Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of HSI in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on TENCENT, AIA, PETROCHINA, LONGFOR, TRIP.COM, MEITUAN.</li>
</ul>


We analysed the earning revision of component stocks of HSI in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on TENCENT, AIA, PETROCHINA, LONGFOR, TRIP.COM, MEITUAN.


HSI Index Earning Revision (Jun): TENCENT, AIA, PETROCHINA, LONGFOR, TRIP.COM, MEITUAN

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)

*Yongcheng Coal Default: According to Shanghai Clearing House, Yongcheng Coal and Electricity (YCE) in Henan Province failed to repay a CNY 1 bn (USD 151 mn) short-term bond despite being given the highest rating by one of mainland China’s awful domestic credit ratings agencies; and*Watch Your Banks: The yield on benchmark five-year “AAA” rated mainland Chinese corporates was 3.99% - up over 100 bp from their April 2020 low. Investor flight is pushing financing costs higher and squeezing local corporate funding in a market which is just barely recovering from the COVID-19 pandemic. Concerns remain over higher problem loans as debt service risk is heightened over higher rates, unreliable financial statements and ratings agency reports, and now an inability to refinance public debt with a number of bond sales being canceled. Further, the degradation of corporate bond values is limiting their usage as collateral.

*Yongcheng Coal Default: According to Shanghai Clearing House, Yongcheng Coal and Electricity (YCE) in Henan Province failed to repay a CNY 1 bn (USD 151 mn) short-term bond despite being given the highest rating by one of mainland China’s awful domestic credit ratings agencies; and*Watch Your Banks: The yield on benchmark five-year “AAA” rated mainland Chinese corporates was 3.99% - up over 100 bp from their April 2020 low. Investor flight is pushing financing costs higher and squeezing local corporate funding in a market which is just barely recovering from the COVID-19 pandemic. Concerns remain over higher problem loans as debt service risk is heightened over higher rates, unreliable financial statements and ratings agency reports, and now an inability to refinance public debt with a number of bond sales being canceled. Further, the degradation of corporate bond values is limiting their usage as collateral.

*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.

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 next step for banks is to purge costs. As banks brace for more defaults, less loan demand,  higher credit costs, we must expect a wholesale effort on cutting costs. Many banks held off on their cost cutting plans early in the year to ease financial stress for staff and their dependents. It is doubtful that this lasts, especially with more countries reinstating insane policies of locking down citizens as an attempt to stop C19 deaths. The one controllable for banks is operating costs. However, this raises an additional question of ‘free banking’ as put forward by SmartKarma some weeks ago. Perhaps this is when more banks begin charging for basic banking services, alongside cost cutting.

The next step for banks is to purge costs. As banks brace for more defaults, less loan demand,  higher credit costs, we must expect a wholesale effort on cutting costs. Many banks held off on their cost cutting plans early in the year to ease financial stress for staff and their dependents. It is doubtful that this lasts, especially with more countries reinstating insane policies of locking down citizens as an attempt to stop C19 deaths. The one controllable for banks is operating costs. However, this raises an additional question of ‘free banking’ as put forward by SmartKarma some weeks ago. Perhaps this is when more banks begin charging for basic banking services, alongside cost cutting.

*Odd Finance Minister Commentary: A report on Bloomberg, suggests that Finance Minister Albayrak has ruled out capital controls in Turkey. This is strange, as capital controls have already been in place for well over a year given the longer settlement dates, higher taxes, limited liquidity, threats of prison, et al. These reported comments suggest a full blown crisis is a fait accompli;  *Low Rates Destroying TRY: Turkey is a slow moving train wreck thanks largely to the policies of President Erdogan. The Central Bank of Turkey (CBT) is keeping interest rates low, and failed to raise interest rates at its latest meeting – against consensus of a 200 bp increase. Despite what were punitive capital controls (in contravention to the Finance Minister’s comments), the Turkish lira (TRY) actually declined 2% on the day the CBT failed to raise rates at its last meeting – now nearing 8.2 TRY/USD and achieving another record low down 40% YTD versus the USD when most other currencies are strengthening versus the USD;  and*Risk Is High For Europe, and an EM Domino Effect Is Real: BBVA (BBVA.SM), BNP Paribas (BNPP.FP), and Unicredit (UCG.IM), and HSBC Holding (5.HK) are most exposed. With Turkish corporates/banking system F/X debt in the USD hundreds of billions, worries over counterparty risks are arising. Investors are likely to continue to take advantage an artificially high TRY by continuing to sell while the getting is still good. Geopolitical risk only adds to our concern.

*Odd Finance Minister Commentary: A report on Bloomberg, suggests that Finance Minister Albayrak has ruled out capital controls in Turkey. This is strange, as capital controls have already been in place for well over a year given the longer settlement dates, higher taxes, limited liquidity, threats of prison, et al. These reported comments suggest a full blown crisis is a fait accompli;  *Low Rates Destroying TRY: Turkey is a slow moving train wreck thanks largely to the policies of President Erdogan. The Central Bank of Turkey (CBT) is keeping interest rates low, and failed to raise interest rates at its latest meeting – against consensus of a 200 bp increase. Despite what were punitive capital controls (in contravention to the Finance Minister’s comments), the Turkish lira (TRY) actually declined 2% on the day the CBT failed to raise rates at its last meeting – now nearing 8.2 TRY/USD and achieving another record low down 40% YTD versus the USD when most other currencies are strengthening versus the USD;  and*Risk Is High For Europe, and an EM Domino Effect Is Real: BBVA (BBVA.SM), BNP Paribas (BNPP.FP), and Unicredit (UCG.IM), and HSBC Holding (5.HK) are most exposed. With Turkish corporates/banking system F/X debt in the USD hundreds of billions, worries over counterparty risks are arising. Investors are likely to continue to take advantage an artificially high TRY by continuing to sell while the getting is still good. Geopolitical risk only adds to our concern.

Turkey – Start Worrying About Counterparties

United Kingdom

HSBC Holdings Plc is a British universal bank and financial services group operating worldwide. It offers a wide range of services including retail and personal banking, wealth management, commercial banking, global banking, and markets and securities services. The company was founded in British Hong Kong in 1865 and is headquartered in London, England.

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HSBC (HSBA LN)

HSI Index Earning Revision (Jun): TENCENT, AIA, PETROCHINA, LONGFOR, TRIP.COM, MEITUAN

We analyzed HSI's consensus for Jun 2026 and highlighted changes of EPS in TENCENT, AIA, PETROCHINA, LONGFOR, TRIP.COM, MEITUAN.

Ke Yan, CFA, FRM

Another Day, Another Default

MAINLAND CHINA DEFAULT: Yongcheng Coal Defaulted On Its Debt, Leading To Concerns About The Credibility Of AAA Rated Corporates In Mainland China...

Thomas J. Monaco

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

Global Banks – Cost Purge

We must expect the previously good delta in credit costs to wane or to reverse altogether alongside renewed lockdowns. To preserve profit, banks...

Daniel Tabbush

Turkey – Start Worrying About Counterparties

TURKEY RISK: Odd Comments From Finance Minister Suggest Lack Of Understanding Of Capital Controls In Place. No Rate Hikes, Weak TRY/USD, And...

Thomas J. Monaco

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