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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>With two weeks left to the cutoff, there could be 5 changes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in June.</li>
<li>Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.</li>
<li>There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.</li>
</ul>


With two weeks left to the cutoff, there could be 5 changes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in June.
Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.
There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.


Yuanta/​​P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>Exposure to the Taiwanese Banks sector has been in near constant decline for the best part of the last decade.</li>
<li>Just 4.5% of Asia Ex-Japan funds hold a position, with active managers running near record underweights of -1.06%, on average.</li>
<li>Investors should consider potential catalysts that could improve the investment outlook for banks in Taiwan, given the broad consensus on positioning.</li>
</ul>


Exposure to the Taiwanese Banks sector has been in near constant decline for the best part of the last decade.
Just 4.5% of Asia Ex-Japan funds hold a position, with active managers running near record underweights of -1.06%, on average.
Investors should consider potential catalysts that could improve the investment outlook for banks in Taiwan, given the broad consensus on positioning.


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

<ul>
<li>Commodities (ex. precious metals) and global yields are on the rise as the US dollar (DXY) deteriorates. Additionally, EM equities (EEM-US) display a bullish RS reversal relative to MSCI ACWI. </li>
<li>These are all important risk-on signals for global equities that continue to support our neutral yet constructive outlook. We expect more consolidation and mixed markets ahead.</li>
<li>Two Sectors that stand to benefit most from rising rates include Energy and Financials. We recommend adding exposure to these Sectors as we see a shift in favor of value.</li>
</ul>


Commodities (ex. precious metals) and global yields are on the rise as the US dollar (DXY) deteriorates. Additionally, EM equities (EEM-US) display a bullish RS reversal relative to MSCI ACWI. 
These are all important risk-on signals for global equities that continue to support our neutral yet constructive outlook. We expect more consolidation and mixed markets ahead.
Two Sectors that stand to benefit most from rising rates include Energy and Financials. We recommend adding exposure to these Sectors as we see a shift in favor of value.


Value Sectors Take The Lead On Rising Global Yields; Buying Energy and Financials

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

Yuanta Financial Holding Co / Equity Bottom-Up

*Very Solid 1Q21: Yuanta Financial Holding (2885.TT) [Yuanta] reported 1Q21 results of NTD 9.4 bn, increasing NTD 4.9 bn (107.5%) linked quarter. Much of Yuanta’s linked quarter growth can be attributed to strong net interest income growth from both a margin loan and bank loan balance increases; a significant reduction in loss provisioning; and net fee improvement on the back of an ADTV increase on the TAIEX; and*Hidden Yuanta Earnings At Bank: At 21% of Yuanta’s bottom-line, Yunata Bank posted strong core operating results as well – NTD 2.0 bn, increasing NTD 731 mn or 59.2% linked quarter. Reserve cover of NPLs is extraordinary and the best we’ve seen in Asia thus far at 12.1x. By our calculation, Yuanta Bank has over reserved and can release upward of NTD 10.5 bn – representing over one quarter of Yuanta’s quarterly bottom-line.

*Very Solid 1Q21: Yuanta Financial Holding (2885.TT) [Yuanta] reported 1Q21 results of NTD 9.4 bn, increasing NTD 4.9 bn (107.5%) linked quarter. Much of Yuanta’s linked quarter growth can be attributed to strong net interest income growth from both a margin loan and bank loan balance increases; a significant reduction in loss provisioning; and net fee improvement on the back of an ADTV increase on the TAIEX; and*Hidden Yuanta Earnings At Bank: At 21% of Yuanta’s bottom-line, Yunata Bank posted strong core operating results as well – NTD 2.0 bn, increasing NTD 731 mn or 59.2% linked quarter. Reserve cover of NPLs is extraordinary and the best we’ve seen in Asia thus far at 12.1x. By our calculation, Yuanta Bank has over reserved and can release upward of NTD 10.5 bn – representing over one quarter of Yuanta’s quarterly bottom-line.

