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)

<ul><li>We have written previously on why <a href="http://www.smartkarma.com/insights/324ae38b-37f4-4a65-940b-038231905ff2" target="_blank" data-smartkarma-citation="insights:1743">The World of Banking is Becoming Ever More Polarized</a>,</li><li>In our next report, <a href="http://www.smartkarma.com/insights/tlac-regulations-will-destroy-banks-as-much-as-it-saves-them" target="_blank" data-smartkarma-citation="insights:1776">TLAC Regulations Will Destroy Banks as Much as it Saves Them</a>, we focussed in on the negative side of the barbell, the banks that are set to struggle.</li><li>In this report we balance the scale, and discuss the positive end of the barbell. Those banks which are continuing to flourish, and are well placed to take advantage of the weakness of their competitors.</li><li>What is interesting in the world of increased banking regulation, and less leverage in particular, is how well most banks in South East Asia fare. But also, how some banks compare very well vs. others in the region.</li></ul>

We have written previously on why The World of Banking is Becoming Ever More Polarized,In our next report, TLAC Regulations Will Destroy Banks as Much as it Saves Them, we focussed in on the negative side of the barbell, the banks that are set to struggle.In this report we balance the scale, and discuss the positive end of the barbell. Those banks which are continuing to flourish, and are well placed to take advantage of the weakness of their competitors.What is interesting in the world of increased banking regulation, and less leverage in particular, is how well most banks in South East Asia fare. But also, how some banks compare very well vs. others in the region.

45 Banks in SE Asia Can Grow for 10 Years Without Need for Capital

<ul><li>The capital requirements for banks will be suicide to returns.</li><li>The Financial Stability Board (FSB) will destroy banks with their regulations, in order that they may be saved in a crisis.</li><li>It&rsquo;s ironic if not absurd.</li><li>This does not mean to say, that we believe banks should be highly leveraged, or engage in complicated, risky, murky businesses.</li><li>But it feels a bit like Basel got it immensely wrong, and is going over-board on its amends.</li></ul>

The capital requirements for banks will be suicide to returns.The Financial Stability Board (FSB) will destroy banks with their regulations, in order that they may be saved in a crisis.It&rsquo;s ironic if not absurd.This does not mean to say, that we believe banks should be highly leveraged, or engage in complicated, risky, murky businesses.But it feels a bit like Basel got it immensely wrong, and is going over-board on its amends.

TLAC Regulations Will Destroy Banks as Much as it Saves Them

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our long-term outlook remains bullish on global equities (MSCI ACWI). Germany and Europe continue to lead, our favorite theme we have been buying since January 9th.</li>
<li>Near-Term we wouldn't be surprised to see a pullback to range supports at $116 on ACWI-US and 5770-5850 or 5600-5670 on SPX in the coming weeks, where we are buyers.</li>
<li>This report was initially sent out Thursday morning, and as of this writing SPX is now testing support at 5850. Bottom potential.</li>
</ul>


Our long-term outlook remains bullish on global equities (MSCI ACWI). Germany and Europe continue to lead, our favorite theme we have been buying since January 9th.
Near-Term we wouldn't be surprised to see a pullback to range supports at $116 on ACWI-US and 5770-5850 or 5600-5670 on SPX in the coming weeks, where we are buyers.
This report was initially sent out Thursday morning, and as of this writing SPX is now testing support at 5850. Bottom potential.


Germany and Europe Continue to Lead; Remain Overweight Germany and U.S.; Bullish Outlook Intact

<ul>
<li>Below we lay out what we believe is a compelling case to add exposure to European/UK Financial stocks at current levels.</li>
<li>The EURO STOXX 50 has been on an absolute tear since we discussed the bullish implications of a break above 4200, and it now breaking above 2+year resistance at 4400-4415.</li>
<li>Financials are one of the leading Sectors within Europe/UK, and banks, insurance, and financial services are all attractive. We highlight several of our favorite names to buy at current levels</li>
</ul>


Below we lay out what we believe is a compelling case to add exposure to European/UK Financial stocks at current levels.
The EURO STOXX 50 has been on an absolute tear since we discussed the bullish implications of a break above 4200, and it now breaking above 2+year resistance at 4400-4415.
Financials are one of the leading Sectors within Europe/UK, and banks, insurance, and financial services are all attractive. We highlight several of our favorite names to buy at current levels


Buying Financials in Europe/UK; Buy Highlighted: $EUFN, Allianz, Banco Santander, Wise PLC, and More

