HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<p><strong>1. Industry viewpoints:</strong></p><ul>
<li>In the aspect of Chinese patent medicines, the main varieties of proprietary Chinese medicine are expected to be the first to be included in VBP, and medicines of stable quality are a higher priority.</li>
<li>Chemiluminescence is in the stage of rapid growth and the trend of intensive procurement of IVD consumables could drive import substitution.</li>
<li>The wellness tourism market has a good development environment and a huge growth potential.</li>
</ul><p><strong>2. Company news:</strong></p><p style="text-align: start;">News about the updated progress of COVID-19 vaccine and new drugs from <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a>, <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a>, and <a href="https://www.smartkarma.com/entities/akeso-biopharma-inc" target="_blank" data-smartkarma-citation="entities:28830:1" rel="noopener">Akeso Biopharma Inc (9926 HK)</a>.</p><p><strong>3. Market review:</strong></p><p style="text-align: start;">Last week, stock price for healthcare sector in A share decreased 8.2%, while CSI 300 decreased 7.65% over the same period of time. </p><p><strong>4. Risk disclosure:</strong></p><p style="text-align: start;">Policy risk, R&amp;D risk, Company risk and COVID-19 risk.</p>

1. Industry viewpoints:
In the aspect of Chinese patent medicines, the main varieties of proprietary Chinese medicine are expected to be the first to be included in VBP, and medicines of stable quality are a higher priority.
Chemiluminescence is in the stage of rapid growth and the trend of intensive procurement of IVD consumables could drive import substitution.
The wellness tourism market has a good development environment and a huge growth potential.
2. Company news:News about the updated progress of COVID-19 vaccine and new drugs from CanSino Biologics Inc (6185 HK), Innovent Biologics Inc (1801 HK), Antengene (6996 HK), and Akeso Biopharma Inc (9926 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 8.2%, while CSI 300 decreased 7.65% over the same period of time. 4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

China Suntien Green Energy / Event-Driven

<div>
<p>Several weeks ago, I gave the warning H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.</p>
<p>They have started to move wider again, and given the global form in risk and higher volatility right now, I would not be surprised if they continued a bit wider.</p>
</div><div>
<p>Last week, in the first full week after the end of all the Chinese New Year festivities, all but one sector saw average spreads widen, and market-wide, spreads had their worst week in quite a while.</p>
<table class="table table-striped"><tbody>
<tr>
<td style="width: 198.182px;"><p>Sector</p></td>
<td style="text-align: right; width: 103.636px;"><p>Last Week</p></td>
<td style="text-align: right; width: 135.455px;"><p>Previous Week</p></td>
<td style="text-align: right; width: 100px;"><p>3wks Ago</p></td>
<td style="text-align: right; width: 102.727px;"><p>4wks Ago</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Consumer</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.65%</p></td>
<td style="text-align: right; width: 135.455px;"><p>-  1.20%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 2.55%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.32%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Energy</p></td>
<td style="text-align: right; width: 103.636px;"><p>+ 0.67%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 1.43%</p></td>
<td style="text-align: right; width: 100px;"><p>-  1.64%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.98%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Financials &amp; Real Estate</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.12%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.10%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 0.29%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 0.62%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Health Care &amp; Info Tech</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  2.86%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 1.45%</p></td>
<td style="text-align: right; width: 100px;"><p>-  1.52%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.29%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Industrials</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.20%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.26%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.62%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.48%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Materials</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  0.84%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 3.08%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.57%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.66%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Utilities</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  0.14%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.99%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 0.25%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.06%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Sector Average</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.02%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.87%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.18%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.92%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p><strong>All Market Average</strong></p></td>
<td style="text-align: right; width: 103.636px;"><p><strong>-  1.22%</strong></p></td>
<td style="text-align: right; width: 135.455px;"><p><strong>+ 0.76%</strong></p></td>
<td style="text-align: right; width: 100px;"><p><strong>-  0.33%</strong></p></td>
<td style="text-align: right; width: 102.727px;"><p><strong>+ 1.80%</strong></p></td>
</tr>
</tbody></table>
<p>Developers saw their Hs rise dramatically on the week on new rules about land sales which would appear to favor large developers over smaller developers, but few have an H/A spread presence.</p>
</div><div><div>
<hr>
<h3>The H/A Spread Market</h3>
</div></div><div>
<p>The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/379/original/Screenshot+2021-02-28+at+7.50.25+PM.png?1614513037" class="editor-image img-responsive" data-smartkarma-image-id="191379"></figure></section>
</div><p>The average discount appears not to want to tighten. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/402/original/Screenshot+2021-02-28+at+9.36.30+PM.png?1614519456" class="editor-image img-responsive" data-smartkarma-image-id="191402"></figure></section><p></p><h2>Last Week's Recommendations</h2><ul>
<li>There were 78 recommendations last week. </li>
<li>The 33 short recommendations gained an average of 1.70%, outperforming the market as a whole (which saw the average spread widen 1.22%). That is alpha of 48bp.</li>
<li>The 45 long recommendations averaged losses of 76bp during the week, outperforming the market as a whole by 46bp. The combined total package was up 0.27% for the week, with 92bp of alpha on the cross-bias. </li>
</ul><hr><section><div><h2>Consumer Sector</h2></div>
<div><p>The first sector discussed is Consumer, where liquid H/A spreads widened on average 1.65% over the past week, with the sector continuing to see significant bumpiness. </p></div>
<div><ul>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> saw its spread move 2.9% narrower last week after widening 3.1% in the previous two weeks. It is now 3.7% narrower over four weeks.  <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> narrowed too, but the others in the space widened. </li>
<li>All but one stock in the sector saw its H-share decline in double digit percentages. The average H in the sector moved down 15.9% in the week. Only <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> was spared that indignity, seeings its H fall 'only' 9.7%.</li>
<li>Southbound was a net seller of nearly HK$2bn of stock since the 10th of February, purchasing only <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> on a net basis.</li>
</ul></div>
<div><div><div class="content-highlight">
<p>Last week, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades gained an average of 3.58% in spread terms on the week.</p>
</div></div></div>
<section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/384/original/Screenshot+2021-02-28+at+8.09.50+PM.png?1614514204" class="editor-image img-responsive" data-smartkarma-image-id="191384"></figure><p></p></section></section></section><section><em>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</em></section></section>


