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

Thematic (Sector/Industry)

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

*Strong Man Strikes Again: Central Bank of Turkey (CBT) Governor Murat Uysal has been released from his duties, and Naci Agbal has been appointed as the new CBT governor. President Erdogan abruptly fired former Governor Uysal after just 16 months, after he indicated that interest rates may increase again in 2020; and*Watch Your Risk: The TRY’s decline of 43% YTD is troublesome, and the potential for a TRY gray market would NOT be of surprise at this stage. We continue to worry about counterparty risks should defaults rise. It’s probably not a bad time to start thinking about purchasing CDS protection on single name securities and on the Turkish sovereign.

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

Favored longs in A shares, ASX, Japan, Taiwan and Korea are hitting some resistance levels (to reduce longs) and sets up a fade with a focus on fresh buy supports. This fade stems from the likelihood of bull energy being deflated given Trump will contest election results and call for re counts which in turn will delay stimulus certainty and see the current euphoric rally pause as bull triangles form in the SPX and NDX (buy weakness). Fed remarks on slowing growth concerns may also throw water on this reaction spike. We like adding risk on weakness.Shorts outlined to trade a pullback lower short term.

Favored longs in A shares, ASX, Japan, Taiwan and Korea are hitting some resistance levels (to reduce longs) and sets up a fade with a focus on fresh buy supports. This fade stems from the likelihood of bull energy being deflated given Trump will contest election results and call for re counts which in turn will delay stimulus certainty and see the current euphoric rally pause as bull triangles form in the SPX and NDX (buy weakness). Fed remarks on slowing growth concerns may also throw water on this reaction spike. We like adding risk on weakness.Shorts outlined to trade a pullback lower short term.

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

It is widely believed that a Biden win will be a boon for China, while a Trump victory will be negative for China – and consequently a boon for Taiwan. We believe this is too simplistic: while a Biden win will help China on the trade front (since Biden will likely focus less on bilateral pressure, and resume multilateral trade negotiations), China will soon face increased pressure on human rights (in Xinjiang, Tibet and Hong Kong). In the low-probability event of a clear win for Trump on 4th November (in Asia), Taiwan equities will receive a boost (and China equities will see a knee-jerk sell-off): a good way to position for this would be to go long SGX FTSE Taiwan Index Futures. A good way for investors to position themselves for a Biden win would be to be long the SGX FTSE China A50 Index Futures: we would recommend going long the latter now, in anticipation of the likely electoral outcome. However, once the dust settles, we would recommend switching to the SGX FTSE Taiwan Index Futures – as Taiwan’s underlying fundamentals are more robust than China’s. From a sectoral standpoint, a Biden win should also be more favourable to Asia’s technology sector (Alibaba, Baidu, Tencent, Samsung Electronics, TSMC) as antitrust action (already initiated against Google last week) likely spreads to Facebook and Amazon under a Biden administration.The key factor pointing to a Biden victory is the massive surge of early voting (in person and via mail-in ballots). Reuters reports that 80 million Americans (i.e., 58.5% of the total number of voters who cast their ballot in 2016) have already voted. Informal exit polling suggests that a large majority of these are Democrats or Democratic-leaning voters, while Trump voters are likelier to vote on 3rd November. This could sow chaos, as Trump may initially be reported as leading in key swing states like Pennsylvania and Michigan on Election Day, only to have this reversed after mail-in votes have been counted (something that Trump says he will challenge in the courts). Biden has led in the polls by 6-9 percentage points consistently since August; if more than half of all voters have already cast their ballot, this suggests that Biden already has a massive lead nationwide even before Election Day. Biden’s gaffe on fossil fuels in the final debate (which would normally cost him votes in Pennsylvania, Ohio and Texas) will be much less costly if half of the electorate had already cast their ballots by the time of that debate. Similarly, Trump is unlikely to be able to benefit from the 33.1% QoQ (saar) recovery announced for the US economy in 3Q 2020.The greatest danger to Taiwan in the immediate aftermath of a Biden victory lies in the possibility of China taking military action – i.e., going a step beyond the many provocative military actions China took in October 2020, to an actual attack on Taiwan. The time of confusion for the US between the defeat of an incumbent and the inauguration of the president 11 weeks later (with a possibly uncertain electoral outcome adding fuel to the fire in November) would be the ideal time for China to attack Taiwan. While that would have a disastrous immediate impact on Taiwan’s economy, in the long term it will destroy China’s relationship with the incoming Biden administration, and provoke Democrats in Congress to go even further in legislating against China’s human rights record. If there is no such military attack on Taiwan in November 2020, it will be time to switch to the SGX FTSE Taiwan Index Futures by the end of that month.

