Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>The Iran War has shifted attention  to the oil and gas sector</li>
<li>The E&amp;P companies have been front running the move in oil prices</li>
<li>We look at some smaller companies adjacent to the E&amp;P industry</li>
</ul>


The Iran War has shifted attention  to the oil and gas sector
The E&amp;P companies have been front running the move in oil prices
We look at some smaller companies adjacent to the E&amp;P industry


A High‑Beta Basket of HK Stocks Leveraged to a Cyclical Oil Bull Market.

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>The airlines and marine transportation sectors are the most exposed to the rise in Brent oil prices caused by the current US-Iran conflicts in the Middle East.</li>
<li>For the airlines, <a href="https://www.smartkarma.com/entities/china-eastern-airlines-co-h" target="_blank" data-smartkarma-citation="entities:1079:1" rel="noopener">China Eastern Airlines (670 HK)</a> is the most vulnerable, while <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> is relatively more insulated.</li>
<li>For marine transportation, <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a> is the least exposed, but <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin Shipping (2343 HK)</a> looks to be more negatively affected.</li>
</ul>


The airlines and marine transportation sectors are the most exposed to the rise in Brent oil prices caused by the current US-Iran conflicts in the Middle East.
For the airlines, China Eastern Airlines (670 HK) is the most vulnerable, while Cathay Pacific Airways (293 HK) is relatively more insulated.
For marine transportation, SITC International (1308 HK) is the least exposed, but Pacific Basin Shipping (2343 HK) looks to be more negatively affected.


HK Strategy: Assessing the Oil Vulnerability

Commodities

<ul>
<li>A review of recent events/data impacting our investment themes and outlook</li>
<li>Short-Term market impact of the recent attack against Iran vs the longer-term outlook</li>
<li>Unintended consequences throw out investment opportunities as portfolio degrossing occurs</li>
</ul>


A review of recent events/data impacting our investment themes and outlook
Short-Term market impact of the recent attack against Iran vs the longer-term outlook
Unintended consequences throw out investment opportunities as portfolio degrossing occurs


Overview #52 – Oil Shocks, De-Grossing, and Trend Breaks?

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<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)

<ul>
<li>Hong Kong's market continues its consolidation in a Secular Bull Market.  Technology and healthcare sectors have weakened, while utilities, telecom, and energy sectors have strengthened.</li>
<li>Mainland investors have slowed net buying through the Southbound Connect platform.  Dividend yield, value and low volatility are leading investment factors since October. Growth and momentum factors have lagged.</li>
<li>
<a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)</a> is initiated as BUY at Shenwan Hongyuan.  VLCC rates to China are rising amid U.S. oil sanctions on Russia and Venezuela.
</li>
</ul>


Hong Kong's market continues its consolidation in a Secular Bull Market.  Technology and healthcare sectors have weakened, while utilities, telecom, and energy sectors have strengthened.
Mainland investors have slowed net buying through the Southbound Connect platform.  Dividend yield, value and low volatility are leading investment factors since October. Growth and momentum factors have lagged.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is initiated as BUY at Shenwan Hongyuan.  VLCC rates to China are rising amid U.S. oil sanctions on Russia and Venezuela.



BUY/SELL/HOLD: Hong Kong Market Update (December 17)

China

COSCO SHIPPING Energy Transportation is a specialized company primarily engaged in the global shipment of energy, including crude oil, refined oil products, liquefied natural gas (LNG), and liquefied petroleum gas (LPG). It also provides vessel chartering and shipping agency services. The company is headquartered in Shanghai, China, and was established in 2016.

COSCO SHIPPING Energy Transportation (1138 HK)

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

COSCO SHIPPING Energy Transportation (1138 HK)

A High‑Beta Basket of HK Stocks Leveraged to a Cyclical Oil Bull Market.

As the Iran war brings focus tot he oil and gas sector, we look at some high-beta companies with leverage to the oil bull market

Rikki Malik

HK Strategy: Assessing the Oil Vulnerability

Rise in Brent oil prices due to US-Iran conflicts hits airlines and marine transportation sectors as fuel and bunker costs increase, with China...

Osbert Tang, CFA

Overview #52 – Oil Shocks, De-Grossing, and Trend Breaks?

A review of recent events/data impacting our investment themes and outlook. We look at the action in stock and commodity markets impacted by the...

Rikki Malik

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

BUY/SELL/HOLD: Hong Kong Market Update (December 17)

Hong Kong's market continues its consolidation in a Secular Bull Market. Technology and healthcare sectors have weakened, while utilities,...

David Mudd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

A High‑Beta Basket of HK Stocks Leveraged to a Cyclical Oil Bull Market.

As the Iran war brings focus tot he oil and gas sector, we look at some high-beta companies with leverage to the oil bull market

Rikki Malik

HK Strategy: Assessing the Oil Vulnerability

​Rise in Brent oil prices due to US-Iran conflicts hits airlines and marine transportation sectors as fuel and bunker costs increase, with China...

Osbert Tang, CFA

Overview #52 – Oil Shocks, De-Grossing, and Trend Breaks?

A review of recent events/data impacting our investment themes and outlook. We look at the action in stock and commodity markets impacted by the...

Rikki Malik

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

BUY/SELL/HOLD: Hong Kong Market Update (December 17)

Hong Kong's market continues its consolidation in a Secular Bull Market. Technology and healthcare sectors have weakened, while utilities,...

David Mudd

Rise in Brent oil prices due to US-Iran conflicts hits airlines and marine transportation sectors as fuel and bunker costs increase, with China...