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>There are signs that a base has been building in Real Estate allocations, and that sentiment is starting to stabilise.</li>
<li>Average weights in the Real Estate sector ticked higher by 0.25% and 5.43% of managers moved to overweight, closing the net underweight by 0.22%.</li>
<li>Central Pattana Pub (CPN TB), China Resources Mixc Lifestyle Services (1209 HK) and Capitaland (CAPL SP) were beneficiaries of recent inflows</li>
</ul>


There are signs that a base has been building in Real Estate allocations, and that sentiment is starting to stabilise.
Average weights in the Real Estate sector ticked higher by 0.25% and 5.43% of managers moved to overweight, closing the net underweight by 0.22%.
Central Pattana Pub (CPN TB), China Resources Mixc Lifestyle Services (1209 HK) and Capitaland (CAPL SP) were beneficiaries of recent inflows


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.</li>
<li>An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.</li>
<li>Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.</li>
</ul>


Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.
An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.
Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.


Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>With US interest rate trending up, many of the Hong Kong blue chips are exposed to higher interest expenses from their outstanding debt. We look into who are less vulnerable.</li>
<li>
<a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a>, <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing Company APAC (1876 HK)</a>, <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar (968 HK)</a>, <a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">Power Assets (6 HK)</a> and <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> are found to be more immunized.</li>
<li>Most have large cash balance, low leverage and more fixed rate debt. GEG, Bud APAC and Xinyi Solar may even benefit from higher interest income given net cash position.  </li>
</ul>


With US interest rate trending up, many of the Hong Kong blue chips are exposed to higher interest expenses from their outstanding debt. We look into who are less vulnerable.

Galaxy Entertainment Group (27 HK), Budweiser Brewing Company APAC (1876 HK), Xinyi Solar (968 HK), Power Assets (6 HK) and MTR Corp (66 HK) are found to be more immunized.
Most have large cash balance, low leverage and more fixed rate debt. GEG, Bud APAC and Xinyi Solar may even benefit from higher interest income given net cash position.  


Rising US Interest Rate: A Look at Which HK Blue Chips Are Less Vulnerable

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>
Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;</li>
<li>
Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and</li>
<li>
Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.</li>
</ul>



Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;

Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and

Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.


*Kaisa Defaults: On November 4, 2021, Kaisa Group Holdings (1638.HK) [Kaisa], which provided a guarantee on a wealth management product (WMP), disclosed that it had missed a payment - citing that “it is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades”.  While the 25th largest developer by home sales in mainland China may not appear to be significant, Kaisa does have the second largest level of short-term debt due (USD 3.2 bn) after China Evergrande Group (3333.HK) [Evergrande] without any meaningful plan for repayment; and*We Await Evergrande’s Next Payments: We await official word on whether Evergrande’s Scenery Journey met its coupon payment of USD 82.5 mn due November 6, 2021, and we look toward the 30-day grace period expiry on a third set of bond interest payments of USD 148 mn due November 10, 2021.

*Kaisa Defaults: On November 4, 2021, Kaisa Group Holdings (1638.HK) [Kaisa], which provided a guarantee on a wealth management product (WMP), disclosed that it had missed a payment - citing that “it is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades”.  While the 25th largest developer by home sales in mainland China may not appear to be significant, Kaisa does have the second largest level of short-term debt due (USD 3.2 bn) after China Evergrande Group (3333.HK) [Evergrande] without any meaningful plan for repayment; and*We Await Evergrande’s Next Payments: We await official word on whether Evergrande’s Scenery Journey met its coupon payment of USD 82.5 mn due November 6, 2021, and we look toward the 30-day grace period expiry on a third set of bond interest payments of USD 148 mn due November 10, 2021.   

Hong Kong

Sun Hung Kai Properties Limited develops and invests in properties. The Company operates and manages hotels, properties, car parking, and transportation infrastructures. Sun Hung Kai Properties serves customers in Hong Kong.

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Sun Hung Kai Properties (16 HK)

Asia Real Estate: Early Stage Recovery

There are signs that a base has been building in Real Estate allocations, and that sentiment is starting to stabilise among active Asia Ex-Japan...

Steven Holden

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Rising US Interest Rate: A Look at Which HK Blue Chips Are Less Vulnerable

We look at what companies in the Hang Seng Index are more immunized to the rising US interest rate environment; and found the top five are with...

Osbert Tang, CFA

China Evergrande Group – Fire Sale

EVERGRANDE: Several investors appear to have confirmed that Evergrande failed to cover grace period payments. Shenjing Bank has CNY 129.4 bn...

Thomas J. Monaco

China Evergrande Group – Kaisa Rolled

EVERGRANDE: Kaisa missed a bond payment, and has the second largest level of short-term debt due. We await official word Evergrande’s Scenery...

Thomas J. Monaco

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