Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

<p><strong><em>*D-SIB Standards Released:</em></strong> The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and</p><p><strong><em>* Aggressive Capital Raises Expected: </em></strong>In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value. </p>

*D-SIB Standards Released: The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and* Aggressive Capital Raises Expected: In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value. 

Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

<p>The strength of the US dollar is a concern that is unlikely to go away any time soon. Understandably. Global US dollar purchasing power has been eroded and Asian export performance, economic activity and corporate profitability adversely affected. 1H19 has been tough for Asian countries and companies alike. Despite this underlying fundamentals remain strong. Asian policymakers too have the flexibility to ease monetary and fiscal policy which they are doing. We remain cautiously optimistic that Asia has enough inbuilt resilience to ride out these uncertain times.</p>

The strength of the US dollar is a concern that is unlikely to go away any time soon. Understandably. Global US dollar purchasing power has been eroded and Asian export performance, economic activity and corporate profitability adversely affected. 1H19 has been tough for Asian countries and companies alike. Despite this underlying fundamentals remain strong. Asian policymakers too have the flexibility to ease monetary and fiscal policy which they are doing. We remain cautiously optimistic that Asia has enough inbuilt resilience to ride out these uncertain times.

<p>Demand for US dollar credit from the rest of the world has waned, as weaker global trade has combined with last year’s emerging market debt turmoil and a strong dollar to dampen demand among EM non-financial corporates. Even so, in absolute terms Asian external debt at both a country and corporate level continues to rise led by China. We are not worried. External debt dynamics remain healthy. We believe that persistent concerns about the global economy and the resulting flight to safety into US treasuries and the US dollar are likely to continue to damp demand for borrowing in foreign currency and that the risks of default in Asia are low.</p>

Demand for US dollar credit from the rest of the world has waned, as weaker global trade has combined with last year’s emerging market debt turmoil and a strong dollar to dampen demand among EM non-financial corporates. Even so, in absolute terms Asian external debt at both a country and corporate level continues to rise led by China. We are not worried. External debt dynamics remain healthy. We believe that persistent concerns about the global economy and the resulting flight to safety into US treasuries and the US dollar are likely to continue to damp demand for borrowing in foreign currency and that the risks of default in Asia are low.

US Dollar Credit and Asia - Still Healthy

<p>Last week in Part I we discussed what the GBA Initiative is. The importance of the GBA Initiative cannot be overstated. It is critical to the success of China’s BRI, to China’s Industry 4.0 revolution and to China reducing its reliance on foreign (US) technology.  BRI and the GBA initiative are the cornerstones of China’s defence strategy against Mr Trump’s China Containment plan.  In this note we examine whether the GBA initiative is viable and what it means for investors.</p>

Last week in Part I we discussed what the GBA Initiative is. The importance of the GBA Initiative cannot be overstated. It is critical to the success of China’s BRI, to China’s Industry 4.0 revolution and to China reducing its reliance on foreign (US) technology.  BRI and the GBA initiative are the cornerstones of China’s defence strategy against Mr Trump’s China Containment plan.  In this note we examine whether the GBA initiative is viable and what it means for investors.

Greater Bay Area Initiative - Viablity & Investor Implications, Part II

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/lufax-holdings" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax Holdings (LU US)</a> is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. Lufax has launched its IPO at a price range of $11.50-13.50 per ADS to raise net proceeds of $2,109 million at the mid-point of the IPO price range. At the mid-point of the IPO price range, Lufax will command a market cap of $30.5 billion which is around 20% lower than the 2018 Series C round valuation of $39 billion. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/lufax-ipo-initiation-lost-in-transition" target="_blank" rel="noopener">our initiation note</a>, we stated that while Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile. Overall, our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.</p></div></div></div>

Lufax Holdings (LU US) is a leading personal financial services platform in China with a focus on retail borrowing and wealth management. Lufax has launched its IPO at a price range of $11.50-13.50 per ADS to raise net proceeds of $2,109 million at the mid-point of the IPO price range. At the mid-point of the IPO price range, Lufax will command a market cap of $30.5 billion which is around 20% lower than the 2018 Series C round valuation of $39 billion. In our initiation note, we stated that while Lufax has several attractive attributes, it is a business in transition which magnifies the risk profile. Overall, our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.

China

9F Inc provides IT services. The Company offers digital financial accounting platform for integrating and personalizing solutions. 9F serves customers in China.

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9F (JFU US)

China Banks – About Time

CHINA BANKS: PBOC and CBIRC Released Finalized D-SIB Standards and Indicated Tighter Regulations. Aggressive Capital Raises Are Expected.

Thomas J. Monaco

Putting The Strong Dollar In Perspective

The strength of the US dollar is a concern that is unlikely to go away any time soon. Understandably. Global US dollar purchasing power has been...

Sharmila Whelan

US Dollar Credit and Asia - Still Healthy

Demand for US dollar credit from the rest of the world has waned, as weaker global trade has combined with last year’s emerging market debt turmoil...

Sharmila Whelan

Greater Bay Area Initiative - Viablity & Investor Implications, Part II

Last week in Part I we discussed what the GBA Initiative is. The importance of the GBA Initiative cannot be overstated. It is critical to the...

Sharmila Whelan

Lufax IPO: Valuation Insights

Our valuation analysis suggests that the IPO price range is unattractive and we would be inclined to give the IPO a pass.

Arun George

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