Several weeks ago, I gave the warning H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.
They have started to move wider again, and given the global form in risk and higher volatility right now, I would not be surprised if they continued a bit wider.

Last week, in the first full week after the end of all the Chinese New Year festivities, all but one sector saw average spreads widen, and market-wide, spreads had their worst week in quite a while.


Sector
Last Week
Previous Week
3wks Ago
4wks Ago


Consumer
-  1.65%
-  1.20%
+ 2.55%
+ 2.32%


Energy
+ 0.67%
+ 1.43%
-  1.64%
+ 1.98%


Financials &amp; Real Estate
-  1.12%
+ 0.10%
+ 0.29%
+ 0.62%


Health Care &amp; Info Tech
-  2.86%
+ 1.45%
-  1.52%
+ 2.29%


Industrials
-  1.20%
+ 0.26%
-  0.62%
+ 2.48%


Materials
-  0.84%
+ 3.08%
-  0.57%
+ 2.66%


Utilities
-  0.14%
+ 0.99%
+ 0.25%
+ 1.06%


Sector Average
-  1.02%
+ 0.87%
-  0.18%
+ 1.92%


All Market Average
-  1.22%
+ 0.76%
-  0.33%
+ 1.80%


Developers saw their Hs rise dramatically on the week on new rules about land sales which would appear to favor large developers over smaller developers, but few have an H/A spread presence.


The H/A Spread Market

The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. 

The average discount appears not to want to tighten. Last Week's Recommendations
There were 78 recommendations last week. 
The 33 short recommendations gained an average of 1.70%, outperforming the market as a whole (which saw the average spread widen 1.22%). That is alpha of 48bp.
The 45 long recommendations averaged losses of 76bp during the week, outperforming the market as a whole by 46bp. The combined total package was up 0.27% for the week, with 92bp of alpha on the cross-bias. 
Consumer Sector
The first sector discussed is Consumer, where liquid H/A spreads widened on average 1.65% over the past week, with the sector continuing to see significant bumpiness. 


BYD (1211 HK) saw its spread move 2.9% narrower last week after widening 3.1% in the previous two weeks. It is now 3.7% narrower over four weeks.  Great Wall Motor (2333 HK) narrowed too, but the others in the space widened. 
All but one stock in the sector saw its H-share decline in double digit percentages. The average H in the sector moved down 15.9% in the week. Only Guangzhou Automobile Group (2238 HK) was spared that indignity, seeings its H fall 'only' 9.7%.
Southbound was a net seller of nearly HK$2bn of stock since the 10th of February, purchasing only Fuyao Glass Industry Group (3606 HK) on a net basis.


Last week, I recommended staying long the Great Wall Motor (2333 HK), and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades gained an average of 3.58% in spread terms on the week.

For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.

Quiddity Weekly H/A: Strong Dispersion, Strong Alpha; Brokers Beat Banks

Equity Bottom-Up

Beijing Wantai Biological Phar / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/beijing-wantai-biological-a" target="_blank" data-smartkarma-citation="entities:30129:1" rel="noopener">Beijing Wantai Biological-A (603392 CH)</a> has always been a hot topic for investors. The stock price of Wantai, which listed in April last year, rose about 2203% over the year. In January, the stock price rose another 60.77%. As of Febuary 26, 2021 (less than a year after its listing), Wantai ranked the first on the list of A-share gainers with a gain of 2753%, and the largest gain in 2020 was about 3839%. However, a closer look suggests that there are some concerns to pay attention to.</p>

Beijing Wantai Biological-A (603392 CH) has always been a hot topic for investors. The stock price of Wantai, which listed in April last year, rose about 2203% over the year. In January, the stock price rose another 60.77%. As of Febuary 26, 2021 (less than a year after its listing), Wantai ranked the first on the list of A-share gainers with a gain of 2753%, and the largest gain in 2020 was about 3839%. However, a closer look suggests that there are some concerns to pay attention to.

Beijing Wantai Biological (603392.CH) - After A 3839% Rally, Let's Look at Some Concerns

<p>Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.</p><p>In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.</p><table class="table table-striped"><tbody>
<tr>
<td><p>Sector</p></td>
<td style="text-align: right;"><p>Last<br>Week</p></td>
<td style="text-align: right;"><p>Previous<br>Week</p></td>
<td style="text-align: right;"><p>3wks<br>Ago</p></td>
<td style="text-align: right;"><p>4wks<br>Ago</p></td>
</tr>
<tr>
<td><p>Consumer</p></td>
<td style="text-align: right;"><p>-  1.20%</p></td>
<td style="text-align: right;"><p>+ 2.55%</p></td>
<td style="text-align: right;"><p>+ 2.32%</p></td>
<td style="text-align: right;"><p>-  2.62%</p></td>
</tr>
<tr>
<td><p>Energy</p></td>
<td style="text-align: right;"><p>+ 1.43%</p></td>
<td style="text-align: right;"><p>-  1.64%</p></td>
<td style="text-align: right;"><p>+ 1.98%</p></td>
<td style="text-align: right;"><p>-  0.59%</p></td>
</tr>
<tr>
<td><p>Financials &amp; Real Estate</p></td>
<td style="text-align: right;"><p>+ 0.10%</p></td>
<td style="text-align: right;"><p>+ 0.29%</p></td>
<td style="text-align: right;"><p>+ 0.62%</p></td>
<td style="text-align: right;"><p>-  1.73%</p></td>
</tr>
<tr>
<td><p>Health Care &amp; Info Tech</p></td>
<td style="text-align: right;"><p>+ 1.45%</p></td>
<td style="text-align: right;"><p>-  1.52%</p></td>
<td style="text-align: right;"><p>+ 2.29%</p></td>
<td style="text-align: right;"><p>-  0.27%</p></td>
</tr>
<tr>
<td><p>Industrials</p></td>
<td style="text-align: right;"><p>+ 0.26%</p></td>
<td style="text-align: right;"><p>-  0.62%</p></td>
<td style="text-align: right;"><p>+ 2.48%</p></td>
<td style="text-align: right;"><p>-  1.30%</p></td>
</tr>
<tr>
<td><p>Materials</p></td>
<td style="text-align: right;"><p>+ 3.08%</p></td>
<td style="text-align: right;"><p>-  0.57%</p></td>
<td style="text-align: right;"><p>+ 2.66%</p></td>
<td style="text-align: right;"><p>-  0.95%</p></td>
</tr>
<tr>
<td><p>Utilities</p></td>
<td style="text-align: right;"><p>+ 0.99%</p></td>
<td style="text-align: right;"><p>+ 0.25%</p></td>
<td style="text-align: right;"><p>+ 1.06%</p></td>
<td style="text-align: right;"><p>-  2.45%</p></td>
</tr>
<tr>
<td><p>Sector Average</p></td>
<td style="text-align: right;"><p>+ 0.87%</p></td>
<td style="text-align: right;"><p>-  0.18%</p></td>
<td style="text-align: right;"><p>+ 1.92%</p></td>
<td style="text-align: right;"><p>-  1.41%</p></td>
</tr>
</tbody></table><p>This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. </p><div class="content-highlight"><p>There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. </p></div><div><div><h3>The H/A Spread Market</h3></div></div><div>
<p>The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/832/original/Screenshot+2021-02-20+at+5.17.17+PM.png?1613812651" class="editor-image img-responsive" data-smartkarma-image-id="189832"></figure></section><hr>
</div><div><div><h3>Consumer Sector</h3></div></div><div>
<p>The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. </p>
<p><a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> taking its place moving 2.4% in the two weeks and 10.7% in four.</p>
</div><div class="content-highlight">
<p>Two weeks ago, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades gained an average of 1.67% in spread terms on the week.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/833/original/Screenshot+2021-02-20+at+5.28.45+PM.png?1613813350" class="editor-image img-responsive" data-smartkarma-image-id="189833"></figure></section><p>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</p>

Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.

Sector
Last Week
Previous Week
3wks Ago
4wks Ago


Consumer
-  1.20%
+ 2.55%
+ 2.32%
-  2.62%


Energy
+ 1.43%
-  1.64%
+ 1.98%
-  0.59%


Financials &amp; Real Estate
+ 0.10%
+ 0.29%
+ 0.62%
-  1.73%


Health Care &amp; Info Tech
+ 1.45%
-  1.52%
+ 2.29%
-  0.27%


Industrials
+ 0.26%
-  0.62%
+ 2.48%
-  1.30%


Materials
+ 3.08%
-  0.57%
+ 2.66%
-  0.95%


Utilities
+ 0.99%
+ 0.25%
+ 1.06%
-  2.45%


Sector Average
+ 0.87%
-  0.18%
+ 1.92%
-  1.41%

This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. The H/A Spread Market
The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. 

Consumer Sector
The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. 
BYD (1211 HK) saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with Fuyao Glass Industry Group (3606 HK) taking its place moving 2.4% in the two weeks and 10.7% in four.

Two weeks ago, I recommended staying long the Great Wall Motor (2333 HK), and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades gained an average of 1.67% in spread terms on the week.
For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

<p><strong>1. Industry viewpoints:</strong></p><ul>
<li>Last week, the bidding for the 4<sup>th</sup> volume-based purchase (VBP) was officially opened.</li>
<li>China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. </li>
<li>China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.</li>
</ul><p><strong>2. Company news:</strong></p><p style="text-align: start;">News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a> and <a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a>.</p><p><strong>3. Market review:</strong></p><p style="text-align: start;">Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.</p><p><strong>4. Risk disclosure:</strong></p><p style="text-align: start;">Policy risk, R&amp;D risk, Company risk and COVID-19 risk.</p>

1. Industry viewpoints:
Last week, the bidding for the 4th volume-based purchase (VBP) was officially opened.
China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. 
China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.
2. Company news:News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from Innovent Biologics Inc (1801 HK), Antengene (6996 HK), CanSino Biologics Inc (6185 HK) and China Medical System (867 HK).3. Market review:Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China

CanSino Biologics Inc. develops and manufactures biological vaccine products. The Company discovers quadrivalence meningococcal conjugate, pneumococcal polysaccharide, and adenovirus vector-based tuberculosis vaccines for human use. CanSino Biologics serves customers worldwide.

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CanSino Biologics (6185 HK)

China Healthcare Weekly (Feb.26)

This article analyzed the VBP policy on Chinese patent medicines, the growth potential in the chemiluminescence and intensive procurement of IVD...

Xinyao (Criss) Wang

Quiddity Weekly H/A: Strong Dispersion, Strong Alpha; Brokers Beat Banks

Great alpha last week as shorts beat by 48bp, longs beat by 46bp. Southbound saw one really big sell day, but on the week, buying continued apace...

Travis Lundy

Beijing Wantai Biological (603392.CH) - After A 3839% Rally, Let's Look at Some Concerns

Behind the outstanding performance in stock price,there could be some concerns that deserve to pay attention to in business side, financial...

Xinyao (Criss) Wang

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

H/A spreads have been reasonably volatile over the CNY period, but again they net narrowed over two weeks. There are still several sectors where...

Travis Lundy

China Healthcare Weekly (Feb.5)

This article analyzed the results of the 4th volume-based purchase, the CTLA-4 antibody drug industry, the orthopedic implant device market, news...

Xinyao (Criss) Wang

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