Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Agricultural Bank Of China / Event-Driven

<ul>
<li>SOUTHBOUND was again a net buyer, for HK$9.3bn this week, on smallish two-way volumes. Banks were a big buy.</li>
<li>It is not clear how much of this is H/A discounts, expected dividend tax removal, shareholder return KPIs for SOE CEOs, upcoming Third Plenum policy, or national team buying...</li>
<li>But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows - national team and otherwise.</li>
</ul>


SOUTHBOUND was again a net buyer, for HK$9.3bn this week, on smallish two-way volumes. Banks were a big buy.
It is not clear how much of this is H/A discounts, expected dividend tax removal, shareholder return KPIs for SOE CEOs, upcoming Third Plenum policy, or national team buying...
But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows - national team and otherwise.


HK Connect SOUTHBOUND Flows (To 28 June 2024); Still a Net Buy, but Less Strong. Financials Dominate

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

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


Quantitative Analysis

<ul>
<li><em>The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.</em></li>
<li>SOUTHBOUND inflow continues, albeit smaller. Banks remain a big net buy. SOEs prominent in low overall SOUTHBOUND volume. </li>
<li>Wide spreads (high AH premium) saw H outperform, but narrow spreads saw Hs underperform quite significantly.</li>
</ul>


The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND inflow continues, albeit smaller. Banks remain a big net buy. SOEs prominent in low overall SOUTHBOUND volume. 
Wide spreads (high AH premium) saw H outperform, but narrow spreads saw Hs underperform quite significantly.


A/H Premium Tracker (To 28 Jun 2024):  AH Premia Still Rebounding But Wide Spreads Narrowing

<ul>
<li>The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.</li>
<li>SOUTHBOUND's buy streak continues unabated. NORTHBOUND was heavy to sell. Only Tech bought. Consumer sold heavily.</li>
<li>AH Premia lowish in 52-week range, but still high for many pairs. I continue to expect further "convergence" among spreads.</li>
</ul>


The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND's buy streak continues unabated. NORTHBOUND was heavy to sell. Only Tech bought. Consumer sold heavily.
AH Premia lowish in 52-week range, but still high for many pairs. I continue to expect further "convergence" among spreads.


A/H Premium Tracker (To 14 Jun 2024):  H Underperform A; the More Liquid, the Worse the Performance.

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 Hong Kong Connect flows with our data engine for holding position as of June 14th.</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 China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 14th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.


Hong Kong Connect Flows (Jun 14th): China Mobile, BOC, CNOOC, China Shenhua Energy, CCB

China

China Construction Bank Corporation provides a comprehensive range of commercial banking products and services to individuals and corporate customers. The Bank's business consists of three principal business segments: corporate banking, personal banking, and treasury operations. China Construction Bank also services infrastructure loans, residential mortgage, and bank cards.

Industrial and Commercial Bank of China Ltd provides a broad range of personal and corporate commercial banking services all over China.  The Bank's businesses include deposit, loan, credit card, fund underwriting and trust, and foreign currency settlement and trading.

China Merchants Bank Co., Ltd. operates as a commercial bank. The Company provides deposits, loans, wealth management, asset custody, finance leasing, investment banking, and other banking services. China Merchants Bank conducts businesses domestically and internationally.

Industrial Bank Co.,Ltd. provides banking services. The Company offers deposits, loans, fund management, foreign currency management, and other services. Industrial Bank provides its services to individuals, enterprises, and other clients.

Postal Savings Bank of China Co., Ltd. provides banking services. The Company offers deposits, loans, fund settlement, and other services. Postal Savings Bank of China provides its services to individuals, enterprises, and other clients.

Bank of Communications Co.,Ltd. provides banking services. The Company offers deposits, loans, domestic settlement, currency trading, and other services. Bank of Communications provides its services to individuals, enterprises, and other clients.

Bank of China Limited provides banking services. The Company offers deposits, loans, foreign currency transaction, fund settlement, and other services. Bank of China provides its services to individuals, enterprises, and other clients.

