Asia focused research insights & advisory, Asia Advisors

Vinay Patel

Asia focused research insights & advisory

Asia Advisors

Asia Advisors is an independent financial advisory and research firm working closely with corporates and institutions to provide consulting solutions & research insights. We provide advisory services including capital solutions, business strategy and investment insights.
Firm is headed by Vinay Patel who has close to two decades of experience in research and business development at large, international investment banks such as HSBC and ICICI Securities. Led research efforts in areas of Macroeconomics, Asset Allocation & Investment Strategy for close to a decade in global & domestic research teams. As a business head in Singapore, advised top global investment management firms & Portfolio managers in Asia for India related investments.
Vinay was recently joined by Swapnil Manish, an investment banker and ex-ecommerce entrepreneur with more than 12 years of experience. Swapnil was the TMT banker at BNP Paribas and was part of several large M&A and ECM transactions (Bharti-Zain, Bharti Infratel IPO, Schneider-Zicom among several others). He's also had a stint as an ecommerce entrepreneur having launched & led Mumbai's first online grocery player.

Thematic (Sector/Industry)

NBFCs along with global PE funds have provided almost 80% of Real estate sector financing needs in the last 5 years as banks slowly reduced exposure to the sectorGiven the prevalent slowdown in the real estate sector, much of the lending was simply a refinancing of loans between NBFCs and also from banks to NBFCs. Developers meanwhile managed to sell just about enough apartments to service the debtHigh competition among NBFCs resulted in significantly lower yields for construction finance, from 18-20% in FY16 down to 13-14% in FY18. With NBFCs carrying exposure to B category builder, the NPL risks run highNBFCs had a false sense of security by having geeks structure these loans nicely (compared to PSU banks) and also took comfort in higher collateral (basically more unfinished apartments!).  Several NBFCs face a double whammy as mortgage finance for the end user has also dried up and so has firms ability to refinance construction finance loans. NBFCs with higher exposure to developer loans are witnessing large sell-off in the markets (see table below)

NBFCs along with global PE funds have provided almost 80% of Real estate sector financing needs in the last 5 years as banks slowly reduced exposure to the sectorGiven the prevalent slowdown in the real estate sector, much of the lending was simply a refinancing of loans between NBFCs and also from banks to NBFCs. Developers meanwhile managed to sell just about enough apartments to service the debtHigh competition among NBFCs resulted in significantly lower yields for construction finance, from 18-20% in FY16 down to 13-14% in FY18. With NBFCs carrying exposure to B category builder, the NPL risks run highNBFCs had a false sense of security by having geeks structure these loans nicely (compared to PSU banks) and also took comfort in higher collateral (basically more unfinished apartments!).  Several NBFCs face a double whammy as mortgage finance for the end user has also dried up and so has firms ability to refinance construction finance loans. NBFCs with higher exposure to developer loans are witnessing large sell-off in the markets (see table below) 

Real Estate Loans Blow up Has Been Cooking For NBFC As High Competition Drove Down Quality & Yields

Severe liquidity crunch affects NBFC lending with several NBFCs, including the housing finance companies reporting a slowdown in lending. NBFCs had become an important part of the credit market extending credit to pockets not explored by banks like the SMEs, MSME and self-employed. With a 44% share of the credit market (up from 21% in 2014), NBFCs are an important component of the financial system today and a slowdown in NBFCS will impact sectors like housing, autos and other discretionary consumption products. While the NBFCs are looking to some help from the RBI (direct liquidity support) as it did provide in 2013 but given the rapid growth of NBFC credit (25%+ in FY18), the RBI may just be welcoming this moderation

Severe liquidity crunch affects NBFC lending with several NBFCs, including the housing finance companies reporting a slowdown in lending. NBFCs had become an important part of the credit market extending credit to pockets not explored by banks like the SMEs, MSME and self-employed. With a 44% share of the credit market (up from 21% in 2014), NBFCs are an important component of the financial system today and a slowdown in NBFCS will impact sectors like housing, autos and other discretionary consumption products. While the NBFCs are looking to some help from the RBI (direct liquidity support) as it did provide in 2013 but given the rapid growth of NBFC credit (25%+ in FY18), the RBI may just be welcoming this moderation 

Gold Rush for NBFCs May End as Worst Liquidity Crisis in a Decade Bites; Banks Review Exposure Norms

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

Recent USD strength has weighed on EM’s relative performance. Given (1) strength in commodity prices (sans precious metals), (2) the potential for some backing-and-filling of the USD, and (3) MSCI EM price and relative strength support levels continuing to hold, we see recent weakness as a buying opportunity.  The MSCI BRIC index has reasserted its leadership status. In addition to China, fellow BRIC countries Brazil and India exhibit attractive setups, while Chile’sIPSA also presents opportunities. Today’s report includes a wide variety of bottom-up recommendations across the EM universe, spanning most sectors and all market capitalizations.

