Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>Hong Kong's Secular Bull Market continues with the index breaking  above its long term resistance levels.  Market breadth is expanding with 87% of stocks trading above their 200  (DMA).</li>
<li>Hong Kong market valuations are well below all other Asian markets.  This year, the materials and healthcare sectors have been the best performers.</li>
<li>Robosense Technology (2498 HK)  reported solid earnings in its LIDAR business with robotics posting surprising growth.  Deutsche Bank and China Renaissance both rate the company a BUY and raise targets.</li>
</ul>


Hong Kong's Secular Bull Market continues with the index breaking  above its long term resistance levels.  Market breadth is expanding with 87% of stocks trading above their 200  (DMA).
Hong Kong market valuations are well below all other Asian markets.  This year, the materials and healthcare sectors have been the best performers.
Robosense Technology (2498 HK)  reported solid earnings in its LIDAR business with robotics posting surprising growth.  Deutsche Bank and China Renaissance both rate the company a BUY and raise targets.


BUY/SELL/HOLD: Hong Kong Market Update (September 10)

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The Hang Seng Index is the main benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to predict index changes.</li>
<li>In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes during the next review in September 2025.</li>
<li>The index changes are expected to be confirmed on 22nd August 2025.</li>
</ul>


The Hang Seng Index is the main benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to predict index changes.
In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes during the next review in September 2025.
The index changes are expected to be confirmed on 22nd August 2025.


Quiddity Leaderboard Hang Seng Index Sep25: BeOne, TME, and Pop Mart Among Our Top Picks

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Unisound AI Technology / Equity Bottom-Up

<ul>
<li>Unisound AI Technology, a founder-led AI solution provider with focus on conversational AI products and speech recognition technologies, completed its IPO in Hong Kong in June.</li>
<li>Beijing based AI company priced an initial public offering at HK$205.00/share, raising ~HK$251M of net proceeds. The stock is up ~248% from its IPO price at Monday’s close.  </li>
<li>Unisound AI’s market cap today is on a par with market cap of SenseTime and 2x bigger than Beijing Fourth Paradigm. All these companies have the similar growth profiles.</li>
</ul>


Unisound AI Technology, a founder-led AI solution provider with focus on conversational AI products and speech recognition technologies, completed its IPO in Hong Kong in June.
Beijing based AI company priced an initial public offering at HK$205.00/share, raising ~HK$251M of net proceeds. The stock is up ~248% from its IPO price at Monday’s close.  
Unisound AI’s market cap today is on a par with market cap of SenseTime and 2x bigger than Beijing Fourth Paradigm. All these companies have the similar growth profiles.


Unisound AI (9678.HK): ~US$6.5B Market Cap, ADTV ~US$6M, Is Secondary Share Sale On The Deck?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>There are 3 potential changes for the HSIII Index in September. There are couple of names that are close to the inclusion/ deletion thresholds.</li>
<li>The largest inflows will go to <a href="https://www.smartkarma.com/entities/horizon-robotics-inc" target="_blank" data-smartkarma-citation="entities:35637:1" rel="noopener">Horizon Robotics (9660 HK)</a> following lock-up expiry that increases the Free-Float Adjusted Factor (FAF) by a factor of 7-8x.</li>
<li>There are large capping changes too and the estimated one-way turnover is 9.8% resulting in a round-trip trade of HK$5.65bn (US$720m).</li>
</ul>


There are 3 potential changes for the HSIII Index in September. There are couple of names that are close to the inclusion/ deletion thresholds.
The largest inflows will go to Horizon Robotics (9660 HK) following lock-up expiry that increases the Free-Float Adjusted Factor (FAF) by a factor of 7-8x.
There are large capping changes too and the estimated one-way turnover is 9.8% resulting in a round-trip trade of HK$5.65bn (US$720m).


Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Constituent, FAF & Capping Changes

Equity Capital Markets

Unisound AI Technology / Equity Capital Markets

<ul>
<li>Unisound AI Technology, a Beijing-based AI solution provider with focus on conversational AI products, healthcare and daily life related application scenarios, is expected to IPO next week.</li>
<li>The offering is expected to be between HK$165.00 and HK$205.00, implying a market cap of ~HK$13B or ~$1.7B at the midpoint of price range.  </li>
<li>Unisound AI Technology IPO valuation implies a premium relative to SenseTime, iFlytek and 4Paradigm. I would consider becoming more constructive on the name if its valuation came down.</li>
</ul>


Unisound AI Technology, a Beijing-based AI solution provider with focus on conversational AI products, healthcare and daily life related application scenarios, is expected to IPO next week.
The offering is expected to be between HK$165.00 and HK$205.00, implying a market cap of ~HK$13B or ~$1.7B at the midpoint of price range.  
Unisound AI Technology IPO valuation implies a premium relative to SenseTime, iFlytek and 4Paradigm. I would consider becoming more constructive on the name if its valuation came down.


Unisound AI IPO (9678.HK): Premium Multiple Is Not Justified, Small Scale and High Cash Burn

China

SenseTime Group Inc. offers information technology services. The Company develops artificial intelligence software products, computer vision software products, and other products. SenseTime Group provides its services throughout China.

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SenseTime Group (20 HK)

BUY/SELL/HOLD: Hong Kong Market Update (September 10)

Hong Kong reached the technical resistance level of 27100 targeted in the insight, and promptly reversed. The interday reversal could be the start...

David Mudd

Quiddity Leaderboard Hang Seng Index Sep25: BeOne, TME, and Pop Mart Among Our Top Picks

The official index change results for the Hang Seng index Sep25 review will be announced publicly on Friday (after market close). This might be a...

Janaghan Jeyakumar, CFA

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Constituent, FAF & Capping Changes

There could be 3 constituent changes in Sep. A big FAF increase is forecast for Horizon Robotics. Plenty of capping changes. Put together, that...

Brian Freitas

Unisound AI IPO (9678.HK): Premium Multiple Is Not Justified, Small Scale and High Cash Burn

I remain cautious on upcoming Unisound AI IPO in Hong Kong. The company will report net losses and operating cash outflows in 2025.

Andrei Zakharov

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BUY/SELL/HOLD: Hong Kong Market Update (September 10)

Hong Kong reached the technical resistance level of 27100 targeted in the insight, and promptly reversed. The interday reversal could be the start...

David Mudd

Quiddity Leaderboard Hang Seng Index Sep25: BeOne, TME, and Pop Mart Among Our Top Picks

The official index change results for the Hang Seng index Sep25 review will be announced publicly on Friday (after market close). This might be a...

Janaghan Jeyakumar, CFA

Unisound AI (9678.HK): ~US$6.5B Market Cap, ADTV ~US$6M, Is Secondary Share Sale On The Deck?

In my another insight about Unisound AI Technology, I discuss post-listing trading dynamics, relative valuation and lock-up expiry

Andrei Zakharov

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Constituent, FAF & Capping Changes

There could be 3 constituent changes in Sep. A big FAF increase is forecast for Horizon Robotics. Plenty of capping changes. Put together, that...

Brian Freitas

Unisound AI IPO (9678.HK): Premium Multiple Is Not Justified, Small Scale and High Cash Burn

I remain cautious on upcoming Unisound AI IPO in Hong Kong. The company will report net losses and operating cash outflows in 2025.

Andrei Zakharov