Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations</li>
<li>Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX</li>
<li>In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers</li>
</ul>


Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations
Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX
In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers


2022 High Conviction Ideas in FinTech & Financials

<ul>
<li>We screen 35 GEM Banks in this report with its accompanying charts, and identify the following names as investment opportunities</li>
<li>In LatAm, we highlight <a href="https://www.smartkarma.com/entities/banco-do-brasil-sa" target="_blank" data-smartkarma-citation="entities:24564:1" rel="noopener">Banco Do Brasil Sa (BBAS3 BZ)</a> , <a href="https://www.smartkarma.com/entities/grupo-financiero-banorte-o" target="_blank" data-smartkarma-citation="entities:24780:1" rel="noopener">Grupo Financiero Banorte-O (GFNORTEO MF)</a> and <a href="https://www.smartkarma.com/entities/credicorp-ltd" target="_blank" data-smartkarma-citation="entities:25963:1" rel="noopener">Credicorp Ltd (BAP US)</a> </li>
<li>In Asia, our preferred stocks are <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a> , <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> , <a href="https://www.smartkarma.com/entities/hana-financial-group" target="_blank" data-smartkarma-citation="entities:12843:1" rel="noopener">Hana Financial (086790 KS)</a> and <a href="https://www.smartkarma.com/entities/state-bank-of-india" target="_blank" data-smartkarma-citation="entities:160:1" rel="noopener">State Bank Of India (SBIN IN)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/commercial-international-bank" target="_blank" data-smartkarma-citation="entities:27625:1" rel="noopener">Commercial International Bank (COMI EY)</a> and <a href="https://www.smartkarma.com/entities/sberbank-of-russia-pjsc-cde59529-fb78-4659-85d0-127942b44ba7" target="_blank" data-smartkarma-citation="entities:27581:1" rel="noopener">Sberbank of Russia PJSC (SBER RM)</a> stand out in CEMEA</li>
<li>Risks to our positive view on these select GEM banks include worse than expected GDP growth leading to worse than anticipated credit quality and slower than expected loan growth, along with limited investor appetite for GEM banks</li>
</ul>


We screen 35 GEM Banks in this report with its accompanying charts, and identify the following names as investment opportunities
In LatAm, we highlight Banco Do Brasil Sa (BBAS3 BZ) , Grupo Financiero Banorte-O (GFNORTEO MF) and Credicorp Ltd (BAP US) 
In Asia, our preferred stocks are Postal Savings Bank of China (1658 HK) , China Construction Bank H (939 HK) , Hana Financial (086790 KS) and State Bank Of India (SBIN IN) 

Commercial International Bank (COMI EY) and Sberbank of Russia PJSC (SBER RM) stand out in CEMEA
Risks to our positive view on these select GEM banks include worse than expected GDP growth leading to worse than anticipated credit quality and slower than expected loan growth, along with limited investor appetite for GEM banks


Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Companies mentioned this week:
<a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart Inc (139480 KS)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices. 
Companies mentioned this week:
Prosus (PRX NA), Alibaba Group (9988 HK), Baidu (9888 HK), ByteDance (1460967D CH), Naver Corp (035420 KS), E Mart Inc (139480 KS) 

Global Emerging Markets Weekly: 18 June 2021

<ul>
<li>Pedro Castillo retains a narrow lead over Keiko Fujimori and Castillo is almost definitely the next Peruvian President</li>
<li>The markets are rattled by the prospect of Castillo as President, and the market, along with <a href="https://www.smartkarma.com/entities/credicorp-ltd" target="_blank" data-smartkarma-citation="entities:25963:1" rel="noopener">Credicorp Ltd (BAP US)</a>, is likely to remain weak and volatile in the near term</li>
<li>It is important, in our view, to assess the potential “colour” of Castillo’s team; hard-left winger Vladimir Cerron is close to Castillo, yet his economic advisor and former World Bank economist Pedro Francke also has influence and seems much more moderate</li>
<li>We also believe that there are political checks and balances in place that could act as a brake to the implementation of any hard left agenda</li>
<li>Comparing the performance of Credicorp shares after left winger Ollanta Humala’s presidential election win ten years ago, gives us a certain degree of comfort; so do Credicorp’s valuations versus EM and LatAm bank peers</li>
<li>Risks to our view include a hard left agenda including interest rate caps on credit products hurting spreads and a worsening GDP growth outlook impacting loan growth and credit quality</li>
</ul>


