In this briefing:
- HK Connect Ideas: Nine Weeks of Inflows, Sino Biopharm, Yadea, Anta, Aoyuan (2019-07-12)
- Are Risky Assets Overvalued?
- Trade War/Hong Kong/Shipbuilding/Rubbish
- Taking Off: Vietnamese Exports Are Rocking and Rolling
- Hong Kong Short Reporting – Insights from 5 July Data
In our weekly HK Connect Snippet series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.
We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
In this insight, we would like to highlight the nine consecutive weeks of inflows from mainland China to Hong Kong stocks. We highlight the inflows into China Vanke Co Ltd (H) (2202 HK), Tencent Holdings (700 HK), Sino Biopharmaceutical (1177 HK), and outflows from Future Land Development Holdings (1030 HK), Sunac China Holdings (1918 HK), and WH Group (288 HK). In addition, we would highlight the trading opportunities on Meituan Dianping (3690 HK) and Xiaomi Corp (1810 HK)‘s likely inclusion into Hong Kong Connect this month. In the mid cap space, we highlighted Kingdee International Software (268 HK), China Aoyuan Property (3883 HK), Yadea Group Holdings (1585 HK) and Anta Sports Products (2020 HK).
US stocks are significantly overvalued and we should expect lower than average returns going forward, unless there is going to be a substantial increase in earnings growth.
In the credit space, corporate bonds are expensive, and leveraged loans unattractive.
As risky assets become less attractive and expensive, that leaves investors mostly with Government Bonds.
China News That Matters
- Trump complains about Chinese shopping
- Hong Kong crisis – deal “dead”, but not withdrawn
- When we could be diving for pearls
- Where there’s muck, there’s brass
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.
Whisper it quietly but not all Asian exporters are struggling. In the first six months of 2019 the dollar value of exports from Korea dropped 8.5% YoY. Taiwanese exports were down 3.6% YoY . Meanwhile, Chinese exports, the country at the heart of the trade war, were down just 0.1% YoY.
We analyse the latest SFC data released today on short position reporting in Hong Kong for the week ended 5 July.
Total short notional in Hong Kong increased from US$58.12bn to US$59.63bn over the week. This is an increase of 2.6% vs a 0.8% gain for the HSI.
The largest notional increase in short positions were Zhongsheng Group (881 HK), Tencent Holdings (700 HK), Geely Auto (175 HK),Ping An Insurance (H) (2318 HK) and Xiaomi Corp (1810 HK) while the largest decreases in short notional were Meituan Dianping (3690 HK), ICBC (H) (1398 HK) and Semiconductor Manufacturing (981 HK).
Short positions increased in Anta Sports Products (2020 HK) on the back of a short seller report and Future Land Development Holdings (1030 HK) on news of the Chairman’s arrest, while Kingsoft Corp (3888 HK) remained the most shorted stock as a percentage of market cap.