Alpha Picks
Strategy - Alpha Picks: October Conviction Calls
Analyst
Highlights
- Chinese equities fell in September, with the HSI and MSCI China Index dropping 3.7% mom and 4.7% mom respectively.
- Markets may remain volatile in October, due to rising US treasury yields, higher energy prices and the unresolved Middle-East conflict. Moreover, global investors may go risk-off, ahead of elections in Israel and the US. It is unclear if this would lead to global funds flowing back to Hong Kong.
- We continue to focus on stocks with near-term catalysts and add DiDi, Sino Land and Trip.com to our BUY list, and cut losses on Cowell, Han’s Laser and Shuanghuan Driveline.
What’s New
- Chinese equities fell in September, with the HSI and MSCI China Index dropping 3.7% mom and 4.7% mom respectively, due to investors’ concerns over rising US treasury yields and energy prices. Our Alpha Picks generally underperformed. Shuanghuan Driveline (002472 CH) was the best performer at 7.3% mom, followed by NetEase (9999 HK) at 0.1% mom.
- October may see further market volatility as treasury yields and energy prices remain high. Moreover, global investors may go risk-off, ahead of elections in Israel and the US. It is unclear if this would lead to global funds flowing back to Hong Kong. On a positive note, the 28 September State Council meeting pledged incremental measures, including larger relending quotas and the use of remaining local government debt quota, which we expect to lift domestic demand in the months ahead.
- We continue to focus on stocks with near-term catalysts. We add DiDi (DIDIY US), Sino Land (83 HK) and Trip.com (9961 HK) to our BUY list. We cut losses on Cowell (1415 HK), Han’s Laser (002008 CH) and Shuanghuan Driveline (002472 CH).
Action
- Add DiDi (DIDIY US) to our BUY list, on sustained market share gains and transaction growth in China mobility, faster-than-expected profitability improvement in international businesses, and successful monetisation of autonomous driving.
- Add Sino Land (83 HK) to our BUY list, as net cash of 31.7% of equity and a maintained dividend of HK$0.58 per share cushion the impact of persistently high US Treasury yields.
- Add Trip.com (9961 HK) to our BUY list, on accelerating international growth, recovery in outbound and robust inbound travel, and the benefit of visa-free policies.
- Cut losses on Cowell (1415 HK), Han’s Laser (002008 CH) and Shuanghuan Driveline (002472 CH).
- Maintain BUY on Alibaba (9988 HK), ASMPT (522 HK), BYD (1211 HK), Foxconn Industrial Internet (601138 CH), Innovent (1801 HK), NAURA (002371 CH), NetEase (9999 HK) and Tencent (700 HK).
Highlights
- Chinese equities fell in September, with the HSI and MSCI China Index dropping 3.7% mom and 4.7% mom respectively.
- Markets may remain volatile in October, due to rising US treasury yields, higher energy prices and the unresolved Middle-East conflict. Moreover, global investors may go risk-off, ahead of elections in Israel and the US. It is unclear if this would lead to global funds flowing back to Hong Kong.
- We continue to focus on stocks with near-term catalysts and add DiDi, Sino Land and Trip.com to our BUY list, and cut losses on Cowell, Han’s Laser and Shuanghuan Driveline.
What’s New
- Chinese equities fell in September, with the HSI and MSCI China Index dropping 3.7% mom and 4.7% mom respectively, due to investors’ concerns over rising US treasury yields and energy prices. Our Alpha Picks generally underperformed. Shuanghuan Driveline (002472 CH) was the best performer at 7.3% mom, followed by NetEase (9999 HK) at 0.1% mom.
- October may see further market volatility as treasury yields and energy prices remain high. Moreover, global investors may go risk-off, ahead of elections in Israel and the US. It is unclear if this would lead to global funds flowing back to Hong Kong. On a positive note, the 28 September State Council meeting pledged incremental measures, including larger relending quotas and the use of remaining local government debt quota, which we expect to lift domestic demand in the months ahead.
- We continue to focus on stocks with near-term catalysts. We add DiDi (DIDIY US), Sino Land (83 HK) and Trip.com (9961 HK) to our BUY list. We cut losses on Cowell (1415 HK), Han’s Laser (002008 CH) and Shuanghuan Driveline (002472 CH).
Action
- Add DiDi (DIDIY US) to our BUY list, on sustained market share gains and transaction growth in China mobility, faster-than-expected profitability improvement in international businesses, and successful monetisation of autonomous driving.
- Add Sino Land (83 HK) to our BUY list, as net cash of 31.7% of equity and a maintained dividend of HK$0.58 per share cushion the impact of persistently high US Treasury yields.
- Add Trip.com (9961 HK) to our BUY list, on accelerating international growth, recovery in outbound and robust inbound travel, and the benefit of visa-free policies.
- Cut losses on Cowell (1415 HK), Han’s Laser (002008 CH) and Shuanghuan Driveline (002472 CH).
- Maintain BUY on Alibaba (9988 HK), ASMPT (522 HK), BYD (1211 HK), Foxconn Industrial Internet (601138 CH), Innovent (1801 HK), NAURA (002371 CH), NetEase (9999 HK) and Tencent (700 HK).
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
