Our Model Portfolio added +1.88 % in the past two days thanks to our hedges and short technology stocks.
In extremely volatile markets, management requires to be agile and reactive, while keeping the course of our strategic conclusions.
In the past few days, the Hong Kong market was hammered considerably on the back of the resumption of the Trade War on one hand and on the increasing unrest and demonstration on the other hand.
However, Chinese stocks listed in Hong Kong were extremely cheap before and have become phenomenally cheap today, particularly considering the fact that they will be reporting their earnings next week and that we believe that earnings will be better than anticipated by the stock prices,
A perfect example in TONGDA GROUP. 698 HK, a company that is one of Apple’s 200 largest suppliers and a company that manufactures high precision glass casings and provides for all the smartphone manufacturers. As such it is a major beneficiary f the rolling out of the 5G technology and the switching of phones that will ensue
The company’s stock price has been shorted indiscriminately and is now trading at 3.71 x earnings.
Another extremely interesting situation worth mentioning is DYNAVAX TECHNOLOGIES which is reporting its first batch of earning since the restructuring tomorrow and you will find enclosed the status of recent analysts recommendations.
As can be seen, the stock is trading at US$ 2.81 but analysts have price targets of between 13 and 38 US$. ! It is extremely rare to see such a gap between market prices and analysts recommendations.
Even the lowest OT at 13 US$ represents at 460 % increase from current levels.
Let’s see what tomorrow will offer.
As a result, in our model portfolio we took profits on our short trackers on the HSCEI Index and reversed into a long tracker, and we started buying a number of stocks that we believe are extremely cheap ahead of the earnings.
As a result, or Asset Allocation has become slightly longer with Chinese stocks rising back to 37.4 % of the portfolio.