HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The just finished "Year of the Rabbit" Chinese New Year has witnessed strong revival in travel appetite. Total domestic travelers increased 23.1% YoY, returning to 88.6% of 2019 level.</li>
<li>
<a href="https://www.smartkarma.com/entities/tongcheng-elong-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng-Elong (780 HK)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com (9961 HK)</a>, <a href="https://www.smartkarma.com/entities/huazhu-group-ltd-79e0c5b5-ad55-42ed-b8d2-a2173defd0ea" target="_blank" data-smartkarma-citation="entities:33487:1" rel="noopener">Huazhu Group (1179 HK)</a>, <a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a> and <a href="https://www.smartkarma.com/entities/china-film-co-ltd" target="_blank" data-smartkarma-citation="entities:29943:1" rel="noopener">China Film Co (600977 CH)</a> are some of the beneficiaries.</li>
<li>As we passed peak of infections and overseas PCR and visa constraints are further removed, the trend of improvement in travel demand will sustain into the National Day holidays.  </li>
</ul>


The just finished "Year of the Rabbit" Chinese New Year has witnessed strong revival in travel appetite. Total domestic travelers increased 23.1% YoY, returning to 88.6% of 2019 level.

Tongcheng-Elong (780 HK), Trip.com (9961 HK), Huazhu Group (1179 HK), Fosun Tourism (1992 HK), China Southern Airlines (1055 HK) and China Film Co (600977 CH) are some of the beneficiaries.
As we passed peak of infections and overseas PCR and visa constraints are further removed, the trend of improvement in travel demand will sustain into the National Day holidays.  


Chinese New Year Travel Market: Roundup And Implications

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI China ETF / Technical Analysis

<ul>
<li>We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.</li>
<li>We continue to expect rangebound price action in the months ahead on the MSCI ACWI.</li>
<li>And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)</li>
</ul>


We remain neutral on global equities (MSCI ACWI), we believe upside remains limited with the MSCI ACWI (ACWI-US), S&amp;P 500, and several European indexes still below major resistance.
We continue to expect rangebound price action in the months ahead on the MSCI ACWI.
And, rangebound price action could very well be the theme for all of 2023 (with resistance at $93 and support at $75-77 on ACWI-US)


Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

<ul>
<li>China's twists in its COVID combating measures are positive to the economy as many quarantine requirements are relaxed and secondary contacts are not identified and traced.</li>
<li>The latest change should bring more spending confidence to the consumers, and this will benefit consumer discretionary companies in the retail and F&amp;B sectors. </li>
<li>Relaxed quarantine requirements are positive to the travel and hospitality companies. Chinese airlines and international air tickets have seen immediate demand surge after the announcement.  </li>
</ul>


China's twists in its COVID combating measures are positive to the economy as many quarantine requirements are relaxed and secondary contacts are not identified and traced.
The latest change should bring more spending confidence to the consumers, and this will benefit consumer discretionary companies in the retail and F&amp;B sectors. 
Relaxed quarantine requirements are positive to the travel and hospitality companies. Chinese airlines and international air tickets have seen immediate demand surge after the announcement.  


China's Latest COVID Policy: What Are the Plays?

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

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>'s reported sale of its <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> stake led to a selloff on Meituan and on other companies that Tencent has invested in.</li>
<li>There are 10 listed companies where <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>'s holding is over US$1bn. Some stakes are more likely to be sold than others. </li>
<li>A complete stake sale will benefit some companies more than others since they are part of a wider array of indices and that will bring in passive flow.</li>
</ul>



Tencent (700 HK)'s reported sale of its Meituan (3690 HK) stake led to a selloff on Meituan and on other companies that Tencent has invested in.
There are 10 listed companies where Tencent (700 HK)'s holding is over US$1bn. Some stakes are more likely to be sold than others. 
A complete stake sale will benefit some companies more than others since they are part of a wider array of indices and that will bring in passive flow.


Tencent's Potential Sale of Meituan Stake - Read Across to Other Stocks & Index Implications

<ul>
<li>Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.</li>
<li>Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.</li>
<li>Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).</li>
</ul>


Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

China

Tongcheng Travel Holdings Limited operates as an online travel agency. The Company provides transportation ticketing, accommodation reservation, value added travel products sales, and other services. Tongcheng Travel Holdings provides its services throughout China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Tongcheng Travel Holdings (780 HK)

Chinese New Year Travel Market: Roundup And Implications

Total domestic travelers in China was up 23.1% in CNY. Tongcheng-Elong, Trip.com, Huazhu Group, Fosun Tourism, China Southern Airlines and China...

Osbert Tang, CFA

Hang Seng and MSCI China Bottoming -- Add; Europe Still Leading; Shift From U.S. To Non-U.S.

We remain neutral on global equities $ACWI and expect rangebound price action in the months (possibly year) ahead. Specific $ACWI trading range we...

Vermilion Research

China's Latest COVID Policy: What Are the Plays?

The refined COVID combating measures in China is welcoming and should benefit the consumer discretionary, travel and hospitality and airlines...

Osbert Tang, CFA

Tencent's Potential Sale of Meituan Stake - Read Across to Other Stocks & Index Implications

A Reuters report that Tencent intended to sell its stake in Meituan led to a selloff across Tencent's investee companies. The impact of passive...

Brian Freitas

Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

Hong Kong's Hang Seng and China's $MCHI and $KWEB are near major base breakouts. We are watching is 22,700 on Hang Seng and $56.60 on MCHI; we are...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)