HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Event-Driven

Shenzhen Mindray Bio-Medical Electronics / Event-Driven

<ul>
<li>Mindray has encountered bottleneck in performance growth. So, it urgently hopes to bring "new growth stories". APT Medical’s current growth momentum is commendable, and could also complement Mindray's product line.</li>
<li>We saw poor stock price performance of both after the announcement. High acquisition premium and the possibility that APT Medical’s future performance fall short of expectations are among the reasons. </li>
<li>In fact, both sides got what they wanted. We advise investors to be patient.Perhaps, Mindray would indeed make a breakthrough from this acquisition, which is also a blow to Microport.  </li>
</ul>


Mindray has encountered bottleneck in performance growth. So, it urgently hopes to bring "new growth stories". APT Medical’s current growth momentum is commendable, and could also complement Mindray's product line.
We saw poor stock price performance of both after the announcement. High acquisition premium and the possibility that APT Medical’s future performance fall short of expectations are among the reasons. 
In fact, both sides got what they wanted. We advise investors to be patient.Perhaps, Mindray would indeed make a breakthrough from this acquisition, which is also a blow to Microport.  


Mindray to Acquire $927 Million Stake in APT Medical – the Logic and Concerns Behind

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.</li>
<li>Last week saw NORTHBOUND net sell RMB 18.6bn of A-shares on slightly lighter activity. Friday saw large NORTHBOUND net buys early in the day but ended a net sell.</li>
<li>Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still. </li>
</ul>


The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.
Last week saw NORTHBOUND net sell RMB 18.6bn of A-shares on slightly lighter activity. Friday saw large NORTHBOUND net buys early in the day but ended a net sell.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still. 


Mainland Connect NORTHBOUND Flows (To 15 Dec 23): Mindray Consistently Bought, Midea Sold

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

<ul>
<li>Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.</li>
<li>Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.</li>
<li>Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.</li>
</ul>


Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.


Thematic (Sector/Industry)

<ul>
<li>From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range</li>
<li>Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary</li>
<li>Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.</li>
</ul>


From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range
Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary
Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.


Greater China Funds: China Health Care Reversal

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>The review period ended on 31 October, the changes should be announced on 29 November and will become effective after the close of trading on 13 December.</li>
<li>We forecast 4 potential changes for the index in December. Estimated one-way turnover is 5.2% resulting in a round-trip trade of CNY 3.3bn (US$460m).</li>
<li>The forecast adds have continued to underperform the forecast deletes over the last few months as markets have rallied. That could change as positioning builds up ahead of announcement.</li>
</ul>


The review period ended on 31 October, the changes should be announced on 29 November and will become effective after the close of trading on 13 December.
We forecast 4 potential changes for the index in December. Estimated one-way turnover is 5.2% resulting in a round-trip trade of CNY 3.3bn (US$460m).
The forecast adds have continued to underperform the forecast deletes over the last few months as markets have rallied. That could change as positioning builds up ahead of announcement.


CSI Medical Service Index Rebalance Preview: Needs Resuscitation

China

Shenzhen Mindray Bio-Medical Electronics Co., Ltd. manufactures and distributes medical equipment. The Company produces life information supporting, in vitro diagnostic, and medical imaging equipment equipment. Shenzhen Mindray Bio-Medical Electronics also produces supporting reagents.

Shenzhen Mindray Bio-Medical Electronics (300760 CH)

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Shenzhen Mindray Bio-Medical Electronics (300760 CH)

Mindray to Acquire $927 Million Stake in APT Medical – the Logic and Concerns Behind

Investors seem unhappy with Mindray's acquisition of APT Medical.But it's not as bad as it looks.A big concern is whether APT medical will keep...

Xinyao (Criss) Wang

Mainland Connect NORTHBOUND Flows (To 15 Dec 23): Mindray Consistently Bought, Midea Sold

NORTHBOUND Mainland Connect saw significant net outflows. It would have been a lot smaller but Friday mid-day saw a HUGE net buy day become a net...

Travis Lundy

China Macro: Sector Positioning Update

Sector positioning among active China Funds. Industrials and Consumer Staples Remain Top Overweights, Energy shows signs of a turnaround, whilst...

Steven Holden

Greater China Funds: China Health Care Reversal

Greater China managers have actively rebalanced portfolios away from China & HK Health Care over the last 6-months, with Taiwan Tech the key...

Steven Holden

CSI Medical Service Index Rebalance Preview: Needs Resuscitation

We forecast 4 changes for the index in Dec. Estimated 1-way turnover is 5.2% resulting in a round-trip trade of CNY 3.3bn (US$460m). The adds have...

Brian Freitas

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