HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

CK Infrastructure Holdings / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> should thrive in the volatile market environment in 2025, given its stable earnings, diversified geography, low gearing, and consistent dividends.</li>
<li>Further reduction in US interest rate should potentially be positive to other currencies, and CKI has diversified exposure in the UK, Australia, Europe, and Canada to benefit.</li>
<li>Investors may turn more risk-averse in the next year. CKI's high earnings visibility, with many regulatory resets happening beyond 2025, is highly welcome in the market. </li>
</ul>



CK Infrastructure Holdings (1038 HK) should thrive in the volatile market environment in 2025, given its stable earnings, diversified geography, low gearing, and consistent dividends.
Further reduction in US interest rate should potentially be positive to other currencies, and CKI has diversified exposure in the UK, Australia, Europe, and Canada to benefit.
Investors may turn more risk-averse in the next year. CKI's high earnings visibility, with many regulatory resets happening beyond 2025, is highly welcome in the market. 


2025 High Conviction: CKI (1038 HK) - Perfect Harmony

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Hong Kong's market continues its consolidation in a Secular Bull Market.  Technology and healthcare sectors have weakened, while utilities, telecom, and energy sectors have strengthened.</li>
<li>Mainland investors have slowed net buying through the Southbound Connect platform.  Dividend yield, value and low volatility are leading investment factors since October. Growth and momentum factors have lagged.</li>
<li>
<a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)</a> is initiated as BUY at Shenwan Hongyuan.  VLCC rates to China are rising amid U.S. oil sanctions on Russia and Venezuela.
</li>
</ul>


Hong Kong's market continues its consolidation in a Secular Bull Market.  Technology and healthcare sectors have weakened, while utilities, telecom, and energy sectors have strengthened.
Mainland investors have slowed net buying through the Southbound Connect platform.  Dividend yield, value and low volatility are leading investment factors since October. Growth and momentum factors have lagged.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is initiated as BUY at Shenwan Hongyuan.  VLCC rates to China are rising amid U.S. oil sanctions on Russia and Venezuela.



BUY/SELL/HOLD: Hong Kong Market Update (December 17)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>There is no shortage of opinions on whether FIRB will back/oppose the Santos Offer, as Australia seeks to balance attracting foreign investment with the need to protect national interests.</li>
<li>The key question is how Australia benefits from Santos becoming a foreign-owned national oil/gas company? Can ADNOC accelerated/bolster existing projects/operations? Can ADNOC better negotiate native title rights for domestic supply? </li>
<li>And should Australia readily sell 100% in a critical infrastructure complex; yet if the roles were reversed, foreigners are capped at 49% ownership in UAE's similar critical assets? </li>
</ul>


There is no shortage of opinions on whether FIRB will back/oppose the Santos Offer, as Australia seeks to balance attracting foreign investment with the need to protect national interests.
The key question is how Australia benefits from Santos becoming a foreign-owned national oil/gas company? Can ADNOC accelerated/bolster existing projects/operations? Can ADNOC better negotiate native title rights for domestic supply? 
And should Australia readily sell 100% in a critical infrastructure complex; yet if the roles were reversed, foreigners are capped at 49% ownership in UAE's similar critical assets? 


Santos (STO AU): Why FIRB Should Block ADNOC's Takeover

<ul>
<li>You might have to go all the back to <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a>'s 2012/2013 unconditional cash offer, which was ostensibly blocked by First Eagle AND Elliott Advisors.</li>
<li>Otherwise, it's slim pickings. Past Schemes or Tender Offers arguably failed as minorities were simply not supportive. There are exceptions, like <a href="https://www.smartkarma.com/entities/soho-china-ltd" target="_blank" data-smartkarma-citation="entities:4123:1" rel="noopener">Soho China (410 HK)</a> and <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">TCM (570 HK)</a>
</li>
<li>IF LVC wish to remain active in this space/region, they appear to be going about it in a counterproductive way. I still don't understand why they would want to block.</li>
</ul>


You might have to go all the back to Guoco Group Ltd (53 HK)'s 2012/2013 unconditional cash offer, which was ostensibly blocked by First Eagle AND Elliott Advisors.
Otherwise, it's slim pickings. Past Schemes or Tender Offers arguably failed as minorities were simply not supportive. There are exceptions, like Soho China (410 HK) and TCM (570 HK)

IF LVC wish to remain active in this space/region, they appear to be going about it in a counterproductive way. I still don't understand why they would want to block.


Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?

<ul>
<li>The Hong Kong Alpha portfolio returned -2.89% in November versus +1.72% for its benchmark index. The HK Alpha portfolio has outperformed Hong Kong indexes by 33% to 45% since inception.</li>
<li>The portfolio continues to generate 57% of its returns from alpha (idiosyncratic returns) while maintaining a Sharpe ratio of 2.19 YTD.</li>
<li>We have sold positions in the materials and industrials sectors and added positions in telecom, gold, and insurance industries at the end of November.</li>
</ul>


The Hong Kong Alpha portfolio returned -2.89% in November versus +1.72% for its benchmark index. The HK Alpha portfolio has outperformed Hong Kong indexes by 33% to 45% since inception.
The portfolio continues to generate 57% of its returns from alpha (idiosyncratic returns) while maintaining a Sharpe ratio of 2.19 YTD.
We have sold positions in the materials and industrials sectors and added positions in telecom, gold, and insurance industries at the end of November.


HONG KONG ALPHA PORTFOLIO: (November 2025)

Hong Kong

Power Assets Holdings Limited invests in power generation, transmission and distribution as well as gas distribution. The Company has investments in Hong Kong, Australia, Canada, China, New Zealand and Thailand.

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Power Assets Holdings (6 HK)

2025 High Conviction: CKI (1038 HK) - Perfect Harmony

CKI should thrive in a volatile market with stable earnings, diversified geography, low gearing, and consistent dividends. Further, a lower US...

Osbert Tang, CFA

BUY/SELL/HOLD: Hong Kong Market Update (December 17)

Hong Kong's market continues its consolidation in a Secular Bull Market. Technology and healthcare sectors have weakened, while utilities,...

David Mudd

Santos (STO AU): Why FIRB Should Block ADNOC's Takeover

Santos Ltd (STO AU) dives ~11% after Abu Dhabi walks away, two days before a formal deadline. "Sensationally ended", as The Australian words it? I...

David Blennerhassett

Henlius (2696 HK): So, When Was The Last Time A PE/VC Outfit Blocked A Deal?

PE and/or a VC outfit blocking deals are rare. Which may suggest LVC doesn't want that moniker. You could therefore, extrapolate that line of...

David Blennerhassett

HONG KONG ALPHA PORTFOLIO: (November 2025)

We made small changes to the HK Alpha portfolio mid-month. At the close on 12/12 we sold all of First Pacific (142 HK) and added 2% to our...

David Mudd

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