Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<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> has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0806/2021080600069.pdf" target="_blank" rel="noopener">priced</a> its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing 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> and <a href="https://www.smartkarma.com/insights/china-telecom-728-hk-ups-div-payout-policy-there-s-a-plan-here-expect-china-mobile-to-follow" target="_blank" data-smartkarma-citation="insights:53355" rel="noopener">China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow</a>.It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But....... There is more below the fold.

China Telecom Corp Ltd (H) (728 HK) has priced its US$7.3bn offering of A-shares at RMB 4.53/share. That is not far from what I suggested might be an appropriate pricing in China Mobile (941 HK) - It Could Have Been Done Better, But It Ain't Bad for Hs and China Telecom (728 HK) Ups Div Payout Policy - There's a Plan Here. Expect China Mobile to Follow.It was also an 87% premium to the current H-share price. As discussed in those previous insights, there are obligations on the China Telecom parent, and a promise of a higher payout ratio NOW and even higher payout ratio LATER. Normally, I would suggest taking profits on an H-share which had rallied in the run-up to an A-share offering. But....... There is more below the fold.

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

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 class="">
<li>The State Administration for Market Regulation orders Tencent (700 HK) to terminate exclusive music copyrights.</li>
<li>However, independent musician is exempted from the ban on exclusive contracts.</li>
<li>Cloud Village has already got some copyright usage rights that TME exclusively owned before 2020.</li>
<li>The real problems are the mature market and the time competition from short video.</li>
</ul>


The State Administration for Market Regulation orders Tencent (700 HK) to terminate exclusive music copyrights.
However, independent musician is exempted from the ban on exclusive contracts.
Cloud Village has already got some copyright usage rights that TME exclusively owned before 2020.
The real problems are the mature market and the time competition from short video.


Tencent Music (TME): Penalty Not Fatal, But Music Market Bad Enough

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Wuxi Biologics (Cayman) Inc. (2269 HK), Hong Kong Exchanges And Clearing Limited (388 HK), China Mobile Limited (941 HK), as well as outflows from Tencent Holdings Limited (700 HK), Meituan (3690 HK), Weimob Inc. (2013 HK).

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Wuxi Biologics (Cayman) Inc. (2269 HK), Hong Kong Exchanges And Clearing Limited (388 HK), China Mobile Limited (941 HK), as well as outflows from Tencent Holdings Limited (700 HK), Meituan (3690 HK), Weimob Inc. (2013 HK).