It is widely believed that a Biden win will be a boon for China, while a Trump victory will be negative for China – and consequently a boon for Taiwan. We believe this is too simplistic: while a Biden win will help China on the trade front (since Biden will likely focus less on bilateral pressure, and resume multilateral trade negotiations), China will soon face increased pressure on human rights (in Xinjiang, Tibet and Hong Kong). In the low-probability event of a clear win for Trump on 4th November (in Asia), Taiwan equities will receive a boost (and China equities will see a knee-jerk sell-off): a good way to position for this would be to go long SGX FTSE Taiwan Index Futures. A good way for investors to position themselves for a Biden win would be to be long the SGX FTSE China A50 Index Futures: we would recommend going long the latter now, in anticipation of the likely electoral outcome. However, once the dust settles, we would recommend switching to the SGX FTSE Taiwan Index Futures – as Taiwan’s underlying fundamentals are more robust than China’s. From a sectoral standpoint, a Biden win should also be more favourable to Asia’s technology sector (Alibaba, Baidu, Tencent, Samsung Electronics, TSMC) as antitrust action (already initiated against Google last week) likely spreads to Facebook and Amazon under a Biden administration.The key factor pointing to a Biden victory is the massive surge of early voting (in person and via mail-in ballots). Reuters reports that 80 million Americans (i.e., 58.5% of the total number of voters who cast their ballot in 2016) have already voted. Informal exit polling suggests that a large majority of these are Democrats or Democratic-leaning voters, while Trump voters are likelier to vote on 3rd November. This could sow chaos, as Trump may initially be reported as leading in key swing states like Pennsylvania and Michigan on Election Day, only to have this reversed after mail-in votes have been counted (something that Trump says he will challenge in the courts). Biden has led in the polls by 6-9 percentage points consistently since August; if more than half of all voters have already cast their ballot, this suggests that Biden already has a massive lead nationwide even before Election Day. Biden’s gaffe on fossil fuels in the final debate (which would normally cost him votes in Pennsylvania, Ohio and Texas) will be much less costly if half of the electorate had already cast their ballots by the time of that debate. Similarly, Trump is unlikely to be able to benefit from the 33.1% QoQ (saar) recovery announced for the US economy in 3Q 2020.The greatest danger to Taiwan in the immediate aftermath of a Biden victory lies in the possibility of China taking military action – i.e., going a step beyond the many provocative military actions China took in October 2020, to an actual attack on Taiwan. The time of confusion for the US between the defeat of an incumbent and the inauguration of the president 11 weeks later (with a possibly uncertain electoral outcome adding fuel to the fire in November) would be the ideal time for China to attack Taiwan. While that would have a disastrous immediate impact on Taiwan’s economy, in the long term it will destroy China’s relationship with the incoming Biden administration, and provoke Democrats in Congress to go even further in legislating against China’s human rights record. If there is no such military attack on Taiwan in November 2020, it will be time to switch to the SGX FTSE Taiwan Index Futures by the end of that month.  

Biden Vs Trump: How Best to Play the Impact on Taiwan and China

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Last evening post market close in Hong Kong, Hang Seng Indexes released an <a href="https://www.hsi.com.hk/static/uploads/contents/en/news/indexChgNotice/20201030T100000.pdf" target="_blank" rel="noopener">index notice</a> announcing a new Fast Entry rule for the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a>.As one can imagine, this is being done solely to ensure the early inclusion of <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> in the index. Index investors would then look at buying index futures and other derivatives on the HSCEI to play the upside. The early inclusion could also help the HSCEI to catch up with other China focused indices, where it has been a laggard for some time now.<a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a>'s Fast Entry into the index will also mean that one stock needs to be deleted, though from the index rules it is not very clear if that would happen at the regular index review in December 2020 or March 2021.In this Insight, we take a look at the impact of <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a>'s inclusion in the HSCEI on the stock and what it means for the other stocks in the index.

Last evening post market close in Hong Kong, Hang Seng Indexes released an index notice announcing a new Fast Entry rule for the Hang Seng China Enterprises Index (HSCEI INDEX).As one can imagine, this is being done solely to ensure the early inclusion of Ant Group (6688 HK) in the index. Index investors would then look at buying index futures and other derivatives on the HSCEI to play the upside. The early inclusion could also help the HSCEI to catch up with other China focused indices, where it has been a laggard for some time now.Ant Group (6688 HK)'s Fast Entry into the index will also mean that one stock needs to be deleted, though from the index rules it is not very clear if that would happen at the regular index review in December 2020 or March 2021.In this Insight, we take a look at the impact of Ant Group (6688 HK)'s inclusion in the HSCEI on the stock and what it means for the other stocks in the index. 

Ant Group: Everyone Wants a Piece of The Action - HSCEI Fast Entry

Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

Our money is on Taiwan. The pandemic is behind, the economy is rebounding faster than anticipated. Underlying fundamentals of the 2019 business cycle upswing resuming. The damage to corporate profitability has been limited compared with regional peers Korean and Japanese companies and the investment upcycle has not be derailed. We expect Taiwan to among this year’s regional growth outperformers. The only downside risk is rising Taiwan-China tensions. But we suspect change is afoot.

Our money is on Taiwan. The pandemic is behind, the economy is rebounding faster than anticipated. Underlying fundamentals of the 2019 business cycle upswing resuming. The damage to corporate profitability has been limited compared with regional peers Korean and Japanese companies and the investment upcycle has not be derailed. We expect Taiwan to among this year’s regional growth outperformers. The only downside risk is rising Taiwan-China tensions. But we suspect change is afoot.  

China

The FTSE China A50 Index includes the largest 50 A Share Chinese companies by total market cap. 

FTSE China A50 Index (XIN9I INDEX)

Turkey – Off With His Head…Again

TURKEY: Central Bank of Turkey Has A New Governor As President Erdogan Removes His Previous Hand-picked Successor. Erdogsnomics Are Not Working.

Thomas J. Monaco

Asia Fade Levels and Fresh Long Supports

Asia is kissing key resistance levels that sets up a fade with a focus on fresh buy supports. Trump will contest election results/call for re...

Thomas Schroeder

Biden Vs Trump: How Best to Play the Impact on Taiwan and China

One way to look at Biden vs Trump is that a Trump win benefits Taiwan, a Biden win is better for China. We suggest ways of using low-cost SGX...

Prasenjit K. Basu

Ant Group: Everyone Wants a Piece of The Action - HSCEI Fast Entry

Hang Seng Indexes has introduced a Fast Entry rule for the HSCEI which ensures the inclusion of Ant Group in the index after the close of trading...

Brian Freitas

Taiwan- Destined To Outperform

Our money is on Taiwan. The pandemic is behind, the economy is rebounding faster than anticipated. Underlying fundamentals are supportive of the...

Sharmila Whelan