Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Wide dispersion of returns has meant that industry sector investing  was a major performance contributor in Hong Kong</li>
<li>
<a href="https://www.smartkarma.com/entities/lygend-resources-technology" target="_blank" data-smartkarma-citation="entities:36493:1" rel="noopener">Lygend Resources &amp; Technology (2245 HK)</a> brokeout after Indonesia announced a moratorium on new nickel mining permits.  <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK)</a> broke its falling wedge pattern after announcing results.
</li>
<li>
<a href="https://www.smartkarma.com/entities/wynn-macau-ltd" target="_blank" data-smartkarma-citation="entities:473:1" rel="noopener">Wynn Macau Ltd (1128 HK)</a> broke to a new low after announcing a disappointing 2Q EBITDA.  The sector is also affected by a crackdown on illegal money exchange operations.
</li>
</ul>


Wide dispersion of returns has meant that industry sector investing  was a major performance contributor in Hong Kong

Lygend Resources &amp; Technology (2245 HK) brokeout after Indonesia announced a moratorium on new nickel mining permits.  Sino Biopharmaceutical (1177 HK) broke its falling wedge pattern after announcing results.


Wynn Macau Ltd (1128 HK) broke to a new low after announcing a disappointing 2Q EBITDA.  The sector is also affected by a crackdown on illegal money exchange operations.



Technically Speaking, Breakouts and Breakdowns: HONG KONG (AUGUST 15)

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a>’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. </li>
<li>The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. </li>
<li>The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.</li>
</ul>



China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.


China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-logistics-inc" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> are potential deletions while <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty (2328 HK)</a> and <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Techn (9901 HK)</a> are potential adds.</li>
<li>Estimated one-way turnover at the rebalance is 1.8% resulting in a one-way trade of HK$950m. Official capping will be based off the close of trading on 3 September.</li>
<li>There will be 1-2x ADV to buy on the adds and over 2x ADV to sell in <a href="https://www.smartkarma.com/entities/jd-logistics-inc" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics</a>. The impact on <a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime</a> is lower given the recent surge in volume.</li>
</ul>



SenseTime Group (20 HK) and JD Logistics (2618 HK) are potential deletions while PICC Property &amp; Casualty (2328 HK) and New Oriental Education &amp; Techn (9901 HK) are potential adds.
Estimated one-way turnover at the rebalance is 1.8% resulting in a one-way trade of HK$950m. Official capping will be based off the close of trading on 3 September.
There will be 1-2x ADV to buy on the adds and over 2x ADV to sell in JD Logistics. The impact on SenseTime is lower given the recent surge in volume.


HSCEI Index Rebalance Preview: Two Changes Likely in September

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 24th.</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 highlight flows for BOC, CCB, ICBC, Zto Express, Tencent, Meituan, Xiaomi, CNOOC.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of May 24th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for BOC, CCB, ICBC, Zto Express, Tencent, Meituan, Xiaomi, CNOOC.


Hong Kong Connect Flows (May 24th): BOC, CCB, ICBC, Zto Express, Tencent, Meituan, Xiaomi, CNOOC

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Akeso Biopharma Inc / Equity Capital Markets

<ul>
<li>Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104's commercialization potential on other indications was "overdrawn" in advance, sales growth would slow afterwards. </li>
<li>The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.</li>
<li>If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.</li>
</ul>


Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104's commercialization potential on other indications was "overdrawn" in advance, sales growth would slow afterwards. 
The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.


Akeso Biopharma Placement (9926.HK) - Would Investors Be Willing to Take a Gamble?

Hong Kong

Sino Biopharmaceutical Limited, through its subsidiaries, researches, develops, produces, and sells biopharmaceutical products for the medical treatment of ophthalmia, as well as modernized Chinese medicine and chemical medicine for the treatment of hepatitis.

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Sino Biopharmaceutical (1177 HK)

Technically Speaking, Breakouts and Breakdowns: HONG KONG (AUGUST 15)

Successful returns in Hong Kong has meant getting the industry right! Lygend benefits from moratorium on new nickel mine permits. Sino Bio RX...

David Mudd

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

It is rare for the market to misprice an HKEx merger arb to this extent, suggesting something is amiss. Nevertheless, the risk (10.6% downside) vs...

Arun George

HSCEI Index Rebalance Preview: Two Changes Likely in September

We forecast two changes in September with a 1-way turnover of 1.8% resulting in a 1-way trade of HK$950m. There will be 1-2 days of ADV to trade on...

Brian Freitas

Hong Kong Connect Flows (May 24th): BOC, CCB, ICBC, Zto Express, Tencent, Meituan, Xiaomi, CNOOC

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for BOC, CCB, ICBC, Zto Express, Tencent, Meituan, Xiaomi, CNOOC.

Ke Yan, CFA, FRM

Akeso Biopharma Placement (9926.HK) - Would Investors Be Willing to Take a Gamble?

Stock price plunged today because the clinical data of AK112 (EGFRm NSCLC progressed after EGFR-TKI treatment) missed expectations. As we analyzed...

Xinyao (Criss) Wang

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