Yuanta Financial Holding – Firing On All Cylinders

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

The Tender Offer for <a href="https://www.smartkarma.com/entities/jih-sun-financial-holdings" target="_blank" data-smartkarma-citation="entities:17971:1" rel="noopener">Jih Sun Financial (5820 TT)</a> by <a href="https://www.smartkarma.com/entities/fubon-financial-holding-co" target="_blank" data-smartkarma-citation="entities:11869:1" rel="noopener">Fubon Financial Holding Co (2881 TT)</a> closes on 23 March. The original close was 1 February but a 50-day extension was granted as requested, to 23 March. In Taiwan, Tender Offers are for a minimum of 20 days and a maximum of 50 days, and an extension can be granted for 50 days. There are further extensions possible for "reasonable cause" upon application to the FSC, but it is not clear that exists in this case. I expect if Fubon wants it, the FSC would be inclined to grant it. There appears to be substantial regulatory support for the deal as a first among what may be many such future financial holding company consolidations. But there remain questions as to whether this gets done or not.

The Tender Offer for Jih Sun Financial (5820 TT) by Fubon Financial Holding Co (2881 TT) closes on 23 March. The original close was 1 February but a 50-day extension was granted as requested, to 23 March. In Taiwan, Tender Offers are for a minimum of 20 days and a maximum of 50 days, and an extension can be granted for 50 days. There are further extensions possible for "reasonable cause" upon application to the FSC, but it is not clear that exists in this case. I expect if Fubon wants it, the FSC would be inclined to grant it. There appears to be substantial regulatory support for the deal as a first among what may be many such future financial holding company consolidations. But there remain questions as to whether this gets done or not. 

Taiwan

First Financial Holding Co., Ltd. is a holding company.  Through its subsidiaries, the Company accepts deposits, provides loans and discount, letters of credit, and guarantee services, invests in marketable securities, provides securities brokerage and investment services, as well as provides insurance services.

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First Financial Holding Co (2892 TT)

Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff

With 2 weeks to cutoff, we see 5 changes in June. The deletions are fairly clear, but there are a lot of non-constituents crowded around similar...

Brian Freitas

Taiwan Banks: Uninvestible?

Exposure to the Taiwanese Banking sector has been in near constant decline for the last decade. Just 4.5% of Asia Ex-Japan investors have...

Steven Holden

Value Sectors Take The Lead On Rising Global Yields; Buying Energy and Financials

Two Sectors that stand to benefit most from rising rates include Energy and Financials. We recommend adding exposure to these Sectors as we see a...

Vermilion Research

Yuanta Financial Holding – Firing On All Cylinders

YUANTA FINANCIAL: Yuanta reported a QOQ 1Q21 results increase of 107.5%, attributed to strong net interest income growth and a provision reduction....

Thomas J. Monaco

Jih Sun Financial Deal Down To The Wire

Fubon deal for Jih Sun comes down to the wire. Extension is possible but there is no word from either of the two big holders. Jih Sun trades at...

Travis Lundy

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Yuanta/​​P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff

With 2 weeks to cutoff, we see 5 changes in June. The deletions are fairly clear, but there are a lot of non-constituents crowded around similar...

Brian Freitas

Taiwan Banks: Uninvestible?

Exposure to the Taiwanese Banking sector has been in near constant decline for the last decade. Just 4.5% of Asia Ex-Japan investors have...

Steven Holden

Value Sectors Take The Lead On Rising Global Yields; Buying Energy and Financials

Two Sectors that stand to benefit most from rising rates include Energy and Financials. We recommend adding exposure to these Sectors as we see a...

Vermilion Research

Yuanta Financial Holding – Firing On All Cylinders

YUANTA FINANCIAL: Yuanta reported a QOQ 1Q21 results increase of 107.5%, attributed to strong net interest income growth and a provision reduction....

Thomas J. Monaco

Jih Sun Financial Deal Down To The Wire

Fubon deal for Jih Sun comes down to the wire. Extension is possible but there is no word from either of the two big holders. Jih Sun trades at...

Travis Lundy

Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff