Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>In 3Q21, the whole smartphone market was weak due to the chip shortage.</li>
<li>Apple took back the No. 2 place from Xiaomi in shipment market share.</li>
<li>Samsung is self-supporting in chip supply, but Xiaomi is not.</li>
<li>Both of Apple and Samsung's margins are higher than Xiaomi's.</li>
</ul>


In 3Q21, the whole smartphone market was weak due to the chip shortage.
Apple took back the No. 2 place from Xiaomi in shipment market share.
Samsung is self-supporting in chip supply, but Xiaomi is not.
Both of Apple and Samsung's margins are higher than Xiaomi's.


Xiaomi (1810 HK): Weak Market in 3Q21 and Not Competitive Internationally

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Fintech Hits Are Coming: Regulators have forced the capitulation of internet anti-competitive behavior. Most recently, both Alibaba (BABA.US) [Alibaba} and Tencent (700.HK) [Tencent] have stopped blocking rivals’ links which prevented users to purchase goods using competitor payment apps. This is a big deal, given that FinTech represented a growing 30.3% of revenue for Tencent at 2Q21. The more Tencent relies on Fintech to support growth, the more alarming the moves by Alibaba and other competitors are; and*Prior To The War On Gaming, Tencent’s Results Have Already Deteriorated: Tencent’s 2Q21 GAAP net income declined CNY 5.2 bn (10.8%) linked quarter – and were of poor quality. Results were challenged by: cost of revenue increase; operating expense increase; losses in associates; higher impairment charges; and weaker online games. Were it not for the artificially lower tax rate, results would have been even more challenged. We can't wait to see what the impact of mainland China’s latest regulatory maneuvers will have on Tencent’s 3Q21 results out on November 10th.

*Fintech Hits Are Coming: Regulators have forced the capitulation of internet anti-competitive behavior. Most recently, both Alibaba (BABA.US) [Alibaba} and Tencent (700.HK) [Tencent] have stopped blocking rivals’ links which prevented users to purchase goods using competitor payment apps. This is a big deal, given that FinTech represented a growing 30.3% of revenue for Tencent at 2Q21. The more Tencent relies on Fintech to support growth, the more alarming the moves by Alibaba and other competitors are; and*Prior To The War On Gaming, Tencent’s Results Have Already Deteriorated: Tencent’s 2Q21 GAAP net income declined CNY 5.2 bn (10.8%) linked quarter – and were of poor quality. Results were challenged by: cost of revenue increase; operating expense increase; losses in associates; higher impairment charges; and weaker online games. Were it not for the artificially lower tax rate, results would have been even more challenged. We can't wait to see what the impact of mainland China’s latest regulatory maneuvers will have on Tencent’s 3Q21 results out on November 10th.  

Tencent Holdings – Under Severe Pressure

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/truecaller-ab" target="_blank" data-smartkarma-citation="entities:34462:1" rel="noopener">Truecaller AB (TRUEB SS)</a>  is expected to IPO this week. The company’s amended prospectus puts the expected price range at SEK 44.00-56.00 per Class B share, implying a market cap of ~19.6B SEK or ~$2.2B at midpoint of the price range on a fully diluted basis. The book-building procedure began on September 29 and continues until October 7. Truecaller’s Class B shares are expected to begin trading on Nasdaq Stockholm under the trading symbol “TRUE” on October 8. Carnegie Investment Bank, Goldman Sachs, J.P. Morgan and Citigroup Global Markets are joint global coordinators on the upcoming offering.

Truecaller AB (TRUEB SS)  is expected to IPO this week. The company’s amended prospectus puts the expected price range at SEK 44.00-56.00 per Class B share, implying a market cap of ~19.6B SEK or ~$2.2B at midpoint of the price range on a fully diluted basis. The book-building procedure began on September 29 and continues until October 7. Truecaller’s Class B shares are expected to begin trading on Nasdaq Stockholm under the trading symbol “TRUE” on October 8. Carnegie Investment Bank, Goldman Sachs, J.P. Morgan and Citigroup Global Markets are joint global coordinators on the upcoming offering.      

Truecaller IPO: Best-In-Class Caller ID And Spam Blocking App

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. <a href="https://www.smartkarma.com/entities/deutsche-post-ag" target="_blank" data-smartkarma-citation="entities:21608:1" rel="noopener">Deutsche Post AG (DPW GR)</a> and <a href="https://www.smartkarma.com/entities/siemens-ag" target="_blank" data-smartkarma-citation="entities:21713:1" rel="noopener">Siemens AG (SIE GR)</a> were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). Sony Corp (6758 JP) and KDDI Corp (9433 JP) are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. Deutsche Post AG (DPW GR) and Siemens AG (SIE GR) were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Global Fund Positioning Update:  Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<h2>Headline Developments</h2>The verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to third-party payment options, whilst ordering Epic to pay damages for violating Apple’s in-app purchasing system.

Headline DevelopmentsThe verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to third-party payment options, whilst ordering Epic to pay damages for violating Apple’s in-app purchasing system.

United States

Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related accessories. The Company also offers payment, digital content, cloud and advertising services. Apple Inc.'s customers are primarily in consumer, small & mid-sized business, education, enterprise and government markets worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Apple (AAPL US)

Xiaomi (1810 HK): Weak Market in 3Q21 and Not Competitive Internationally

In 3Q21, the smartphone market was weak due to the chip shortage. Apple took back the No. 2 place from Xiaomi in market share. Xiaomi has tech and...

Ming Lu

Tencent Holdings – Under Severe Pressure

TENCENT: Alibaba and Tencent have begun unblocking rivals’ app links. Prior to impact of the new regulations, Tencent’s results were already stressed.

Thomas J. Monaco

Truecaller IPO: Best-In-Class Caller ID And Spam Blocking App

Swedish caller identification and spam-call blocker unicorn Truecaller filed for an IPO on Nasdaq Stockholm and plans to raise more than $100M this...

Andrei Zakharov

Global Fund Positioning Update: Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

A detailed look at investor positioning among 380 active Global strategies, covering the major themes in country, sector and stock exposure.

Steven Holden

Weekly Innovation Review (WIRE) #49

The verdict is out in the Apple (AAPL) vs Epic (private) case, with the court ruling that Apple cannot stop app developers from directing users to...

Granite Bay Capital

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)