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)

*Yield Steepening Likely Leads To FRB Action: The recent turmoil in the US bond market has now led to expectations that the Federal Reserve Board (FRB) may announce interest rate policy tweaks as soon as its next meeting on March 16th. The FRB appears to seek inflation, and the question would appear to be when (not if) the FRB will become more aggressive in preventing the long end of the curve from further steepening; and*Watch Your Financial Positions: Coupled with a rapid economic recovery  - especially given the US lead with vaccination rollouts, the steep yield curve has led to YTD US financial sector outperformance. However, if the FRB begins flattening the yield curve, sentiment is likely to quickly turn. As such, near-term caution for financials is likely warranted ahead of next FRB meeting as the recent bond market volatility is likely to force the FRB’s hand on Yield Curve Control (YCC).

*Yield Steepening Likely Leads To FRB Action: The recent turmoil in the US bond market has now led to expectations that the Federal Reserve Board (FRB) may announce interest rate policy tweaks as soon as its next meeting on March 16th. The FRB appears to seek inflation, and the question would appear to be when (not if) the FRB will become more aggressive in preventing the long end of the curve from further steepening; and*Watch Your Financial Positions: Coupled with a rapid economic recovery  - especially given the US lead with vaccination rollouts, the steep yield curve has led to YTD US financial sector outperformance. However, if the FRB begins flattening the yield curve, sentiment is likely to quickly turn. As such, near-term caution for financials is likely warranted ahead of next FRB meeting as the recent bond market volatility is likely to force the FRB’s hand on Yield Curve Control (YCC).

Federal Reserve Board – Doing The Twist

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

Macroeconomics

India's nominal GDP increased 4.3% YoY in Oct-Dec 2020, although real GDP was only reported to have increased 1% YoY (based on production-side estimates). The implicit GDP deflator thus increased 3.3% YoY -- much more than the average WPI inflation rate of 1.66% YoY during the quarter. Using expenditure-side estimates, nominal GDP grew even faster (+5.3% YoY), although the reported real increase in GDE was only 0.4% YoY -- implying an increase in the GDE deflator of 3.9% YoY. While this appears consistent with the higher CPI inflation rate, the GDE deflator also takes account of the GFCF and net export deflators, neither of which were rising much. So it is likely that the GDP estimates for that quarter will be revised up eventually. The most encouraging aspect of the GDE estimates was that fixed investment spending (GFCF) increased 2.6% YoY in the Oct-Dec 2020 quarter, the first such increase in a year. This suggests that the production-linked incentives (PLI) and sharply-lower corporate tax rates are beginning to spur a revival in investment spending, not just in FDI (which was doing well anyway, but remains a small proportion of overall GFCF).  As investment gains momentum, the additional capacity creation will dampen costs and prices. Additionally, CPI inflation was artificially high in April-November 2020 because of supply disruptions and bottlenecks arising from the strict lockdown in April-June, which only eased gradually in subsequent months. CPI inflation has already eased to 4.06% YoY in January 2021. Compared with the high base in Apr-Nov 2020, CPI inflation is likely to ease toward 3% YoY by June 2021, obliging the RBI to cut its policy rate by 50bp (to 3.5%) by September 2021. We continue to expect a powerful economic recovery to occur in FY2021/22, helped by the low base from a year ago, the slew of fiscal incentives, an acceleration in privatization (which will crowd-in private investment, already enthused by low tax rates) and a surge of public investment. The decline in policy rates will be the icing on the cake, helping to deliver real GDP growth of 13.5% YoY in FY2021/22.

India's nominal GDP increased 4.3% YoY in Oct-Dec 2020, although real GDP was only reported to have increased 1% YoY (based on production-side estimates). The implicit GDP deflator thus increased 3.3% YoY -- much more than the average WPI inflation rate of 1.66% YoY during the quarter. Using expenditure-side estimates, nominal GDP grew even faster (+5.3% YoY), although the reported real increase in GDE was only 0.4% YoY -- implying an increase in the GDE deflator of 3.9% YoY. While this appears consistent with the higher CPI inflation rate, the GDE deflator also takes account of the GFCF and net export deflators, neither of which were rising much. So it is likely that the GDP estimates for that quarter will be revised up eventually. The most encouraging aspect of the GDE estimates was that fixed investment spending (GFCF) increased 2.6% YoY in the Oct-Dec 2020 quarter, the first such increase in a year. This suggests that the production-linked incentives (PLI) and sharply-lower corporate tax rates are beginning to spur a revival in investment spending, not just in FDI (which was doing well anyway, but remains a small proportion of overall GFCF).  As investment gains momentum, the additional capacity creation will dampen costs and prices. Additionally, CPI inflation was artificially high in April-November 2020 because of supply disruptions and bottlenecks arising from the strict lockdown in April-June, which only eased gradually in subsequent months. CPI inflation has already eased to 4.06% YoY in January 2021. Compared with the high base in Apr-Nov 2020, CPI inflation is likely to ease toward 3% YoY by June 2021, obliging the RBI to cut its policy rate by 50bp (to 3.5%) by September 2021. We continue to expect a powerful economic recovery to occur in FY2021/22, helped by the low base from a year ago, the slew of fiscal incentives, an acceleration in privatization (which will crowd-in private investment, already enthused by low tax rates) and a surge of public investment. The decline in policy rates will be the icing on the cake, helping to deliver real GDP growth of 13.5% YoY in FY2021/22.   

