Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

<p><em>An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the spreads are trading within their own historical ranges.</em></p>
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<h2>The Nitty-Gritty Details Follow</h2>
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<p>There are five sets of data for now:<br>1.   HK-Shanghai Connect Southbound Turnover and Net Buying vs Indices and HKEx Turnover<br>2.   Top 20 Net Southbound buys and sells over the last 5 days<br>3.   H-Share/A-Share Discounts, Changes in Discount over 1 and 4 wks, Changes in Southbound Flow<br>4.   Southbound Flow as a % of Volume and Float on All Eligible Stocks<br>5.   H-Share/A-Share Sector Discount Ranges and Averages Charted Over the Last 12 months </p>
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<h2>Historical Southbound Flows:  Outright &amp; vs HKEx Turnover</h2>
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<p>Net Southbound outflows continued for the fourth month in a row as stock prices continue to fall (net Northbound flows are, on average, still positive, but the last two weeks have seen several net selling days).</p>
<div class="content-remarks">
<p>Note: The charts below show <em>only</em> HK-Shanghai Connect. The HK-Shenzhen Southbound data shows similar patterns in the short time it has been live, and total volumes are on the order of 1/3 the size of HK-Shanghai Connect. </p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/056/709/original/Screen%20Shot%202018-07-03%20at%2011.41.56%20AM.png?1530589373" class="editor-image img-responsive" data-smartkarma-image-id="56709"></figure>
<div style="text-align: left;" class="content-caption">data: Bloomberg, Travis Lundy</div>

An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the spreads are trading within their own historical ranges.

The Nitty-Gritty Details Follow

There are five sets of data for now: 1.   HK-Shanghai Connect Southbound Turnover and Net Buying vs Indices and HKEx Turnover 2.   Top 20 Net Southbound buys and sells over the last 5 days 3.   H-Share/A-Share Discounts, Changes in Discount over 1 and 4 wks, Changes in Southbound Flow 4.   Southbound Flow as a % of Volume and Float on All Eligible Stocks 5.   H-Share/A-Share Sector Discount Ranges and Averages Charted Over the Last 12 months 

Historical Southbound Flows:  Outright &amp; vs HKEx Turnover

Net Southbound outflows continued for the fourth month in a row as stock prices continue to fall (net Northbound flows are, on average, still positive, but the last two weeks have seen several net selling days).

Note: The charts below show only HK-Shanghai Connect. The HK-Shenzhen Southbound data shows similar patterns in the short time it has been live, and total volumes are on the order of 1/3 the size of HK-Shanghai Connect. 


data: Bloomberg, Travis Lundy

Quiddity Weekly H/A: Spread Monitor & Southbound Flows [Week to 29 Jun 2018]

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

<ul>
<li>For the past 7 years Riedel Research has been issuing company-specific Corporate Governance scores on companies in the Emerging Markets.  This service is now being widely used by risk managers, fundamental investors and quant funds.</li>
<li>Our proprietary Corporate Governance (CG) scoring system now covers 1,629 stocks.</li>
<li>RRG CG scores have a proven ability to highlight the risk of frauds and misstatements by EM companies and a track record of adding alpha.  Over the past 5 years a basket of companies with…</li>
</ul>


For the past 7 years Riedel Research has been issuing company-specific Corporate Governance scores on companies in the Emerging Markets.  This service is now being widely used by risk managers, fundamental investors and quant funds.
Our proprietary Corporate Governance (CG) scoring system now covers 1,629 stocks.
RRG CG scores have a proven ability to highlight the risk of frauds and misstatements by EM companies and a track record of adding alpha.  Over the past 5 years a basket of companies with…


RRG Corporate Governance Scoring System Adds Coverage of 60 HKG Names - Who Are the Likely Frauds?

ASEAN (Indo) & China-focused. Ex-Deputy HoR UBS.

Johannes Salim, CFA

<ul>
<li>A longer term implication of Trump-Xi meeting is that US-China trade relations could be (much) smoother than many have anticipated.</li>
<li>A Fuyao Glass case illustrates that a win-win solution for US-China trade relations is for real.</li>
<li>Global reflation trade is alive and well; for China market, we recommend technology, consumer discretionary, and infrastructure plays.</li>
</ul><p>With the first official 2-day meeting between the US President Donald Trump and China President Xi Jinping kicking off today, we would like…</p>


A longer term implication of Trump-Xi meeting is that US-China trade relations could be (much) smoother than many have anticipated.
A Fuyao Glass case illustrates that a win-win solution for US-China trade relations is for real.
Global reflation trade is alive and well; for China market, we recommend technology, consumer discretionary, and infrastructure plays.
With the first official 2-day meeting between the US President Donald Trump and China President Xi Jinping kicking off today, we would like…

China Strategy: (Much) Smoother US-China Relations Ahead?

