Alpha-Centric ESG Research

Kyle Rudden

Announcements keep on coming from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the <a href="https://www.smartkarma.com/entities/sgx-nikkei-esg-reit-index-futures" target="_blank" data-smartkarma-citation="entities:33480:1" rel="noopener">SGX Nikkei ESG-REIT Index Futures (JRTA INDEX)</a> contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

Announcements keep on coming from Singapore Exchange (SGX SP) and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the SGX Nikkei ESG-REIT Index Futures (JRTA INDEX) contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

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

The weight of the evidence continues to support our mixed, but overall constructive outlook. Below we outline the basis for our outlook, and we also highlight opportunities within Real Estate and Health Care.

The weight of the evidence continues to support our mixed, but overall constructive outlook. Below we outline the basis for our outlook, and we also highlight opportunities within Real Estate and Health Care.

Global Equity Strategy: Opportunities In Real Estate and Health Care

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Forensic Accounting

Zoomlion Heavy Industry H / Forensic Accounting

This is a follow-on insight from our original insight <a href="https://www.smartkarma.com/insights/a-forensic-analysis-tool-for-detecting-accounting-red-flags-focus-on-developed-asia" target="_blank" data-smartkarma-citation="insights:36832" rel="noopener">A Forensic Analysis Tool for Detecting Accounting Red Flags: Focus on Developed Asia</a>. This insight aims to provide updated results flagged by our model per the most recent updated financial data for the companies in our Developed Asia universe. Given that most companies have now reported CY19 or FY20 data, our model has taken this updated data and flagged updated set of the companies carrying high accounting risk. Per the updated results, our model has downgraded three new companies to the high risk category and upgraded four companies from high risk earlier to medium to no risk category now.
We have also made some minor enhancements to the model relating to 1) more robust handling of negative data points for interest rates and EBITDA, and 2) more robust calculations for Cash Flow from Operations (adjustments for any interest payments classified within operating activity per Cap IQ classification) and Pension &amp; Other Retirement Liabilities (alternate data using Debt Equivalent of Net PBO, where the base data is not available). These enhancements have also partly affected the updated results.

This is a follow-on insight from our original insight A Forensic Analysis Tool for Detecting Accounting Red Flags: Focus on Developed Asia. This insight aims to provide updated results flagged by our model per the most recent updated financial data for the companies in our Developed Asia universe. Given that most companies have now reported CY19 or FY20 data, our model has taken this updated data and flagged updated set of the companies carrying high accounting risk. Per the updated results, our model has downgraded three new companies to the high risk category and upgraded four companies from high risk earlier to medium to no risk category now.
We have also made some minor enhancements to the model relating to 1) more robust handling of negative data points for interest rates and EBITDA, and 2) more robust calculations for Cash Flow from Operations (adjustments for any interest payments classified within operating activity per Cap IQ classification) and Pension &amp; Other Retirement Liabilities (alternate data using Debt Equivalent of Net PBO, where the base data is not available). These enhancements have also partly affected the updated results.

Forensic Accounting | High Risk Companies in Developed Asia - Update 1.0

TSE Tokyo Price Index TOPIX / Technical Analysis

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE vs. EM ratio. The U.S. dollar (DXY) is currently trading near support within the 16-17 month uptrend channel. Technicals suggest the most likely scenario is for the DXY uptrend to continue and for support to hold -- which would likely result in EAFE reasserting as leadership.  In this publication we highlight attractive investment themes and individual ideas across developed markets, with special attention given to Japan, Germany, Sweden, Italy, Spain, and Switzerland.

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE vs. EM ratio. The U.S. dollar (DXY) is currently trading near support within the 16-17 month uptrend channel. Technicals suggest the most likely scenario is for the DXY uptrend to continue and for support to hold -- which would likely result in EAFE reasserting as leadership.  In this publication we highlight attractive investment themes and individual ideas across developed markets, with special attention given to Japan, Germany, Sweden, Italy, Spain, and Switzerland.

Developed Markets Strategy: Stick with Japan

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe  developed international (EAFE) will remain in a leadership position relative to EM (MSCI EM). In this report we highlight actionable set ups within Japan, Switzerland and Australia. Within Japanese Sectors, we focus on opportunities within Technology, Financials, Health Care, and Staples. We also highlight attractive setups within European/UK Sectors, including Health Care, Industrials, Staples and Utilities.

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe  developed international (EAFE) will remain in a leadership position relative to EM (MSCI EM). In this report we highlight actionable set ups within Japan, Switzerland and Australia. Within Japanese Sectors, we focus on opportunities within Technology, Financials, Health Care, and Staples. We also highlight attractive setups within European/UK Sectors, including Health Care, Industrials, Staples and Utilities.

Japan

Invincible Investment Corp is a real estate investment trust (REIT) which  invests in securitized real estate products. TGR Investment invests in income  producing residential and office buildings.

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Invincible Investment (8963 JP)

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Singapore Exchange just launched the SGX Nikkei ESG-REIT Index futures contract. A multi-win for SGX, but it also serves as a reminder of how...

Kyle Rudden

Global Equity Strategy: Opportunities In Real Estate and Health Care

The weight of the evidence continues to support our mixed, but overall constructive outlook. We outline the basis for our outlook and also...

Vermilion Research

Forensic Accounting | High Risk Companies in Developed Asia - Update 1.0

This is a follow-on insight from our original insight A Forensic Analysis Tool for Detecting Accounting Red Flags: Focus on Developed Asia. This...

Ankit Agrawal, CFA

Developed Markets Strategy: Stick with Japan

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE...

Vermilion Research

Developed Markets Opportunities

Continue to favor EAFE over EM. As long as the U.S. dollar remains elevated, we believe developed international (EAFE) will remain in a leadership...

Vermilion Research

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