Pedro Castillo retains a narrow lead over Keiko Fujimori and Castillo is almost definitely the next Peruvian President
The markets are rattled by the prospect of Castillo as President, and the market, along with Credicorp Ltd (BAP US), is likely to remain weak and volatile in the near term
It is important, in our view, to assess the potential “colour” of Castillo’s team; hard-left winger Vladimir Cerron is close to Castillo, yet his economic advisor and former World Bank economist Pedro Francke also has influence and seems much more moderate
We also believe that there are political checks and balances in place that could act as a brake to the implementation of any hard left agenda
Comparing the performance of Credicorp shares after left winger Ollanta Humala’s presidential election win ten years ago, gives us a certain degree of comfort; so do Credicorp’s valuations versus EM and LatAm bank peers
Risks to our view include a hard left agenda including interest rate caps on credit products hurting spreads and a worsening GDP growth outlook impacting loan growth and credit quality


Credicorp (BAP US): Prospects Hinge on the Composition of the Castillo Administration

<ul>
<li><a target="_blank">The presidential election in Peru, a very tight race between far-left teacher Pedro Castillo and tarnished career politician Keiko Fujimori, will be held on 6th June</a></li>
<li>The contest is considered too close to call by pollsters, and although Castillo appears to have a slim lead over Fujimori, this lead has narrowed recently to well within the margin of error</li>
<li>
<a href="https://www.smartkarma.com/entities/credicorp-ltd" target="_blank" data-smartkarma-citation="entities:25963:1" rel="noopener">Credicorp Ltd (BAP US)</a>  is a weathervane of the small Peruvian equity market, and, in view of the election uncertainty, its share price volatility has increased over the last few months; in addition, this uncertainty has fuelled short interest in Credicorp</li>
<li>It is clear that the election outcome, from a market perspective, will be a binary one, with further downside risk in the event of a Castillo victory and a relief rally should more market-friendly Fujimori win</li>
<li>Despite Credicorp’s share rebound of 20% off its recent lows, we see Credicorp as a buy for the brave – especially in view of Castillo’s lead narrowing – and, in the event of a Fujimori win, there is the added potential of investors scrambling to cover short positions in Peruvian assets, including Credicorp</li>
<li>Risks to our positive view on Credicorp include a Castillo victory and his implementation of draconian left-wing policies that hurt growth prospects, and result in higher system NPLs and higher costs through wage increases</li>
</ul>


The presidential election in Peru, a very tight race between far-left teacher Pedro Castillo and tarnished career politician Keiko Fujimori, will be held on 6th June
The contest is considered too close to call by pollsters, and although Castillo appears to have a slim lead over Fujimori, this lead has narrowed recently to well within the margin of error

Credicorp Ltd (BAP US)  is a weathervane of the small Peruvian equity market, and, in view of the election uncertainty, its share price volatility has increased over the last few months; in addition, this uncertainty has fuelled short interest in Credicorp
It is clear that the election outcome, from a market perspective, will be a binary one, with further downside risk in the event of a Castillo victory and a relief rally should more market-friendly Fujimori win
Despite Credicorp’s share rebound of 20% off its recent lows, we see Credicorp as a buy for the brave – especially in view of Castillo’s lead narrowing – and, in the event of a Fujimori win, there is the added potential of investors scrambling to cover short positions in Peruvian assets, including Credicorp
Risks to our positive view on Credicorp include a Castillo victory and his implementation of draconian left-wing policies that hurt growth prospects, and result in higher system NPLs and higher costs through wage increases


Credicorp (BAP US); Hanging on a Binary Election Outcome

Bermuda

Credicorp Ltd. provides a full range of financial services including commercial banking, corporate finance, brokerage services, asset management, trust and insurance. The Company, through its subsidiaries, operates in Peru.

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Credicorp Ltd (BAP US)

2022 High Conviction Ideas in FinTech & Financials

Our 2022 high conviction ideas include buys on Sberbank, Banco do Brasil and HDFC Bank, as well as BBVA, Banco BPM, B3, SGX, Mastercard and...

Victor Galliano

GEM Banks 1Q21 Screens

Our GEM bank picks are derived from value and growth, plus balance sheet, metrics; we highlight Banco do Brasil, Banorte, Credicorp, PSBC, CCB,...

Victor Galliano

Global Emerging Markets Weekly: 18 June 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Credicorp (BAP US): Prospects Hinge on the Composition of the Castillo Administration

Credicorp's prospects depend partly on the "colour" of the Castillo government and his choice of economic adviser is a positive pick; there are...

Victor Galliano

Credicorp (BAP US); Hanging on a Binary Election Outcome

Peru's presidential election, set for 6th June, will provide a binary outcome with clear market implications. Far-left candidate Castillo's lead is...

Victor Galliano

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