In today’s briefing:
- Actionable Trade: CNOOC H-Share 883HK – Strong SB Flow, A/H Prem, Low Valuation & Multiple Catalysts
- Index Rebalance & ETF Flow Recap: KS200, KQ150, HSI, CSI300/500, STAR50, SSE50, ChiNext, PCOMP, HDFC
- Last Week in Event SPACE: China Mobile, Fast Retailing, Yuexiu Property, Vinda, Tokyo Gas
- China Healthcare Weekly (Apr.28) – Four Stages of China Biotech, The Real Foothold of R&D, Kelun
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Sell in May and Go Away?
Actionable Trade: CNOOC H-Share 883HK – Strong SB Flow, A/H Prem, Low Valuation & Multiple Catalysts
- Southbound will close for 3 days due to holiday, we view it as a good time to buy the stock on short-term momentum
- Investment thesis for CNOOC is similar to China Mobile: Strong southbound flows and A/H premium to narrow to support H share price
- Valuation is attractive. Potential share buybacks and trading dual counter (to narrow AH gap) are the upcoming catalysts
Index Rebalance & ETF Flow Recap: KS200, KQ150, HSI, CSI300/500, STAR50, SSE50, ChiNext, PCOMP, HDFC
- Friday marked the end of the review cutoff for the MSCI, CSI300, CSI500, STAR50, SSE50, ChiNext and a bunch of other indices for the upcoming rebalances in May and June.
- There are no major index events coming up this week as a lot of markets are shut on different days.
- There were big inflows to mainland China ETFs during the week, while there was a big redemption from the iShares MSCI ACWI ETF (ACWI US).
Last Week in Event SPACE: China Mobile, Fast Retailing, Yuexiu Property, Vinda, Tokyo Gas
- It is relatively low-hanging fruit to “further propel the renmimbi’s internationalisation” and for HKEX, it will “cement HK’s position as the premier offshore renmimbi financing center.”
- The Conundrum: the more active investors decide they like Fast Retailing (9983 JP), the more there is to sell. That creates interesting opportunities.
- Short Yuexiu Property (123 HK) now, or soon. The dynamics of this is that there WILL be selling when the rights come out.
China Healthcare Weekly (Apr.28) – Four Stages of China Biotech, The Real Foothold of R&D, Kelun
- The real foothold of a pharmaceutical company lies in “Development” rather than “Research”. After the clinical development has reached the first-class level, what remains is the vision of the leaders.
- For China biotech, we think they would go through four stages- Stage 1 (2015 – 2019), Stage 2 (2019 – present), Stage 3 (2026-2028) and Stage 4 (starting from 2030).
- If without Merck’s deal, Kelun’s profit improvement was mainly due to effective cost control. If Kelun could maintain double-digit revenue growth, with net profit margin around 10%, it’s already good.
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Sell in May and Go Away?
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
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