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There seems to be a lot of selling in HK, currently down 12%, I can't see a specific reason
HK/Chinese investors are worried about the announced investigations into the pharma sector
Hengrui, Beigene, Zai, Innovent, junshi were all already down quite significantly last week.
see: https://www.china-briefing.com/news/why-corruption-is-inevitable-in-chinas-pharmaceutical-industry/
Thx compounding, that article is 10 years old, are they still concerned? I've not seen any commentary in the press about it recently....
Sorry about that. There was a question from an analyst about anti-corruption measures in the most recent Hutchmed earnings call. Thats why I checked if there were articles about it.
Here a more recent one: http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1282092/popular-news/HK6
Unfortunately there is not much to be found in western media...
Thanks compounding, all China Biotech down, Innovent, Wuxi, Junshi, Hengrui etc etc but when they drop 5% we drop 14%, never a dull moment being a Hutchmed Investor. Possibly stupidly I will buy more.
I suspect that Hutch is down more today, bc last week it was the only HK biotech posting some gains thanks to the results announcement.
Unfortunately it seems that every time the company is re-gaining some momentum there are new things coming up that put us back down...
If there's no bad news they invent it lol, flim flam of the highest order..
That's the thing but I don't see any news, good or bad......
Shorts back against the wall after strong numbers, big drop to encourage sellers.
HCM is fairly tightly held with a relatively small free float, add to that M & G adding to their long makes for a thin market ..
Behind paywall:
https://scrip.pharmaintelligence.informa.com/SC148833/Storm-Coming-Commercial-Compliance-Crackdown-Shocks-China-Pharma-Industry?utm_source=dailyem,sfmc&utm_medium=email,email&utm_campaign=,Scrip%20Daily%20(Tues%20-%20Fri)
Thanks compounding, there is certainly never a dull moment investing in Chinese companies and Hutchmed, all the geo-political rubbish, the HFCAA, various company mishaps, the infamous botched CKHH placing etc etc and now it appears there may be some form of corruption in the Biopharma sector - and whenever something impacts the sector Hutchmed seems to suffer more than most
Good find compoundingm, there had to be something to cause such a savage sector wide markdown. Based on the impact of crackdowns in other sectors I am not surprised investors got severe indigestion. Summary from Bing from article dated today as follows "In a new wave of crackdowns on compliance in the pharma sector in China, 10 medical meetings have been cancelled in short order, while sector-wide stock prices have plunged and 100 hospital officials placed under investigation, shocking the industry." It would be a brave CEO to state that their business is 100% clean when you have 100's or maybe 1000's of sales reps selling into hospitals across such a vast country.
Amazing how these articles appear just when shorts are at their peak..
It was regulators’ latest effort to stamp out the pervasive use of secure messaging apps like Signal, Meta
’s WhatsApp or Apple
’s iMessage by Wall Street employees and managers. Starting in late 2021, the watchdogs secured settlements with bigger players including JPMorgan Chase
, Goldman Sachs
, Morgan Stanley
and Citigroup
. Fines related to the issue total more than $2 billion, according to the SEC and CFTC.
https://www.cnbc.com/2023/08/08/regulators-hit-wall-street-banks-with-549-million-in-penalties-for-record-keeping-failures-.html
More worryingly, the percentage of shorts in Chinese quoted pharma seems very high. Often in the teens. Ref a link inside one of the earlier links. Does that mean it’s not just corrupt salesmen and hospitals and officials but also traders? Most gamblers like to feel that they have an edge of breaking the system to win… human nature or criminality?
Just a thought.
Our job is to figure out what our pipeline is really worth regardless of the shenanigans.
GS
The article referred to is old, as highlighted by davey it was first aired 10 years ago, nothing new just surfaces every now and then.
If serious investors are going to sell because "10 medical meetings have been cancelled in short order" they need to develop a sense of humour, lol
I'm afraid this is not old...see: http://www.aastocks.com/en/stocks/analysis/stock-aafn-con/06160/NOW.1284403/hk-stock-news
My view is that in the end all this will benefit the innnovative Players like Hutchmed.
