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

EURO STOXX 50 Price EUR / Technical Analysis

<ul>
<li>We continue to view the latest pullback as healthy and normal within the ongoing bull market on MSCI ACWI (ACWI-US) and the EURO STOXX 50, as discussed April 18</li>
<li>Discussed last Thursday(4/18/24) how further downside may be limited with these indexes 4-5% off their highs, combined with ACWI-US testing gap support ($105) and the EURO STOXX50 testing 6-month uptrend. </li>
<li>So far, these supports have held strong, and Japan's TOPIX has also held strong above 2615 support -- with all producing strong bounces far this week.</li>
</ul>


We continue to view the latest pullback as healthy and normal within the ongoing bull market on MSCI ACWI (ACWI-US) and the EURO STOXX 50, as discussed April 18
Discussed last Thursday(4/18/24) how further downside may be limited with these indexes 4-5% off their highs, combined with ACWI-US testing gap support ($105) and the EURO STOXX50 testing 6-month uptrend. 
So far, these supports have held strong, and Japan's TOPIX has also held strong above 2615 support -- with all producing strong bounces far this week.


Upgrading Europe to Overweight; Supports Holding on MSCI ACWI, ACWI Ex-US, EAFE, and EM

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>The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.</li>
<li>There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. </li>
<li>Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?</li>
</ul>


The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.
There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. 
Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?


Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

Equity Bottom-Up

Bank Of Ningbo Co Ltd A / Equity Bottom-Up

<ul>
<li>Bank of Ningbo saw its margins decline dramatically from 1.79% to 1.55% from 3Q22 to 3Q23. This is of concern for earnings power in coming quarters. </li>
<li>The bank's loan-to-deposit ratio (LDR) is now down to 73% from 78% YoY which tends to act as a dampener on NIM and core income. </li>
<li>Credit metrics are worsening with NPLs up from RMB7.9bn to RMB9.3bn YoY in 3Q23. This rise is not easily visible in the NPL ratio due to rising total loans. </li>
</ul>


Bank of Ningbo saw its margins decline dramatically from 1.79% to 1.55% from 3Q22 to 3Q23. This is of concern for earnings power in coming quarters. 
The bank's loan-to-deposit ratio (LDR) is now down to 73% from 78% YoY which tends to act as a dampener on NIM and core income. 
Credit metrics are worsening with NPLs up from RMB7.9bn to RMB9.3bn YoY in 3Q23. This rise is not easily visible in the NPL ratio due to rising total loans. 


Bank of Ningbo - 24bps NIM Decline, Lower LDR, 18% Higher NPLs

China Construction Bank H / Equity Bottom-Up

<ul>
<li>The large SOE bank indicates that it will list its housing rental subsidiary, although the proceeds may be inconsequential given the size of CCB.</li>
<li>CCB shows lower (and very low) credit costs despite what appears to be a major weakening in its NPL distribution.</li>
<li>Loss NPLs are up 2.5x from FY19 to 1H23 much more than its 1.5x rise in total NPLs, so that its declining and benign credit costs may not last.</li>
</ul>


The large SOE bank indicates that it will list its housing rental subsidiary, although the proceeds may be inconsequential given the size of CCB.
CCB shows lower (and very low) credit costs despite what appears to be a major weakening in its NPL distribution.
Loss NPLs are up 2.5x from FY19 to 1H23 much more than its 1.5x rise in total NPLs, so that its declining and benign credit costs may not last.


CCB- Housing Rental Subsidiary Listing May Be Overshadowed By Weak Credit Metrics

<ul>
<li>Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. </li>
<li>The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. </li>
<li>Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?</li>
</ul>


Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. 
The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. 
Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?


Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

Hong Kong

BOC Hong Kong (Holdings) Limited provides a comprehensive range of financial products and services to retail and corporate customers.  Its products include retail banking, corporate banking, and treasury services.  The Company operates its branches in Hong Kong and China.

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BOC Hong Kong (BOC HK) (2388 HK)

Upgrading Europe to Overweight; Supports Holding on MSCI ACWI, ACWI Ex-US, EAFE, and EM

Upgrading Europe to Overweight EURO $STOXX 50 $FEZ; Supports Holding on MSCI $ACWI, $ACWX, $EFA, and $EEM. Latest 4-6% pullback remains healthy...

Vermilion Research

Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

Bank of Jiujiang announced that its profit would be at least 30% lower for FY23 due to worsening credit metrics. This is incredibly rare to see...

Daniel Tabbush

Bank of Ningbo - 24bps NIM Decline, Lower LDR, 18% Higher NPLs

Bank of Ningbo shows sharply lower NIM YoY with a declining LDR ratio, that can both means worsening core earnings power. High real estate loan...

Daniel Tabbush

CCB- Housing Rental Subsidiary Listing May Be Overshadowed By Weak Credit Metrics

CCB will list its subsidiary China Housing Rental although this may be small relative to the bank's total loans, and any benefits can be...

Daniel Tabbush

Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

Hong Kong Exchanges shows that much of its profit was due to rising rates on it cash deposits, and this can reverse. Lower taxation inflates...

Daniel Tabbush

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