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)

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<li>
China Loves the "F" Word: The China Bank and Insurance Regulatory Commission's (CBIRC) latest bout of bank capital forbearance in reaction to the negative economic implications of the corona virus pandemic: 1) Banks can now roll over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt; and 2) Some banks are also refraining from reporting delinquencies to mainland China's centralized credit-scoring system and allowing borrowers to skip interest payments for up to six months.</li>
<li>
Sick Man of Asia Is a Double Entendre: Not only is mainland China the epicenter for the corona virus outbreak, but it certainly appears its struggling financial system is as ill as the folks in Wuhan. There are increasing and hidden risks on bank balance sheets. Its latest bout of forbearance is reversing a several year trend of vigilance and discipline within its financial system.  </li>
</ul></div>



China Loves the "F" Word: The China Bank and Insurance Regulatory Commission's (CBIRC) latest bout of bank capital forbearance in reaction to the negative economic implications of the corona virus pandemic: 1) Banks can now roll over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt; and 2) Some banks are also refraining from reporting delinquencies to mainland China's centralized credit-scoring system and allowing borrowers to skip interest payments for up to six months.

Sick Man of Asia Is a Double Entendre: Not only is mainland China the epicenter for the corona virus outbreak, but it certainly appears its struggling financial system is as ill as the folks in Wuhan. There are increasing and hidden risks on bank balance sheets. Its latest bout of forbearance is reversing a several year trend of vigilance and discipline within its financial system.  


<ul>
<li>Massive central bank liquidity and fiscal stimulus came rushing in to stabilize the global economy in 2019, and should continue in 2020. However, asset bubbles continue to grow. </li>
<li>Risk concentrations are increasing. </li>
</ul>


Massive central bank liquidity and fiscal stimulus came rushing in to stabilize the global economy in 2019, and should continue in 2020. However, asset bubbles continue to grow. 
Risk concentrations are increasing. 


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.

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.

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

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic superpower will be a protracted one.  Recognising this, China is accelerating regional integration while exploiting comparative advantages to encourage the growth of new technology and specialisation hubs at home. China’s Belt and Road Initiative, which will open up new markets by connecting the Eurasia landmass is one hedge against rising US protectionism. Of equal importance is the development of the Greater Bay Area (GBA). It is integral to the success of the BRI and President’s Xi Jinping’s Made in China 2025 plan.  We explain why over the course of two notes. This is the first.

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic superpower will be a protracted one.  Recognising this, China is accelerating regional integration while exploiting comparative advantages to encourage the growth of new technology and specialisation hubs at home. China’s Belt and Road Initiative, which will open up new markets by connecting the Eurasia landmass is one hedge against rising US protectionism. Of equal importance is the development of the Greater Bay Area (GBA). It is integral to the success of the BRI and President’s Xi Jinping’s Made in China 2025 plan.  We explain why over the course of two notes. This is the first.

Greater Bay Initiative - Upping Integration, Part 1

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/132/original/2019-03-25_18-58-11.png?1553507902" class="editor-image img-responsive" data-smartkarma-image-id="83132"></figure>Source: Japan Analytics
</div>There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">S</a><a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">oftbank Group (9984 JP)</a>) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/206/original/2019-03-25_17-46-58.png?1553565764" class="editor-image img-responsive" data-smartkarma-image-id="83206"></figure><div class="content-caption">Source: Japan Analytics</div>OVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'.


Source: Japan Analytics
There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including Softbank Group (9984 JP)) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •Source: Japan AnalyticsOVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - Softbank Group (9984 JP)'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'. 

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

China

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

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Ant Group (6688 HK)

China Banks - Abracadabra

China Loves the "F" Word: The China Bank and Insurance Regulatory Commission's (CBIRC) latest bout of bank capital forbearance in reaction to the...

Thomas J. Monaco

Global Stall Speed Growth

Massive central bank liquidity and fiscal stimulus came rushing in to stabilize the global economy in 2019, and should continue in 2020. However,...

Thomas J. Monaco

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

Greater Bay Initiative - Upping Integration, Part 1

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic...

Sharmila Whelan

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33...

Campbell Gunn

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