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

<p>Active Global managers are running record underweights in Emerging Market stocks.  The average Emerging Markets allocation among the active Global funds in our analysis stands at 9.44%, underweight -4.56% compared to the MSCI ACWI weight with 78.3% of funds underweight the benchmark.</p>
<p>Whilst India Financials are the largest overweight, China &amp; HK Consumer Discretionary and Health Care, Taiwan Financials and Saudi Financials have driven the underweight to all-time highs.</p>
<p>On a stock level, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a> is the most widely held stock, owned by 48% of the 383 active Global managers in our analysis.  The top 6 most widely held stocks, which are <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a> , <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> , <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> , <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> , <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> occupy the top tier.  They are held by significantly more managers and at larger average weight than those below them.</p>
<p>In fact, active Global managers have come to rely on these top 6 names more and more over the last decade.  Almost 40% of all EM allocations are in these 6 stocks.  Should Global managers be better diversifying their EM allocations?</p>
<p><em>Analysis taken from our Global fund research, covering 383 active Global strategies with combined AUM of $1.05tr</em></p>

Active Global managers are running record underweights in Emerging Market stocks.  The average Emerging Markets allocation among the active Global funds in our analysis stands at 9.44%, underweight -4.56% compared to the MSCI ACWI weight with 78.3% of funds underweight the benchmark.
Whilst India Financials are the largest overweight, China &amp; HK Consumer Discretionary and Health Care, Taiwan Financials and Saudi Financials have driven the underweight to all-time highs.
On a stock level, TSMC (2330 TT) is the most widely held stock, owned by 48% of the 383 active Global managers in our analysis.  The top 6 most widely held stocks, which are TSMC (2330 TT) , AIA Group Ltd (1299 HK) , Alibaba Group (BABA US) , Samsung Electronics (005930 KS) , Tencent (700 HK) and HDFC Bank (HDFCB IN) occupy the top tier.  They are held by significantly more managers and at larger average weight than those below them.
In fact, active Global managers have come to rely on these top 6 names more and more over the last decade.  Almost 40% of all EM allocations are in these 6 stocks.  Should Global managers be better diversifying their EM allocations?
Analysis taken from our Global fund research, covering 383 active Global strategies with combined AUM of $1.05tr

EM Underweight Hits Record High Among Global Managers

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Sembcorp, Milton, Toshiba, Dah Sing Bank, WH Group, 51job, Port Congestion

<p>With Value funds making gains on Growth funds this year, where are EM Value managers positioned?</p><p><strong>Country: </strong></p><p>U/W China &amp; HK and India, O/W South Korea and Mexico.  Note also the overweight in Turkey, with 71% of the Value funds in our analysis positioned overweight versus the iShares MSCI Emerging Markets ETF.</p><p><strong>Sector:</strong></p><p>U/W Consumer Discretionary, Communication Services and Health Care.  O/W  Materials, Industrials and Financials.</p><p>Read on for further data and analysis on Industry and Stock positioning.</p><p><em>Analysis taken from our Emerging Markets Research, covering 242 active GEM funds with combined AUM of $500bn</em></p>

With Value funds making gains on Growth funds this year, where are EM Value managers positioned?Country: U/W China &amp; HK and India, O/W South Korea and Mexico.  Note also the overweight in Turkey, with 71% of the Value funds in our analysis positioned overweight versus the iShares MSCI Emerging Markets ETF.Sector:U/W Consumer Discretionary, Communication Services and Health Care.  O/W  Materials, Industrials and Financials.Read on for further data and analysis on Industry and Stock positioning.Analysis taken from our Emerging Markets Research, covering 242 active GEM funds with combined AUM of $500bn

Travis Lundy

Equity Bottom-Up

<p>As fallout from the Trump Executive Order on Chinese military companies, the NYSE decided to delist the ADRs of <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> and <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> and US Persons were obliged to cease investment into the stocks wherever they were listed. </p><p>The H-Shares of both fell, then rose sharply one what was seen as "National Team buying." Southbound investment in the two names increased, and almost immediately the two companies set to work to "find alternative capital markets opportunities."</p><p>The idea that <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a> and <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> would eventually list their shares in the mainland was deemed an almost foregone conclusion when China introduced the idea of China Depositary Receipts with a <a href="https://www.smartkarma.com/insights/pilot-program-on-china-depositary-receipts-launched-expect-the-big-5-to-prep-quickly" target="_blank" rel="noopener">Pilot Programme announced in April 2018</a>.</p><p>In mid-March, China Telecom announced its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031700304.pdf" target="_blank" rel="noopener">proposal</a>, and in late April announced that it had applied and the CSRC had accepted its application for an A-Share listing. In late May, China Mobile announced its intention to apply shortly, as discussed in <a href="https://www.smartkarma.com/insights/china-mobile-941-hk-it-could-have-been-done-better-but-it-ain-t-bad-for-hs" target="_blank" data-smartkarma-citation="insights:52018" rel="noopener">China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs</a>.</p><p>In that piece, I noted my objection to the way the planned capital raise was presented, but also noted that the details were bullish for H-share investors for both stocks. </p><p>The market hasn't reacted that well to the proposals (the blue lines in the charts below). </p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/186/original/Screenshot+2021-06-21+at+9.48.55+AM.png?1624240150" class="editor-image img-responsive" data-smartkarma-image-id="214186"></figure></section></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/175/original/Screenshot+2021-06-21+at+9.45.38+AM.png?1624239961" class="editor-image img-responsive" data-smartkarma-image-id="214175"></figure></section><p>One of the reasons was hidden in the back of the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0524/2021052400195.pdf" target="_blank" rel="noopener">Circular</a> for China Mobile, which was almost word-for-word the same as the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031700304.pdf" target="_blank" rel="noopener">Announcement</a> for China Telecom.</p><p>It was a combination of Shareholder Return and Price Stabilization Obligation. </p><div class="content-highlight"><p>This morning, China Telecom has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0621/2021062100289.pdf" target="_blank" rel="noopener">announced</a> that it will adjust the Dividend Policy to a 60% payout ratio, lifting it later to 70%. </p></div>

