In today’s briefing:
- China Equities: Relative Upside in Offshore Vs. Onshore Stocks
- Monday Macro Update: Status Quo 2.0, Interrupted
China Equities: Relative Upside in Offshore Vs. Onshore Stocks
- 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.
Monday Macro Update: Status Quo 2.0, Interrupted
- Just when it appeared the “relative calm” would continue, the U.S. and Iran have resumed military strikes.
- At this juncture, however, we see no reason to amend our previously delineated trading range for the prompt NYMEX crude oil contract of roughly $75.00-$88.00 per barrel.
- However, given Friday’s surge in value, we consider NYMEX RBOB cracks to be overvalued from a fundamental, seasonal basis as we move into September.
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