major shareholders - that is, the Big 3 China telecom operators - are also its largest customers and therefore have considerable influence on China Tower's business decisions. 

China Tower (788 HK) - Deep Value, Though Lease Negotiation Overhang Persists

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

Shenton Research

Shenton 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.

Index Rebalance

<ul>
<li>We screen the Mainland Securities ahead of the HSCEI review result, due on 20 Nov 2026 after market close.</li>
<li>One ADD and one DELETE are screened as high-conviction calls this cycle.</li>
<li>We also include one mid-conviction ADD and one low-conviction DELETE.</li>
</ul>


We screen the Mainland Securities ahead of the HSCEI review result, due on 20 Nov 2026 after market close.
One ADD and one DELETE are screened as high-conviction calls this cycle.
We also include one mid-conviction ADD and one low-conviction DELETE.


Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>HK Alpha portfolio gained 3.45% in August, outperforming its benchmark by 2.67%.  Since inception, the portfolio has outperformed HK indexes by 60% to 84%. HK ALPHA is up 14.35% YTD.</li>
<li>The Sharpe ratio stands at 1.21, compared with a benchmark of 0.68 since inception.  This higher Sharpe ratio is driven by excess alpha, which represents more than 50% of returns.</li>
<li>The portfolio gained in the healthcare, industrial, and technology sectors in August, while utilities and telecom exposure dragged on performance.</li>
</ul>


HK Alpha portfolio gained 3.45% in August, outperforming its benchmark by 2.67%.  Since inception, the portfolio has outperformed HK indexes by 60% to 84%. HK ALPHA is up 14.35% YTD.
The Sharpe ratio stands at 1.21, compared with a benchmark of 0.68 since inception.  This higher Sharpe ratio is driven by excess alpha, which represents more than 50% of returns.
The portfolio gained in the healthcare, industrial, and technology sectors in August, while utilities and telecom exposure dragged on performance.


<ul>
<li>The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.</li>
<li>The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.</li>
<li>The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.</li>
</ul>


The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.
The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.
The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.


Hong Kong

China Unicom (Hong Kong) Limited is an investment holding company that provides comprehensive telecommunications services in China. Its core businesses include mobile services such as voice, roaming, mobile broadband, and value-added services, as well as fixed-line services like broadband access and internet networks. The company also offers ICT, IoT, software development, big data, and cloud computing services. It was incorporated in Hong Kong in February 2000 and is headquartered in Central, Hong Kong.

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China Unicom (762 HK)

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

SOUTHBOUND flows were positive on the week but most of the net buying was in the big two ETFs. The trend of buying low PER high div SOEs continues....

Travis Lundy

China Tower (788 HK) - Deep Value, Though Lease Negotiation Overhang Persists

We discuss whether China Tower's share price has bottomed and address potential corporate governance concerns given that the Big 3 China telcos...

Jason Yap, CFA

HSCEI Dec 2026 Index Rebalance Forecast

We expect Shenzhou to be deleted below rank 60 and Hua Hong Grace to fill its seat, while a mid-conviction WuXi Bio ADD would also see ZTO deleted.

Ke Yan, CFA, FRM

HONG KONG ALPHA PORTFOLIO: (August 2026)

HK Alpha portfolio gained 3.45% in August, outperforming its benchmark by 2.67%. Since inception, the portfolio has outperformed HK indexes by 60%...

David Mudd

HONG KONG ALPHA PORTFOLIO: (July 2026)

We made several adjustments to the portfolio yesterday. We sold the Baidu (9888) position since it hit our stop-loss level. We also sold the...

David Mudd

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