Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>There are 22 changes for the Nifty200 Momentum 30 Index and 1 change for the Nifty100 Low Volatility 30 Index that will be implemented at the close on 29 June.</li>
<li>The round-trip trade across both indices is estimated at just over US$2bn and there are 18 stocks that have over 1x ADV to trade from passives.</li>
<li>A number of the inclusions will have inflows from global and local passive trackers over the next few months.</li>
</ul>


There are 22 changes for the Nifty200 Momentum 30 Index and 1 change for the Nifty100 Low Volatility 30 Index that will be implemented at the close on 29 June.
The round-trip trade across both indices is estimated at just over US$2bn and there are 18 stocks that have over 1x ADV to trade from passives.
A number of the inclusions will have inflows from global and local passive trackers over the next few months.


NIFTY200 Momentum30 / Nifty100 LowVol30 Index Rebalance: Over US$2bn to Trade in June

Specialist in Indian Banking and Economic Research

Hemindra Hazari

Thematic (Sector/Industry)

A newly-appointed (on October 9, 2020) deputy governor of the Reserve Bank of India (RBI) has <a href="https://www.rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1101" target="_blank" rel="noopener">proposed</a>, for discussion, that large systemically-important non-bank finance companies (NBFCs) either convert themselves into banks, or that they contract assets, in order to protect financial stability. This proposal not only has major implications for prominent NBFCs some belonging to industrial houses, but also highlights the regulator’s present lack of capability to regulate such companies. Instead of arguing for the large NBFCs to either become banks or face an eventual demise by setting on a path to shrinking their size, the regulator should be examining how to improve its own regulation and supervision of large NBFCs. The collapses of IL&amp;FS (<a href="https://hemindrahazari.com/2019/01/31/ilfs-collapse-what-happens-when-infrastructure-development-is-privatised-hemindra-hazari/" target="_blank" rel="noopener">here</a>) and <a href="https://www.smartkarma.com/entities/dewan-housing-finance-corp" target="_blank" data-smartkarma-citation="entities:8142:1" rel="noopener">Dewan Housing Finance (DEWH IN)</a> (<a href="https://hemindrahazari.com/2019/01/29/panel-discussion-on-cobrapost-expose-of-dhfl/" target="_blank" rel="noopener">here</a>) were not only a failure of corporate governance and the economic slowdown, but also the consequence of a severe shortfall in regulatory supervision.Financial deregulation and the entry of more players in the strategic financial sector require a more vigilant, intrusive regulator armed with the necessary systems, processes and human resource talent to effectively regulate and supervise the sector. Sadly, the total officer strength of the RBI is currently below the levels of 2015, and it needs to invest in more resources for regulating the NBFC sector instead of proposing to compel large NBFCs to become banks. NBFCs cater to specific needs of the economy which the banks, for whatever reasons, have been unable to address, and while some NBFCs may want to become banks, others owned by industrial houses may not even be permitted to get bank licenses, and some may not even want to become banks. In such a scenario it is imperative for the regulator to implement systems and processes to regulate large NBFCs instead of floating such proposals in the public domain.

A newly-appointed (on October 9, 2020) deputy governor of the Reserve Bank of India (RBI) has proposed, for discussion, that large systemically-important non-bank finance companies (NBFCs) either convert themselves into banks, or that they contract assets, in order to protect financial stability. This proposal not only has major implications for prominent NBFCs some belonging to industrial houses, but also highlights the regulator’s present lack of capability to regulate such companies. Instead of arguing for the large NBFCs to either become banks or face an eventual demise by setting on a path to shrinking their size, the regulator should be examining how to improve its own regulation and supervision of large NBFCs. The collapses of IL&amp;FS (here) and Dewan Housing Finance (DEWH IN) (here) were not only a failure of corporate governance and the economic slowdown, but also the consequence of a severe shortfall in regulatory supervision.Financial deregulation and the entry of more players in the strategic financial sector require a more vigilant, intrusive regulator armed with the necessary systems, processes and human resource talent to effectively regulate and supervise the sector. Sadly, the total officer strength of the RBI is currently below the levels of 2015, and it needs to invest in more resources for regulating the NBFC sector instead of proposing to compel large NBFCs to become banks. NBFCs cater to specific needs of the economy which the banks, for whatever reasons, have been unable to address, and while some NBFCs may want to become banks, others owned by industrial houses may not even be permitted to get bank licenses, and some may not even want to become banks. In such a scenario it is imperative for the regulator to implement systems and processes to regulate large NBFCs instead of floating such proposals in the public domain.

RBI Proposal to Convert Large NBFCs into Banks: No Solution to the Problem of Regulatory Failures

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

*HFC Harmonization With NBFCs: The Reserve Bank of India (RBI) had initially published a draft proposal for changes in regulations for Housing Finance Companies (HFC) in June 2020, seeking commentary from stakeholders by July 15, 2020; and*Final Regulatory Changes: After stakeholder review, there is essentially one key change to the draft proposal mandating a higher 60% of total assets be “qualifying housing finance assets” and that a minimum of 50% of total assets be housing loans. The RBI has indicated that other differences between HFC and NBFC regulations will be eliminated over a period of two years.

