External reports (aggregated public sources), Value Investors Club

Value Investors Club (VIC)

External reports (aggregated public sources)

Value Investors Club

Equity Bottom-Up

<ul><li>LSEG is shifting from a transactional exchange operator to a data and info services company</li><li>Expected low-teens EPS growth and 20% IRR in the medium term</li><li>Operates in financial data/analytics and market infrastructure, offering long-term investment potential</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>

LSEG is shifting from a transactional exchange operator to a data and info services companyExpected low-teens EPS growth and 20% IRR in the medium termOperates in financial data/analytics and market infrastructure, offering long-term investment potentialThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

London Stock Exchange Group (LSEG LN) - Wednesday, Aug 14, 2024

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>Our core pick is flow monster CME Group for its dominant franchise through its trading and post-trading (including clearing) operations in interest rates, equity indices, foreign exchange and commodity derivatives</li>
<li>We also like Deutsche Borse as the European flow monster and for its attractive valuations and gearing into greater European securities activity</li>
<li>We downgrade Japan Exchange to a neutral from buy for its fair valuations, as we see more compelling opportunities with CME group and Deutsche Borse; CBOE is one to watch</li>
</ul>


Our core pick is flow monster CME Group for its dominant franchise through its trading and post-trading (including clearing) operations in interest rates, equity indices, foreign exchange and commodity derivatives
We also like Deutsche Borse as the European flow monster and for its attractive valuations and gearing into greater European securities activity
We downgrade Japan Exchange to a neutral from buy for its fair valuations, as we see more compelling opportunities with CME group and Deutsche Borse; CBOE is one to watch


Developed Market Exchanges – Integrated Flow Monsters and Big Data Monetisers

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>Global equity funds are heavily overweight in UK stock heading in to the election on July 4th.</li>
<li>Compared to the SPDRs MSCI ACWI ETF benchmark, UK allocations are at a record overweight of +2.64%, with 69% of investors positioned ahead of the benchmark.</li>
<li>All sectors in the UK are held net overweight, led by Industrials and Consumer Staples. Key stocks like AstraZeneca, Linde, and Unilever are among the most widely held.</li>
</ul>


Global equity funds are heavily overweight in UK stock heading in to the election on July 4th.
Compared to the SPDRs MSCI ACWI ETF benchmark, UK allocations are at a record overweight of +2.64%, with 69% of investors positioned ahead of the benchmark.
All sectors in the UK are held net overweight, led by Industrials and Consumer Staples. Key stocks like AstraZeneca, Linde, and Unilever are among the most widely held.


United Kingdom:  Record Overweights in Run Up to Election

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.

<ul>
<li>The top line of <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.</li>
<li>Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. </li>
<li>Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. </li>
</ul>


The top line of HKEX (388 HK) is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.
Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. 
Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. 


HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

<ul>
<li>Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. </li>
<li>The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. </li>
<li>Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?</li>
</ul>


Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane. 
The company's effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute. 
Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?


Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

United Kingdom

London Stock Exchange Group plc is the United Kingdom's primary stock exchange. The LSE provides markets that facilitate the raising of capital and the trading of corporate securities, access to a trading environment, as well as real-time pricing and reference information services worldwide.  Market coverage includes equities, derivatives and fixed-interest securities.

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London Stock Exchange (LSEG LN)

London Stock Exchange Group (LSEG LN) - Wednesday, Aug 14, 2024

LSEG is shifting from a transactional exchange operator to a data and info services company. Expected low-teens EPS growth and 20% IRR in the...

Value Investors Club (VIC)

Developed Market Exchanges – Integrated Flow Monsters and Big Data Monetisers

CME Group is our top pick for its dominant market position in key US derivatives, Deutsche Borse is also on the buy list. We downgrade Japan...

Victor Galliano

United Kingdom: Record Overweights in Run Up to Election

Global equity fund managers are heading into the UK election with a significant overweight position compared to the SPDRs MSCI ACWI ETF benchmark.

Steven Holden

HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

The direction of most line items are poor and this is not likely to reverse. The top line decline is especially severe as is average daily...

Daniel Tabbush

Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

Hong Kong Exchanges shows that much of its profit was due to rising rates on it cash deposits, and this can reverse. Lower taxation inflates...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

London Stock Exchange Group (LSEG LN) - Wednesday, Aug 14, 2024

LSEG is shifting from a transactional exchange operator to a data and info services company. Expected low-teens EPS growth and 20% IRR in the...

Value Investors Club (VIC)

Developed Market Exchanges – Integrated Flow Monsters and Big Data Monetisers

​CME Group is our top pick for its dominant market position in key US derivatives, Deutsche Borse is also on the buy list. We downgrade Japan...

Victor Galliano

United Kingdom: Record Overweights in Run Up to Election

Global equity fund managers are heading into the UK election with a significant overweight position compared to the SPDRs MSCI ACWI ETF benchmark.

Steven Holden

HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

The direction of most line items are poor and this is not likely to reverse. The top line decline is especially severe as is average daily...

Daniel Tabbush

Hong Kong Exchanges - Key Earnings Delta Was Rising Rates, Net Profit Inflated from Lower Taxation

Hong Kong Exchanges shows that much of its profit was due to rising rates on it cash deposits, and this can reverse. Lower taxation inflates...

Daniel Tabbush

CME Group is our top pick for its dominant market position in key US derivatives, Deutsche Borse is also on the buy list. We downgrade Japan...