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>Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors.  </li>
<li>From a high of 4% in July of 2020, average fund weights have fallen to just 1.14% and average underweights have plunged towards their lowest level on record.</li>
<li>
<a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> has led the declines, as sentiment towards the China A-Share Biotechnology sector looks fragile.</li>
</ul>


Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors.  
From a high of 4% in July of 2020, average fund weights have fallen to just 1.14% and average underweights have plunged towards their lowest level on record.

Wuxi Biologics (2269 HK) has led the declines, as sentiment towards the China A-Share Biotechnology sector looks fragile.


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Recently, the Senate blesses bill to boost American competitiveness, restore the country’s manufacturing base and curb its reliance on China for critical supplies, especially in “medical and pharmaceutical fields”.</li>
<li>The global API industry pattern and status of China's APIs in global market are difficult to change.The US would find it difficult to enforce sanctions because of supply chain problems.</li>
<li>However, the worst-case scenario is if there's an extreme or black swan event (e.g. Taiwan Strait war), there is a risk of decoupling, which should be aware of by investors.</li>
</ul>


Recently, the Senate blesses bill to boost American competitiveness, restore the country’s manufacturing base and curb its reliance on China for critical supplies, especially in “medical and pharmaceutical fields”.
The global API industry pattern and status of China's APIs in global market are difficult to change.The US would find it difficult to enforce sanctions because of supply chain problems.
However, the worst-case scenario is if there's an extreme or black swan event (e.g. Taiwan Strait war), there is a risk of decoupling, which should be aware of by investors.


The Impact of America COMPETES Act on China Healthcare – Supply Chain Decoupling?

Equity Bottom-Up

Asymchem Laboratories Tianjin / Equity Bottom-Up

<ul>
<li>The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, <a href="https://www.smartkarma.com/entities/asymchem-laboratories" target="_blank" data-smartkarma-citation="entities:35691:1" rel="noopener">Asymchem Laboratories (6821 HK)</a>'s performance could decline from a high base.</li>
<li>In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.</li>
<li>Overall, Asymchem’s moat is not strong enough, and the certainty of the Company's long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.</li>
</ul>


The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, Asymchem Laboratories (6821 HK)'s performance could decline from a high base.
In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.
Overall, Asymchem’s moat is not strong enough, and the certainty of the Company's long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.


Asymchem Laboratories (6821.HK/002821.CH) - Concerns on Future Growth Momentum

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Mar 25th. </li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short interest changes in Wuxi Biologics, HK China Gas, Geely, Netease.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Mar 25th. 
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short interest changes in Wuxi Biologics, HK China Gas, Geely, Netease.


HK Short Interest: Wuxi Biologics, HK China Gas, Geely, Netease

<ul>
<li>The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> in 2022.</li>
<li>Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.</li>
<li>There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics. </li>
</ul>


The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of Wuxi Biologics (2269 HK) in 2022.
Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.
There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics. 


Wuxi Biologics (2269.HK) 2021 Results - The Highlights and the Concerns

China

WuXi Biologics (Cayman) Inc. is a leading open-access R&D capability and technology platform company serving the pharmaceutical, biotechnology, and medical device industries, with operations in China, U.S., and Iceland.  We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the drug and medical device R&D process.  Our services are designed to help our global partners in shortening the cycle and lowering the cost of drug and medical device R&D through cost-effective and efficient solutions. 

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Wuxi Biologics (2269 HK)

China A-Shares: Biotechnology Exit

Allocations in Biotechnology stocks have taken a severe drop among active China A-Share investors. From a high of 4% in July of 2020, average fund...

Steven Holden

The Impact of America COMPETES Act on China Healthcare – Supply Chain Decoupling?

The impact of America COMPETES Act could be limited in ST due to China's strong position in global supply chain.But if there's extreme case...

Xinyao (Criss) Wang

Asymchem Laboratories (6821.HK/002821.CH) - Concerns on Future Growth Momentum

Despite COVID-19 drug orders, Asymchem's performance could decline afterwards. In essence, it mainly relies on cost advantage of large-scale...

Xinyao (Criss) Wang

HK Short Interest: Wuxi Biologics, HK China Gas, Geely, Netease

We highlight week on week short interest changes in Wuxi Biologics, HK China Gas, Geely, Netease based on latest HK SFC short aggregate report.

Ke Yan, CFA, FRM

Wuxi Biologics (2269.HK) 2021 Results - The Highlights and the Concerns

WuXi Bio would continue to perform outstanding in 2022, but it doesn't mean a complete “reversal”.Investors needs to see the rebounds rationally...

Xinyao (Criss) Wang

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