Hong Kong Connect Flows: $1bn Outflow from Tencent

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include Russian energy plays <a href="https://www.smartkarma.com/entities/gazprom-pjsc-6a7231a9-d5e4-4da4-bf21-aa1b9d50fbf8" target="_blank" data-smartkarma-citation="entities:27578:1" rel="noopener">Gazprom PJSC (GAZP RM)</a> and <a href="https://www.smartkarma.com/entities/lukoil-pjsc" target="_blank" data-smartkarma-citation="entities:24141:1" rel="noopener">Lukoil PJSC (LKOD LI)</a>, Brazilian securities exchange <a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ)</a>, and <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a>.<table class="table table-striped">
<colgroup>
<col>
<col>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="text-align: center; width: 74.7344px;">rank</td>
<td style="width: 263.203px;">Name</td>
<td style="width: 185.312px;">Sector</td>
<td style="width: 147.938px;">Location</td>
<td style="text-align: center; width: 74.8125px;">prev.</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">1</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> </td>
<td style="width: 185.312px;">Information Technology</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">3</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">2</td>
<td style="width: 263.203px;">
<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> </td>
<td style="width: 185.312px;">Communication</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">9</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">3</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">1</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">4</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a> </td>
<td style="width: 185.312px;">Materials</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">21</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">5</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/kia-motors-corp" target="_blank" data-smartkarma-citation="entities:156:1" rel="noopener">Kia Motors Corp (000270 KS)</a> </td>
<td style="width: 185.312px;">Consumer Discretionary</td>
<td style="width: 147.938px;">Korea (South)</td>
<td style="text-align: center; width: 74.8125px;">4</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">6</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank Of China Ltd (H) (3988 HK)</a> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">5</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">7</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/gazprom-pjsc-6a7231a9-d5e4-4da4-bf21-aa1b9d50fbf8" target="_blank" data-smartkarma-citation="entities:27578:1" rel="noopener">Gazprom PJSC (GAZP RM)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">Russian Federation</td>
<td style="text-align: center; width: 74.8125px;">14</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">8</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/lukoil-pjsc" target="_blank" data-smartkarma-citation="entities:24141:1" rel="noopener">Lukoil PJSC (LKOD LI)</a> </td>
<td style="width: 185.312px;">Energy</td>
<td style="width: 147.938px;">Russian Federation</td>
<td style="text-align: center; width: 74.8125px;">32</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">9</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/b3-sa-brasil-bolsa-balcao" target="_blank" data-smartkarma-citation="entities:24580:1" rel="noopener">B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ)</a> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">Brazil</td>
<td style="text-align: center; width: 74.8125px;">70</td>
</tr>
<tr>
<td style="text-align: center; width: 74.7344px;">10</td>
<td style="width: 263.203px;">
<a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> </td>
<td style="width: 185.312px;">Financials</td>
<td style="width: 147.938px;">China</td>
<td style="text-align: center; width: 74.8125px;">41</td>
</tr>
<tr><td colspan="5" style="text-align: left; width: 746px;">Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas</td></tr>
</tbody>
</table>As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include Russian energy plays Gazprom PJSC (GAZP RM) and Lukoil PJSC (LKOD LI), Brazilian securities exchange B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ), and China Construction Bank H (939 HK).









rank
Name
Sector
Location
prev.


1

SK Hynix (000660 KS) 
Information Technology
Korea (South)
3


2

China Mobile (941 HK) 
Communication
China
9


3

CNOOC Ltd (883 HK) 
Energy
China
1


4

Posco (005490 KS) 
Materials
Korea (South)
21


5

Kia Motors Corp (000270 KS) 
Consumer Discretionary
Korea (South)
4


6

Bank Of China Ltd (H) (3988 HK) 
Financials
China
5


7

Gazprom PJSC (GAZP RM) 
Energy
Russian Federation
14


8

Lukoil PJSC (LKOD LI) 
Energy
Russian Federation
32


9

B3 Sa - Brasil Bolsa Balcao (B3SA3 BZ) 
Financials
Brazil
70


10

China Construction Bank H (939 HK) 
Financials
China
41

Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas

As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

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

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, <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.
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

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

Hong Kong

China Mobile Limited provides telecommunication services. The Company offers wireline voice, broadband, roaming, and other related services. China Mobile serves customers in Hong Kong.

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

China Mobile (941 HK)

Tencent Music (TME): Penalty Not Fatal, But Music Market Bad Enough

The authorities order Tencent to terminate exclusive music copyrights. However, independent musician is exempted. The real problems are the mature...

Ming Lu

Hong Kong Connect Flows: $1bn Outflow from Tencent

We highlight weekly inflows into Wuxi Biologics (2269 HK), HKEx (388 HK), China Mobile Limited (941 HK), as well as outflows from Tencent (700 HK),...

Ke Yan, CFA, FRM

Screening for GEMs: July 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Telecom A-Share IPO Prices; H-Share Discount Wide; Buy China Mobile

China Telecom has priced its A-share IPO at an 87% premium to the H. To get to the same 2021e DivYield, China Mobile will have to be 20+ higher,...

Travis Lundy

Tencent Music (TME): Penalty Not Fatal, But Music Market Bad Enough

The authorities order Tencent to terminate exclusive music copyrights. However, independent musician is exempted. The real problems are the mature...

Ming Lu

Hong Kong Connect Flows: $1bn Outflow from Tencent

We highlight weekly inflows into Wuxi Biologics (2269 HK), HKEx (388 HK), China Mobile Limited (941 HK), as well as outflows from Tencent (700 HK),...

Ke Yan, CFA, FRM

Screening for GEMs: July 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

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