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Cross Asset Strategy

<ul><li>TOP STORIES Analysis: Why China’s Carmakers Fear Falling Behind Without Huawei China’s carmakers once feared Huawei Technologies Co. Ltd. would become a rival.</li><li>Now many worry they can’t compete without it.</li><li>At an April 23 launch event, Huawei’s smart car unit rolled out a slate of new technologies, including the Qiankun ADS 5 autonomous driving system, the HarmonySpace 6 smart cockpit and Qiankun OS, which the company described as the industry’s first operating system designed for autonomous vehicles.</li></ul>

TOP STORIES Analysis: Why China’s Carmakers Fear Falling Behind Without Huawei China’s carmakers once feared Huawei Technologies Co. Ltd. would become a rival.Now many worry they can’t compete without it.At an April 23 launch event, Huawei’s smart car unit rolled out a slate of new technologies, including the Qiankun ADS 5 autonomous driving system, the HarmonySpace 6 smart cockpit and Qiankun OS, which the company described as the industry’s first operating system designed for autonomous vehicles.

CX Daily: Why China’s Carmakers Fear Falling Behind Without Huawei 

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The Hang Seng Internet &amp; IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).</li>
<li>In this insight, we take a look at the December 2026 index capping flows.</li>
<li>We have also presented our index change expectations for the next semiannual index review which will take place in March 2027.</li>
</ul>


The Hang Seng Internet &amp; IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
In this insight, we take a look at the December 2026 index capping flows.
We have also presented our index change expectations for the next semiannual index review which will take place in March 2027.


Quiddity Leaderboard HSIII Dec26/Mar27: Two ADDs/DELs Expected in Mar27, Third Change Possible

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>The Hong Kong market continues to trade sideways, with pockets of AI-themed stocks surging.  IPO activity remains robust in the technology sector.</li>
<li>Growth and momentum factors have underperformed so far in 2026, as stagnation in mainland domestic consumption is reflected in the underperformance of the consumer discretionary and staples sectors.</li>
<li>
<a href="https://www.smartkarma.com/entities/baidu-inc-class-a" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> received a BUY rating from Deutsche Bank with a target price of $186.  The company's cloud infrastructure revenue rose 79% in 1Q26.
</li>
</ul>


The Hong Kong market continues to trade sideways, with pockets of AI-themed stocks surging.  IPO activity remains robust in the technology sector.
Growth and momentum factors have underperformed so far in 2026, as stagnation in mainland domestic consumption is reflected in the underperformance of the consumer discretionary and staples sectors.

Baidu (9888 HK) received a BUY rating from Deutsche Bank with a target price of $186.  The company's cloud infrastructure revenue rose 79% in 1Q26.



BUY/SELL/HOLD: Hong Kong Market Update (5/27/26)

<ul><li>U.S. President Donald Trump’s summit with his Chinese counterpart Xi Jinping in Beijing last week highlighted how deeply intertwined major American companies remain with the world’s second-largest economy despite years of geopolitical and trade tensions.</li><li>The yuan is now in what many market analysts see as a sustained period of appreciation against the U.S. dollar, raising fundamental questions about how far it will go, how fast, and what that means for China’s exporters and the broader global economy.</li><li>Hong Kong’s convertible bond market is having its busiest year on record, with companies raising $14.2 billion so far this year as investors pour into equity-linked debt despite low or negative yields, according to investment bank UBS.</li></ul>

U.S. President Donald Trump’s summit with his Chinese counterpart Xi Jinping in Beijing last week highlighted how deeply intertwined major American companies remain with the world’s second-largest economy despite years of geopolitical and trade tensions.The yuan is now in what many market analysts see as a sustained period of appreciation against the U.S. dollar, raising fundamental questions about how far it will go, how fast, and what that means for China’s exporters and the broader global economy.Hong Kong’s convertible bond market is having its busiest year on record, with companies raising $14.2 billion so far this year as investors pour into equity-linked debt despite low or negative yields, according to investment bank UBS.

CX Daily: Trump’s China Trip Opens Doors for U.S. Business 

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Shenzhen Transsion Holdings / Equity Capital Markets

<ul>
<li>The H-share IPO of <a href="https://www.smartkarma.com/entities/shenzhen-transsion-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:58740:1" rel="noopener">Shenzhen Transsion Holdings (2636 HK)</a>, a smart device and mobile Internet service provider, appears to provide some upside at the maximum IPO price.</li>
<li>Its earnings have recovered sharply in 1H26, and for FY25-28F, it is expected to achieve an EPS CAGR of 30.2% as it expands its market and products.</li>
<li>We value it at 12.5x FY26 PER, 10% discount to <a href="https://www.smartkarma.com/entities/tcl-electronics-holdings-limited" target="_blank" data-smartkarma-citation="entities:15654:1" rel="noopener">TCL Electronics (1070 HK)</a>, implying a fair price of HK$43.73, or 12.7% upside.  </li>
</ul>


The H-share IPO of Shenzhen Transsion Holdings (2636 HK), a smart device and mobile Internet service provider, appears to provide some upside at the maximum IPO price.
Its earnings have recovered sharply in 1H26, and for FY25-28F, it is expected to achieve an EPS CAGR of 30.2% as it expands its market and products.
We value it at 12.5x FY26 PER, 10% discount to TCL Electronics (1070 HK), implying a fair price of HK$43.73, or 12.7% upside.  


Shenzhen Transsion (2636 HK) IPO: Still Some Upside

China

Xiaomi is a Chinese multinational corporation specializing in consumer electronics and technology, primarily known for its smartphones (Mi, Redmi, POCO series) and a wide range of AIoT (Artificial Intelligence of Things) devices, including smart home products, wearables, and laptops. The company also provides internet services, including its MIUI operating system. Xiaomi was founded in 2010 and is headquartered in Beijing, China.

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Xiaomi (1810 HK)

CX Daily: Why China’s Carmakers Fear Falling Behind Without Huawei

TOP STORIES Analysis: Why China’s Carmakers Fear Falling Behind Without Huawei China’s carmakers once feared Huawei Technologies Co. Ltd. would...

Caixin Global

Quiddity Leaderboard HSIII Dec26/Mar27: Two ADDs/DELs Expected in Mar27, Third Change Possible

We continue to see two ADDs/DELs for HSIII in March 2027. One more potential ADD remains close to the addition border and if it outperforms other...

Janaghan Jeyakumar, CFA

BUY/SELL/HOLD: Hong Kong Market Update (5/27/26)

The Hong Kong market continues to trade sideways, with pockets of AI-themed stocks surging. IPO activity remains robust in the technology sector.

David Mudd

CX Daily: Trump’s China Trip Opens Doors for U.S. Business

U.S. President Donald Trump’s summit with his Chinese counterpart Xi Jinping in Beijing last week highlighted how deeply intertwined major American...

Caixin Global

Shenzhen Transsion (2636 HK) IPO: Still Some Upside

Shenzhen Transsion's IPO is priced for an 12.7% upside. 1H26 earnings have recovered, and the 3-year EPS CAGR will reach 30.2%. Conservative...

Osbert Tang, CFA

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