Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

Equity Bottom-Up

<ul>
<li>Onshore Chinese investors’ purchases of HK equity through the Southbound Connect accelerated rapidly after China's September stimulus. Despite net selling in early May, the onshore bullishness seems sustainable for now.</li>
<li>Onshore investors prefer internet platforms (Tencent, Alibaba), technology and consumer discretionaries (Xiaomi, SMIC, China Mobile), and lately EVs (Li Auto, XPeng). High dividend SOE banks were bought earlier, not recently.</li>
<li>Our "China Twelve" stocks and focus themes closely align with onshore investors' preferences. 6 out of 12 figure in the "top bought" Southbound list - reaffirming our bullishness on them.</li>
</ul>


Onshore Chinese investors’ purchases of HK equity through the Southbound Connect accelerated rapidly after China's September stimulus. Despite net selling in early May, the onshore bullishness seems sustainable for now.
Onshore investors prefer internet platforms (Tencent, Alibaba), technology and consumer discretionaries (Xiaomi, SMIC, China Mobile), and lately EVs (Li Auto, XPeng). High dividend SOE banks were bought earlier, not recently.
Our "China Twelve" stocks and focus themes closely align with onshore investors' preferences. 6 out of 12 figure in the "top bought" Southbound list - reaffirming our bullishness on them.


Asian Equities: Southbound Trades Re-Affirm Our China Preferences

<ul>
<li>The recent spike in Asian currencies is driving foreign institutional flows into Asian equities. Currency appreciation is usually a lead indicator of FII flows, implying that this enthusiasm may continue. </li>
<li>The markets that were sold down the most are attracting the most flows and could continue to do so. India, Taiwan and to a lesser extent, Korea qualify.</li>
<li>Domestic sectors like Chinese internet, restaurant chains, athleisure; Indian private banks, consumer discretionary, hospital chains could gain. So could defensives with high dividend yields, e.g. Korea and Chinese utilities, telecom.</li>
</ul>


The recent spike in Asian currencies is driving foreign institutional flows into Asian equities. Currency appreciation is usually a lead indicator of FII flows, implying that this enthusiasm may continue. 
The markets that were sold down the most are attracting the most flows and could continue to do so. India, Taiwan and to a lesser extent, Korea qualify.
Domestic sectors like Chinese internet, restaurant chains, athleisure; Indian private banks, consumer discretionary, hospital chains could gain. So could defensives with high dividend yields, e.g. Korea and Chinese utilities, telecom.


Asian Equities: Currency Strength Driving FII Flows – Winners and Losers

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>
Implied Volatility Trends: One-month implied volatility is currently cheap, trading in its 14th percentile, while <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> approaches its twelve-months high.</li>
<li>
Skew and Term Structure Dynamics: A pronounced skew smile and a relatively flat term structure make spreads and calendar / diagonal spreads attractive strategies.</li>
<li>
Open Interest Distribution: Liquidity can be found in the monthly May expiry and the Quarterly expiries. The historically low implied volatility facilitates longer term positions.</li>
</ul>



Implied Volatility Trends: One-month implied volatility is currently cheap, trading in its 14th percentile, while Tencent (700 HK) approaches its twelve-months high.

Skew and Term Structure Dynamics: A pronounced skew smile and a relatively flat term structure make spreads and calendar / diagonal spreads attractive strategies.

Open Interest Distribution: Liquidity can be found in the monthly May expiry and the Quarterly expiries. The historically low implied volatility facilitates longer term positions.


Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure

<ul>
<li>Over the past five trading days, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.</li>
<li>Calendar and Diagonal Spreads make up a quarter of all strategies. Several examples are presented incorporating upfront cost, upfront credit, or zero-cost combinations. </li>
<li>While there is a bias towards bullish strategies, 26% of all strategies express a market-neutral view in the form of Straddles, Strangles, Butterflies or Condors.</li>
</ul>


Over the past five trading days, Tencent (700 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Calendar and Diagonal Spreads make up a quarter of all strategies. Several examples are presented incorporating upfront cost, upfront credit, or zero-cost combinations. 
While there is a bias towards bullish strategies, 26% of all strategies express a market-neutral view in the form of Straddles, Strangles, Butterflies or Condors.


Tencent (700 HK): Strategic Insights and Top Trades from HKEX Options Trading

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A week after the State Council issued "Several Opinions" (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC <a href="http://www.csrc.gov.cn/csrc/c100028/c7474875/content.shtml" target="_blank" rel="noopener">announced</a> Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.</li>
<li>They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.</li>
<li>RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the "To Do" list "as soon as possible and smoothly." Watch impact on H/A Pairs.</li>
</ul>


A week after the State Council issued "Several Opinions" (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the "To Do" list "as soon as possible and smoothly." Watch impact on H/A Pairs.


RMB Dual Counter Trading Is Coming - This Changes AH Relationships

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Asian Equities: Southbound Trades Re-Affirm Our China Preferences

In May, net buying of HK-listed stocks cratered to $5.8bn from the previous 3 month’s $20-21bn range. Avg daily turnover dropped to $12bn from the...

Manishi Raychaudhuri

Asian Equities: Currency Strength Driving FII Flows – Winners and Losers

In May, net buying of HK-listed stocks cratered to $5.8bn from the previous 3 month’s $20-21bn range. Avg daily turnover dropped to $12bn from the...

Manishi Raychaudhuri

Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure

Tencent is approaching its 12-month high and implied volatility is cheap. The skew smile and flattish term structure make spreads attractive.

Gaudenz Schneider

Tencent (700 HK): Strategic Insights and Top Trades from HKEX Options Trading

Tencent's multi-leg option strategies feature a mix of bullish, bearish and market-neutral approaches, including Calendar and Diagonal Spreads....

Gaudenz Schneider

RMB Dual Counter Trading Is Coming - This Changes AH Relationships

1 year+ after the CSRC said it was working towards expanding HKD RMB dual counter trading in HK, making RMB counters eligible, last month through...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Asian Equities: Southbound Trades Re-Affirm Our China Preferences

In May, net buying of HK-listed stocks cratered to $5.8bn from the previous 3 month’s $20-21bn range. Avg daily turnover dropped to $12bn from the...

Manishi Raychaudhuri

Asian Equities: Currency Strength Driving FII Flows – Winners and Losers

In May, net buying of HK-listed stocks cratered to $5.8bn from the previous 3 month’s $20-21bn range. Avg daily turnover dropped to $12bn from the...

Manishi Raychaudhuri

Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure

Tencent is approaching its 12-month high and implied volatility is cheap. The skew smile and flattish term structure make spreads attractive.

Gaudenz Schneider

Tencent (700 HK): Strategic Insights and Top Trades from HKEX Options Trading

​Tencent's multi-leg option strategies feature a mix of bullish, bearish and market-neutral approaches, including Calendar and Diagonal Spreads....

Gaudenz Schneider

RMB Dual Counter Trading Is Coming - This Changes AH Relationships

1 year+ after the CSRC said it was working towards expanding HKD RMB dual counter trading in HK, making RMB counters eligible, last month through...

Travis Lundy

Tencent's multi-leg option strategies feature a mix of bullish, bearish and market-neutral approaches, including Calendar and Diagonal Spreads....