HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Worldwide, inflation is surging and outlook is for it to stay elevated for an extended period of time. Meanwhile, we are seeing retreats in some commodity prices lately. </li>
<li>We witnessed that some stocks have showed divergences against the downward movement of their input prices, and this made them look interesting.</li>
<li>Share prices for <a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a>, <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a> and <a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl (2313 HK)</a> are still at low levels while their input costs have already come down sharply.</li>
</ul>


Worldwide, inflation is surging and outlook is for it to stay elevated for an extended period of time. Meanwhile, we are seeing retreats in some commodity prices lately. 
We witnessed that some stocks have showed divergences against the downward movement of their input prices, and this made them look interesting.
Share prices for CPMC Holdings (906 HK), Want Want (151 HK) and Shenzhou Intl (2313 HK) are still at low levels while their input costs have already come down sharply.


China Industrials: Positioning for Lower Inflation? If Yes, Here Are Three Names of Interest...

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.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over roughly 4 years and implemented in its current state for over 2 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over roughly 4 years and implemented in its current state for over 2 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.


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 June rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.</li>
<li>The largest inflows will be on <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</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>, <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/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">SMIC (981 HK)</a>, <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas (316 HK)</a>, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a>, <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>.</li>
<li>The largest outflows will be on <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/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific (522 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank (939 HK)</a>, <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>.</li>
</ul>


The June rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).


HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Apr 29th. </li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short interest increases in Meituan, JD.com and short covers for CMB, Shenzhou International, Pacific Basin.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Apr 29th. 
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short interest increases in Meituan, JD.com and short covers for CMB, Shenzhou International, Pacific Basin.


HK Short Interest: Short Spikes in Meituan, JD.com

China

HLA CORP., Ltd. manufactures and markets apparel, woolen fabrics, woolen yarns, and textile raw materials, as well as provides dyeing and processing services. Heilan Home distributes their product globally.

Li Ning Company Limited researches, designs, manufactures, distributes, and retails sports footwear, apparel and accessories for sport and leisure use.

Fujian Funeng Co., Ltd. manufactures a variety of textile including flannelette, cotton yarn, polyurethane synthetic leather, needling fabric, and water-jet bonding fabric.

Zhejiang Weixing Industrial Development Co., Ltd. manufactures buttons, zips, and other apparel accessories. The Company also provides electroplating services.

Lao Feng Xiang Co., Ltd. processes and sells gold and jewelry products.  Through its subsidiaries, the Company manufactures and sells wooden, mechanical and cosmetic pencils, as well as manufactures and sells pencil making machinery and paints, and general trading.

Zhejiang Semir Garment Company Limited designs, develops, outsources production, markets and distributes apparels.  The Company's main operation is casual wear and children's apparels.

Biem.L.Fdlkk Garment Co., Ltd. is an apparel designer. The Company designs, markets, and distributes a variety of golf apparels. Biem.L.Fdlkk Garment serves customers throughout China.

Billion Industrial Holdings Ltd. manufactures polyester filament yarn.  The Company produces drawn textured yarn and fully drawn yarn, which are used in apparel, footwear and home furnishings.

Xtep International Holdings Ltd. designs, manufactures, and markets sportwear. The Company produces footwear, apparel, and accessories.

Sichuan Zhenjing Corporation Limited manufactures and distributes leather products. The Company produces and sells leather cases, leather car seats, decoration leather, and other products. Sichuan Zhenjing markets its products throughout China.

Prada S.p.A. is an Italian fashion company that designs, manufactures, promotes and sells high-end leather goods, ready-to-wear and footwear through various brands.

Skechers U.S.A., Inc. designs and markets branded contemporary casual, active, rugged, and lifestyle footwear for men, women, and children.  The Company sells its products to department stores and specialty retailers.  Skechers also sells its products internationally through distributors and directly to consumers through its own retail stores.

SRF Limited is a multi-business Indian multinational engaging in the manufacture of chemical based industrial intermediates. The Company has a business portfolio that encompasses technical textiles, chemicals, packaging films and engineering plastics.

Ralph Lauren Corporation designs, markets, and distributes men's, women's and children's apparel, accessories, fragrances, and home furnishings. The Company's products are sold under a wide range of brands. Ralph Lauren's operations include wholesale, retail, and licensing.

Crocs, Inc. designs and manufactures shoes.  The Company produces soft, lightweight, non-marking, slip- and odor-resistant shoes made of closed-cell resin material.  Crocs manufactures men's, women's, and children's shoes and markets them to retail chains.

Tapestry, Inc. designs and markets clothes and accessories. The Company offers handbags, leather goods, footwear, fragrance, jewelry, outer wear, ready-to-wear, scarves, sunwear, travel accessories, and watches. Tapestry serves customers in the United States.

VF Corporation is an international apparel company. The Company owns a broad portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear and occupational apparel categories. VF Corp's products are marketed to consumers shopping in specialty stores, upscale and traditional department stores, national chains and mass merchants.

ASICS CORPORATION manufactures general sporting goods and equipment.  The Company's products, such as athletic shoes and sportswear, are distributed in the United States, Europe, Australia, and Asia.

Brunello Cucinelli SpA is a luxury fashion company, known for its cashmere products as well as exclusive brands.  The Company designs, manufactures, and distributes clothing and accessories globally for men and women.

Moncler S.p.A. is a brand with a winter heritage. Known for its outerwear, Moncler today designs and produces clothing and accessories for women, men and children, directly distributed through Moncler boutiques, its online store, department stores and multibrand stores.

Shenzhou International Group Holdings Ltd manufactures and processes textiles.  The Company produces, dyes, finishes, prints, embroiders, cuts, and sews knitwear.

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Shenzhou Intl Group Holdings (2313 HK)

China Industrials: Positioning for Lower Inflation? If Yes, Here Are Three Names of Interest...

Share prices of CPMC Holdings, Want Want and Shenzhou Intl have not yet reacted to reflect the recent declines in input costs due to the retreat in...

Osbert Tang, CFA

Screening for GEMs: July 2022

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

HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

The June rebalance of the HSI, HSCEI, HSTECH indices will use todays close prices for capping. The one-way trade across all stocks across the three...

Brian Freitas

Screening for GEMs: June 2022

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

HK Short Interest: Short Spikes in Meituan, JD.com

We highlight weekly short interest increases in Meituan, JD.com and short covers for CMB, Shenzhou International, Pacific Basin based on the latest...

Ke Yan, CFA, FRM

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52-week Range

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