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<p>This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in casinos effective on Jan. 1, 2019, one year later than our existing expectation. Our current forecasts across our narrow moat coverage universe already factor in a negative mid-single-digit percentage point impact to VIP play in 2018, and postponing that one year is not expected to have any significant impact to our fair value estimates. Our current fair value estimates per share are HKD 17 for <a href="https://www.smartkarma.com/entities/472" target="_blank" data-smartkarma-citation="entities:472:1">MGM China Holdings Ltd (2282 HK)</a>, HKD 36 for <a href="https://www.smartkarma.com/entities/182" target="_blank" data-smartkarma-citation="entities:182:1">Sands China Ltd (1928 HK)</a>, HKD 14 for <a href="https://www.smartkarma.com/entities/473" target="_blank" data-smartkarma-citation="entities:473:1">Wynn Macau Ltd (1128 HK)</a>, USD 17 for <a href="https://www.smartkarma.com/entities/810" target="_blank" data-smartkarma-citation="entities:810:1">Melco Crown Entertainment ADR (MPEL US)</a>, HKD 36 for <a href="https://www.smartkarma.com/entities/806" target="_blank" data-smartkarma-citation="entities:806:1">Galaxy Entertainment Group Limited (27 HK)</a>, HKD 6.6 for <a href="https://www.smartkarma.com/entities/805" target="_blank" data-smartkarma-citation="entities:805:1">SJM Holdings Ltd (880 HK)</a>, $133 for <a href="https://www.smartkarma.com/entities/606" target="_blank" data-smartkarma-citation="entities:606:1">Wynn Resorts Ltd (WYNN US)</a>, $56 for <a href="https://www.smartkarma.com/entities/807" target="_blank" data-smartkarma-citation="entities:807:1">Las Vegas Sands Corp (LVS US)</a>, and $29.50 for <a href="https://www.smartkarma.com/entities/16227" target="_blank" data-smartkarma-citation="entities:16227:1">MGM Resorts International (MGM US)</a>. We continue to see Wynn trading at an attractive margin of safety.</p><p>The revised bill creates a level playing field for casino operators. We have confirmed with a Macau legislative assembly member that the revised bill outlines that all VIP smoking gaming areas will be closed and that all casinos will be able to establish smoking lounges on both VIP and mass gaming floors. Therefore, under the proposed bill newer casinos will be able to establish smoking lounges in VIP gaming areas, while the older casinos will lose the smoking premium mass and VIP smoking area. As a result, Cotai casinos as a whole stand to gain market share at the expense of Macau peninsula casinos.</p><p><em>Analyst: Chelsea Tam</em></p>

This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in casinos effective on Jan. 1, 2019, one year later than our existing expectation. Our current forecasts across our narrow moat coverage universe already factor in a negative mid-single-digit percentage point impact to VIP play in 2018, and postponing that one year is not expected to have any significant impact to our fair value estimates. Our current fair value estimates per share are HKD 17 for MGM China Holdings Ltd (2282 HK), HKD 36 for Sands China Ltd (1928 HK), HKD 14 for Wynn Macau Ltd (1128 HK), USD 17 for Melco Crown Entertainment ADR (MPEL US), HKD 36 for Galaxy Entertainment Group Limited (27 HK), HKD 6.6 for SJM Holdings Ltd (880 HK), $133 for Wynn Resorts Ltd (WYNN US), $56 for Las Vegas Sands Corp (LVS US), and $29.50 for MGM Resorts International (MGM US). We continue to see Wynn trading at an attractive margin of safety.The revised bill creates a level playing field for casino operators. We have confirmed with a Macau legislative assembly member that the revised bill outlines that all VIP smoking gaming areas will be closed and that all casinos will be able to establish smoking lounges on both VIP and mass gaming floors. Therefore, under the proposed bill newer casinos will be able to establish smoking lounges in VIP gaming areas, while the older casinos will lose the smoking premium mass and VIP smoking area. As a result, Cotai casinos as a whole stand to gain market share at the expense of Macau peninsula casinos.Analyst: Chelsea Tam

Expected Macau Smoking Ban Creates a Level Playing Field for Operators

Investing in high growth Asian frontier economies., Asia Frontier Capital

Scott Osheroff

Investing in high growth Asian frontier economies.