*HFC Harmonization With NBFCs: The Reserve Bank of India (RBI) had initially published a draft proposal for changes in regulations for Housing Finance Companies (HFC) in June 2020, seeking commentary from stakeholders by July 15, 2020; and*Final Regulatory Changes: After stakeholder review, there is essentially one key change to the draft proposal mandating a higher 60% of total assets be “qualifying housing finance assets” and that a minimum of 50% of total assets be housing loans. The RBI has indicated that other differences between HFC and NBFC regulations will be eliminated over a period of two years.

Reserve Bank of India  - Final HFC Changes

Forensic Analyst, Trudence Capital Advisors

Nitin Mangal

Forensic Analyst

Macroeconomics

Covid 19 pandemic proved to be as troublesome a financial crisis as a humanitarian one. In <a href="https://www.smartkarma.com/insights/covid-19-rbi-has-gone-all-out-attack" target="_blank" data-smartkarma-citation="insights:37873" rel="noopener">Covid-19: RBI Has Gone All-Out-Attack</a> we spoke about some bold and drastic measures the central bank has taken to curb the crisis back in March/April.The respite from the central bank was just the beginning that needed a spot on execution. Fast forward few months, while the broad macro indicators still gasp for a speedy recovery, the financial stress on both lenders and borrowers had been soaring aggravatingly especially on the MSMEs. This insight deals with the latest mode of action on the regulatory side that the RBI has taken in its MPC meet Aug'20, which will bring a breathing space to the borrowers.

Covid 19 pandemic proved to be as troublesome a financial crisis as a humanitarian one. In Covid-19: RBI Has Gone All-Out-Attack we spoke about some bold and drastic measures the central bank has taken to curb the crisis back in March/April.The respite from the central bank was just the beginning that needed a spot on execution. Fast forward few months, while the broad macro indicators still gasp for a speedy recovery, the financial stress on both lenders and borrowers had been soaring aggravatingly especially on the MSMEs. This insight deals with the latest mode of action on the regulatory side that the RBI has taken in its MPC meet Aug'20, which will bring a breathing space to the borrowers.

RBI MPC Meet: Can New Policies Really Curb the Covid-19 Impact?

*Another Plan, More Forbearance: The Reserve Bank of India (RBI) has announced a one-time restructuring framework or asset classification forbearance to resolve assets under stress related to COVID-19 across corporate, M-SME, and retail; * Mitigating Bank P&amp;L Impact: In general, all banks will be able to restructure the exposures under stress and mitigate the impact to the bottom-line in FY 2H21. This amounts to between 50%-55% of system loans; and  * Devil In The Details: Like everything else with the RBI and the bureaucracy of India, not everything is as it seems. This plan needs to be thoroughly reviewed  - although we hope its not another robbing Peter to pay Paul deal as we have become so accustomed to in India.

*Another Plan, More Forbearance: The Reserve Bank of India (RBI) has announced a one-time restructuring framework or asset classification forbearance to resolve assets under stress related to COVID-19 across corporate, M-SME, and retail; * Mitigating Bank P&amp;L Impact: In general, all banks will be able to restructure the exposures under stress and mitigate the impact to the bottom-line in FY 2H21. This amounts to between 50%-55% of system loans; and  * Devil In The Details: Like everything else with the RBI and the bureaucracy of India, not everything is as it seems. This plan needs to be thoroughly reviewed  - although we hope its not another robbing Peter to pay Paul deal as we have become so accustomed to in India.

Reserve Bank of India – Read The Fine Print

India

Muthoot Finance Ltd is an Indian non-banking financial company and the largest gold loan NBFC in the country. The company primarily provides personal and business loans secured by gold jewelry, and also offers other loans, insurance, money transfer services, and sells gold coins. It is headquartered in Kochi, Kerala, India, and was founded in 1939.

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Muthoot Finance (MUTH IN)

NIFTY200 Momentum30 / Nifty100 LowVol30 Index Rebalance: Over US$2bn to Trade in June

The deletes have outperformed the adds by 4.7% since the announcement of the changes. The passives trade at the close today and those flows could...

Brian Freitas

RBI Proposal to Convert Large NBFCs into Banks: No Solution to the Problem of Regulatory Failures

Instead of forcible conversion to banks the RBI should ensure that it improves the regulation of important NBFCs so as to ensure that these...

Hemindra Hazari

Reserve Bank of India - Final HFC Changes

RESERVE BANK OF INDIA - Final Housing Finance and Non-Bank Financial Company Rule Harmonization Regulations Now Set With Stricter Rules.

Thomas J. Monaco

RBI MPC Meet: Can New Policies Really Curb the Covid-19 Impact?

Covid 19 pandemic proved to be as troublesome a financial crisis as a humanitarian one. In Covid-19: RBI Has Gone All-Out-Attack we spoke about...

Nitin Mangal

Reserve Bank of India – Read The Fine Print

*Another Plan, More Forbearance: The Reserve Bank of India (RBI) has announced a one-time restructuring framework or asset classification...

Thomas J. Monaco

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