Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Thematic (Sector/Industry)

<p>For our next Webinar, we welcome Insight Provider <a href="https://www.smartkarma.com/profiles/stanley-tsai-cfa" target="_blank" data-smartkarma-citation="accounts:1116" rel="noopener">Stanley Tsai, CFA</a>, who will present his views on positioning in China financials for the remainder of 2021 in the face of a slowing economy, renewed concerns over Covid-19, and asset quality challenges.</p><div><div><h3>The webinar will be hosted on Wednesday, 18 August 2021, 17:00 SGT/HKT.</h3></div></div><div><div>
<div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=82322164524" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>
<p>Stanley Tsai has over two decades' experience as a financials specialist across equities and fixed income. He is currently an advisor to a private investment fund and a non-executive director of a US VC fund.</p>
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For our next Webinar, we welcome Insight Provider Stanley Tsai, CFA, who will present his views on positioning in China financials for the remainder of 2021 in the face of a slowing economy, renewed concerns over Covid-19, and asset quality challenges.The webinar will be hosted on Wednesday, 18 August 2021, 17:00 SGT/HKT.
Register for the Webinar here
Stanley Tsai has over two decades' experience as a financials specialist across equities and fixed income. He is currently an advisor to a private investment fund and a non-executive director of a US VC fund.


Smartkarma Webinar | China Banks: Silver Linings Playbook

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

Equity Bottom-Up

<p><strong><em>*De-Merger Dates Set:</em></strong> Prudential Plc (PRU.LN) [Prudential] disclosed the timeframe of its Jackson Financial (Jackson) de-merger. Jackson (JXN.US) will become a separately listed company on the New York Stock Exchange. After the de-merger, Prudential will hold approximately 19.7% of Jackson’s common shares and will monetize a portion of this within a year of the de-merger; and</p><p><em><strong>*Franchise Of The Future: </strong></em> We see Prudential's exiting of its US business is a positive, as it will reduce the group's exposure to US macro and transition the group into a pure Asian play. We believe that Prudential's Asian franchise is impressive with a strong growth outlook.</p>

*De-Merger Dates Set: Prudential Plc (PRU.LN) [Prudential] disclosed the timeframe of its Jackson Financial (Jackson) de-merger. Jackson (JXN.US) will become a separately listed company on the New York Stock Exchange. After the de-merger, Prudential will hold approximately 19.7% of Jackson’s common shares and will monetize a portion of this within a year of the de-merger; and*Franchise Of The Future:  We see Prudential's exiting of its US business is a positive, as it will reduce the group's exposure to US macro and transition the group into a pure Asian play. We believe that Prudential's Asian franchise is impressive with a strong growth outlook.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Ping An A-shares <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-china" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group Co Of China (601318 CH)</a> are trading at a 2.75% discount versus the H-shares <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>. This continues the cycle of premiums and discounts going back to 2015.</p><p>The last time the A-shares traded at a discount to the H-shares was in April this year. By mid May, the A-shares traded at a 5% premium to the H-shares before moving lower again.</p><p>With <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-china" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group Co Of China (601318 CH)</a> trading at a 2.75% discount to <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> the risk/reward is favourable to setting up a premium expansion trade. The current discount lies at the 82nd percentile over the last 5 years and the discount has been widening as the premium of the overall market continues to increase.</p><p>Northbound holdings of <a href="https://www.smartkarma.com/entities/ping-an-insurance-group-co-of-china" target="_blank" data-smartkarma-citation="entities:24682:1" rel="noopener">Ping An Insurance Group Co Of China (601318 CH)</a> have increased over the last couple of months, while the Southbound shareholding on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> has dropped sharply. This implies that mainland China investors have been selling the A-shares a lot more aggressively than the H-shares.</p><p>In this Insight, we look at the historical premium for Ping An and compare it to the premium on the AH index and other large caps, and look at some catalysts that could lead to an expansion of the premium.</p>

