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.

Thematic (Sector/Industry)

The concern now is that the sizeable credit cost delta seen in the latest quarter and for some in the second quarter, now wanes.  This is entirely due to the risk of increased of economic shutdown around the world and for some, a reversion to remaining closed to tourism and relatively normal living. We are seeing this is large countries in Europe now. Bank analysis is wholly different in the current environment, and at the whim of fearful governments – the antithesis of the private sector. We believe there are three considerations now that drive bank profit: 1) vaccine, 2) rationality and 3) excessive fear.

The concern now is that the sizeable credit cost delta seen in the latest quarter and for some in the second quarter, now wanes.  This is entirely due to the risk of increased of economic shutdown around the world and for some, a reversion to remaining closed to tourism and relatively normal living. We are seeing this is large countries in Europe now. Bank analysis is wholly different in the current environment, and at the whim of fearful governments – the antithesis of the private sector. We believe there are three considerations now that drive bank profit: 1) vaccine, 2) rationality and 3) excessive fear.

Global Banks – Waning Credit Cost Delta

Alpha-Centric ESG Research

Kyle Rudden

First things first, Biden still has an election to win and although that still seems to be his destiny (see <a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-is-looking-more-likely" target="_blank" data-smartkarma-citation="insights:44504" rel="noopener">U.S. Elections: A Biden Win Is Looking More Likely</a> ), Trump is by no means out of the race.If Biden wins, the real work starts including his transition and building his administration through various appointments such as those described in <a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-would-mean-a-new-u-s-treasury-secretary-elizabeth-warren-might-be-it" target="_blank" data-smartkarma-citation="insights:44761" rel="noopener">U.S. Elections: A Biden Win Would Mean a New U.S. Treasury Secretary (Elizabeth Warren Might Be It)</a>.After key appointments and implementing a coronavirus response and related economic relief and stimulus, Biden would likely start fixing some of what Trump broke. That means reversing Trump's reversals of Obama-era environmental policy, and other Trump's doings (some would say damage).Herein, I briefly discuss three of the more important – and most likely to be addressed early in the Biden presidency – that pertain to directly to sustainable/ESG investing. They are:<ol>
<li>Rejoining the Paris Agreement on Climate Change and repairing relationships related to it</li>
<li>Undoing the "anti-ESG" investing rule (just passed on 30 October) affecting pension funds</li>
<li>Replacing the SEC Chairman (his term expires in 2021) with a Democrat supportive of ESG</li>
</ol>

First things first, Biden still has an election to win and although that still seems to be his destiny (see U.S. Elections: A Biden Win Is Looking More Likely ), Trump is by no means out of the race.If Biden wins, the real work starts including his transition and building his administration through various appointments such as those described in U.S. Elections: A Biden Win Would Mean a New U.S. Treasury Secretary (Elizabeth Warren Might Be It).After key appointments and implementing a coronavirus response and related economic relief and stimulus, Biden would likely start fixing some of what Trump broke. That means reversing Trump's reversals of Obama-era environmental policy, and other Trump's doings (some would say damage).Herein, I briefly discuss three of the more important – and most likely to be addressed early in the Biden presidency – that pertain to directly to sustainable/ESG investing. They are:
Rejoining the Paris Agreement on Climate Change and repairing relationships related to it
Undoing the "anti-ESG" investing rule (just passed on 30 October) affecting pension funds
Replacing the SEC Chairman (his term expires in 2021) with a Democrat supportive of ESG


U.S. Elections: A Biden Win Would Include Reversing Trump's Anti-ESG Handiwork

Only Donald Trump can run the United States alone. Other presidents require the support of many departments, agencies, and advisors. When a new president is elected, there is a formal transition process, a central component of which is appointing people to those critical positions.Should Biden win the election, his administration will ultimately appoint more than 4,000 people. We will never hear about the vast majority of them. However, some appointments are anticipated and debated (in the U.S. and globally) because they are so utterly consequential.Appointments vary in relevance to each of the Triple Bottom Line pillars – Environmental, Social (including Governance), Economic. For some appointed positions, the relevance to investing is far removed. A few, however, have major and immediate capital markets implications.This Insight does three things:<ol>
<li>Introduces the transition and appointment process including critical appointments and roles</li>
<li>Discusses the "transition politics" that will drive Biden's appointment strategy and decisions</li>
<li>Analyses the candidates and their likelihoods for the Secretary of the Treasury appointment</li>
</ol>For more on the election, the likelihood of a Biden win, and ESG investing implications of a Biden win see <a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-is-looking-more-likely" target="_blank" data-smartkarma-citation="insights:44504" rel="noopener">U.S. Elections: A Biden Win Is Looking More Likely</a> as well as <a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-would-be-a-win-for-esg-investing-and-sustainable-finance" target="_blank" data-smartkarma-citation="insights:44503" rel="noopener">U.S. Elections: A Biden Win Would Be a Win for ESG Investing and Sustainable Finance</a>.