Recent USD strength has weighed on EM’s relative performance. Given (1) strength in commodity prices (sans precious metals), (2) the potential for some backing-and-filling of the USD, and (3) MSCI EM price and relative strength support levels continuing to hold, we see recent weakness as a buying opportunity.  The MSCI BRIC index has reasserted its leadership status. In addition to China, fellow BRIC countries Brazil and India exhibit attractive setups, while Chile’sIPSA also presents opportunities. Today’s report includes a wide variety of bottom-up recommendations across the EM universe, spanning most sectors and all market capitalizations.

Emerging Markets Strategy: Attractive Setups in China, Brazil, India, and Chile

Specialist in Indian Banking and Economic Research

Hemindra Hazari

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the capital market.  The cause for concern is the BJP’s promise to the UP electorate to waive off all farm loans and provide fresh loans at zero per cent interest. Media, capital market analysts and prominent bankers have jumped on the bandwagon of moral hazard, ruining the loan payment discipline amongst farmers and apprehensions that the sacrosanct fiscal deficit may be breached as a consequence of such ‘populist’ policies. The BJP electoral promise raises some issues which need to be explored further on whether the central government has the fiscal space to provide for a total farm waiver and whether the criticism of moral hazard is credible.

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the capital market.  The cause for concern is the BJP’s promise to the UP electorate to waive off all farm loans and provide fresh loans at zero per cent interest. Media, capital market analysts and prominent bankers have jumped on the bandwagon of moral hazard, ruining the loan payment discipline amongst farmers and apprehensions that the sacrosanct fiscal deficit may be breached as a consequence of such ‘populist’ policies. The BJP electoral promise raises some issues which need to be explored further on whether the central government has the fiscal space to provide for a total farm waiver and whether the criticism of moral hazard is credible.

U.P. Loan Waiver: 'Populist' or a Necessity?

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.

The collapse of lending in India remains well in place in January where annual growth is running at an anemic 3.3%. This is the same as in December last year, and lower than in November. To us, it does not feel like India is anywhere near a post-demonetization boom in credit, as some are expecting. The reality is that companies will see more stress, economic growth will worsen, and banks will face greater NPLs. India – Credit growth (% ch YoY)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/022/174/original/daniel%201.png?1488984550" class="editor-image img-responsive" data-smartkarma-image-id="22174"></figure><div class="content-caption">Source: CEIC</div>What may be more of a surprise is that…

The collapse of lending in India remains well in place in January where annual growth is running at an anemic 3.3%. This is the same as in December last year, and lower than in November. To us, it does not feel like India is anywhere near a post-demonetization boom in credit, as some are expecting. The reality is that companies will see more stress, economic growth will worsen, and banks will face greater NPLs. India – Credit growth (% ch YoY)Source: CEICWhat may be more of a surprise is that…

India's Lending Is Still Painfully Low in January

India

Edelweiss Financial Services Ltd. provides financial services.  The Company offers financial services including lines of credit, investment banking, institutional and retail broking, financial planning, asset advisory, life insurance, and investment management services.

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Edelweiss Financial Services (EDEL IN)

Real Estate Loans Blow up Has Been Cooking For NBFC As High Competition Drove Down Quality & Yields

NBFCs along with global PE funds have provided almost 80% of Real estate sector financing needs in the last 5 years as banks slowly reduced...

Asia Advisors

Gold Rush for NBFCs May End as Worst Liquidity Crisis in a Decade Bites; Banks Review Exposure Norms

Severe liquidity crunch affects NBFC lending with several NBFCs, including the housing finance companies reporting a slowdown in lending. NBFCs had...

Asia Advisors

Emerging Markets Strategy: Attractive Setups in China, Brazil, India, and Chile

Recent USD strength has weighed on EM’s relative performance. Given (1) strength in commodity prices (sans precious metals), (2) the potential for...

Vermilion Research

U.P. Loan Waiver: 'Populist' or a Necessity?

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the...

Hemindra Hazari

India's Lending Is Still Painfully Low in January

The collapse of lending in India remains well in place in January where annual growth is running at an anemic 3.3%. This is the same as in December...

Daniel Tabbush

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