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

Rikki Malik

Cross Asset Strategy

<ul>
<li>Minimum correction targets  have been hit for the Hang Seng Index</li>
<li>Some potential catalysts for the resumption of the bull market</li>
<li>We highlight some suggested sector allocations for the next phase </li>
</ul>


Minimum correction targets  have been hit for the Hang Seng Index
Some potential catalysts for the resumption of the bull market
We highlight some suggested sector allocations for the next phase 


Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Thematic (Sector/Industry)

<ul>
<li>China has unveiled measures to emphasize a major push for passenger and freight movement by railroad</li>
<li>Rolling stock companies  play catch-up from the COVID under-investment years</li>
<li>High speed freight trains on near term horizon to compete with highway for e-commerce business</li>
</ul>


China has unveiled measures to emphasize a major push for passenger and freight movement by railroad
Rolling stock companies  play catch-up from the COVID under-investment years
High speed freight trains on near term horizon to compete with highway for e-commerce business


HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Communications Construction / Equity Bottom-Up

<ul>
<li>The fall in share price in the last five months have sent <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> back to very attractive level. The market has misread the strong 2Q23 result.</li>
<li>2Q23 recurring net profit surged 68.5% as 2Q22 has an inflated base. Gross margin has recorded meaningful YoY recovery while capex, particularly for BOT, has scaled back significantly. </li>
<li>There should not be concerns about CCCC's contract outlook. Its backlog is enough to cover 4.9x FY23F revenue and its PER of 2.7x has provided more than sufficient buffer.</li>
</ul>


The fall in share price in the last five months have sent China Communications Construction (1800 HK) back to very attractive level. The market has misread the strong 2Q23 result.
2Q23 recurring net profit surged 68.5% as 2Q22 has an inflated base. Gross margin has recorded meaningful YoY recovery while capex, particularly for BOT, has scaled back significantly. 
There should not be concerns about CCCC's contract outlook. Its backlog is enough to cover 4.9x FY23F revenue and its PER of 2.7x has provided more than sufficient buffer.


China Comm Const (1800 HK): Well Worth Revisiting

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

Dawning Information Industry C / Index Rebalance

<ul>
<li>There are 4 constituent changes for the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> that will be implemented at the close on 12 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/dawning-information-industry-c" target="_blank" data-smartkarma-citation="entities:25380:1" rel="noopener">Dawning Information Industry C (603019 CH)</a> is a surprise add given the upcoming merger with <a href="https://www.smartkarma.com/entities/hygon-information-technology-c" target="_blank" data-smartkarma-citation="entities:36366:1" rel="noopener">Hygon Information Technology C (688041 CH)</a>. </li>
<li>The <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index</a> adds have underperformed the deletes over the last couple of months and there could be outperformance from here as positioning builds ahead of the implementation of the changes.</li>
</ul>


There are 4 constituent changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 12 December.

Dawning Information Industry C (603019 CH) is a surprise add given the upcoming merger with Hygon Information Technology C (688041 CH). 
The SSE50 Index adds have underperformed the deletes over the last couple of months and there could be outperformance from here as positioning builds ahead of the implementation of the changes.


SSE50 Index Rebalance: 4 Changes a Side & US$2.2bn Trade

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.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 160 stocks over the last week. The average A-H premium was 62.9% as of Nov 28th.</li>
<li>The average A-H premium changed by -0.9ppt week-on-week, led by industrials, energy and offset by real estate, information technology, communication services.</li>
<li>We highlight weekly changes in A-H premium for Guangzhou Automobile, China Everbright Bank, China Southern Airlines, Cig Shanghai.</li>
</ul>


We analyse the changes of A-H premium on 160 stocks over the last week. The average A-H premium was 62.9% as of Nov 28th.
The average A-H premium changed by -0.9ppt week-on-week, led by industrials, energy and offset by real estate, information technology, communication services.
We highlight weekly changes in A-H premium for Guangzhou Automobile, China Everbright Bank, China Southern Airlines, Cig Shanghai.


A-H Premium Weekly (Nov 28th): Guangzhou Automobile, China Everbright Bank, China Southern Airlines

China

CRRC Corporation Limited manufactures rolling stock products. The Company produces locomotives, passenger carriages, freight wagons, vehicles key components, and other products. CRRC also provides vehicle repairing, investment management, and other services.

Price Gauge
52-week Range	0.00 - 0.00
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CRRC Corp Ltd A (601766 CH)

Where Now for the Hong Kong Market?

Hang Seng Index has hit minimum correction targets, potential catalysts for bull market resumption and sector allocation suggestions discussed.

Rikki Malik

China Railway Stocks Back on Track

China has announced two significant launches in its High Speed Rail network. The HK-Beijing and HK-Shanghai sleeper trains will cut travel time in...

David Mudd

China Comm Const (1800 HK): Well Worth Revisiting

CCCC has become very attractive due to an unjustified fall in share price. Recurring net profit surged 68.5% in 2Q23 and its contract outlook is...

Osbert Tang, CFA

SSE50 Index Rebalance: 4 Changes a Side & US$2.2bn Trade

There are 4 changes for the SSE50 Index in Dec. Dawning is the surprise addition and could move closer to the merger ratio implied price. Estimated...

Brian Freitas

A-H Premium Weekly (Nov 28th): Guangzhou Automobile, China Everbright Bank, China Southern Airlines

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Guangzhou Automobile, China Everbright Bank, China Southern...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Where Now for the Hong Kong Market?

​Hang Seng Index has hit minimum correction targets, potential catalysts for bull market resumption and sector allocation suggestions discussed.

Rikki Malik

China Railway Stocks Back on Track

China has announced two significant launches in its High Speed Rail network. The HK-Beijing and HK-Shanghai sleeper trains will cut travel time in...

David Mudd

China Comm Const (1800 HK): Well Worth Revisiting

CCCC has become very attractive due to an unjustified fall in share price. Recurring net profit surged 68.5% in 2Q23 and its contract outlook is...

Osbert Tang, CFA

SSE50 Index Rebalance: 4 Changes a Side & US$2.2bn Trade

There are 4 changes for the SSE50 Index in Dec. Dawning is the surprise addition and could move closer to the merger ratio implied price. Estimated...

Brian Freitas

A-H Premium Weekly (Nov 28th): Guangzhou Automobile, China Everbright Bank, China Southern Airlines

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Guangzhou Automobile, China Everbright Bank, China Southern...

Ke Yan, CFA, FRM

Hang Seng Index has hit minimum correction targets, potential catalysts for bull market resumption and sector allocation suggestions discussed.