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

China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.The most widely held stocks are <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US), </a><a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, with the trio accounting for 40.6% of total China allocations.  If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 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> and <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> as stocks lightly held by Global managers but well invested by EM active funds.

China allocations among Global active managers have fallen to below pre 2017 levels.  Average holding weights among the 381 funds in our analysis dropped to 3.76%, underweight the MSCI All Country World index by -1.18% with just 28.3% overweight the benchmark. This allocation drop is in stark contrast to what is occurring in the USA, with allocations powering to all-time highs of 53.70%.  The difference between US and China weights are at all-time wides.The most widely held stocks are Alibaba Group (BABA US), AIA Group Ltd (1299 HK) and Tencent (700 HK), with the trio accounting for 40.6% of total China allocations.  If Global managers are to increase weights in China, they will likely have to broaden their investment horizons.  Comparing Global stock holdings in China with their Global Emerging Market peers suggests a number of stocks that could enter the radar of Global investors.  We highlight Ping An Insurance (H) (2318 HK) , Meituan (3690 HK) and JD.com Inc (ADR) (JD US) as stocks lightly held by Global managers but well invested by EM active funds.

Global Funds China Fall:  Gap to US Largest in History

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 20 August. The constituent changes will be effective after the close of trading on 3 September.</div><div>
For the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> there are 3 inclusions - <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a>, <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a> and <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> and 1 exclusion - <a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a>. This takes the number of index constituents to 60.
Following an increase in the index shares and no change in the capping factor at the July monthly rebalance, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>'s weight will be capped at 8% leading to outflows from the stock. 
One-way turnover is estimated at 6.82% and will result in a one-way trade of HK$13.77bn.
There are only 10 trading days to implementation of the changes. We expect all inclusions to open higher on Monday. <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a> and <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> are surprise inclusions while <a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a> is a surprise deletion. The largest passive impact will be on <a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a> where there will be over 7 days of ADV to sell. <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a>has been announced as an inclusion to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> as well.
Big Tech is conspicuous by its absence among the inclusions in the review. HSIL seems to have consciously avoided the stocks due to the constantly changing regulatory landscape in China. HSIL is also taking its time in moving towards it goal of reaching 80 index constituents by mid-2022. That leaves 20 stocks to be included at the next 3 index reviews.
</div>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 20 August. The constituent changes will be effective after the close of trading on 3 September.
For the Hong Kong Hang Seng Index (HSI INDEX) there are 3 inclusions - Xinyi Glass Holdings (868 HK), Li Ning Co Ltd (2331 HK) and China Merchants Bank H (3968 HK) and 1 exclusion - Bank Of Communications Co H (3328 HK). This takes the number of index constituents to 60.
Following an increase in the index shares and no change in the capping factor at the July monthly rebalance, Alibaba Group (9988 HK)'s weight will be capped at 8% leading to outflows from the stock. 
One-way turnover is estimated at 6.82% and will result in a one-way trade of HK$13.77bn.
There are only 10 trading days to implementation of the changes. We expect all inclusions to open higher on Monday. Li Ning Co Ltd (2331 HK) and China Merchants Bank H (3968 HK) are surprise inclusions while Bank Of Communications Co H (3328 HK) is a surprise deletion. The largest passive impact will be on Bank Of Communications Co H (3328 HK) where there will be over 7 days of ADV to sell. Li Ning Co Ltd (2331 HK)has been announced as an inclusion to the Hang Seng China Enterprises Index (HSCEI INDEX) as well.
Big Tech is conspicuous by its absence among the inclusions in the review. HSIL seems to have consciously avoided the stocks due to the constantly changing regulatory landscape in China. HSIL is also taking its time in moving towards it goal of reaching 80 index constituents by mid-2022. That leaves 20 stocks to be included at the next 3 index reviews.


HSI Index Rebalance: Big Tech Avoided; Few Changes Now Means More Changes Later

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.