As fallout from the Trump Executive Order on Chinese military companies, the NYSE decided to delist the ADRs of China Mobile (941 HK) and China Telecom Corp Ltd (H) (728 HK) and US Persons were obliged to cease investment into the stocks wherever they were listed. The H-Shares of both fell, then rose sharply one what was seen as "National Team buying." Southbound investment in the two names increased, and almost immediately the two companies set to work to "find alternative capital markets opportunities."The idea that China Telecom Corp Ltd (H) (728 HK) and China Mobile (941 HK) would eventually list their shares in the mainland was deemed an almost foregone conclusion when China introduced the idea of China Depositary Receipts with a Pilot Programme announced in April 2018.In mid-March, China Telecom announced its proposal, and in late April announced that it had applied and the CSRC had accepted its application for an A-Share listing. In late May, China Mobile announced its intention to apply shortly, as discussed in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs.In that piece, I noted my objection to the way the planned capital raise was presented, but also noted that the details were bullish for H-share investors for both stocks. The market hasn't reacted that well to the proposals (the blue lines in the charts below). One of the reasons was hidden in the back of the Circular for China Mobile, which was almost word-for-word the same as the Announcement for China Telecom.It was a combination of Shareholder Return and Price Stabilization Obligation. This morning, China Telecom has announced that it will adjust the Dividend Policy to a 60% payout ratio, lifting it later to 70%. 

China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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 Capital Markets

Alibaba Group Holding  / Equity Capital Markets

<div>
<p>On 27th May 2021, U.S. Senators Marco Rubio and Bob Casey introduced the <em>No IPOs for Unaccountable Actors Act</em>, which aims to prohibit IPO on U.S. exchanges for Chinese companies. </p>
<p>The act is a follow up on the Holding Foreign Companies Accountable Act which was signed by Trump on 18th Dec 2020 and which seeks to stop China ADRs from being traded on the US exchanges.</p>
</div><div><p>We have looked at the ADRs in the past, in our previous notes:</p></div><div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move</a>, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. </li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-sec-notice-instead-of-three-probably-have-four-years-till-2025-correction-overdone" target="_blank" rel="noopener">China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone, </a> we spoke about the new SEC notice and its implications. </li>
</ul>
<p>In this note, we'll talk about the new act and its possible timelines and implications.</p>
</div>


On 27th May 2021, U.S. Senators Marco Rubio and Bob Casey introduced the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S. exchanges for Chinese companies. 
The act is a follow up on the Holding Foreign Companies Accountable Act which was signed by Trump on 18th Dec 2020 and which seeks to stop China ADRs from being traded on the US exchanges.
We have looked at the ADRs in the past, in our previous notes:


China ADRs Secondary Listing Deep-Dive: Yin and Yang, published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. 

In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List published in May 2020, we looked at the recent developments and provided an revised short-list
In China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home, published in May 2020, we spoke about the implication of the act which had made its way through the senate.
In China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. 
In China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone,  we spoke about the new SEC notice and its implications. 

In this note, we'll talk about the new act and its possible timelines and implications.


China ADRs - A New Act Aims to Put an End to China ADR IPOs

Hong Kong

China Mobile Limited, through its subsidiaries, provides cellular telecommunications and related services in the People's Republic of China and Hong Kong SAR.

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China Mobile Ltd Spon Adr (CHL US)

EM Underweight Hits Record High Among Global Managers

Active Global managers are running record underweights in Emerging Market stocks. The average Emerging Markets allocation sits underweight -4.56%...

Steven Holden

Last Week in Event SPACE: Sembcorp, Milton, Toshiba, Dah Sing Bank, WH Group, 51job, Port Congestion

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

EM Value Fund Positioning

With Value funds making gains on Growth funds this year, where are active Emerging Market Value managers positioned across countries, sectors,...

Steven Holden

China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow

China Telecom ups its dividend payout policy ahead of A-Share listing in order to support higher A-share valuation. The goal is to boost A-share...

Travis Lundy

China ADRs - A New Act Aims to Put an End to China ADR IPOs

On 27th May 2021, U.S. Senators Marco Rubio and Bob Casey introduced the No IPOs for Unaccountable Actors Act, which aims to prohibit IPO on U.S....

Sumeet Singh

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