Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.</li>
<li>The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.</li>
<li>The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.</li>
</ul>


The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%.  The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.
The portfolio's largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.
The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark.  The portfolio's annualized mean excess return is 19.4%.


External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>NetEase announced 3Q25 results: total revenue grew by 8% YoY to RMB28.4bn, 3% below Bloomberg consensus estimate; operating income increased by 12% YoY to RMB8.0bn, below consensus estimate of RMB9.2bn, primarily attributable to the higher-than-expected marketing expenses.</li><li>Nonetheless, we remain upbeat on the games revenue growth outlook in 4Q25E and FY26E, supported by NetEase’s quality game pipeline, solid performance of legacy titles and healthy growth of contract liabilities (+25% YoY in 3Q25).</li><li>In view of increased marketing spending, we slightly lower our FY25-27E nonGAAP net income forecast by 0-1%. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

NetEase announced 3Q25 results: total revenue grew by 8% YoY to RMB28.4bn, 3% below Bloomberg consensus estimate; operating income increased by 12% YoY to RMB8.0bn, below consensus estimate of RMB9.2bn, primarily attributable to the higher-than-expected marketing expenses.Nonetheless, we remain upbeat on the games revenue growth outlook in 4Q25E and FY26E, supported by NetEase’s quality game pipeline, solid performance of legacy titles and healthy growth of contract liabilities (+25% YoY in 3Q25).In view of increased marketing spending, we slightly lower our FY25-27E nonGAAP net income forecast by 0-1%. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

NetEase (NTES US) - Solid Games Business Outlook on Quality Pipeline and Evergreen Games

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 analyzed the latest HK SFC report for aggregate short position as of Oct 2nd.</li>
<li>Top short increases and decreases were tabulated for one week and four week period.</li>
<li>We highlight short changes in Lenovo, Baba, Meituan, Tencent, Kb Laminates, Zj Innolight.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Oct 2nd.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short changes in Lenovo, Baba, Meituan, Tencent, Kb Laminates, Zj Innolight.


HK Short Interest Weekly: Lenovo, Baba, Meituan, Tencent, Kb Laminates, Zj Innolight

Thematic (Sector/Industry)

<ul>
<li>China announced game approval for the July batch. The number of games approved remained at a higher level than in 2023 and 2024.</li>
<li>The pace of China game approval appears to have accelerated to the same level as pre-tightening.</li>
<li>Of the companies that we are monitoring, Netease got 1 approval.</li>
</ul>


China announced game approval for the July batch. The number of games approved remained at a higher level than in 2023 and 2024.
The pace of China game approval appears to have accelerated to the same level as pre-tightening.
Of the companies that we are monitoring, Netease got 1 approval.


Tencent/Netease: One Game for NetEase as July Approvals Hit New High

<ul>
<li>The Hong Kong Alpha portfolio beat the Hong Kong indexes in June and was flat to its benchmark with a loss of 6.98%.</li>
<li>The Hong Kong market experienced heavy selling in the second half of June, as both foreign and mainland investors reduced their exposure.</li>
<li>At the end of June, we sold positions in the electric utilities, technology, consumer, and property sectors. We added positions in the broker, biotech, telecom, and industrial sectors.</li>
</ul>


The Hong Kong Alpha portfolio beat the Hong Kong indexes in June and was flat to its benchmark with a loss of 6.98%.
The Hong Kong market experienced heavy selling in the second half of June, as both foreign and mainland investors reduced their exposure.
At the end of June, we sold positions in the electric utilities, technology, consumer, and property sectors. We added positions in the broker, biotech, telecom, and industrial sectors.


China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

HONG KONG ALPHA PORTFOLIO: (July 2026)

We made several adjustments to the portfolio yesterday. We sold the Baidu (9888) position since it hit our stop-loss level. We also sold the...

David Mudd

NetEase (NTES US) - Solid Games Business Outlook on Quality Pipeline and Evergreen Games

We roll forward our valuation window to FY26E, and fine-tune our SOTP-derived target price to US$164.0 (previous: US$160.0). Maintain BUY.

CMB International

HK Short Interest Weekly: Lenovo, Baba, Meituan, Tencent, Kb Laminates, Zj Innolight

We analyzed the latest HK SFC report for aggregate short position as of Oct 2nd and highlight short interest changes in Lenovo, Baba, Meituan,...

Ke Yan, CFA, FRM

Tencent/Netease: One Game for NetEase as July Approvals Hit New High

NPPA released its July 2026 domestic game approval batch, the largest of the year. Netease secured one game approved. We also discuss sector...

Ke Yan, CFA, FRM

HONG KONG ALPHA PORTFOLIO: (June 2026)

At mid-month, we note that pc makers are passing on higher chip and component costs to consumers. For this reason, we sold our positions in Lenovo...

David Mudd

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