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

Thematic (Sector/Industry)

<ul>
<li>China Utilities stocks are lightly held, underweight and underowned in active China portfolios.  However, recent fund activity shows an turnaround in sentiment is playing out.</li>
<li>For MSCI China, China A-Share and Greater China funds it was among the top beneficiaries of recent manager rebalancing across domestic sectors.</li>
<li>As investors look for sectors that are insulated from further regulation or red-tape, China &amp; HK Utilities stocks are back on the radar.</li>
</ul>


China Utilities stocks are lightly held, underweight and underowned in active China portfolios.  However, recent fund activity shows an turnaround in sentiment is playing out.
For MSCI China, China A-Share and Greater China funds it was among the top beneficiaries of recent manager rebalancing across domestic sectors.
As investors look for sectors that are insulated from further regulation or red-tape, China &amp; HK Utilities stocks are back on the radar.


China & HK Utilities: Safehaven Comes in to Play

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

China Yangtze Power Co, Ltd. / Event-Driven

<ul>
<li>There are 5 changes to the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.</li>
<li>There is same way flow on <a href="https://www.smartkarma.com/entities/zhangzhou-pientzehuang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:15709:1" rel="noopener">Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd" target="_blank" data-smartkarma-citation="entities:34045:1" rel="noopener">China Telecom (601728 CH)</a> and <a href="https://www.smartkarma.com/entities/sanan-optoelectronics-co-ltd" target="_blank" data-smartkarma-citation="entities:4436:1" rel="noopener">Sanan Optoelectronics Co (600703 CH)</a> around the time of the SSE50 inclusion.</li>
<li>With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.</li>
</ul>


There are 5 changes to the SSE50 Index (SSE50 INDEX) as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.
There is same way flow on Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH), China Telecom (601728 CH) and Sanan Optoelectronics Co (600703 CH) around the time of the SSE50 inclusion.
With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.


SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Sino American Silicon Products / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a>  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT)</a> , <a href="https://www.smartkarma.com/entities/parade-technologies-ltd" target="_blank" data-smartkarma-citation="entities:6987:1" rel="noopener">Parade Technologies (4966 TT)</a> , <a href="https://www.smartkarma.com/entities/actron-technology-corp" target="_blank" data-smartkarma-citation="entities:4989:1" rel="noopener">Actron Technology (8255 TT)</a> and <a href="https://www.smartkarma.com/entities/advanced-wireless-semiconduc" target="_blank" data-smartkarma-citation="entities:16559:1" rel="noopener">Advanced Wireless Semiconduc (8086 TT)</a> with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 
<div class="content-highlight">
Besides the above-mentioned reasons, <a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a> remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 
</div>

Sino American Silicon Products (5483 TT)  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including Globalwafers (6488 TT) , Parade Technologies (4966 TT) , Actron Technology (8255 TT) and Advanced Wireless Semiconduc (8086 TT) with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 

Besides the above-mentioned reasons, Sino American Silicon Products (5483 TT) remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 


Sino American Silicon (5483): Entry to Globalwafers and Others

HK/China Equity Long-Short

Osbert Tang, CFA

China Yangtze Power Co, Ltd. / Equity Bottom-Up

Despite outperformance against the Shanghai Composite Index, <a href="https://www.smartkarma.com/entities/china-yangtze-power-co-ltd" target="_blank" data-smartkarma-citation="entities:3210:1" rel="noopener">China Yangtze Power Co, Ltd. (600900 CH)</a> will continue to see positive factors driving its outlook and supporting its valuations. These factors include its excellent position to capture China's clean energy initiative, improvement in profitability, likely asset injections in the future and good overseas track record that underpins geographical expansion.The stock is currently trading on 19.5x PER and 3x P/B for FY20F; and these are premium valuations compared with its peers. However, its growth potential from asset injection, immense size (market cap of Rmb467bn) and GDR listing are edges that make it stands out against A-share peers like <a href="https://www.smartkarma.com/entities/huaneng-lancang-river-hydr-a" target="_blank" data-smartkarma-citation="entities:26585:1" rel="noopener">Huaneng Lancang River Hydr-A (600025 CH)</a>, <a href="https://www.smartkarma.com/entities/sichuan-chuantou-energy-stock-co-ltd" target="_blank" data-smartkarma-citation="entities:2557:1" rel="noopener">Sichuan Chuantou Energy Stock (600674 CH)</a> and <a href="https://www.smartkarma.com/entities/guangxi-guiguan-electric-a" target="_blank" data-smartkarma-citation="entities:20919:1" rel="noopener">Guangxi Guiguan Electric A (600236 CH)</a>.

Despite outperformance against the Shanghai Composite Index, China Yangtze Power Co, Ltd. (600900 CH) will continue to see positive factors driving its outlook and supporting its valuations. These factors include its excellent position to capture China's clean energy initiative, improvement in profitability, likely asset injections in the future and good overseas track record that underpins geographical expansion.The stock is currently trading on 19.5x PER and 3x P/B for FY20F; and these are premium valuations compared with its peers. However, its growth potential from asset injection, immense size (market cap of Rmb467bn) and GDR listing are edges that make it stands out against A-share peers like Huaneng Lancang River Hydr-A (600025 CH), Sichuan Chuantou Energy Stock (600674 CH) and Guangxi Guiguan Electric A (600236 CH). 

China Yangtze Power (600900 CH): Well Positioned to Capture China's Clean Energy Initiative

Equity Capital Markets

China Yangtze Power Co, Ltd. / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/china-yangtze-power-co-ltd" target="_blank" data-smartkarma-citation="entities:3210:1" rel="noopener">China Yangtze Power Co, Ltd. (600900 CH)</a> (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China

China Yangtze Power Company Ltd. owns the Gezhouba Power Station and the Three Gorges Power Station. The Company generates hydroelectric power, which is supplied to central China, east China, Guangdong province, Chongqing city, and other areas.

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China Yangtze Power Co, Ltd. (600900 CH)

China & HK Utilities: Safehaven Comes in to Play

China Utilities stocks are lightly held, underweight and underowned in active China portfolios. However, recent fund activity shows an turnaround...

Steven Holden

SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

There are 5 changes to the SSE50 Index at the Dec rebalance and there are stocks that have over 1.5 days of ADV to trade. With CFFEX traded futures...

Brian Freitas

Sino American Silicon (5483): Entry to Globalwafers and Others

Sino American Silicon remains a smart way to gain exposure in Globalwafers (24x PER), compared to SAS (13x PER). The other factor is that...

Henry Soediarko

China Yangtze Power (600900 CH): Well Positioned to Capture China's Clean Energy Initiative

China Yangtze Power's outlook will be driven by China's clean energy initiative, profitability improvement, asset injections and overseas...

Osbert Tang, CFA

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder...

Osbert Tang, CFA

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