Analyst

Steve

Equity Bottom-Up

<ul>
<li>Late last night (near mid-night), <a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. </li>
<li>The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. </li>
<li>Moutai's Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting <a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a>.</li>
</ul>


Late last night (near mid-night), Kweichow Moutai (600519 CH) shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. 
The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. 
Moutai's Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting ZJLD Group (6979 HK).


ZJLD Group (6979 HK):  Direct Beneficiary Of Moutai Raising Ex-Factory Price

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.</li>
<li>We see attractive stories for <a href="https://www.smartkarma.com/entities/shanxi-xinghuacun-fen-wine-factory-co" target="_blank" data-smartkarma-citation="entities:9288:1" rel="noopener">Shanxi Xinghuacun Fen Wine (600809 CH)</a>, <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring (603288 CH)</a>, <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial (600887 CH)</a> and <a href="https://www.smartkarma.com/entities/fu-jian-anjoy-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Fu Jian Anjoy Foods (603345 CH)</a>.  </li>
<li>While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  </li>
</ul>


Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.
We see attractive stories for Shanxi Xinghuacun Fen Wine (600809 CH), Foshan Haitian Flavouring (603288 CH), Inner Mongolia Yili Industrial (600887 CH) and Fu Jian Anjoy Foods (603345 CH).  
While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  


China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>Alcoholic Beverages sector exposure has dropped to multi-year lows, falling below 50% of active GEM funds. </li>
<li>Recent outflows total $700m, with China &amp; HK and Brazil seeing the steepest declines. </li>
<li>Key stocks like Kweichow Moutai and Wuliangye Yibin face consistent month-on-month closures as managers rotate out.</li>
</ul>


Alcoholic Beverages sector exposure has dropped to multi-year lows, falling below 50% of active GEM funds. 
Recent outflows total $700m, with China &amp; HK and Brazil seeing the steepest declines. 
Key stocks like Kweichow Moutai and Wuliangye Yibin face consistent month-on-month closures as managers rotate out.


Last Orders? GEM Funds Retreat from Alcoholic Beverages Stocks

Cross Asset Strategy

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


Equity Derivatives and Volatility Specialist, Clifton Derivatives

John Ley

Equity Derivatives and Volatility Specialist

Clifton Derivatives

Independent derivative and volatility research firm focusing on events/catalysts, earnings, relative value and cross asset volatility strategies.

Equity Derivatives

<ul>
<li>The US election is the ultimate of known unknowns. The markets have endured both Trump and Biden/Harris so impactful policy surprises should be limited. </li>
<li>Hedging cost are running high for Asian equities post August unwind and September stimulus combined with election. </li>
<li>Markets have some momentum and in some cases mean reversion to the price move on the day after the election. </li>
</ul>


The US election is the ultimate of known unknowns. The markets have endured both Trump and Biden/Harris so impactful policy surprises should be limited. 
Hedging cost are running high for Asian equities post August unwind and September stimulus combined with election. 
Markets have some momentum and in some cases mean reversion to the price move on the day after the election. 


EQD | US Election -  Hedge Considerations

China

Kweichow Moutai Co., Ltd. manufactures spirits.  The Company's spirit products are distilled from sorghum and wheat.  Kweichow Moutai markets its products worldwide.

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Kweichow Moutai (600519 CH)

ZJLD Group (6979 HK): Direct Beneficiary Of Moutai Raising Ex-Factory Price

ZJLD Group is the direct beneficiary of Kweichow Moutai's surprise 20% price hike of its Feitian product, announced late last night.

Steve

Last Orders? GEM Funds Retreat from Alcoholic Beverages Stocks

Alcoholic Beverages sector exposure among GEM funds has dropped to a decade low, with Kweichow Moutai and Wuliangye Yibin driving the exodus.

Steven Holden

China Macro: Sector Positioning Update

Sector positioning among active China Funds. Industrials and Consumer Staples Remain Top Overweights, Energy shows signs of a turnaround, whilst...

Steven Holden

EQD | US Election - Hedge Considerations

The US election brings uncertainty, but market impact should be limited due to enduring Trump and Biden/Harris policies. Asian equities face high...

John Ley

Price Gauge

52-week Range

Market Cap (USDm)

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ZJLD Group (6979 HK): Direct Beneficiary Of Moutai Raising Ex-Factory Price

ZJLD Group is the direct beneficiary of Kweichow Moutai's surprise 20% price hike of its Feitian product, announced late last night.

Steve

China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

With the recent IPOs of Foshan Haitian Flavouring and Fujian Anjoy Foods (planned), we think the interest in China's consumer staples sector will...

Osbert Tang, CFA

Last Orders? GEM Funds Retreat from Alcoholic Beverages Stocks

Alcoholic Beverages sector exposure among GEM funds has dropped to a decade low, with Kweichow Moutai and Wuliangye Yibin driving the exodus.

Steven Holden

China Macro: Sector Positioning Update

Sector positioning among active China Funds. Industrials and Consumer Staples Remain Top Overweights, Energy shows signs of a turnaround, whilst...

Steven Holden

EQD | US Election - Hedge Considerations

​The US election brings uncertainty, but market impact should be limited due to enduring Trump and Biden/Harris policies. Asian equities face high...

John Ley

The US election brings uncertainty, but market impact should be limited due to enduring Trump and Biden/Harris policies. Asian equities face high...