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.

Thematic (Sector/Industry)

<ul>
<li>The removal of the Central Bank governor by President Erdogan flies in the face of orthodox monetary policy</li>
<li>The TRY and Turkish assets are being hit hard; in this note, we focus on <a href="https://www.smartkarma.com/entities/banco-bilbao-vizcaya-argentari" target="_blank" data-smartkarma-citation="entities:21251:1" rel="noopener">Banco Bilbao Vizcaya Argentari (BBVA SM)</a> , <a href="https://www.smartkarma.com/entities/turkiye-garanti-bankasi-as" target="_blank" data-smartkarma-citation="entities:25026:1" rel="noopener">Turkiye Garanti Bankasi As (GARAN TI)</a> , <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit SpA (UCG IM)</a> , <a href="https://www.smartkarma.com/entities/bnp-paribas" target="_blank" data-smartkarma-citation="entities:525:1" rel="noopener">BNP Paribas (BNP FP)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc-a723bd63-0890-486f-aaa0-3bb9ad2b95ce" target="_blank" data-smartkarma-citation="entities:21976:1" rel="noopener">HSBC Holdings (HSBA LN)</a> </li>
<li>Garanti and its domestic peers could see worsening delinquency, especially on FX loan balances, as well as tougher terms for refinancing their FX funding needs</li>
<li>We look at the capital impacts of TRY depreciation, as well as the earnings exposure of the three international banks</li>
<li>In conclusion, we see limited impact on Unicredit and especially HSBC from the Turkish turbulence, with a clearly bigger adverse impact for BBVA, especially on earnings; the impact of TEB on BNP Paribas should be modest too</li>
<li>We reiterate our positive opinions on HSBC and Unicredit; we are more cautious on BBVA in the near term</li>
<li>Risks to our view include a further heavy depreciation of the TRY, resulting from any potential sharp cuts to the Turkish benchmark interest rate</li>
</ul>


The removal of the Central Bank governor by President Erdogan flies in the face of orthodox monetary policy
The TRY and Turkish assets are being hit hard; in this note, we focus on Banco Bilbao Vizcaya Argentari (BBVA SM) , Turkiye Garanti Bankasi As (GARAN TI) , UniCredit SpA (UCG IM) , BNP Paribas (BNP FP) and HSBC Holdings (HSBA LN) 
Garanti and its domestic peers could see worsening delinquency, especially on FX loan balances, as well as tougher terms for refinancing their FX funding needs
We look at the capital impacts of TRY depreciation, as well as the earnings exposure of the three international banks
In conclusion, we see limited impact on Unicredit and especially HSBC from the Turkish turbulence, with a clearly bigger adverse impact for BBVA, especially on earnings; the impact of TEB on BNP Paribas should be modest too
We reiterate our positive opinions on HSBC and Unicredit; we are more cautious on BBVA in the near term
Risks to our view include a further heavy depreciation of the TRY, resulting from any potential sharp cuts to the Turkish benchmark interest rate


Turkey – Erdogan Creates More Market Turbulence, Again

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

*Strong Man Strikes Again: Lighting has struck again, not five months since his hiring, Central Bank of Turkey (CBT) Governor Agbal has now been dismissed for raising interest rates. President Erdogan handpicked Sahap Kavcioglu as new CBT Governor. He is the fourth CBT Governor in two years, and a banking professor and newspaper columnist who has argued for lower interest rates, after serving a a lawmaker in Erdogan’s AKP party. We all know what happens when academics are in charge; and*Watch Your Risk: The TRL’s decline is troublesome, and the potential for a TRL gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

*Strong Man Strikes Again: Lighting has struck again, not five months since his hiring, Central Bank of Turkey (CBT) Governor Agbal has now been dismissed for raising interest rates. President Erdogan handpicked Sahap Kavcioglu as new CBT Governor. He is the fourth CBT Governor in two years, and a banking professor and newspaper columnist who has argued for lower interest rates, after serving a a lawmaker in Erdogan’s AKP party. We all know what happens when academics are in charge; and*Watch Your Risk: The TRL’s decline is troublesome, and the potential for a TRL gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

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

As long as market dynamics remain largely positive and the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we believe a constructive outlook is warranted. To reiterate, support levels to watch include $90 on ACWI-US, $53 on ACWX-US, and $52 on EEM-US. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.

As long as market dynamics remain largely positive and the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we believe a constructive outlook is warranted. To reiterate, support levels to watch include $90 on ACWI-US, $53 on ACWX-US, and $52 on EEM-US. Open the attached file to read our complete International Strategy document, and to find links to detailed comments and recommendations for each of our 12 Sectors.

Global Equity Strategy: Constructive Pullback; Overweight Value

Our bullish outlook continues to be supported by ongoing positive market dynamics and the absence of breakdowns for major indexes around the globe. The path of least resistance remains higher and we continue to believe a melt-up is likely in the weeks/months ahead. The global Technology, Discretionary, and Manufacturing Sectors remain leadership -- add exposure/remain overweight. The Financial Sector has been playing catch-up and continues to show signs of price and RS bottoms as expectations rise for a global recovery -- add exposure.

Our bullish outlook continues to be supported by ongoing positive market dynamics and the absence of breakdowns for major indexes around the globe. The path of least resistance remains higher and we continue to believe a melt-up is likely in the weeks/months ahead. The global Technology, Discretionary, and Manufacturing Sectors remain leadership -- add exposure/remain overweight. The Financial Sector has been playing catch-up and continues to show signs of price and RS bottoms as expectations rise for a global recovery -- add exposure.

Global Equity Strategy: Santa Claus Rally Underway

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

France

BNP Paribas S.A. attracts deposits and offers commercial, retail, investment, private and corporate banking services.  The Bank also provides asset management and investment advisory services to institutions and individuals in Europe, the United States, Asia and the Emerging Markets.

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BNP Paribas (BNP FP)

Turkey – Erdogan Creates More Market Turbulence, Again

Central bank chief removal heightens market risk with the TRY and Turkish assets being hit. For the banks, we feel there are mitigating factors...

Victor Galliano

Turkey - YELP!

TURKEY: Not five months since his hiring, the CBT Governor has been replaced. The TRL’s decline is troublesome, and a TRL gray market would NOT be...

Thomas J. Monaco

Global Equity Strategy: Constructive Pullback; Overweight Value

As long as the MSCI ACWI (ACWI-US), ACWI ex-US (ACWX-US), and EM (EEM-US) indexes are above their respective intermediate-term support levels we...

Vermilion Research

Global Equity Strategy: Santa Claus Rally Underway

Our bullish outlook continues to be supported by ongoing positive market dynamics and the absence of breakdowns across indexes, and we continue to...

Vermilion Research

Turkey – Off With His Head…Again

TURKEY: Central Bank of Turkey Has A New Governor As President Erdogan Removes His Previous Hand-picked Successor. Erdogsnomics Are Not Working.

Thomas J. Monaco

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