Quantitative Analysis

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 20.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xinyi Glass Holdings Limited (868 HK) (HKD 123.8 million worth of buybacks), Ck Hutchison Holdings Limited (1 HK) (HKD 105.4 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 77.0 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 20.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xinyi Glass Holdings Limited (868 HK) (HKD 123.8 million worth of buybacks), Ck Hutchison Holdings Limited (1 HK) (HKD 105.4 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 77.0 million worth of buybacks).

Hong Kong Buybacks: Tencent Started Buy-Back After 2 Years

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 13.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Ck Hutchison Holdings Limited (1 HK) (HKD 174.9 million worth of buybacks), New World Development Co Ltd (17 HK) (HKD 140.7 million worth of buybacks), Xinyi Glass Holdings Limited (868 HK) (HKD 32.3 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 13.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Ck Hutchison Holdings Limited (1 HK) (HKD 174.9 million worth of buybacks), New World Development Co Ltd (17 HK) (HKD 140.7 million worth of buybacks), Xinyi Glass Holdings Limited (868 HK) (HKD 32.3 million worth of buybacks).

Hong Kong Buybacks: CKH, New World Development, Xinyi Glass

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 6th.In the past 7 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/xinyi-glass-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11940:1" rel="noopener">Xinyi Glass Holdings (868 HK)</a> (HKD 350.6 million worth of buybacks), <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> (HKD 195.3 million worth of buybacks), <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK)</a> (HKD 49.8 million worth of buybacks).

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 6th.In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xinyi Glass Holdings (868 HK) (HKD 350.6 million worth of buybacks), New World Development (17 HK) (HKD 195.3 million worth of buybacks), Sino Biopharmaceutical (1177 HK) (HKD 49.8 million worth of buybacks).

Hong Kong Buybacks: HK$350m Buyback by Xinyi Glass

China

Sailun Group Co.,Ltd. manufactures and sells rubber tire products. The Company produces commercial car tires, truck tires, special tires, and other products. Sailun Group also produces mechanical equipment, molds, chemicals, and other products.

Zhejiang Century Huatong Group Co., Ltd. develops, manufactures and sells automotive plastic parts and molds.

Ningbo Joyson Electronic Corp manufactures automotive accessories. The Company produces drive control systems, climate control systems, sensor systems, air intake systems, electronic control systems, automated production lines, vehicle air management systems, windscreen washer systems, rearview mirror systems, and other related products. Ningbo Joyson offers its products to around the world.

Zhejiang Wanfeng Auto Wheel Co., Ltd. researches, manufactures, and markets aluminum alloy auto wheels.

Changzhou Xingyu Automotive Lighting Systems Company Limited develops, produces and sells automotive lightings. The Company produces headlamps, rear combination lamps, fog lights, warning triangle and other automotive lamps.

Bethel Automotive Safety Systems Co., Ltd manufactures and distributes automotive braking systems. The Company produces front disc brake modules, rear drum brake modules, integrated parking brakes, drum-in-hat parking brakes, master cylinders, and vacuum boosters. Bethel Automotive Safety Systems exports products to the United States, Britain, Spain, and other countries.

Shandong Linglong Tyre Co., Ltd. operates in the manufacturing industry. The Company designs, produces, and sells a variety of tires for commercial and construction vehicles. Linglong Tyre markets worldwide.

Zhejiang Yinlun Machinery Co.,Ltd. develops, manufactures and markets steel plate oil cooler, concentric oil cooler, shell and tube oil cooler. The company's products are used in automobile engine systems and automatic transmission systems.

Zhejiang Yinlun Machinery Co,Ltd. (002126 CH)

China Shipbuilding Industry Group Power Co., Ltd. designs, produces, and markets power systems including electricity, gas, steam, chemical, diesel, civil-nuclear, and stirling engines.

China Shipbuilding Industry Group Power (600482 CH)

Huayu Automotive Systems Company Limited manufactures and sells auto parts. The Company's main products include interior and exterior auto parts, functional assembly autoparts and thermo processed auto parts etc.

NGK SPARK PLUG Co., Ltd. manufactures and markets spark plugs for automobiles, motorcycles, agricultural machinery, ships, and aircrafts.  The Company also makes ceramic products for semiconductor and telecommunication equipment. NGK Spark Plug markets its products under the NGK and NTK brand names and has subsidiaries in the US, Canada, France, Germany, and South Korea.

Cheng Shin Rubber Industry Co., Ltd. manufactures tires.  The Company produces bicycle, radial, bias, motorcycle, agricultural, and industrial tires.  Cheng Shin markets its tires and tubes in Taiwan as well as exports to North America and Europe.

Cheng Shin Rubber Ind Co., Ltd. (2105 TT)

Modine Manufacturing Company manufactures heat-transfer and heat-storage technology products.  The Company develops, manufactures, and markets heat exchangers and systems for use in various original equipment manufacturer applications and for sale to the automotive aftermarket and to a wide array of building markets.

PT Multistrada Arah Sarana Tbk manufactures vehicle tires. The Company markets its tires worldwide.

The Yokohama Rubber Company Limited produces rubber products including automobile tires, tubes, and conveyor belt for industrial use.  The Company also produces golf clubs and passenger aircraft parts such as restroom units and tanks for drinking water.

Apollo Tyres Limited manufactures tires and tubes for cars, trucks, farm equipment and light commercial vehicles. The Company also manufactures automobile flaps and retreading materials.

Sundram Fasteners Limited manufactures a wide range of nuts, bolts and related fastener equipment.  Products include high-tensile fasteners and equipment for the automotive industry, such as cold extruded parts, radiator caps and gear shifters.  The Company also manufactures water pumps and fuel pumps.

Dorman Products, Inc. supplies automotive products and home hardware.  The Company supplies its products to the automotive aftermarket and mass merchandise markets.

ZF Commercial Vehicle Control Systems India Limited manufactures automotive parts.  The Company produces electronic braking, stability, and suspension and transmission control systems for heavy-duty commercial trucks, trailers and buses.

ZF Commercial Vehicle Control Systems India Limited (WIL IN)

ZF Commercial Vehicle Control Systems India Limited

KOITO MANUFACTURING CO., LTD. produces lighting equipments for automobiles such as head and tail lights, rear combination lamps, and fog lamps.  The Company has  its production facilities in Japan, the US, the UK, Czech, China, Thailand, Taiwan, and India.  Koito Manufacturing also manufactures electronics parts for aircrafts including lighting equipments and oil pressure gauges.

Xinyi Glass Holdings Ltd, through its subsidiaries, produces a variety of processed glass products for automobile, construction and household applications. The Company also tenders for glass curtain wall projects and conducts installation service of glass curtain wall in China.

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Xinyi Glass Holdings (868 HK)

Global Funds China Fall: Gap to US Largest in History

China allocations among Global active funds have fallen to below pre 2017 levels. Average holding weights among the 381 funds in our analysis...

Steven Holden

HSI Index Rebalance: Big Tech Avoided; Few Changes Now Means More Changes Later

Hang Seng Indexes has avoided adding Big Tech and included Li Ning, Xinyi Glass and CM Bank while deleting BoComm. Tencent will be capped higher,...

Brian Freitas

Hong Kong Buybacks: Tencent Started Buy-Back After 2 Years

We highlight that Tencent started buyback activity this week amid the share price weakness. We also take a quick look at its last buyback in 2019.

Ke Yan, CFA, FRM

Hong Kong Buybacks: CKH, New World Development, Xinyi Glass

We highlight the top 3 companies that repurchased the most shares in the past 7 days were Ck Hutchison Holdings Limited (1 HK), New World...

Ke Yan, CFA, FRM

Hong Kong Buybacks: HK$350m Buyback by Xinyi Glass

We highlight the top 3 companies that repurchased the most shares from the market were Xinyi Glass (868 HK), New World Development (17 HK), and...

Ke Yan, CFA, FRM

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