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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Thematic (Sector/Industry)

After dropping steadily for the last 3 years, HK-listed China banks are finally starting to move higher led by <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> and <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a>.The suspension 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 IPO and the subsequent restrictions placed on Fintech (or Techfin) players gave the banks a shot in the arm. The economic recovery in China and the recent pre-announcement of better than consensus results by <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> have got investor attention.<a href="https://www.smartkarma.com/profiles/steven-holden" target="_blank" data-smartkarma-citation="accounts:1337" rel="noopener">Steven Holden</a> has highlighted the shift out of Banking stocks pre- and post COVID by active managers with holdings close to the lowest on record.With the China economy stabilizing and growing and reporting better than expected GDP numbers today, there could be a further move into Banking stocks pushing them higher.

After dropping steadily for the last 3 years, HK-listed China banks are finally starting to move higher led by China Merchants Bank H (3968 HK) and Postal Savings Bank of China (1658 HK).The suspension of Ant Group (6688 HK)'s IPO and the subsequent restrictions placed on Fintech (or Techfin) players gave the banks a shot in the arm. The economic recovery in China and the recent pre-announcement of better than consensus results by China Merchants Bank H (3968 HK) have got investor attention.Steven Holden has highlighted the shift out of Banking stocks pre- and post COVID by active managers with holdings close to the lowest on record.With the China economy stabilizing and growing and reporting better than expected GDP numbers today, there could be a further move into Banking stocks pushing them higher.

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 mass hysteria that has engulfed so many countries’ media appears well gone from China. This is perhaps one of the most important steps to regain normalcy. With this difference, China's banks can benefit from better top line growth than perhaps others globally, while a more stable underlying economy is certainly valuable for banks.

The mass hysteria that has engulfed so many countries’ media appears well gone from China. This is perhaps one of the most important steps to regain normalcy. With this difference, China's banks can benefit from better top line growth than perhaps others globally, while a more stable underlying economy is certainly valuable for banks.

China – No Mass Hysteria, Banks To Benefit

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 MS-China 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 XPENG, COSCO SHIP ENGY, MEITUAN, TENCENT, PDD, GCL TECHNOLOGY, Full Truck Alliance, KUNLUN TECH.</li>
</ul>


We analysed the earning revision of component stocks of MS-China 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 XPENG, COSCO SHIP ENGY, MEITUAN, TENCENT, PDD, GCL TECHNOLOGY, Full Truck Alliance, KUNLUN TECH.


MS-China Index Earning Revision (Jun): XPENG, COSCO SHIP ENGY, MEITUAN, TENCENT, PDD, GCL TECHNOLOGY

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine for the month ended Jun 30th.</li>
<li>We estimate that the net southbound flows in June were $4.6bn Inflows.</li>
<li>We tabulate the top stocks by inflows, outflows, stake changes, and holdings, and highlight flows for Alibaba, Kingboard Laminates, Kingboard, Smic, Knowledge Atlas.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine for the month ended Jun 30th.
We estimate that the net southbound flows in June were $4.6bn Inflows.
We tabulate the top stocks by inflows, outflows, stake changes, and holdings, and highlight flows for Alibaba, Kingboard Laminates, Kingboard, Smic, Knowledge Atlas.


Hong Kong Connect Flows (June): AI Driven $4.6bn Inflows

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

*D-SIB Standards Released: The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and* Aggressive Capital Raises Expected: In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value.

*D-SIB Standards Released: The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and* Aggressive Capital Raises Expected: In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value. 

China

Industrial and Commercial Bank of China Ltd provides a broad range of personal and corporate commercial banking services all over China.  The Bank's businesses include deposit, loan, credit card, fund underwriting and trust, and foreign currency settlement and trading.

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Ind & Comm Bk Of China (A) (601398 CH)

China Banks: Moving On Up

The recovery in the Chinese economy, the changes to fintech rules, the better than expected results, the low valuations and the extreme positioning...

Brian Freitas

China – No Mass Hysteria, Banks To Benefit

The mass hysteria that has engulfed so many countries’ media appears well gone in China. This is perhaps the most important step to regain...

Daniel Tabbush

MS-China Index Earning Revision (Jun): XPENG, COSCO SHIP ENGY, MEITUAN, TENCENT, PDD, GCL TECHNOLOGY

We analyzed MS-China's consensus for Jun 2026 and highlighted changes of EPS in XPENG, COSCO SHIP ENGY, MEITUAN, TENCENT, PDD, GCL TECHNOLOGY, Full...

Ke Yan, CFA, FRM

Hong Kong Connect Flows (June): AI Driven $4.6bn Inflows

We estimate inflows to be $4.6bn from mainland investors to HK stocks in June. We highlight flows for Alibaba, Kingboard Laminates, Kingboard,...

Ke Yan, CFA, FRM

China Banks – About Time

CHINA BANKS: PBOC and CBIRC Released Finalized D-SIB Standards and Indicated Tighter Regulations. Aggressive Capital Raises Are Expected.

Thomas J. Monaco

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