Only Donald Trump can run the United States alone. Other presidents require the support of many departments, agencies, and advisors. When a new president is elected, there is a formal transition process, a central component of which is appointing people to those critical positions.Should Biden win the election, his administration will ultimately appoint more than 4,000 people. We will never hear about the vast majority of them. However, some appointments are anticipated and debated (in the U.S. and globally) because they are so utterly consequential.Appointments vary in relevance to each of the Triple Bottom Line pillars – Environmental, Social (including Governance), Economic. For some appointed positions, the relevance to investing is far removed. A few, however, have major and immediate capital markets implications.This Insight does three things:
Introduces the transition and appointment process including critical appointments and roles
Discusses the "transition politics" that will drive Biden's appointment strategy and decisions
Analyses the candidates and their likelihoods for the Secretary of the Treasury appointment
For more on the election, the likelihood of a Biden win, and ESG investing implications of a Biden win see U.S. Elections: A Biden Win Is Looking More Likely as well as U.S. Elections: A Biden Win Would Be a Win for ESG Investing and Sustainable Finance.

U.S. Elections: A Biden Win Would Mean a New U.S. Treasury Secretary (Elizabeth Warren Might Be It)

Equity Bottom-Up

This is not something that we are hearing about from all banks, or even a small percentage. But it is something that we must prepare for, a return to normal business levels. Norway’s <a href="https://www.smartkarma.com/entities/dnb-asa" target="_blank" data-smartkarma-citation="entities:22227:1" rel="noopener">DNB ASA (DNB NO)</a> describes its customer activity and business levels as normal, just a few days ago. As we have indicated in much of our research, this should not be too great a surprise, as the current crisis is self-inflicted by governments enacting insane policies. As we re-open, the pace of recovery is reflecting this.

This is not something that we are hearing about from all banks, or even a small percentage. But it is something that we must prepare for, a return to normal business levels. Norway’s DNB ASA (DNB NO) describes its customer activity and business levels as normal, just a few days ago. As we have indicated in much of our research, this should not be too great a surprise, as the current crisis is self-inflicted by governments enacting insane policies. As we re-open, the pace of recovery is reflecting this.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>US underweight rises to highest ever level among Global investors</li>
<li>Tech and Consumer Discretionary outperformance drives underweights higher</li>
<li>Increasing underweight driven by passive inflows as large cap stocks dominate indices.</li>
<li>Active funds running larger underweight positions among top index constituents.</li>
<li>Active buying to close underweight holdings fuels the fire of the large-cap rally further still.</li>
</ul>Analysis taken from our global active manager research, covering 391 global funds with a combined AUM of $750bn


US underweight rises to highest ever level among Global investors
Tech and Consumer Discretionary outperformance drives underweights higher
Increasing underweight driven by passive inflows as large cap stocks dominate indices.
Active funds running larger underweight positions among top index constituents.
Active buying to close underweight holdings fuels the fire of the large-cap rally further still.
Analysis taken from our global active manager research, covering 391 global funds with a combined AUM of $750bn

The Anatomy of the US Underweight (And the Effect of Rising Passive ETF Flows in the US).

United States

JPMorgan Chase & Co. provides global financial services and retail banking. The Company provides services such as investment banking, treasury and securities services, asset management, private banking, card member services, commercial banking, and home finance. JP Morgan Chase serves business enterprises, institutions, and individuals.

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JPMorgan Chase & Co (JPM US)

Global Banks – Waning Credit Cost Delta

Bank analysis is wholly different in the current environment. We believe there are three considerations now that drive bank profit: 1) vaccine, 2)...

Daniel Tabbush

U.S. Elections: A Biden Win Would Include Reversing Trump's Anti-ESG Handiwork

If Biden wins the election, and after dealing with the coronavirus pandemic, he will start reversing Trump's reversals of Obama-era environmental...

Kyle Rudden

U.S. Elections: A Biden Win Would Mean a New U.S. Treasury Secretary (Elizabeth Warren Might Be It)

If Biden wins, his next step is appointing a Cabinet including Secretary of the Treasury. Elizabeth Warren is a leading candidate. Far-left...

Kyle Rudden

DNB ASA – Business Is Back to Normal

Norway's DNB is indicating a return to normalcy in business; we may expect similar commentary from more banks in coming months

Daniel Tabbush

The Anatomy of the US Underweight (And the Effect of Rising Passive ETF Flows in the US).

ETF inflows drive underweights in US equities to record levels. Active buying to close underweights in major index stocks fuels the rally further...

Steven Holden

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