The Ping An A-shares Ping An Insurance Group Co Of China (601318 CH) are trading at a 2.75% discount versus the H-shares Ping An Insurance (H) (2318 HK). This continues the cycle of premiums and discounts going back to 2015.The last time the A-shares traded at a discount to the H-shares was in April this year. By mid May, the A-shares traded at a 5% premium to the H-shares before moving lower again.With Ping An Insurance Group Co Of China (601318 CH) trading at a 2.75% discount to Ping An Insurance (H) (2318 HK) the risk/reward is favourable to setting up a premium expansion trade. The current discount lies at the 82nd percentile over the last 5 years and the discount has been widening as the premium of the overall market continues to increase.Northbound holdings of Ping An Insurance Group Co Of China (601318 CH) have increased over the last couple of months, while the Southbound shareholding on Ping An Insurance (H) (2318 HK) has dropped sharply. This implies that mainland China investors have been selling the A-shares a lot more aggressively than the H-shares.In this Insight, we look at the historical premium for Ping An and compare it to the premium on the AH index and other large caps, and look at some catalysts that could lead to an expansion of the premium.

Ping An A/H: Discount Widens and Diverges from Broader Market

<p><strong><em>*Document 15: </em></strong><span class="leadin">Recently the China Bank and Insurance Regulatory Commission (CBIRC) </span>issued guidance to both banks and insurers on implicit debt of local government financing vehicles (LGFV) via Document 15 – tightening the screws even further;  and</p><p><strong><em>*No Let Up In Sight: </em></strong>Coupled with the structural reforms of an increase in risk-based capital minimums for certain state banks, the partial bank Wealth Management Product (WMP) resolution, and the recent reserve requirement ratio (RRR) reduction, these tightening measures should act to contain some of the out of control financial risk within the mainland Chinese financial system.</p>

*Document 15: Recently the China Bank and Insurance Regulatory Commission (CBIRC) issued guidance to both banks and insurers on implicit debt of local government financing vehicles (LGFV) via Document 15 – tightening the screws even further;  and*No Let Up In Sight: Coupled with the structural reforms of an increase in risk-based capital minimums for certain state banks, the partial bank Wealth Management Product (WMP) resolution, and the recent reserve requirement ratio (RRR) reduction, these tightening measures should act to contain some of the out of control financial risk within the mainland Chinese financial system.