China Construction Bank Corporation provides banking services. The Company offers deposits, loans, fund management, foreign exchange, and other services. China Construction Bank provides its services to individuals, enterprises, and other clients.

Postal Savings Bank of China C (601658 CH)

Ping An Bank Co Ltd provides a full range of commercial banking services including RMB and foreign currency deposit, loan, international and domestic settlement, discount, currency trading, letter of credit, bank guarantee, and other related services.

Commonwealth Bank of Australia provides banking, life insurance, and related services for individuals, small businesses and medium sized commercial enterprises. The Bank provides corporate and general banking, international financing, institutional banking and stock broking and funds management such as superannuation product.

National Australia Bank Limited is an international banking group which operates in Australia, New Zealand, Europe, Asia and the United States.  The Group offers banking services, credit and access card facilities, leasing, housing and general finance, international and investment banking, wealth and funds management, life insurance and custodian, trustee and nominee services.

DBS Group Holdings Limited and its subsidiaries provide a variety of financial services.  The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage .  DBS Group also acts as the primary dealer in Singapore government securities.

Oversea-Chinese Banking Corporation Limited offers a comprehensive range of financial services.  The Company's services include deposit-taking, corporate, enterprise and personal lending, international trade financing, investment banking, private banking, treasury, stockbroking, insurance, credit cards, cash management, asset management and other financial and related services.

State Bank of India provides a wide range of banking and financial services to corporate, institutional, commercial, agricultural, industrial and individual customers throughout India.  The Bank also provides international banking to its Indian customers and has operations in other countries.

Sumitomo Mitsui Financial Group, Inc. manages financial operations for its subsidiaries. The Company provides commercial banking and a variety of financial services.

Sumitomo Mitsui Financial Group (8316 JP)

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company established through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings. As a financial group, the Company provides a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services.

Mitsubishi UFJ Financial (MUFG) (8306 JP)

Mizuho Financial Group, Inc. provides comprehensive financial services through its subsidiaries. The Group provides variety of financial services such as general banking, securities brokerage, trust banking, and assets management.

Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage, leasing, credit cards, and consumer finance.  The Company operates through physical stores, the Internet and other distribution channels across North America and elsewhere internationally.

PNC Financial Services Group, Inc. is a diversified financial services organization.  The Company provides regional banking, wholesale banking, and asset management services nationally and in the Company's primary regional markets.

Agricultural Bank of China Limited provides a full range of commercial banking services. The Banks services includes RMB and foreign currency deposit, loan, international and domestic settlement, bill discount, currency trading, bank guarantee, and treasury bill underwriting.

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Agricultural Bank Of China (1288 HK)

HK Connect SOUTHBOUND Flows (To 28 June 2024); Still a Net Buy, but Less Strong. Financials Dominate

SOUTHBOUND saw its 4th net sell day since Chinese New Year last week. But the week ended up again. That is ~20 weeks in a row. But SOUTHBOUND...

Travis Lundy

China Macro: Sector Positioning Update

Sector positioning among active China Funds. Industrials and Consumer Staples Remain Top Overweights, Energy shows signs of a turnaround, whilst...

Steven Holden

A/H Premium Tracker (To 28 Jun 2024): AH Premia Still Rebounding But Wide Spreads Narrowing

AH Premia continue to gently rise, but the very wide spreads are seeing Hs outperform As. This "twist" is still a good strategy in my book. The...

Travis Lundy

A/H Premium Tracker (To 14 Jun 2024): H Underperform A; the More Liquid, the Worse the Performance.

AH Premia up on the week, with Hs underperforming their As by 0.7% on average, 1.2% on liquid pairs. Securities Selection Alpha +0.45% on the week...

Travis Lundy

Hong Kong Connect Flows (Jun 14th): China Mobile, BOC, CNOOC, China Shenhua Energy, CCB

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.

Ke Yan, CFA, FRM

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