Asia Frontier Capital

Asia Frontier Capital Ltd. is a pioneering fund management company based in Hong Kong that specializes in investing in high growth Asian frontier economies by managing the AFC Asia Frontier Fund , AFC Iraq Fund and the AFC Vietnam Fund.

The AFC Asia Frontier Fund invests in public equities of Asian frontier countries that are seeing increasing consumption due to favorable demographic trends, rising incomes and high GDP growth. The fund invests in listed equities of companies that have their principal business activities in Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar (Burma), Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam. The AFC Asia Frontier Fund is positioned to take advantage of the continuing economic shifts in these countries and offers high returns combined with significant diversification opportunities. This fund is directed by the founder and CEO of Asia Frontier Capital, Thomas Hugger, who has been investing in frontier markets across Asia and Africa for more than 20 years.

The AFC Iraq Fund was launched on the 26th June 2015 and aims to achieve long-term capital appreciation for investors by capturing value and growth potential in the post conflict high-growth & resource rich Iraq market. The fund emphasises long term investment horizon to truly capture the opportunity in Iraq. The fund's investable universe consists of locally listed companies that have their principal business activities in Iraq as well as foreign listed companies that have the majority of the business in Iraq as a whole including the prosperous Kurdish Region of Iraq (KRI). The AFC Iraq Fund offers access to investments in post conflict recovery potential of Iraq, including the KRI, and/or stability in its territory. The AFC Iraq Fund is managed by Asia Frontier Capital (Iraq) Limited, Cayman Islands under the executive leadership team of Thomas Hugger (CEO & Fund Manager) and Ahmed Tabaqchali (CIO) who have more than 47 years of investment experience as well as an extensive background covering global, emerging, frontier and MENA markets.

The AFC Vietnam Fund invests exclusively in listed Vietnamese equities to capture value in growth companies with a focus on the small to medium size companies. This market segment offers a unique investment opportunity as the valuation gap between large- and small-cap stocks in Vietnam is presently much wider than in comparable neighboring markets and the valuations are significantly depressed versus their regional peers. The fund adopts a fundamental-quantitative approach and employs an in-house earnings model to identify attractive companies where we see high growth opportunities. In conjunction with targeting the maximum upside potential the portfolio has been structured to mitigate corporate government and liquidity risks. The fund invests in a diversified portfolio of 70-90 attractively valued companies to carefully control concentration risk.  This approach allows the fund to sell, or buy, positions without having a significant market impact. The fund is directed under the executive leadership of Thomas Hugger and Andreas Vogelsanger who have more than 50 years combined experience managing investments in frontier markets, Asia and around the world.

For more information about the fund, management team and investment strategy please contact us at info@asiafrontiercapital.com.

<p><em>In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.</em></p>

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

Asia Frontier Capital Travel Report: Laos

China

Fuyao Glass Industry Group Co Ltd, through its subsidiaries, manufactures and distributes automobile glass, decorated glassware, and other industrial glassware. The Company also provides glass installation service. Fuyao Glass Industry Group markets its products internationally.

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Fuyao Group Glass Industr A (600660 CH)

Quiddity Weekly H/A: Spread Monitor & Southbound Flows [Week to 29 Jun 2018]

An H/A Spread Monitor Project offering a brief look at recent changes in H-Share and A-Share spreads, Southbound flow and impact, and where the...

Travis Lundy

RRG Corporate Governance Scoring System Adds Coverage of 60 HKG Names - Who Are the Likely Frauds?

For the past 7 years Riedel Research has been issuing company-specific Corporate Governance scores on companies in the Emerging Markets. This...

David Riedel

China Strategy: (Much) Smoother US-China Relations Ahead?

A longer term implication of Trump-Xi meeting is that US-China trade relations could be (much) smoother than many have anticipated. A Fuyao Glass...

Johannes Salim, CFA

Expected Macau Smoking Ban Creates a Level Playing Field for Operators

This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in...

Morningstar, Inc.

Asia Frontier Capital Travel Report: Laos

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos...

Asia Frontier Capital

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