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)

The China Banking Regulatory Commission (CBRC) is concerned about high growth in consumer loans. But not only the pace. It is also worried about misdirected lending into mortgage real estate loans, from other categories of consumer, such as personal or credit card. While impossible to prove, experience in Asia has shown mis-directed lending to be fairly normal, and especially when growth is over-sized.Most of China’s credit growth in recent quarters, is from consumer, which is basically…

The China Banking Regulatory Commission (CBRC) is concerned about high growth in consumer loans. But not only the pace. It is also worried about misdirected lending into mortgage real estate loans, from other categories of consumer, such as personal or credit card. While impossible to prove, experience in Asia has shown mis-directed lending to be fairly normal, and especially when growth is over-sized.Most of China’s credit growth in recent quarters, is from consumer, which is basically…

China Consumer Loans – Risk at Ping An Bank, China Merchants Bank, and System?

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent. There remains considerable concern with ‘overdue loans’ and the distribution of NPLs, while China corporate financials remain frail. Aside from this, we must recognize that banks' credit costs as a proportion of loans does suggest a nasty and prolonged NPL cycle. Perhaps this is why banks’ market capitalisation as a percentage of assets continues to…

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent. There remains considerable concern with ‘overdue loans’ and the distribution of NPLs, while China corporate financials remain frail. Aside from this, we must recognize that banks' credit costs as a proportion of loans does suggest a nasty and prolonged NPL cycle. Perhaps this is why banks’ market capitalisation as a percentage of assets continues to…

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

MSCI Emerging Markets Index / Technical Analysis

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels, presenting attractive entry points. We see little reason to abandon our bullish outlooks for both markets... see page 2• Overweight Materials Sector. We highlight actionable names within the materials sector as global miners continue to emerge from base patterns, most of which still yield attractive entry points, including Vale (VALE) and Rio Tinto (RIO-GB)... see pages 3-5• Opportunities in China. This week we highlight attractive set-ups in China.  Highlighted charts range from Baidu (BIDU) and Bank of China (3988-HK) to Fosun (656-HK) and China Southern Airlines (1055-HK)... see pages 6-8

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels, presenting attractive entry points. We see little reason to abandon our bullish outlooks for both markets... see page 2• Overweight Materials Sector. We highlight actionable names within the materials sector as global miners continue to emerge from base patterns, most of which still yield attractive entry points, including Vale (VALE) and Rio Tinto (RIO-GB)... see pages 3-5• Opportunities in China. This week we highlight attractive set-ups in China.  Highlighted charts range from Baidu (BIDU) and Bank of China (3988-HK) to Fosun (656-HK) and China Southern Airlines (1055-HK)... see pages 6-8

EM Is Cementing Its Leadership Status; Buy Miners

Equity Bottom-Up

China Merchants Bank H / Equity Bottom-Up

Some may be lulled by the stable non-performing loan (NPL) ratios of many China banks. This can be a mistake. Often, worsening credit quality reveals itself in other areas of banks’ financial statements, or their notes. It often pays to review these behemoth earnings releases or annual reports, from back to front. We showcase a couple of our findings from <a href="https://www.smartkarma.com/entities/10987" target="_blank" data-smartkarma-citation="entities:10987:1">China Merchants Bank (H) (3968 HK)</a>, which are not positive.CMB’s liquidity coverage ratio (LCR) plummeted. It fell from 115% at the end of…

Some may be lulled by the stable non-performing loan (NPL) ratios of many China banks. This can be a mistake. Often, worsening credit quality reveals itself in other areas of banks’ financial statements, or their notes. It often pays to review these behemoth earnings releases or annual reports, from back to front. We showcase a couple of our findings from China Merchants Bank (H) (3968 HK), which are not positive.CMB’s liquidity coverage ratio (LCR) plummeted. It fell from 115% at the end of…

China Merchants Bank - Failing Liquidity, Inflamed Overdue Loan Distribution

APAC Investment Strategy, Animal Spirits Report, Quiddity Advisors

Paul M. Kitney, PhD

APAC Investment Strategy, Animal Spirits Report

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul><li>BOC And Chinese Banking Sector Notionally Attractive Valuations Might Be A "Value Trap" As We Are Sceptical Over NIMs,  NPLs, Loan Growth And Divergent Analyst Earnings Revisions</li><li>BOC Net Interest Margins Underperform A Chinese Banking Sector Facing Policy Pressure</li><li>Analysts Revise Up Earnings Despite Slower Loan Growth And NIM Pressure - Why??? </li><li>BOC And Sector Loans Books Suffer From Indigestion - The NPL Cycle Has Further To Run. This Provides Additional Risk To Asset Quality and Earnings</li><li>BOC Is Removed From "Top Picks" And Suggest "Underweight" Positioning In Chinese Banks</li></ul>

BOC And Chinese Banking Sector Notionally Attractive Valuations Might Be A "Value Trap" As We Are Sceptical Over NIMs,  NPLs, Loan Growth And Divergent Analyst Earnings RevisionsBOC Net Interest Margins Underperform A Chinese Banking Sector Facing Policy PressureAnalysts Revise Up Earnings Despite Slower Loan Growth And NIM Pressure - Why??? BOC And Sector Loans Books Suffer From Indigestion - The NPL Cycle Has Further To Run. This Provides Additional Risk To Asset Quality and EarningsBOC Is Removed From "Top Picks" And Suggest "Underweight" Positioning In Chinese Banks

ANIMAL SPIRITS: "You're Fired"- Underweight Chinese Banks & Bank of China (3988 H) Exits "Top Picks"

China

China Merchants Bank Co., Ltd. operates as a commercial bank. The Company provides deposits, loans, wealth management, asset custody, finance leasing, investment banking, and other banking services. China Merchants Bank conducts businesses domestically and internationally.

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China Merchants Bank H (3968 HK)

China Consumer Loans – Risk at Ping An Bank, China Merchants Bank, and System?

The China Banking Regulatory Commission (CBRC) is concerned about high growth in consumer loans. But not only the pace. It is also worried about...

Daniel Tabbush

China Banks: We Must Not Be Complacent

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent....

Daniel Tabbush

EM Is Cementing Its Leadership Status; Buy Miners

• Pullback opportunities are prevalent in Europe and Japan. Both markets are testing key support levels,presenting attractive entry points. We see...

Vermilion Research

China Merchants Bank - Failing Liquidity, Inflamed Overdue Loan Distribution

Some may be lulled by the stable non-performing loan (NPL) ratios of many China banks. This can be a mistake. Often, worsening credit quality...

Daniel Tabbush

ANIMAL SPIRITS: "You're Fired"- Underweight Chinese Banks & Bank of China (3988 H) Exits "Top Picks"

BOC And Chinese Banking Sector Notionally Attractive Valuations Might Be A "Value Trap" As We Are Sceptical Over NIMs, NPLs, Loan Growth And...

Paul M. Kitney, PhD

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52-week Range

Market Cap (USDm)

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