Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction.  Mainland investors bought a record amount the day after Trump's win.</li>
<li>
<a href="https://www.smartkarma.com/entities/kingsoft-corp-ltd" target="_blank" data-smartkarma-citation="entities:492:1" rel="noopener">Kingsoft Corp (3888 HK)</a> reported consensus beating results with its online game segment surging.  The company is benefiting from AI upgrades in its office SAAS business.
</li>
<li>
<a href="https://www.smartkarma.com/entities/precision-tsugami-china-corp" target="_blank" data-smartkarma-citation="entities:26199:1" rel="noopener">Precision Tsugami China (1651 HK)</a> posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.</li>
</ul>


Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction.  Mainland investors bought a record amount the day after Trump's win.

Kingsoft Corp (3888 HK) reported consensus beating results with its online game segment surging.  The company is benefiting from AI upgrades in its office SAAS business.


Precision Tsugami China (1651 HK) posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>Post market close on Friday, Hang Seng Indexes will announce the changes for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> that will be implemented at the close on 6 December.</li>
<li>With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.</li>
<li>Short interest is especially large in <a href="https://www.smartkarma.com/entities/sinotruk-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:19764:1" rel="noopener">Sinotruk</a>, <a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene</a>, <a href="https://www.smartkarma.com/entities/kuaishou-technology" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASMPT</a> and <a href="https://www.smartkarma.com/entities/jd-logistics-inc" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics</a> and inclusion could set off some short covering.</li>
</ul>


Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 December.
With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December

<ul>
<li>On 16th Nov 22, post-market close, along with its 3Q22 results Tencent also declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.</li>
<li>The share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021.</li>
<li>In this note, we talk about the implications of the deal.</li>
</ul>


On 16th Nov 22, post-market close, along with its 3Q22 results Tencent also declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
The share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021.
In this note, we talk about the implications of the deal.


Tencent Meituan Dividend - The US$20bn Overhang - Impact, Placement, Index, Other Investees

China

Kingsoft Corporation Ltd. develops and markets computer software.  The Company develops role-playing computer games and security, word processing, and spreadsheet software.

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Kingsoft Corp (3888 HK)

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)

Mainland investors buying in Hong Kong peaked after Trump won the election. Kingsoft beat consensus estimates for revenue and earnings. Precision...

David Mudd

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Tencent Investee Selldown - The US$120bn Global Overhang

There have been multiple reports that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. We look at Tencent's...

Sumeet Singh

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December

We highlight 10 potential inclusions for the HSI in Dec. The number of constituents has not increased this year and the target to reach 100 members...

Brian Freitas

Tencent Meituan Dividend - The US$20bn Overhang - Impact, Placement, Index, Other Investees

On 16th Nov 22, Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan. In this note, we look...

Sumeet Singh

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52-week Range

Market Cap (USDm)

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