Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Hong Kong Alpha portfolio gained 0.46 % in February resulting in a 2.99% underperformance to its benchmark. The portfolio has outperformed HK indexes by 53% to 75% since inception 10/1/24.</li>
<li>Hong Kong Alpha has generated 63% of its return from alpha and has a Sharpe ratio of 1.71 since inception. The portfolio's annualized mean excess return is 24%.</li>
<li>At the end of February, we reduced positions in the technology sector and added positions in the energy and building materials sectors.</li>
</ul>


Hong Kong Alpha portfolio gained 0.46 % in February resulting in a 2.99% underperformance to its benchmark. The portfolio has outperformed HK indexes by 53% to 75% since inception 10/1/24.
Hong Kong Alpha has generated 63% of its return from alpha and has a Sharpe ratio of 1.71 since inception. The portfolio's annualized mean excess return is 24%.
At the end of February, we reduced positions in the technology sector and added positions in the energy and building materials sectors.


HONG KONG ALPHA PORTFOLIO: (February 2026)

<ul>
<li>Hong Kong had a strong January performance which saw a continuation of material sector outperformance.  China saw ETF outflows as the National Team sole and margin requirements were tightened.</li>
<li>Hong Kong's market continues to enjoy net inflows with the most active IPO market in the world.  </li>
<li>
<a href="https://www.smartkarma.com/entities/aux-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:45549:1" rel="noopener">Aux Electric (2580 HK)</a> share price is under pressure ahead of its lockup expiration on March 1st.  The HVAC supplier's share price has declined by 30% since its IPO.
</li>
</ul>


Hong Kong had a strong January performance which saw a continuation of material sector outperformance.  China saw ETF outflows as the National Team sole and margin requirements were tightened.
Hong Kong's market continues to enjoy net inflows with the most active IPO market in the world.  

Aux Electric (2580 HK) share price is under pressure ahead of its lockup expiration on March 1st.  The HVAC supplier's share price has declined by 30% since its IPO.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (February 22)

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.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of CSI 100 in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on CHINA VANKE, COSCO SHIPPING, CHINA STATE CONSTRUCTION ENGINEERING, Longi Green, POWERCHINA, AVIC SHENYANG AIRCRAFT.</li>
</ul>


We analysed the earning revision of component stocks of CSI 100 in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on CHINA VANKE, COSCO SHIPPING, CHINA STATE CONSTRUCTION ENGINEERING, Longi Green, POWERCHINA, AVIC SHENYANG AIRCRAFT.


CSI 100 Index Earning Revision (Sep): CHINA VANKE, COSCO SHIPPING, Longi Green, POWERCHINA

<ul>
<li>The materials, healthcare, and tech sectors are leading the Hong Kong market out of its consolidation pattern, with January shaping up to be one of the best in years.</li>
<li>China and Hong Kong ETF flows were the strongest in Asia during 2025 posting significant inflows throughout the year although Korea had the most significant increase at 600%.</li>
<li>
<a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> share price plunged after it announced an investigation into its monopolistic business practices. <a href="https://www.smartkarma.com/entities/haidilao-international-holding" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao International Holding (6862 HK)</a> shares jumped after the founder returned as CEO.
</li>
</ul>


The materials, healthcare, and tech sectors are leading the Hong Kong market out of its consolidation pattern, with January shaping up to be one of the best in years.
China and Hong Kong ETF flows were the strongest in Asia during 2025 posting significant inflows throughout the year although Korea had the most significant increase at 600%.

Trip.com Group (9961 HK) share price plunged after it announced an investigation into its monopolistic business practices. Haidilao International Holding (6862 HK) shares jumped after the founder returned as CEO.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (January 14)

<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)

China

Ganfeng Lithium is a global leader in the lithium industry, specializing in the production and sales of lithium products and lithium batteries. Its business spans the entire lithium value chain, including upstream lithium resource development, midstream lithium refining and metal smelting, and downstream lithium battery manufacturing and recycling. The company's products, such as lithium salts and batteries, are widely used in electric vehicles, energy storage systems, consumer electronics, chemicals, and pharmaceuticals. Ganfeng Lithium was founded in 2000 and is headquartered in Xinyu City, Jiangxi Province, China.

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Ganfeng Lithium (1772 HK)

HONG KONG ALPHA PORTFOLIO: (February 2026)

The war, which launched at the beginning of the month, is now into its second week and its economic effects are being reflected in global markets....

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (February 22)

Hong Kong had a strong January performance which saw a continuation of material sector outperformance. China saw ETF outflows as the National Team...

David Mudd

CSI 100 Index Earning Revision (Sep): CHINA VANKE, COSCO SHIPPING, Longi Green, POWERCHINA

We analyzed CSI 100's consensus for Sep 2026 and highlighted changes of EPS in CHINA VANKE, COSCO SHIPPING, CHINA STATE CONSTRUCTION ENGINEERING,...

Ke Yan, CFA, FRM

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (January 14)

Trip.com Group (9961 HK) price plunged after it announced an investigation into its monopolistic business practices. Haidilao International Holding...

David Mudd

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

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