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

In mid-December 2020, there were news reports which suddenly circulated suggesting <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> was planning to buy ¥300bn of its own shares, with the goal of making sure that <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a>'s ownership dropped below 50%.This was discussed that day in <a href="https://www.smartkarma.com/insights/huge-japan-post-insurance-buyback-mooted-decks-cleared-time-to-buy" target="_blank" data-smartkarma-citation="insights:46429" rel="noopener">Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy</a> and re-upped three weeks later in <a href="https://www.smartkarma.com/insights/japan-post-insurance-update-three-reasons-to-buy-any-overhang-slightly-higher" target="_blank" data-smartkarma-citation="insights:46862" rel="noopener">Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher</a> just before the TOPIX FFW announcement. Things have been quiet since then, but the Company has steadily made progress ticking off the matters which were part of the company's corrective action plan after the sales scandal of 2019-2020. Getting these things finalised effectively "proves" that the company is ready to be let loose of its parent company, but importantly, the corrective action plan was couched in terms that basically said the only good way forward was to have a better and more comprehensive product suite, which would require being free of the burdens of the "Approval System."<div class="content-remarks">
In November of 2020, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> ("JPH") CEO Masuda publicly described a JPH plan to lower its stake in <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> ("JPI") and <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> ("JPB") to below 50% in the five year period to 2025.
In late April 2021, the government Panel on Postal Service Privatization (<a href="https://www.yuseimineika.go.jp/iinkai.html" target="_blank" rel="noopener">link</a>) submitted a report (Japanese only (<a href="https://www.yuseimineika.go.jp/iinkai/dai230/230_iken.pdf" target="_blank" rel="noopener">link1</a>, <a href="https://www.yuseimineika.go.jp/iinkai/dai230/230_iken_gaiyo.pdf" target="_blank" rel="noopener">link2</a>)) to Prime Minister Suga which urged <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> to lower its equity stakes in its two financial units - <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> to or below 50 pct between fiscal 2021 and fiscal 2025. It also asked the JPH to make a plan to sell ALL of its shares in the subsidiaries.
</div><h2>The NEW News</h2>Today, with full-year earnings, Japan Post Insurance announced a buyback of up to 162,906,300 shares (29.0%) spending up to ¥439.8bn. This will be done in a ToSTNeT-3 transaction Monday morning. Japan Post Holdings announced they would sell a similar number of shares into the buy order, and would sell an additional 400,000 shares held in a trust. By so doing, the percentage of Japan Post Insurance voting rights held by Japan Post Holdings would drop to 49.90%. That's it. A HUGELY accretive buyback leads to a huge business opportunity for a hugely undervalued life insurer (about to become substantially more undervalued on Price/EEV terms) which has been handcuffed for its whole existence. What more do you want?

In mid-December 2020, there were news reports which suddenly circulated suggesting Japan Post Insurance (7181 JP) was planning to buy ¥300bn of its own shares, with the goal of making sure that Japan Post Holdings (6178 JP)'s ownership dropped below 50%.This was discussed that day in Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy and re-upped three weeks later in Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher just before the TOPIX FFW announcement. Things have been quiet since then, but the Company has steadily made progress ticking off the matters which were part of the company's corrective action plan after the sales scandal of 2019-2020. Getting these things finalised effectively "proves" that the company is ready to be let loose of its parent company, but importantly, the corrective action plan was couched in terms that basically said the only good way forward was to have a better and more comprehensive product suite, which would require being free of the burdens of the "Approval System."
In November of 2020, Japan Post Holdings (6178 JP) ("JPH") CEO Masuda publicly described a JPH plan to lower its stake in Japan Post Insurance (7181 JP) ("JPI") and Japan Post Bank (7182 JP) ("JPB") to below 50% in the five year period to 2025.
In late April 2021, the government Panel on Postal Service Privatization (link) submitted a report (Japanese only (link1, link2)) to Prime Minister Suga which urged Japan Post Holdings (6178 JP) to lower its equity stakes in its two financial units - Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) to or below 50 pct between fiscal 2021 and fiscal 2025. It also asked the JPH to make a plan to sell ALL of its shares in the subsidiaries.
The NEW NewsToday, with full-year earnings, Japan Post Insurance announced a buyback of up to 162,906,300 shares (29.0%) spending up to ¥439.8bn. This will be done in a ToSTNeT-3 transaction Monday morning. Japan Post Holdings announced they would sell a similar number of shares into the buy order, and would sell an additional 400,000 shares held in a trust. By so doing, the percentage of Japan Post Insurance voting rights held by Japan Post Holdings would drop to 49.90%. That's it. A HUGELY accretive buyback leads to a huge business opportunity for a hugely undervalued life insurer (about to become substantially more undervalued on Price/EEV terms) which has been handcuffed for its whole existence. What more do you want?

Japan Post Insurance - It's ON! Buyback, Huge Accretion, Restrictions Lifted. What's Not To Like?

Germany

Allianz SE, through subsidiaries, offers insurance and financial services. The Company offers property and casualty, life and health, credit, motor vehicle, and travel insurance, as well as and fund management services.

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Allianz (ALV GR)

45 Banks in SE Asia Can Grow for 10 Years Without Need for Capital

We have written previously on why The World of Banking is Becoming Ever More Polarized, In our next report, TLAC Regulations Will Destroy Banks as...

Daniel Tabbush

TLAC Regulations Will Destroy Banks as Much as it Saves Them

The capital requirements for banks will be suicide to returns. The Financial Stability Board (FSB) will destroy banks with their regulations, in...

Daniel Tabbush

Germany and Europe Continue to Lead; Remain Overweight Germany and U.S.; Bullish Outlook Intact

Germany and Europe Continue to Lead; Remain Overweight Germany $DAX $EWG and the U.S. $SPX; Bullish Outlook Intact on $ACWI above $116. $SPX...

Vermilion Research

Buying Financials in Europe/UK; Buy Highlighted: $EUFN, Allianz, Banco Santander, Wise PLC, and More

Europe EURO $STOXX 50 in re-emerging as leadership, and Financials $EUFN are leading the charge within Europe/UK. Banks, insurance, and financial...

Vermilion Research

Japan Post Insurance - It's ON! Buyback, Huge Accretion, Restrictions Lifted. What's Not To Like?

Japan Post Insurance has announced a 29% buyback, the JPH selldown, the imminent end to Postal Privatization Act restrictions. And it can get some...

Travis Lundy

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