Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Macroeconomics

<ul>
<li>PBOC announced that it will borrow and trade treasury bonds from primary markets. </li>
<li>The central bank will use Open Market Operations to not only control and steepen the yield curve, but also improve market liquidity.</li>
<li>Last week the 50-year bond dropped below the 2.5% yield which was the minimal threshold the PBOC indicated before defense.</li>
</ul>


PBOC announced that it will borrow and trade treasury bonds from primary markets. 
The central bank will use Open Market Operations to not only control and steepen the yield curve, but also improve market liquidity.
Last week the 50-year bond dropped below the 2.5% yield which was the minimal threshold the PBOC indicated before defense.


QE With Chinese Characteristics: What It Will Look Like.

Cross Asset Strategy

<ul>
<li>China ETF flows in June continued to show positive momentum while other categories remained flat.  Southbound Connect Flows were positive while Northbound Connect recorded a Net Sell.</li>
<li>Midea Real Estate Holdings jumped on plans to privatize its property development business</li>
<li>Shanghai Microport fell after launching a share placement at a 15% discount.  The share price  is hitting all time lows.</li>
</ul>


China ETF flows in June continued to show positive momentum while other categories remained flat.  Southbound Connect Flows were positive while Northbound Connect recorded a Net Sell.
Midea Real Estate Holdings jumped on plans to privatize its property development business
Shanghai Microport fell after launching a share placement at a 15% discount.  The share price  is hitting all time lows.


The Heat Is On: News Flow and Sentiment in HONG KONG

Equity Bottom-Up

Stella International Holdings Limited develops and manufactures footwear products for casual and fashion footwear companies worldwide.

<ul>
<li>Vietnam now accounts for more than 50% of production replacing China</li>
<li>China production is less than 25% of overall capacity in 2023</li>
<li>Reshoring and production of higher end "Athleisure" shoes is increasing margins for Stella International (1836 HK) </li>
</ul>


Vietnam now accounts for more than 50% of production replacing China
China production is less than 25% of overall capacity in 2023
Reshoring and production of higher end "Athleisure" shoes is increasing margins for Stella International (1836 HK) 


Stella International: A Beneficiary of Reshoring

<ul>
<li>The PBOC has launched a home purchase program providing a 300 billion yuan re-lending facility which will fund local government SOE's purchases of unsold homes.</li>
<li>With government bond rates at record low yields the PBOC has started to issue long term debt to finance its property support plan.</li>
<li>Households with total savings of Rmb 140T  and seeking alternatives to low bank deposit rates are enthusiastic buyers of new government issues offering higher returns.</li>
</ul>


The PBOC has launched a home purchase program providing a 300 billion yuan re-lending facility which will fund local government SOE's purchases of unsold homes.
With government bond rates at record low yields the PBOC has started to issue long term debt to finance its property support plan.
Households with total savings of Rmb 140T  and seeking alternatives to low bank deposit rates are enthusiastic buyers of new government issues offering higher returns.


CHINA: How China's Household Savings Are Bailing Out the Property Sector

<ul>
<li>China's debt markets are experiencing an historic bull cycle as government and companies take advantage by ramping up issuances this year.  </li>
<li>Beijing will use its healthy balance sheet and continued debt issuance to clean up local government debt and simultaneously address the property sector problems.</li>
<li>China's healthy external position will provide continued support for its currency and debt markets with equity markets to follow in the coming months.</li>
</ul>


China's debt markets are experiencing an historic bull cycle as government and companies take advantage by ramping up issuances this year.  
Beijing will use its healthy balance sheet and continued debt issuance to clean up local government debt and simultaneously address the property sector problems.
China's healthy external position will provide continued support for its currency and debt markets with equity markets to follow in the coming months.


CHINA: When Will Stocks Catch Up With Surging Debt Markets?

Asian Hedge Fund manager with more than 20 years experience managing Asian Long/Short Equity funds.  Macroeconomic top down analysis generating thematic investments which are further researched from bottom up.  Research is supplemented with advanced technical analysis.