Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
​
More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Macroeconomics

<div class="content-highlight">The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.</div>As noted by Yongding Yu and Ting Lu in a <a href="http://onlinelibrary.wiley.com/doi/10.1111/cwe.12141/epdf" target="_blank">recent paper</a>(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…

The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.As noted by Yongding Yu and Ting Lu in a recent paper(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…

How a Debt to Equity Swap Plan in China Could Work

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)

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

China Bank Profit on the Way to Contraction

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA 

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Cross Asset Strategy

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

<ul><li>Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL).</li><li>These categories are substandard, doubtful and loss.</li><li>The first category of loans is called pass, while the second is called special mention.</li><li>It is this latter category that is of interest to us here. These loans are late, but not impaired. They are not timely with payment, but not NPL.</li><li>These loans therefore have a high propensity to roll or migrate into the NPL loan category.</li><li>This is important as for some banks these loans are high compared with total NPLs. For some banks these loans are 2x or 3x higher than NPLs!</li><li>Also NPLs require far higher provisions than pass or special mention loans, and increasingly so, as they deteriorate from one category to another.</li></ul>Full report below the fold....

Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL).These categories are substandard, doubtful and loss.The first category of loans is called pass, while the second is called special mention.It is this latter category that is of interest to us here. These loans are late, but not impaired. They are not timely with payment, but not NPL.These loans therefore have a high propensity to roll or migrate into the NPL loan category.This is important as for some banks these loans are high compared with total NPLs. For some banks these loans are 2x or 3x higher than NPLs!Also NPLs require far higher provisions than pass or special mention loans, and increasingly so, as they deteriorate from one category to another.Full report below the fold....

China

Northeast Securities Co., Ltd. provides securities brokerage, trading, underwriting, asset management, investment consulting, and other financial services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Northeast Securities (000686 CH)

How a Debt to Equity Swap Plan in China Could Work

The government should set up a new national pension fund to save the economy. Securitising future pension payments may be the answer to the...

Mark Artherton

China Bank Profit on the Way to Contraction

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We...

Daniel Tabbush

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks. Bill-financing frauds seen at both the...

Morningstar, Inc.

A "Sudden Stop" For China in 2016?

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main...

John-Paul Smith

"Special Mention Loans" across Asia

Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL). These categories are substandard,...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)