I tend to agree this will benefit newer innovative players in the medium term…..although it does depend how endemic it is within the hospital sector in China - they could be more vulnerable to “pay to play” arrangements but they should be prepared to whistleblow against their established competitors as they have less to lose.
We perhaps should not be I surprised by the knee jerk reaction of the markets…..although AZ as the biggest non Chinese pharma did not react nearly as much…..I wonder if this is good old procurement fraud….on PPE, general supplies etc rather than specialist drugs and with NRDL inclusion maybe the risk is lowered too?
FWIW i have recently purchase some Innovent stock ahead of their results next week….as well as oncology they also seem to be making progress with lifestyle related drugs (Diabetes, obesity etc) which seems to be a favoured subsector at the moment.
Its just part of the latest crackdown from a policy decision many years ago, but agree, it should be welcomed as no one wants that sort of activity.
You're a brave man Jatw adding another Chinese stock to your portfolio, ones more than enough for me !
The dichotomy with China (which I am sure exists for many investors) is an attractive and growing market, second largest healthcare system in the world, but the flip side is the never ending slew of negativity and associated tensions.
HCM's board and major holders must be acutely aware of this situation, corporate activity seems the most logical and likely route forward imo.
Bit of weekend chit chat, here's what happened to one fund shorting ad lib - very experienced manager too:
Anti-Tesla ETF Set to Close After Hefty Losses
"George Noble announced Wednesday that his Noble Absolute Return ETFNOPE +2.89% (ticker: NOPE) will stop trading on Aug. 24, and liquidate its $19 million in assets—after cumulative losses of nearly 60% since"
"He quickly put the money to work, going long oil and gas stocks, while shorting Tesla, Coinbase Global (COIN), DraftKings (DKNG), Roku (ROKU), and Wood’s ARK Innovation ETFARKK –0.54% (ARKK).
It has come to a quick end. With the S&P 500 up more than 20% this year through July, the Noble ETF was down 69%. Not even a year old, the NOPE fund will end its run."
https://www.barrons.com/articles/anti-tesla-etf-to-close-losses-934af767?siteid=yhoof2
Aggregated Reportable Short Positions of Specified Shares as of 04/08/2023
https://www.sfc.hk/-/media/EN/pdf/spr/2023/08/04/Short_Position_Reporting_Aggregated_Data_Eng_20230804.pdf?rev=bc545ce10270459abbfa78d19997f8be
Aggregated Reportable Short Positions of Specified Shares as of 28/07/2023
https://www.sfc.hk/-/media/EN/pdf/spr/2023/07/28/Short_Position_Reporting_Aggregated_Data_Eng_20230728.pdf?rev=6ee6ef0e16af41ceb145f0fa34fd0943
HK has closed in a new bear market….yet it is about 20% higher than the lows it hit around end October last year…..v volatile and driven by the outlook for China which appears to be bearish again after not meeting expectations surrounding the end of Covid restrictions on the mainland, the ongoing property developer debt issues…..
All of which is irrelevant to HCM….who have cash in the bank, further product developments coming soon….and the prospect of meaningful royalty revenues commencing in 2024.
For long term investors this is surely a good time to buy..
I have thought on many occasions it was a good time to buy, especially during the time of the botched placing by CKHH in Dec 2021 when it halved in 3 months from $35 to $16, but then lose even more money! Iam also now considering the opportunity cost here because it's ok to not lose any more money but if this sits where it is for the next 2 or 3 years could the money be better deployed elsewhere? That is the question I continue to ask myself.
That is a difficult one to respond to as most of my investments seem to be at best going sideways….it seems to me that the success stories of the last few years have often been built on hope of future profit rather than actual earnings…..currently anything AI is flavour of the month…..nothing listed is at its correct value…..
I hope HCM is bumping along the bottom of its likely value but as we know it can be lower!
I am not going to put new money in and may sell some to diversify into other companies (Beigene and Innovent seem likely candidates)….but I expect to hold the bulk of my current holding for 5 years or more