India: Easing Inflation Will Oblige RBI to Cut Policy Rates in the Next Half Year

*Bracing For Even Tougher Times: According to the Reserve Bank of India (RBI), India’s financial sector needs to prepare for even more challenging times given the continued risk of credit deterioration, which remains heightened due to this unrelenting pandemic; and*Open Your Wallets, Indian Financials Need Money: Given the economic uncertainty posed by COVID-19, credit quality in the Indian financial system is likely to present continued economic challenges in 2021. If the RBI is correct, and we believe that it is – although its forecasts appear quite light, FY 2022 will see continued losses and massive levels of capital raised.

*Bracing For Even Tougher Times: According to the Reserve Bank of India (RBI), India’s financial sector needs to prepare for even more challenging times given the continued risk of credit deterioration, which remains heightened due to this unrelenting pandemic; and*Open Your Wallets, Indian Financials Need Money: Given the economic uncertainty posed by COVID-19, credit quality in the Indian financial system is likely to present continued economic challenges in 2021. If the RBI is correct, and we believe that it is – although its forecasts appear quite light, FY 2022 will see continued losses and massive levels of capital raised.   

Reserve Bank of India – Continued Bank Waterboarding

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

National Stock Exchange of India / Equity Capital Markets

National Stock Exchange of India (NSE IN)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/national-stock-exchange" target="_blank" data-smartkarma-citation="entities:23751:1" rel="noopener">National Stock Exchange (NSEIN IN)</a> is looking to raise upto US$2.5bn in its India IPO. </li>
<li>NSE operates electronic platforms for trading equities, derivatives, currencies, and debt securities, also earning revenue from clearing and settlement services, market data, index licensing, listing fees, connectivity, and technology services.</li>
<li>In this note, we look at the company’s past performance and other deal dynamics.</li>
</ul>



National Stock Exchange (NSEIN IN) is looking to raise upto US$2.5bn in its India IPO. 
NSE operates electronic platforms for trading equities, derivatives, currencies, and debt securities, also earning revenue from clearing and settlement services, market data, index licensing, listing fees, connectivity, and technology services.
In this note, we look at the company’s past performance and other deal dynamics.


Aequitas: NSE Pre-IPO - Dominance Has Only Grown

*Adding To The Confusion Again: Just when we thought Indian banking couldn’t get any muddier, the Reserve Bank of India (RBI) released its Report of the Internal Working Group (IWG) to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks which convened on June 12, 2020; and*Proposed Changes: The IWG has proposed: a) a higher promoter stake cap of 26% (from 15% currently); b) harmonization of corporate structures to non-operative financial holding companies (NOFHC); c) large corporates can be given a banking license subject to conditions and checks; and d) large non-bank financial companies (NBFCs) with assets greater than INR 500 bn can be considered for a banking license.

*Adding To The Confusion Again: Just when we thought Indian banking couldn’t get any muddier, the Reserve Bank of India (RBI) released its Report of the Internal Working Group (IWG) to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks which convened on June 12, 2020; and*Proposed Changes: The IWG has proposed: a) a higher promoter stake cap of 26% (from 15% currently); b) harmonization of corporate structures to non-operative financial holding companies (NOFHC); c) large corporates can be given a banking license subject to conditions and checks; and d) large non-bank financial companies (NBFCs) with assets greater than INR 500 bn can be considered for a banking license.

Reserve Bank of India – How Simple Becomes Really Complicated

India

iShares MSCI India Index ETF is an exchange-traded fund registered in Singapore. The Fund seeks to provide investment results that, before expenses, closely correspond to the performance of the MSCI India Index. The Fund invests all or substantially all of its assets in shares comprising the MSCI India Index in substantially the same weightings as constituted in the underlying index.

iShares MSCI India Index ETF (INDIA SP)

Federal Reserve Board – Doing The Twist

FEDERAL RESERVE BOARD: There are expectations of FRB interest rate policy tweaks as soon as its next meeting. If the FRB flattens the curve,...

Thomas J. Monaco

India: Easing Inflation Will Oblige RBI to Cut Policy Rates in the Next Half Year

Nominal GDP was up 5.3%YoY in Oct-Dec 2020, although real GDP rose only 1%YoY. But CPI inflation will likely be below 3%YoY by June, forcing a 50bp...

Prasenjit K. Basu

Reserve Bank of India – Continued Bank Waterboarding

RESERVE BANK OF INDIA: India’s financial sector needs to prepare for even more challenging times. If the RBI is correct, FY 2022 will see continued...

Thomas J. Monaco

Aequitas: NSE Pre-IPO - Dominance Has Only Grown

National Stock Exchange (NSEIN IN) is looking to raise upto US$2.5bn in its India IPO. In this note, we look at the company's past performance.

Sumeet Singh

Reserve Bank of India – How Simple Becomes Really Complicated

RESERVE BANK OF INDIA: New Just when we thought Indian banking couldn’t get any muddier, the Reserve Bank of India (RBI) released its Report of the...

Thomas J. Monaco