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 analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.</li>
<li>$4.7bn USD inflows led by material, industrials and consumer staple. </li>
<li>We highlight inflows into CATL, Moutai, Yunnan Energy New Material, and outflows from Aier Eye. </li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine.
$4.7bn USD inflows led by material, industrials and consumer staple. 
We highlight inflows into CATL, Moutai, Yunnan Energy New Material, and outflows from Aier Eye. 


Northbound Flows: CATL, Moutai, Yunnan Energy New Material, Aier Eye

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

Thematic (Sector/Industry)

<ul>
<li>Over the past 2 years, Industrials exposure has almost doubled among China A-Share active investors.  Today's weight of 18.7% and overweight of 1.69% are near peak levels.</li>
<li>The most widely held stocks in the sector are CATL (A), Luxshare Precision Industry (002475 CH), Shenzhen Inovance Technology Co. (300124 CH) and EVE Energy (300014 CH)</li>
<li>Weight increases in the Industrials sector far outweighed decreases over the last half of 2021. Sungrow Power Supply (300274 CH) and NARI Technology Co (600406 CH) were among the beneficiaries.</li>
</ul>


Over the past 2 years, Industrials exposure has almost doubled among China A-Share active investors.  Today's weight of 18.7% and overweight of 1.69% are near peak levels.
The most widely held stocks in the sector are CATL (A), Luxshare Precision Industry (002475 CH), Shenzhen Inovance Technology Co. (300124 CH) and EVE Energy (300014 CH)
Weight increases in the Industrials sector far outweighed decreases over the last half of 2021. Sungrow Power Supply (300274 CH) and NARI Technology Co (600406 CH) were among the beneficiaries.


Research on Tech Companies

Evelyn Zhang

<ul>
<li>It'll take another 3-5 years of further development for VR and AR products to reach the level of user experience and reduction in cost necessary for wide commercial adoption. </li>
<li>The emergence of blockbuster AAA content will aid the large-scale adoption of Metaverse hardware, user generated contents are much lower in development cost,  a trend pioneered by Roblox &amp;Epic Games.</li>
<li>A-Share listed companies mainly focus on hardware value chain. China's video game regulator hasn't approved any new titles since July 2021. Leading Chinese companies are focusing on the commercial application.  </li>
</ul>


It'll take another 3-5 years of further development for VR and AR products to reach the level of user experience and reduction in cost necessary for wide commercial adoption. 
The emergence of blockbuster AAA content will aid the large-scale adoption of Metaverse hardware, user generated contents are much lower in development cost,  a trend pioneered by Roblox &amp;Epic Games.
A-Share listed companies mainly focus on hardware value chain. China's video game regulator hasn't approved any new titles since July 2021. Leading Chinese companies are focusing on the commercial application.  


Virtual Smoke and Mirror—Vision to Reality

USTR requested comments on potential exclusions of products of China subject to tariffs.
The largest exemption categories include Electrical equipment, electronic, mechanical equipment.
The household appliances have over 50% dependence on Chinese imports. 
This article combines the four tariff lists and identifies the goods most reliant on China, and consequently, potential beneficiaries of this Sino-US trade relaxation.

USTR requested comments on potential exclusions of products of China subject to tariffs.
The largest exemption categories include Electrical equipment, electronic, mechanical equipment.
The household appliances have over 50% dependence on Chinese imports. 
This article combines the four tariff lists and identifies the goods most reliant on China, and consequently, potential beneficiaries of this Sino-US trade relaxation.

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.

China

Luxshare Precision Industry Co., Ltd. researches, manufactures and sells connectors. The Company's products are widely used in computers, communication devices, consumer electronics products and automobiles.

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Luxshare Precision Industry (002475 CH)

Northbound Flows: CATL, Moutai, Yunnan Energy New Material, Aier Eye

We highlight weekly southbound inflows into the A-share market into CATL, Moutai, Yunnan Energy New Material, and outflows from Aier Eye.

Ke Yan, CFA, FRM

China A-Shares: Industrials Revolution

Over the past 2 years, Industrials exposure has almost doubled among China A-Share active investors. Today's weight of 18.7% and overweight of...

Steven Holden

Virtual Smoke and Mirror—Vision to Reality

The recent surge in Metaverse have brought VR & AR back into the focus of the market. So is the Metaverse finally ready for prime time or still a...

Evelyn Zhang

A Truce in Trade War?

USTR requested comments on potential exclusions of products of China subject to tariffs. We analyze the potential beneficiaries of this Sino-US...

Evelyn Zhang

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

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