Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Macroeconomics

<div class="content-highlight"><p><em><strong>The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.</strong></em></p></div><p>As noted by Yongding Yu and Ting Lu in a <a href="http://onlinelibrary.wiley.com/doi/10.1111/cwe.12141/epdf" target="_blank">recent paper</a>(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…</p>

The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.As noted by Yongding Yu and Ting Lu in a recent paper(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…

How a Debt to Equity Swap Plan in China Could Work

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<p>It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…</p>

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

China Bank Profit on the Way to Contraction

<ul><li>BIS will no longer allow internal modeling for banks to arrive at risk weights</li><li>In all likelihood, there will be a rise in credit risk assets, which is by far the most important category of risk- weighted assets</li><li>The risk is that under new regulations those banks benefiting from internal models to drive their credit risk estimates, will be penalized the most</li><li>Australia's banks stand out as possibly being hardest hit, but we are not convinced</li><li>Hang Seng Bank, is at the other end of the spectrum, and may be less over capitalised than it appears</li></ul><p> </p>

BIS will no longer allow internal modeling for banks to arrive at risk weightsIn all likelihood, there will be a rise in credit risk assets, which is by far the most important category of risk- weighted assetsThe risk is that under new regulations those banks benefiting from internal models to drive their credit risk estimates, will be penalized the mostAustralia's banks stand out as possibly being hardest hit, but we are not convincedHang Seng Bank, is at the other end of the spectrum, and may be less over capitalised than it appears 

Equity Bottom-Up

<ul>
<li><strong>There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. </strong></li>
<li><strong>This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  </strong></li>
</ul><div class="content-highlight"><p><em>The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.</em>   </p></div><h2>Ping An</h2>…


There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. 
This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  
The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.   Ping An…

We ask the questions that need to be asked, Hong Bao Media Holdings Pte Ltd

Mark Laudi • Investor Central

We ask the questions that need to be asked

Hong Bao Media Holdings Pte Ltd

<p>Now that Singapore's banks have published their results, veteran market watchers Song Seng Wun and Kevin Scully take an in-depth look at China's economic woes and give their calls on the banks and other financial services companies.</p>

Now that Singapore's banks have published their results, veteran market watchers Song Seng Wun and Kevin Scully take an in-depth look at China's economic woes and give their calls on the banks and other financial services companies.

Video: How Much Will a Bursting of the China Bubble Hurt Singapore Banks?

China

Bank of Nanjing Co., Ltd. operates commercial banking businesses. The Company offers deposits, loans, settlement, discounting, financial bond issuance, government bond underwriting, bank guarantee, and other related financial services. Bank of Nanjing provides services for enterprises and individuals.

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Bank Of Nanjing Co Ltd A (601009 CH)

How a Debt to Equity Swap Plan in China Could Work

The government should set up a new national pension fund to save the economy. Securitising future pension payments may be the answer to the...

Mark Artherton

China Bank Profit on the Way to Contraction

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We...

Daniel Tabbush

Bank Regulatory Changes to Credit Risk

BIS will no longer allow internal modeling for banks to arrive at risk weights In all likelihood, there will be a rise in credit risk assets,...

Daniel Tabbush

China Is Frantic About NPLs

There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. This is also talk that the...

Daniel Tabbush

Video: How Much Will a Bursting of the China Bubble Hurt Singapore Banks?

Now that Singapore's banks have published their results, veteran market watchers Song Seng Wun and Kevin Scully take an in-depth look at China's...

Mark Laudi • Investor Central

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