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

Equity Bottom-Up

Hong Kong Exchanges and Clearing / Equity Bottom-Up

Hong Kong Exchanges and Clearing (388 HK)

<p><em><strong>*A50 Challenges From HKEx: </strong></em>On October 18, 2021, the Hong Kong Exchange &amp; Clearing (388.HK) [HKEx] successfully launched the MSCI China A50 Connect (HK A50), which is predicated on the new MSCI A50 Index. Unfortunately, this new product will be in direct competition with Singapore Exchange’s (SGX.SP) [SGX]  FTSE A50 contract, which represents approximately 10% of company revenue or close to 20% of PBT.  HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering; and</p><p><em><strong>*Time For Massive Strategic Move: </strong></em>As SGX needs to contend with a greater than expected impact from the earlier-than-expected launch of HKEX's MSCI China A50 index futures – on top of weaker equity volumes and fees, it continues to do numerous tiny bolt-on deals which appear to be more of a distraction than their worth. SGX must consider significant strategic alternatives if it is to avoid being hollowed out over the longer-term. </p>

*A50 Challenges From HKEx: On October 18, 2021, the Hong Kong Exchange &amp; Clearing (388.HK) [HKEx] successfully launched the MSCI China A50 Connect (HK A50), which is predicated on the new MSCI A50 Index. Unfortunately, this new product will be in direct competition with Singapore Exchange’s (SGX.SP) [SGX]  FTSE A50 contract, which represents approximately 10% of company revenue or close to 20% of PBT.  HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering; and*Time For Massive Strategic Move: As SGX needs to contend with a greater than expected impact from the earlier-than-expected launch of HKEX's MSCI China A50 index futures – on top of weaker equity volumes and fees, it continues to do numerous tiny bolt-on deals which appear to be more of a distraction than their worth. SGX must consider significant strategic alternatives if it is to avoid being hollowed out over the longer-term. 

Hong Kong Exchanges & Clearing – Hollowing Out Of SGX Starts

<p><strong><em>*A50 Challenges From HKEx: </em></strong>On October 18, 2021, the Hong Kong Exchange &amp; Clearing (388.HK) [HKEx] is set to launch a derivative product (China A50 contract), which is predicated on the new MSCI A50 Index. Unfortunately, this new product will be in direct competition with Singapore Exchange’s (SGX.SP) [SGX]  FTSE A50 contract, which represents approximately 10% of company revenue or close to 20% of PBT - not to mention 53% of its equity derivatives volume. HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering; and</p><p><strong><em>*Time For Massive Strategic Move: </em></strong>As SGX needs to contend with a greater than expected impact from the earlier-than-expected launch of HKEX's MSCI China A50 index futures – on top of weaker equity volumes and fees, it continues to do numerous tiny bolt-on deals which appear to be more of a distraction than their worth. SGX must consider significant strategic alternatives if it is to avoid being hollowed out over the longer-term.</p>

*A50 Challenges From HKEx: On October 18, 2021, the Hong Kong Exchange &amp; Clearing (388.HK) [HKEx] is set to launch a derivative product (China A50 contract), which is predicated on the new MSCI A50 Index. Unfortunately, this new product will be in direct competition with Singapore Exchange’s (SGX.SP) [SGX]  FTSE A50 contract, which represents approximately 10% of company revenue or close to 20% of PBT - not to mention 53% of its equity derivatives volume. HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering; and*Time For Massive Strategic Move: As SGX needs to contend with a greater than expected impact from the earlier-than-expected launch of HKEX's MSCI China A50 index futures – on top of weaker equity volumes and fees, it continues to do numerous tiny bolt-on deals which appear to be more of a distraction than their worth. SGX must consider significant strategic alternatives if it is to avoid being hollowed out over the longer-term.

Singapore Exchange – 50 Hits To Bottom-Line

<p><strong><em>*New Product Line:</em></strong> Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] has published a consultation paper seeking feedback on offering Special Purpose Acquisition Companies (SPAC) by October 31, 2021; and    </p><p><em><strong>*Not A Panacea:</strong></em> We do not believe that SPACs are the panacea which will resolve HKEX’s weakened revenue stream. Further, the US Securities and Exchange Commission (SEC) issued accounting guidance for SPACs, calling warrant issuance by SPACs liabilities rather than equity instruments. This could disrupt new SPAC filings, and certainly throw a wrench into HKEX’s SPAC plans.</p>

*New Product Line: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] has published a consultation paper seeking feedback on offering Special Purpose Acquisition Companies (SPAC) by October 31, 2021; and    *Not A Panacea: We do not believe that SPACs are the panacea which will resolve HKEX’s weakened revenue stream. Further, the US Securities and Exchange Commission (SEC) issued accounting guidance for SPACs, calling warrant issuance by SPACs liabilities rather than equity instruments. This could disrupt new SPAC filings, and certainly throw a wrench into HKEX’s SPAC plans.

