Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

Sun Art Retail Group Ltd. operates hypermarkets.  The Company retails food and offers amenities such as restaurants, automated teller machines, pharmacies and dry cleaners.

<ul>
<li>Hong Kong markets continue to outperform globally this year with short selling declining and mainland buying increasing.  These trends should accelerate going into next year.</li>
<li>
<a href="https://www.smartkarma.com/entities/sun-art-retail-group-ltd" target="_blank" data-smartkarma-citation="entities:401:1" rel="noopener">Sun Art Retail (6808 HK)</a>resumed trading after announcing that the company is entertaining one or more potential acquisition plans for the company.  The company also announced strong 1H25 earnings.
</li>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group Company (2727 HK) </a>announce a buyback plan for 10% of A and H shares outstanding.  The company also announced the acquisition of the China Fanuc robotics business.
</li>
</ul>


Hong Kong markets continue to outperform globally this year with short selling declining and mainland buying increasing.  These trends should accelerate going into next year.

Sun Art Retail (6808 HK)resumed trading after announcing that the company is entertaining one or more potential acquisition plans for the company.  The company also announced strong 1H25 earnings.


Shanghai Electric Group Company (2727 HK) announce a buyback plan for 10% of A and H shares outstanding.  The company also announced the acquisition of the China Fanuc robotics business.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 22)

Macroeconomics

<ul>
<li>China's trade is growing strongly and has become less dependent on the US.  The EU and Mexico now exceed China's monthly exports to the US.</li>
<li>Taiwan as a flashpoint between the US and China will decline in coming years as each country ramps up its semiconductor manufacturing capabilities.</li>
<li>Tariffs and the Yuan will be important negotiating points between the US and China, but the good news is they will be talking.</li>
</ul>


China's trade is growing strongly and has become less dependent on the US.  The EU and Mexico now exceed China's monthly exports to the US.
Taiwan as a flashpoint between the US and China will decline in coming years as each country ramps up its semiconductor manufacturing capabilities.
Tariffs and the Yuan will be important negotiating points between the US and China, but the good news is they will be talking.


Trump and China: It's Going to Get Interesting!

<ul>
<li>As HK/China markets complete their retracements after the best rally in more than a decade, the exaggerated pessimism from the media and analysts returns.</li>
<li>The government continues to roll out measures to relieve the pressure on the property market in what is a multi-year process with no quick fix.</li>
<li>Even after a historic rally, the HSI still trades at a significant valuation discount which will narrow in the coming months.</li>
</ul>


As HK/China markets complete their retracements after the best rally in more than a decade, the exaggerated pessimism from the media and analysts returns.
The government continues to roll out measures to relieve the pressure on the property market in what is a multi-year process with no quick fix.
Even after a historic rally, the HSI still trades at a significant valuation discount which will narrow in the coming months.


HK/China: DOOM AND GLOOM? DON'T GET FOOLED AGAIN

Cross Asset Strategy

<ul>
<li>Healthcare sector continues to gain momentum in Hong Kong market during pullback with materials and energy sectors lagging.</li>
<li>Value and Liquidity factors have outperformed since stimulus announcement in September.</li>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> , <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health International (6618 HK)</a> and <a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a> were rated as BUY as analysts turn toward China consumption plays as future winners.
</li>
</ul>


Healthcare sector continues to gain momentum in Hong Kong market during pullback with materials and energy sectors lagging.
Value and Liquidity factors have outperformed since stimulus announcement in September.

Anta Sports Products (2020 HK) , JD Health International (6618 HK) and Sands China (1928 HK) were rated as BUY as analysts turn toward China consumption plays as future winners.



BUY/SELL/HOLD: Hong Kong Stock Updates (October 15)

<ul>
<li>Our most prominent theme this year has been to BUY HK/China markets.  We are still very bullish on these SECULAR BULL markets.</li>
<li>We have been Bullish on gold and discussed the asymmetry of its price movements given the global tightening starting in 2021/22.  Gold will continues to benefit from negative real rates.</li>
<li>We have been Bearish on Japan since publishing <a href="https://www.smartkarma.com/insights/technically-speaking-japan-meets-resistance-and-hong-kong-finally-breaks-downtrend" target="_blank" data-smartkarma-citation="insights:135575" rel="noopener">Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend</a> on April 2nd.  Japan's market is facing significant headwinds going forward.</li>
</ul>


Our most prominent theme this year has been to BUY HK/China markets.  We are still very bullish on these SECULAR BULL markets.
We have been Bullish on gold and discussed the asymmetry of its price movements given the global tightening starting in 2021/22.  Gold will continues to benefit from negative real rates.
We have been Bearish on Japan since publishing Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend on April 2nd.  Japan's market is facing significant headwinds going forward.


OVER THE HORIZON: Thematic Review Year-To-Date

Asian Hedge Fund manager based in HK/SG with over 20 years of experience managing Asian Long/Short Equity funds. Macroeconomic top-down analysis generates thematic investments that are further researched from the bottom-up. Research is supplemented with advanced technical analysis. 
Previous experience includes M&A with Morgan Stanley and CPA with Deloitte in NYC. Wharton MBA.

David Mudd
Asian Hedge Fund Manager, Long Short Equity, Macro

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 22)

HK out-perform global peers with short selling abating and mainland buying increasing. Sun Art resumed trading as it entertains potential buyout...

David Mudd

Trump and China: It's Going to Get Interesting!

China's trade is growing strongly and less dependent on the US than it was 4 years ago. Trump's will seek to enter trade negotiations with China...

David Mudd

HK/China: DOOM AND GLOOM? DON'T GET FOOLED AGAIN

China posted strong economic numbers for September and 3Q which exceeded consensus forecasts. The HK/China markets are significantly undervalued...

David Mudd

BUY/SELL/HOLD: Hong Kong Stock Updates (October 15)

Healthcare sector gains momentum in HK and materials and energy lag. Anta is appealing to the mass market with new megastores. JDH benefits from...

David Mudd

OVER THE HORIZON: Thematic Review Year-To-Date

We have been and continue to be BULLISH on HK/China markets and gold. We also continue to see headwinds for the Japan market from here.

David Mudd