HK/China Equity Long-Short

Osbert Tang, CFA

Quantitative Analysis

<ul>
<li>Our Insight <a href="https://www.smartkarma.com/insights/is-there-a-january-effect-in-hang-seng-index" target="_blank" data-smartkarma-citation="insights:85565" rel="noopener">Is There a January Effect in Hang Seng Index?</a> correctly pointed to a strong Jan 2023. Based on historical pattern, Mar will be weak while Apr is positive.<a href="https://www.smartkarma.com/insights/smartkarma-webinar-is-there-still-hope-for-crypto-in-2023" target="_blank" data-smartkarma-citation="insights:86525" rel="noopener"></a>
</li>
<li>Macro factors including Russia-Ukraine war, Sino-US tension, disappointing US CPI and potentially weak 4Q22 corporate earnings are negative to HSI performance in Mar.</li>
<li>In Apr, focus may shift to positive factors which include improved clarity on US rate after FOMC meeting, better guidances for 1Q23 result and favourable policies after NPC/CPPCC.</li>
</ul>


Our Insight Is There a January Effect in Hang Seng Index? correctly pointed to a strong Jan 2023. Based on historical pattern, Mar will be weak while Apr is positive.

Macro factors including Russia-Ukraine war, Sino-US tension, disappointing US CPI and potentially weak 4Q22 corporate earnings are negative to HSI performance in Mar.
In Apr, focus may shift to positive factors which include improved clarity on US rate after FOMC meeting, better guidances for 1Q23 result and favourable policies after NPC/CPPCC.


What Is the Historical HSI Moves in Next Two Months, and Will It Follow This Year?

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of February 17th.</li>
<li>We estimate the weekly inflows to be US$1,241.6 million, led by industrials, consumer discretionary, information technology sectors, and offset by financials, utilities.</li>
<li>We highlight flows for Contemporary Amperex Technology, Sany Heavy Industry, Hundsun Technologies, Ping An Insurance, China Merchants Bank, Eve Energy.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of February 17th.
We estimate the weekly inflows to be US$1,241.6 million, led by industrials, consumer discretionary, information technology sectors, and offset by financials, utilities.
We highlight flows for Contemporary Amperex Technology, Sany Heavy Industry, Hundsun Technologies, Ping An Insurance, China Merchants Bank, Eve Energy.


Northbound Flows (Feb 17th): CATL, Sany Heavy, Hundsun, Ping An Insurance, CMB, Eve Energy

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 17th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the total inflows to be USD 960m and  highlight flows for Meituan, Xiaomi, Tencent.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 17th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the total inflows to be USD 960m and  highlight flows for Meituan, Xiaomi, Tencent.


Hong Kong Connect Flows (Feb 17th): Meituan, Xiaomi, Tencent

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>China’s passenger-vehicle (PV) retail sales volume fell 43% YoY in Jan 2023, in line with our prior forecast of 44% YoY decline.</li><li>Wholesale volume fell 33% YoY last month, 30% stronger than our prior projection, largely due to much weaker than-expected inventory destocking and higher export volume.</li><li>PV exports only fell 9% MoM to about 250,000 units in Jan 2023. Automakers only cut about 26,000 units of inventories in their dealers’ showrooms in Jan 2023 based on our calculations, despite early Chinese New Year, which has led to more than two months of inventories based on our projected retail sales volume for Feb and Mar 2023. I</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

China’s passenger-vehicle (PV) retail sales volume fell 43% YoY in Jan 2023, in line with our prior forecast of 44% YoY decline.Wholesale volume fell 33% YoY last month, 30% stronger than our prior projection, largely due to much weaker than-expected inventory destocking and higher export volume.PV exports only fell 9% MoM to about 250,000 units in Jan 2023. Automakers only cut about 26,000 units of inventories in their dealers’ showrooms in Jan 2023 based on our calculations, despite early Chinese New Year, which has led to more than two months of inventories based on our projected retail sales volume for Feb and Mar 2023. IContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Auto Sector – Inventory risk could lead to a bumpy recovery

Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

<ul><li>European Parliament has approved the law to effectively ban the sale of new petrol and diesel cars and vans in EU from 2035, aiming to speed up the switch to EV and combat climate change.</li><li>The law has been drafted and agreed by EU countries last October and finally legislated on 14 Feb 2022.</li><li>EU targets to reduce 100% CO2 emission produced by new cars and vans in 2035 with an intermediate goal of 55% for cars and 50% for vans in 2030.</li></ul>

European Parliament has approved the law to effectively ban the sale of new petrol and diesel cars and vans in EU from 2035, aiming to speed up the switch to EV and combat climate change.The law has been drafted and agreed by EU countries last October and finally legislated on 14 Feb 2022.EU targets to reduce 100% CO2 emission produced by new cars and vans in 2035 with an intermediate goal of 55% for cars and 50% for vans in 2030.

China

BYD Company Limited, through its subsidiaries, manufactures and sells automobiles. The Company also researches, develops, manufactures and sells batteries, which are applied on mobile phones, cordless phones, power tools and other kinds of portable electronic devices.

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BYD (1211 HK)

What Is the Historical HSI Moves in Next Two Months, and Will It Follow This Year?

Historically, Mar is a weak month for HSI while Apr is generally with positive return. Macro factors in this year look to support this pattern,...

Osbert Tang, CFA

Northbound Flows (Feb 17th): CATL, Sany Heavy, Hundsun, Ping An Insurance, CMB, Eve Energy

We analyzed the Shanghai/Shenzhen Connect Scheme for last week and highlight flows for CATL, Sany Heavy, Hundsun, Ping An Insurance, CMB, Eve Energy.

Ke Yan, CFA, FRM

Hong Kong Connect Flows (Feb 17th): Meituan, Xiaomi, Tencent

We analyzed the Hong Kong Connect Scheme for last week and highlight inflows for Meituan, Xiaomi and outflows from Tencent.

Ke Yan, CFA, FRM

China Auto Sector – Inventory risk could lead to a bumpy recovery

Wholesale volume fell 33% YoY last month, 30% stronger than our prior projection, largely due to much weaker than-expected inventory destocking and...

CMB International

Tactical Trade Idea – Auto Sector

EU zero-emission target by 2035 may place Chinese carmakers on the fast track. The law has been drafted and agreed by EU countries last October and...

Quam Securities

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