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)

<ul>
<li>What's new is that Japan's domestic credit growth is accelerating, and it's now better than in Singapore, for instance; accelerating to 2.51% YoY in July from 0.77% February low</li>
<li>Loan growth and higher JGB yields, both matter for net interest income, and margins. Two year JGB yields are 0.035% on 22 September compared with -0.075% on 30 June.</li>
<li>Profit delta can rise further for Japan's banks due to better NPLs, with the largest banks' credit costs/loans moving to 5bps in 1Q24, vs 21bps in 4Q22, 11bps in 1Q23</li>
</ul>


What's new is that Japan's domestic credit growth is accelerating, and it's now better than in Singapore, for instance; accelerating to 2.51% YoY in July from 0.77% February low
Loan growth and higher JGB yields, both matter for net interest income, and margins. Two year JGB yields are 0.035% on 22 September compared with -0.075% on 30 June.
Profit delta can rise further for Japan's banks due to better NPLs, with the largest banks' credit costs/loans moving to 5bps in 1Q24, vs 21bps in 4Q22, 11bps in 1Q23


Japan Banks - Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

<ul><li>Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in September, the BoJ decided to leave its ultra- loose interest rates unchanged in spite of domestic consumer prices rising faster than the central bank’s 2% mandate.</li><li>The central bank’s decision to not tighten credit conditions, especially given the differential between BoJ’s policy rate and that of the US Federal Reserve’s (Fed) widening, led to the JPY tumbling against the USD to a 10-month low of JPY 148.46/USD.</li><li>Such domestic headwinds continue to put pressure on Japanese banks’ credit profiles which have been plagued by low domestic interest rate margins and fallout from decades of weak economic growth.</li></ul>

Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in September, the BoJ decided to leave its ultra- loose interest rates unchanged in spite of domestic consumer prices rising faster than the central bank’s 2% mandate.The central bank’s decision to not tighten credit conditions, especially given the differential between BoJ’s policy rate and that of the US Federal Reserve’s (Fed) widening, led to the JPY tumbling against the USD to a 10-month low of JPY 148.46/USD.Such domestic headwinds continue to put pressure on Japanese banks’ credit profiles which have been plagued by low domestic interest rate margins and fallout from decades of weak economic growth.

Change of Fortunes Result in Japanese Megabanks’ Leading Road to Recovery

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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).</li>
<li>As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).</li>
<li>Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.</li>
</ul>


Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).
As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).
Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.


Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

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

Shenton Research

Shenton 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 analyzed the changes in margin trading positions of JPX stocks as of Aug 14th. The aggregated net margin trading position is USD27,503m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Kioxia, Advantest, IHI, Tokio Marine, Nintendo, Screen, Mitsubishi Heavy Industries, Taiyo Yuden, Fast Retailing, Rakuten.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Aug 14th. The aggregated net margin trading position is USD27,503m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Kioxia, Advantest, IHI, Tokio Marine, Nintendo, Screen, Mitsubishi Heavy Industries, Taiyo Yuden, Fast Retailing, Rakuten.


JPX Margin Trading Weekly (Aug 14th): Kioxia, Advantest, IHI, Tokio Marine, Nintendo, Screen

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.

<ul>
<li>BoJ’s tweaking of yield curve controls places Japanese financials on a more positive investment footing, and given the modest valuations, there is healthy potential for further re-rating</li>
<li>We assess the large-cap and select mid-cap Japanese commercial banks’ exposures to JGBs and foreign sovereign bonds and their loan books’ gearing to the prospect of higher rates</li>
<li>We see value, in particular, in Resona, Mizuho and SMFG with attractive valuations supported by modest LDRs, good loan sensitivity to higher rates and relatively modest exposure to JGBs</li>
</ul>


BoJ’s tweaking of yield curve controls places Japanese financials on a more positive investment footing, and given the modest valuations, there is healthy potential for further re-rating
We assess the large-cap and select mid-cap Japanese commercial banks’ exposures to JGBs and foreign sovereign bonds and their loan books’ gearing to the prospect of higher rates
We see value, in particular, in Resona, Mizuho and SMFG with attractive valuations supported by modest LDRs, good loan sensitivity to higher rates and relatively modest exposure to JGBs


Japanese Banks – Our Picks for a Steepening Yield Curve

Japan

Mizuho Financial Group, Inc. provides comprehensive financial services through its subsidiaries. The Group provides variety of financial services such as general banking, securities brokerage, trust banking, and assets management.

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Mizuho Financial Group (8411 JP)

Japan Banks - Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY

Japan's banks are seeing accelerating domestic credit growth, better than Singapore now. JGB yields remain higher than in the past, credit costs...

Daniel Tabbush

Change of Fortunes Result in Japanese Megabanks’ Leading Road to Recovery

Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in...

Criat

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

JPX Margin Trading Weekly (Aug 14th): Kioxia, Advantest, IHI, Tokio Marine, Nintendo, Screen

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia (285A JP), Advantest (6857 JP), IHI (7013 JP), Tokio...

Ke Yan, CFA, FRM

Japanese Banks – Our Picks for a Steepening Yield Curve

We assess Japanese commercial banks’ exposures to JGBs and foreign sovereign bonds and their loan books’ gearing to the prospect of higher rates,...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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