Quality-first, Business-perspective, Long-term, Urbem (HK) Limited

Urbem Capital

Quality-first, Business-perspective, Long-term

Thematic (Sector/Industry)

<ul>
<li>The market has been so diligently hitting new highs this year, which may surprise many investors and annoy some like us;</li>
<li>Of course, there is nothing we can do about this, while, on the positive side, we do know what to buy in case of a more favorable market condition;</li>
<li>We put together our wish list for the new year containing top picks that we dream of buying a lot of when their valuations have turned south vastly.</li>
</ul>


The market has been so diligently hitting new highs this year, which may surprise many investors and annoy some like us;
Of course, there is nothing we can do about this, while, on the positive side, we do know what to buy in case of a more favorable market condition;
We put together our wish list for the new year containing top picks that we dream of buying a lot of when their valuations have turned south vastly.


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

Cross Asset Strategy

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>, one of the standout domestic holdings within the Health Care sector, followed by <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> and <a href="https://www.smartkarma.com/entities/luxshare-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:12310:1" rel="noopener">Luxshare Precision Industry (002475 CH)</a> .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by Jiangsu Hengrui Medicine (600276 CH), one of the standout domestic holdings within the Health Care sector, followed by China Tourism Group Duty Free Corp Ltd (601888 CH) and Luxshare Precision Industry (002475 CH) .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

China's Next Generation:  Diversifying Away from Tencent and Alibaba.

<ul>
<li>Record-breaking 2020 Singles-day Shopping Festival may produce some insights regarding brands winning Chinese consumers;</li>
<li>But most winning brands cannot derive an investable business in China, given the prevalent lack of persistently high ROIC.</li>
<li>We hand-pick four companies that are investable from TMall's Singles-day top brand list.</li>
</ul>


Record-breaking 2020 Singles-day Shopping Festival may produce some insights regarding brands winning Chinese consumers;
But most winning brands cannot derive an investable business in China, given the prevalent lack of persistently high ROIC.
We hand-pick four companies that are investable from TMall's Singles-day top brand list.


Quick Picks: Top Investable Brands From The 2020 Singles-Day Shopping Festival

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

DZT Research

DZT 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 analyzed the changes in margin trading positions of A-share stocks as of Jun 26th. The aggregated net margin trading position is USD411,555m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in CHINA MINSHENG BANKING, PING AN INSURANCE, EAST MONEY INFORMATION, CHONGQING ZONGSHEN POWER MACHINERY, ZIJIN MINING.</li>
</ul>


We analyzed the changes in margin trading positions of A-share stocks as of Jun 26th. The aggregated net margin trading position is USD411,555m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in CHINA MINSHENG BANKING, PING AN INSURANCE, EAST MONEY INFORMATION, CHONGQING ZONGSHEN POWER MACHINERY, ZIJIN MINING.


A-Share Margin Trading Weekly (Jun 26th): CHINA MINSHENG BANKING, PING AN INSURANCE, ZIJIN MINING

<ul class="">
<li>The consumer sector in China has been a complex and dynamic one, with both consumption upgrade and downgrade going on across different categories and segments;</li>
<li>In the meantime, we see the consumer space as being a decent source for high-quality, relatively predictable Chinese companies;</li>
<li>To enjoy the long-term tailwind of consumption upgrade, investors may need to look for superior returns on capital, signs of an economic moat, stable market-share leaders/gainers, and solid structural trends.</li>
<li>We list our quick picks (three domestic and three overseas) that are hopeful of keeping delighting Chinese consumers in the long run.</li>
</ul>


The consumer sector in China has been a complex and dynamic one, with both consumption upgrade and downgrade going on across different categories and segments;
In the meantime, we see the consumer space as being a decent source for high-quality, relatively predictable Chinese companies;
To enjoy the long-term tailwind of consumption upgrade, investors may need to look for superior returns on capital, signs of an economic moat, stable market-share leaders/gainers, and solid structural trends.
We list our quick picks (three domestic and three overseas) that are hopeful of keeping delighting Chinese consumers in the long run.


Quick Picks that Are Hopeful of Keeping Delighting Chinese Consumers

China

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

Price Gauge
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Kweichow Moutai (600519 CH)

Our Wish List for 2021

We put together our wish list for 2021 containing top picks that we dream of buying a lot of when their valuations can turn south vastly.

Urbem Capital

China's Next Generation: Diversifying Away from Tencent and Alibaba.

China exposure is becoming more concentrated in a small number of large cap stocks. We identify the next generation of China stocks by analyzing...

Steven Holden

Quick Picks: Top Investable Brands From The 2020 Singles-Day Shopping Festival

Most winning brands cannot lead to an investable business in China, but here are our four hand-picked rare species that are investable from TMall's...

Urbem Capital

Quick Picks that Are Hopeful of Keeping Delighting Chinese Consumers

The consumer sector in China has been a complex and dynamic one in recent years, with two totally opposing trends (of both consumption upgrade and...

Urbem Capital

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Our Wish List for 2021

We put together our wish list for 2021 containing top picks that we dream of buying a lot of when their valuations can turn south vastly.

Urbem Capital

China's Next Generation: Diversifying Away from Tencent and Alibaba.

China exposure is becoming more concentrated in a small number of large cap stocks. We identify the next generation of China stocks by analyzing...

Steven Holden

Quick Picks: Top Investable Brands From The 2020 Singles-Day Shopping Festival

Most winning brands cannot lead to an investable business in China, but here are our four hand-picked rare species that are investable from TMall's...

Urbem Capital

A-Share Margin Trading Weekly (Jun 26th): CHINA MINSHENG BANKING, PING AN INSURANCE, ZIJIN MINING

We analyzed A-share margin trading positions report for the past week and highlighted CHINA MINSHENG BANKING (600016 CH), PING AN INSURANCE (601318...

Ke Yan, CFA, FRM

Quick Picks that Are Hopeful of Keeping Delighting Chinese Consumers

The consumer sector in China has been a complex and dynamic one in recent years, with two totally opposing trends (of both consumption upgrade and...

Urbem Capital