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/china-cosco-holdings-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">COSCO Shipping Holdings (1919 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> and <a href="https://www.smartkarma.com/entities/china-life-insurance-co-ltd-9f877d22-7cf7-4b00-b525-cec71139f369" target="_blank" data-smartkarma-citation="entities:5794:1" rel="noopener">China Life Insurance Co H (2628 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/weimob-inc" target="_blank" data-smartkarma-citation="entities:27394:1" rel="noopener">Weimob Inc. (2013 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a>, <a href="https://www.smartkarma.com/entities/pop-mart-international-group-limited" target="_blank" data-smartkarma-citation="entities:29016:1" rel="noopener">Pop Mart International Group Limited (9992 HK)</a> and <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a>. Shorts increased in the Financials, Industrials, Communication Services, Consumer Discretionary, Health Care, Consumer Staples and Real Estate sectors, while decreasing in the Information Technology sector.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a>, <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a>, <a href="https://www.smartkarma.com/entities/sbi-holdings-inc" target="_blank" data-smartkarma-citation="entities:10928:1" rel="noopener">SBI Holdings (8473 JP)</a>, <a href="https://www.smartkarma.com/entities/tokyo-electric-power-co-inc" target="_blank" data-smartkarma-citation="entities:15457:1" rel="noopener">Tokyo Electric Power Co (9501 JP)</a> and <a href="https://www.smartkarma.com/entities/renova-inc" target="_blank" data-smartkarma-citation="entities:26753:1" rel="noopener">RENOVA Inc (9519 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/agc-inc" target="_blank" data-smartkarma-citation="entities:2167:1" rel="noopener">AGC Inc (5201 JP)</a>, <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a> and <a href="https://www.smartkarma.com/entities/shimizu-corp" target="_blank" data-smartkarma-citation="entities:8530:1" rel="noopener">Shimizu Corp (1803 JP)</a>. Shorts increased in the Health Care, Utilities and  Information Technology sectors while decreasing in the Consumer Staples, Industrials and Consumer Discretionary sectors.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-electronics-inc" target="_blank" data-smartkarma-citation="entities:8814:1" rel="noopener">LG Electronics (066570 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/posco-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12421:1" rel="noopener">Posco Chemical Co Ltd (003670 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/lotte-chemical-corp" target="_blank" data-smartkarma-citation="entities:8757:1" rel="noopener">Lotte Chemical (011170 KS)</a>, <a href="https://www.smartkarma.com/entities/db-hitek-co-ltd" target="_blank" data-smartkarma-citation="entities:18926:1" rel="noopener">DB Hitek Co., Ltd. (000990 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. </p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a>, <a href="https://www.smartkarma.com/entities/winbond-electronics-corp" target="_blank" data-smartkarma-citation="entities:9177:1" rel="noopener">Winbond Electronics (2344 TT)</a>, <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a> and <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/yuanta-financial-holding-co" target="_blank" data-smartkarma-citation="entities:685:1" rel="noopener">Yuanta Financial Holding Co (2885 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> and <a href="https://www.smartkarma.com/entities/alchip-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20219:1" rel="noopener">Alchip Technologies (3661 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on COSCO Shipping Holdings (1919 HK), Alibaba Group (9988 HK), China Merchants Bank H (3968 HK), Kuaishou Technology (1024 HK) and China Life Insurance Co H (2628 HK) while there was short covering on BYD (1211 HK), Weimob Inc. (2013 HK), WuXi AppTec Co. Ltd. (2359 HK), Pop Mart International Group Limited (9992 HK) and Country Garden Services Holdings (6098 HK). Shorts increased in the Financials, Industrials, Communication Services, Consumer Discretionary, Health Care, Consumer Staples and Real Estate sectors, while decreasing in the Information Technology sector.In Japan, stocks increased on Takeda Pharmaceutical (4502 JP), Ryohin Keikaku (7453 JP), SBI Holdings (8473 JP), Tokyo Electric Power Co (9501 JP) and RENOVA Inc (9519 JP) while there was short covering on Kirin Holdings (2503 JP), Rakuten Inc (4755 JP), AGC Inc (5201 JP), Monex Group Inc (8698 JP) and Shimizu Corp (1803 JP). Shorts increased in the Health Care, Utilities and  Information Technology sectors while decreasing in the Consumer Staples, Industrials and Consumer Discretionary sectors.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), NCSOFT Corp (036570 KS), LG Electronics (066570 KS), Celltrion Inc (068270 KS) and LG Display (034220 KS) while shorts were covered on Posco Chemical Co Ltd (003670 KS), Samsung Electronics (005930 KS), Lotte Chemical (011170 KS), DB Hitek Co., Ltd. (000990 KS) and Naver Corp (035420 KS). In Taiwan, shorts increased on Yang Ming Marine Transport (2609 TT), Nanya Technology (2408 TT), Winbond Electronics (2344 TT), Novatek Microelectronics Corp (3034 TT) and AU Optronics (2409 TT) while shorts covered on Evergreen Marine Corp (2603 TT), Yageo Corporation (2327 TT), Yuanta Financial Holding Co (2885 TT), United Microelectronics Corp (2303 TT) and Alchip Technologies (3661 TT). 

Asia Shorts: Cosco Ship, Kuaishou, Pop Mart, WuXi, Takeda, Kirin, Monex, HMM, NC Soft, Yang Ming

China

China Life Insurance Company Ltd. offers a wide range of life, accident, and health insurance products and services.

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China Life Insurance Company (2628 HK)

Smartkarma Webinar | China Banks: Silver Linings Playbook

Join us on 18 August, 5pm SGT, as we welcome Stanley Tsai, CFA, who will present his views on positioning in China financials in the face of a...

Smartkarma Research

Prudential Plc – Action Jackson

PRUDENTIAL PLC: Pru disclosed the timeframe of its Jackson de-merger. Jackson will list on the NYSE, and Pru will retain 19.7% of Jackson. This...

Thomas J. Monaco

Ping An A/H: Discount Widens and Diverges from Broader Market

The Ping An A/H spread is trading at a discount and has diverged from the spread on the overall market. Set up for a premium expansion trade that...

Brian Freitas

China Banks – Screws Tighten On LGFVs

CHINA BANKS: Recently the CBIRC issued guidance on implicit LGFV debt via Document 15 – further tightening the screws on mainland China's financial...

Thomas J. Monaco

Asia Shorts: Cosco Ship, Kuaishou, Pop Mart, WuXi, Takeda, Kirin, Monex, HMM, NC Soft, Yang Ming

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

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