DESK OBSERVATIONS – HK/CHINA
-WHO’s BUYING? Seeing continued global LO inflows which seems to be related to China with Hang Seng now outperforming S&P. Seeing multitude of LOs buying with foreign large asset managers most active, EM specialists and regional managers less active. Today’s move further solidifies foreign buying being the main driver of Hang Seng as Southbound is closed today for holiday.
-WHAT IS BEING BOT? Buying being concentrated in large cap index constituents, out top buys are AIA, (1299 HK), Meituan (3690 HK), and Tencent (700 HK). Suspect some underweight managers are looking to quickly get on some China positioning and hence the focus on large liquid index constituents, yet to see proper stock picking from these LOs (I do expect this to come).
-WHY BUY NOW? Still the most common question from investors. Seeing multiple brokers recently upgrade China and particularly China Property (including BofA), many brokers now highlighting the worst is now behind us. Recent volatility in markets like Japan and US, investors could be looking for inexpensive diversification for their portfolio in HK/China.