EM PM, Ecstrat

Emad Mostaque

EM PM

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Thematic (Sector/Industry)

<p>Following the downgrade of the Credit Outlook of Saudi Arabia by S&amp;P concerns continue to mount as to the stability of countries in the region should oil prices stay at or below current levels for the next 3-5 years, a &ldquo;lower for longer&rdquo; scenario as opposed to the $100+ oil long-run oil prices that were expected at the middle of last year.</p><p>This note analyses some of the key drivers that will determine the different scenarios that may play out in the Middle East and which paths are more likely.</p><p>Whereas in previous instances higher oil prices were bad for peace in the region, it may now be that we are in for a rocky road unless prices rebound sharply, which may in itself drive up prices.</p>

Following the downgrade of the Credit Outlook of Saudi Arabia by S&amp;P concerns continue to mount as to the stability of countries in the region should oil prices stay at or below current levels for the next 3-5 years, a &ldquo;lower for longer&rdquo; scenario as opposed to the $100+ oil long-run oil prices that were expected at the middle of last year.This note analyses some of the key drivers that will determine the different scenarios that may play out in the Middle East and which paths are more likely.Whereas in previous instances higher oil prices were bad for peace in the region, it may now be that we are in for a rocky road unless prices rebound sharply, which may in itself drive up prices.

What happens to the Gulf if oil prices stay lower for longer?

<p>In the wake of what looks to be the second most deadly terror attack since 9/11 (the first being the horror that was Beslan), we look at the&nbsp;local and regional ramifications.&nbsp;<br/><br/>It does not make for cheerful reading as the terrorist threat continues to evolve and extend its tendrils, with a&nbsp;nuanced response needed. Egyptians are working hard and I hope they pull through.<br/><br/>This also highlights the severe geopolitical risk in the region, which I believe is the highest in a decade, even as OPEC spare capacity is at 08 lows.</p>

In the wake of what looks to be the second most deadly terror attack since 9/11 (the first being the horror that was Beslan), we look at the&nbsp;local and regional ramifications.&nbsp;  It does not make for cheerful reading as the terrorist threat continues to evolve and extend its tendrils, with a&nbsp;nuanced response needed. Egyptians are working hard and I hope they pull through.  This also highlights the severe geopolitical risk in the region, which I believe is the highest in a decade, even as OPEC spare capacity is at 08 lows.

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.

<ul><li>The polarization of the world&rsquo;s banks is gaining momentum.</li><li>The lumbering, large, globally systemically important banks are increasingly forced to shore up capital, limit their leverage, and limit potentially high return businesses.</li><li>Smaller, more domestic banks in Asia, and South East Asia in particular, are at the other end of this polarization.</li></ul>

The polarization of the world&rsquo;s banks is gaining momentum.The lumbering, large, globally systemically important banks are increasingly forced to shore up capital, limit their leverage, and limit potentially high return businesses.Smaller, more domestic banks in Asia, and South East Asia in particular, are at the other end of this polarization.

The World of Banking is Becoming Ever More Polarized

<div>Below are some thoughts on the current situation in Turkey re: the Kurdish flare up, the likely outcome of which will be an AKP majority government. Not all kurds are the same and ISIS is succeeding in its tactics of neutering one of the more effective forces against it, although the YPG &amp; Peshmerga will remain.</div><div>&nbsp;</div><div>Egypt is now at a crucial point in its development, with real risks of repeating the mistakes of Algeria in the 90s civil war.&nbsp;</div><div>&nbsp;</div><div>Further escalation may well mark a great opportunity for investment however as the underlying economy, ex-tourism, will continue to hum along with the real victim of all this being civil society.&nbsp;</div>

Below are some thoughts on the current situation in Turkey re: the Kurdish flare up, the likely outcome of which will be an AKP majority government. Not all kurds are the same and ISIS is succeeding in its tactics of neutering one of the more effective forces against it, although the YPG &amp; Peshmerga will remain.&nbsp;Egypt is now at a crucial point in its development, with real risks of repeating the mistakes of Algeria in the 90s civil war.&nbsp;&nbsp;Further escalation may well mark a great opportunity for investment however as the underlying economy, ex-tourism, will continue to hum along with the real victim of all this being civil society.&nbsp;

A Kurdish conundrum & Egypt faces the ghosts of Algeria

<p>Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.</p><p>BIS statistics show that Germany, US, and UK as having the most exposure to Greece, at US$56bn &ndash; of which just over half is Germany.</p><p>The issue is not contained to mark downs on Greek exposure, which many would have us believe.</p><p>Risk models immediately change. Banks must incorporate a higher probability of default (PD) for their sovereign exposures in general, and in particular, those in ailing European countries.</p><p>Foreign borrowings of France, Italy and Spain combined are 50x the level of Greece. And this is where banks will have to focus their estimates of increased risk following a Greece default.</p><p>More below the fold.</p><p>&nbsp;</p>

Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.BIS statistics show that Germany, US, and UK as having the most exposure to Greece, at US$56bn &ndash; of which just over half is Germany.The issue is not contained to mark downs on Greek exposure, which many would have us believe.Risk models immediately change. Banks must incorporate a higher probability of default (PD) for their sovereign exposures in general, and in particular, those in ailing European countries.Foreign borrowings of France, Italy and Spain combined are 50x the level of Greece. And this is where banks will have to focus their estimates of increased risk following a Greece default.More below the fold.&nbsp;

Unintended Consequences of a Greek Default

United States

The Hartford Financial Services Group, Inc. provides a range of insurance products.  The Company's products include property and casualty insurance, group benefits and mutual funds.  Hartford Financial is based and operates in the U.S.

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Hartford Financial Svcs Grp (HIG US)

What happens to the Gulf if oil prices stay lower for longer?

Following the downgrade of the Credit Outlook of Saudi Arabia by S&P concerns continue to mount as to the stability of countries in the region...

Emad Mostaque

Egypt on the brink

In the wake of what looks to be the second most deadly terror attack since 9/11 (the first being the horror that was Beslan), we look at the local...

Emad Mostaque

The World of Banking is Becoming Ever More Polarized

The polarization of the world’s banks is gaining momentum. The lumbering, large, globally systemically important banks are increasingly forced to...

Daniel Tabbush

A Kurdish conundrum & Egypt faces the ghosts of Algeria

Below are some thoughts on the current situation in Turkey re: the Kurdish flare up, the likely outcome of which will be an AKP majority...

Emad Mostaque

Unintended Consequences of a Greek Default

Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.BIS statistics show that Germany,...

Daniel Tabbush

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