Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>The Indian market saw record foreign selling during October and that selling has continued this month.</li>
<li>Valuations are not only stretched, they are at historically high levels with mediocre earnings growth projected for next year.</li>
<li>Market breadth is narrowing and the market has declining momentum.  Near-term moving averages will act as resistance levels.</li>
</ul>


The Indian market saw record foreign selling during October and that selling has continued this month.
Valuations are not only stretched, they are at historically high levels with mediocre earnings growth projected for next year.
Market breadth is narrowing and the market has declining momentum.  Near-term moving averages will act as resistance levels.


Equity Bottom-Up

Kingsoft Corporation Ltd. develops and markets computer software.  The Company develops role-playing computer games and security, word processing, and spreadsheet software.

<ul>
<li>Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction.  Mainland investors bought a record amount the day after Trump's win.</li>
<li>
<a href="https://www.smartkarma.com/entities/kingsoft-corp-ltd" target="_blank" data-smartkarma-citation="entities:492:1" rel="noopener">Kingsoft Corp (3888 HK)</a> reported consensus beating results with its online game segment surging.  The company is benefiting from AI upgrades in its office SAAS business.
</li>
<li>
<a href="https://www.smartkarma.com/entities/precision-tsugami-china-corp" target="_blank" data-smartkarma-citation="entities:26199:1" rel="noopener">Precision Tsugami China (1651 HK)</a> posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.</li>
</ul>


Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction.  Mainland investors bought a record amount the day after Trump's win.

Kingsoft Corp (3888 HK) reported consensus beating results with its online game segment surging.  The company is benefiting from AI upgrades in its office SAAS business.


Precision Tsugami China (1651 HK) posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)

Tencent Music Entertainment Group / Equity Bottom-Up

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

Tencent Music Entertainment Group (1698 HK)

<ul>
<li>Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.</li>
<li>
<a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" data-smartkarma-citation="entities:124:1" rel="noopener">CRRC Corp Ltd H (1766 HK)</a> gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-music-entertainment-group" target="_blank" data-smartkarma-citation="entities:36601:1" rel="noopener">Tencent Music Entertainment Group (1698 HK)</a> reported solid results as it shifts to a pay-to-stream subscription model. <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> had a blowout quarter with EV sales surging.
</li>
</ul>


Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.

CRRC Corp Ltd H (1766 HK) gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.


Tencent Music Entertainment Group (1698 HK) reported solid results as it shifts to a pay-to-stream subscription model. Xiaomi Corp (1810 HK) had a blowout quarter with EV sales surging.



BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Macroeconomics

<ul>
<li>China companies may start to repatriate F/X deposits held offshore as the CNY gains start to pick up. </li>
<li>The sudden unwind of the JPY carry trade reversed the weakening pressure of the CNY against its daily fixing.</li>
<li>Forward markets are showing a more rapid strengthening of the CNY than analysts estimates.</li>
</ul>


China companies may start to repatriate F/X deposits held offshore as the CNY gains start to pick up. 
The sudden unwind of the JPY carry trade reversed the weakening pressure of the CNY against its daily fixing.
Forward markets are showing a more rapid strengthening of the CNY than analysts estimates.


<ul>
<li>Trump and Powell have had an acrimonious relationship since Trump's first term and that continues today.</li>
<li>Trump's fiscal policies will create crosscurrents for the US economy and run counter to Powell's objectives as chairman of the Fed.</li>
<li>Although tariffs can be implemented quickly, they must run concurrently with other policies to restrain their inflationary effects on the US economy.  Other policies will take longer to implement.</li>
</ul>


Trump and Powell have had an acrimonious relationship since Trump's first term and that continues today.
Trump's fiscal policies will create crosscurrents for the US economy and run counter to Powell's objectives as chairman of the Fed.
Although tariffs can be implemented quickly, they must run concurrently with other policies to restrain their inflationary effects on the US economy.  Other policies will take longer to implement.


Asian Hedge Fund manager based in HK/SG with over 20 years of experience managing Asian Long/Short Equity funds. Macroeconomic top-down analysis generates thematic investments that are further researched from the bottom-up. Research is supplemented with advanced technical analysis. 
Previous experience includes M&A with Morgan Stanley and CPA with Deloitte in NYC. Wharton MBA.

David Mudd
Asian Hedge Fund Manager, Long Short Equity, Macro

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