HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> next month.   </li>
<li>Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. </li>
<li>November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.</li>
</ul>


October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the Hang Seng Index (HSI INDEX) next month.   
Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. 
November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.


HK Strategy: The Forthcoming Black October?

Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<ul>
<li>We recommend opening a position in WUXI06, a DR linked to a leading Chinese biotechnology and pharmaceutical development and manufacturing company.</li>
<li>Our KTX Tactical DR Port's average total return rose 0.79%, supported by gains in global equities after weak employment data reduced market expectations for a Fed rate hike.</li>
<li>According to our KTX Baht Tracker, the Thai baht has begun to rebound from previously oversold levels.</li>
</ul>


We recommend opening a position in WUXI06, a DR linked to a leading Chinese biotechnology and pharmaceutical development and manufacturing company.
Our KTX Tactical DR Port's average total return rose 0.79%, supported by gains in global equities after weak employment data reduced market expectations for a Fed rate hike.
According to our KTX Baht Tracker, the Thai baht has begun to rebound from previously oversold levels.


KTX Tactical DR Picks - August 10, 2026 (Eng.)

Global Equities, Multi-Asset PM, Dantes Outlook

Damanick Dantes, CMT

Global Equities, Multi-Asset PM

Dantes Outlook

We invest over a full market cycle, using multi-asset portfolios tailored to each global client, from individuals to family offices.

Built to Endure

Cross Asset Strategy

<ul>
<li>
Offshore relative value: We tested 12-month relative returns across onshore vs. offshore, and both vs. EM. Offshore China is the oversold leg, driven by its own weakness rather than onshore strength. </li>
<li>
AI rotation: The performance gap reflects capital favoring the onshore industrial upgrades vs. offshore consumption. Re-rating requires offshore earnings pickup regardless of how cheap the multiple looks.</li>
<li>
Stock selection:<a href="https://www.smartkarma.com/entities/msci-china-index" target="_blank" data-smartkarma-citation="entities:22895:1" rel="noopener">MSCI China Index (MXCN INDEX)</a> is dominated by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group-holding-limited" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a> while dispersion across the index is wide. We built an investable bucket.
</li>
</ul>



Offshore relative value: We tested 12-month relative returns across onshore vs. offshore, and both vs. EM. Offshore China is the oversold leg, driven by its own weakness rather than onshore strength. 

AI rotation: The performance gap reflects capital favoring the onshore industrial upgrades vs. offshore consumption. Re-rating requires offshore earnings pickup regardless of how cheap the multiple looks.

Stock selection:MSCI China Index (MXCN INDEX) is dominated by Tencent (700 HK) and Alibaba (9988 HK) while dispersion across the index is wide. We built an investable bucket.



China Equities: Relative Upside in Offshore Vs. Onshore Stocks

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Index Rebalance

<ul>
<li>We screen the Hong Kong-listed mainland stocks ahead of the HSCEI August 2026 review.</li>
<li>The screen produces one ADD and one DELETE, and the DELETE fires only if the ADD lands.</li>
<li>We note that the committee skipped the same ADD candidate last review but re-iterate our call.</li>
</ul>


We screen the Hong Kong-listed mainland stocks ahead of the HSCEI August 2026 review.
The screen produces one ADD and one DELETE, and the DELETE fires only if the ADD lands.
We note that the committee skipped the same ADD candidate last review but re-iterate our call.


Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>The Hong Kong market has regained momentum and strength since bottoming in June.  The materials and healthcare sectors have outperformed this month, with gold's advance underpinning metals' outperformance.</li>
<li>Growth factor investing continues to lag, while large-cap stocks have had the highest Sharpe ratio over the last year.  Value and dividend yield factors have outperformed in the long-only space.</li>
<li>GenScript Biotech (1548 HK) broke out to new highs in August, surpassing its 2022 high.  The company has seen a surge in its mainland revenue over the last year.</li>
</ul>


The Hong Kong market has regained momentum and strength since bottoming in June.  The materials and healthcare sectors have outperformed this month, with gold's advance underpinning metals' outperformance.
Growth factor investing continues to lag, while large-cap stocks have had the highest Sharpe ratio over the last year.  Value and dividend yield factors have outperformed in the long-only space.
GenScript Biotech (1548 HK) broke out to new highs in August, surpassing its 2022 high.  The company has seen a surge in its mainland revenue over the last year.


Technically Speaking Breakouts & Breakdowns - HONG KONG (August 2026)

China

Wuxi Biologics is a global Contract Research, Development, and Manufacturing Organization (CRDMO) offering end-to-end solutions for biologics discovery, development, and manufacturing, including complex modalities like monoclonal antibodies and antibody-drug conjugates. The company provides comprehensive services from concept to commercialization, including vaccine CRDMO services. It was founded in 2010 and is headquartered in Wuxi, China.

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Wuxi Biologics (2269 HK)

HK Strategy: The Forthcoming Black October?

With the HSI losing 2.5% so far today (the first trading day of Oct), it will be interesting to boomerang this Insight. Based on historical...

Osbert Tang, CFA

KTX Tactical DR Picks - August 10, 2026 (Eng.)

We recommend opening a position in WUXI06, a DR linked to a leading Chinese biotechnology and pharmaceutical development and manufacturing...

Krungthai XSpring

China Equities: Relative Upside in Offshore Vs. Onshore Stocks

Offshore China is improving relative to onshore China. We anticipate a re-ratings cycle and selected a basket of offshore stocks for active returns.

Damanick Dantes, CMT

HSCEI Sep 2026 Index Rebalance Forecast

We pair a WuXi Bio ADD with a Shenzhou DELETE at mid conviction. The committee skipped WuXi Bio last review, but this time we would not rule the...

Ke Yan, CFA, FRM

Technically Speaking Breakouts & Breakdowns - HONG KONG (August 2026)

Genscript shares gain after the company announced it will provide wet-lab services to companies participating in Eli Lilly's TundeLab, helping them...

David Mudd

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