China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes released by NPPA, positive to gaming companies(+)</li>
<li>BGNE/9995HK：Daiichi and Zymeworks end antibody pact after seven years (-)</li>
<li>ZLAB：ZaiLab's partner Karua's Schizophrenia drug obtained positive Phase 3 data (+)</li>
</ul>


700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes released by NPPA, positive to gaming companies(+)
BGNE/9995HK：Daiichi and Zymeworks end antibody pact after seven years (-)
ZLAB：ZaiLab's partner Karua's Schizophrenia drug obtained positive Phase 3 data (+)


China TMT Update(Mar.22): 700HK/NTES/BILI/IQ/3659.JP /BGNE/9995HK/ZLAB - Foreign Game Codes(+)

Equity Bottom-Up

<ul>
<li>We suggest that the recent strong performance of &lt;Eggy Party&gt; could be sustainable because of the absence of competitive games...</li>
<li>...an emerging user-generated-content (UGC) ecosystem with much potential, social connections among players, and popularity on social media. </li>
<li>We maintain our previous estimation that &lt;Eggy Party&gt; could at least contribute RMB 4-5 bn this year. NetEase is one of our top picks in China internet.</li>
</ul>


We suggest that the recent strong performance of &lt;Eggy Party&gt; could be sustainable because of the absence of competitive games...
...an emerging user-generated-content (UGC) ecosystem with much potential, social connections among players, and popularity on social media. 
We maintain our previous estimation that &lt;Eggy Party&gt; could at least contribute RMB 4-5 bn this year. NetEase is one of our top picks in China internet.


[NetEase (NTES US) Company Update]: Eggy Party Could Have Long Life Cycle

<ul>
<li>1024HK：China's consumer rights gala exposes problems of livestreaming industry, Kuaishou receives a warning（-）</li>
<li>BIDU：Baidu ERNIE bot press conference is held， there result is not promising（-）</li>
<li>Gaming Industry: Game-related proposals during Two Sessions indicate positive attitude for gaming industry (+)</li>
</ul>


1024HK：China's consumer rights gala exposes problems of livestreaming industry, Kuaishou receives a warning（-）
BIDU：Baidu ERNIE bot press conference is held， there result is not promising（-）
Gaming Industry: Game-related proposals during Two Sessions indicate positive attitude for gaming industry (+)


China TMT Update (Mar.17): 1024.HK/BIDU/700.HK/NTES：Baidu ERNIE Bot Press Conference Is Held

<ul>
<li>We recently conducted a round of interviews of Chinese start-up gaming companies, and we see an overall loosening in the regulatory environment, although near-term hit titles are still absent.</li>
<li>We are positive on Tencent because of the increasing possibility of DNF mobile launch. We raise NetEase’s TP to US$ 99, and it’s one of our top picks now</li>
<li>Other gaming companies that have upward trends include Kingsoft, Lingxi Games (under Alibaba), Koei Tecmo, Nexon, and Mihoyo. Companies with a downward trend include BILI and Garena (under SEA).  </li>
</ul>


We recently conducted a round of interviews of Chinese start-up gaming companies, and we see an overall loosening in the regulatory environment, although near-term hit titles are still absent.
We are positive on Tencent because of the increasing possibility of DNF mobile launch. We raise NetEase’s TP to US$ 99, and it’s one of our top picks now
Other gaming companies that have upward trends include Kingsoft, Lingxi Games (under Alibaba), Koei Tecmo, Nexon, and Mihoyo. Companies with a downward trend include BILI and Garena (under SEA).  


[Gaming Sector Update]: Top Picks Are Tencent and NetEase, Positive to Kingsoft, Koei Tecmo, Nexon.

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

Event-Driven

<ul>
<li>The March rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.</li>
<li>The largest inflows will be on <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>. </li>
<li>The largest outflows will be on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC (883 HK)</a> and <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">SMIC (981 HK)</a>.</li>
</ul>


The March rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK). 
The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).


HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)

China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

China TMT Update(Mar.22): 700HK/NTES/BILI/IQ/3659.JP /BGNE/9995HK/ZLAB - Foreign Game Codes(+)

700HK/NTES/BILI/IQ/3659.JP: The latest Foreign game codes; BGNE/9995HK：Daiichi and Zymeworks end antibody pact (-) ; ZLAB：ZaiLab's partner Karua's...

Blue Lotus Research Institute

[NetEase (NTES US) Company Update]: Eggy Party Could Have Long Life Cycle

Eggy Party could be sustainable because of the absence of competitive games, an emerging UGC ecosystem with much potential, social connections...

Blue Lotus Research Institute

China TMT Update (Mar.17): 1024.HK/BIDU/700.HK/NTES：Baidu ERNIE Bot Press Conference Is Held

BIDU：Baidu ERNIE bot press conference is held（-）；1024HK：China's consumer rights gala exposes problems of livestreaming industry（-）；Game-related...

Blue Lotus Research Institute

[Gaming Sector Update]: Top Picks Are Tencent and NetEase, Positive to Kingsoft, Koei Tecmo, Nexon.

We recently conducted a round of interviews of Chinese start-up gaming companies. Our top picks are Tencent and NetEase. We are also positive to...

Blue Lotus Research Institute

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (March 2023)

The Hang Seng indices rebalance Friday. Capping uses today's closing prices. The one-way trade across all stocks across the indices is estimated at...

Brian Freitas

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