Hong Kong Exchanges & Clearing – SPAC Time

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Philippine Stock Exchange / Equity Bottom-Up

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<p>The <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> reported a strong set of 1H2021 numbers with net income up by +63.1% YoY on the back of a +30.9% increase in operating revenues.</p>
<p>The bottom-line performance was driven by the increase in operating revenues together with positive investment income. </p>
<p>The company saw particularly strong growth in listing fees due to a number of large size IPOs, whilst transaction fees and SCCP clearing fees increased due to higher market volumes, driven by particularly strong retail activity.</p>
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<p>The real growth driver for revenues and profits in 1H2021 came from a significant increase in capital raisings.</p>
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<p>Even after the flush of offerings in 1H2021, the listing pipeline is robust for 2H2021 and going into 2022, with a number of already approved issues plus upcoming planned listings as well as a number of planned REITs in the pipeline, which have already been featured in the news.</p>
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<p>The <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> has also laid out a number of key initiatives set to launch this year which will provide a potential boost to activity on the exchange including new rules on short selling.</p>
<p><a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> will launch a new marketing campaign to encourage more companies to list and especially SMEs. </p>
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<p>This latest set of results underline the positive story with <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> which continues to look promising with a strong IPO and placement pipeline for 2H2021 and going into 2022. </p>
<p>If we factor in the company's cash per share into the <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> valuation then the company is trading on an ex-cash FY21E PER of 16.0x and FY22E PER of 14.5x making it look significantly more attractive versus its peers together with stronger growth prospects. </p>
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The Philippine Stock Exchange (PSE PM) reported a strong set of 1H2021 numbers with net income up by +63.1% YoY on the back of a +30.9% increase in operating revenues.
The bottom-line performance was driven by the increase in operating revenues together with positive investment income. 
The company saw particularly strong growth in listing fees due to a number of large size IPOs, whilst transaction fees and SCCP clearing fees increased due to higher market volumes, driven by particularly strong retail activity.





The real growth driver for revenues and profits in 1H2021 came from a significant increase in capital raisings.

Even after the flush of offerings in 1H2021, the listing pipeline is robust for 2H2021 and going into 2022, with a number of already approved issues plus upcoming planned listings as well as a number of planned REITs in the pipeline, which have already been featured in the news.



The Philippine Stock Exchange (PSE PM) has also laid out a number of key initiatives set to launch this year which will provide a potential boost to activity on the exchange including new rules on short selling.
Philippine Stock Exchange (PSE PM) will launch a new marketing campaign to encourage more companies to list and especially SMEs. 





This latest set of results underline the positive story with Philippine Stock Exchange (PSE PM) which continues to look promising with a strong IPO and placement pipeline for 2H2021 and going into 2022. 
If we factor in the company's cash per share into the Philippine Stock Exchange (PSE PM) valuation then the company is trading on an ex-cash FY21E PER of 16.0x and FY22E PER of 14.5x making it look significantly more attractive versus its peers together with stronger growth prospects. 


Philippine Stock Exchange (PSE PM) - Thriving on Retailers and IPOs

<p><strong><em>*Challenging Quarter: </em></strong>Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 2Q21 weak earnings of HKD 2.8 bn, declining HKD 1.1 bn (27.9%) linked quarter. Results were even worse when we exclude investment income (declined HKD 73 mn or 15.7% linked quarter) – decreasing HKD 997 mn (29.5%) to HKD 2.4 bn. Results were highlighted by HKEX’ marginally negative operating jaws, as recurring revenue declined HKD 1.9 bn (29.7%) while operating expenses increased HKD 8 mn (0.7%) over the period. HKEX’ 2Q21 witnessed weak revenues almost across the board; and</p><p><strong><em>*Risks Are Increasing: </em></strong>In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase, mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center; and the Sino-ification of HKEX trading as tension mount between the US and mainland China.</p>

*Challenging Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 2Q21 weak earnings of HKD 2.8 bn, declining HKD 1.1 bn (27.9%) linked quarter. Results were even worse when we exclude investment income (declined HKD 73 mn or 15.7% linked quarter) – decreasing HKD 997 mn (29.5%) to HKD 2.4 bn. Results were highlighted by HKEX’ marginally negative operating jaws, as recurring revenue declined HKD 1.9 bn (29.7%) while operating expenses increased HKD 8 mn (0.7%) over the period. HKEX’ 2Q21 witnessed weak revenues almost across the board; and*Risks Are Increasing: In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase, mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center; and the Sino-ification of HKEX trading as tension mount between the US and mainland China.

Hong Kong Exchanges & Clearing – Glitter Is Gone

Philippines

The Philippine Stock Exchange, Inc. (PSE) operates as the national stock exchange of the Philippines, providing listing, trading, market data, clearing, and settlement services. It facilitates the trading of various securities, including shares of stock, Exchange Traded Funds (ETFs), and Real Estate Investment Trusts (REITs). The company is headquartered in Taguig City, Philippines, and has been in operation since 1927, including its previous forms.

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Philippine Stock Exchange (PSE PM)

Hong Kong Exchanges & Clearing – Hollowing Out Of SGX Starts

HKEX: On October 18, 2021, HKEx launched MSCI China A50 Connect (HK A50), which is predicated on the new MSCI A50 Index. Unfortunately, this new...

Thomas J. Monaco

Singapore Exchange – 50 Hits To Bottom-Line

SGX: On October 18th HKEx is set to launch its own China A50 contract, which will be in direct competition with SGX FTSE A50 contract. SGX's A50...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – SPAC Time

HKEX: HKEX is seeking feedback on offering SPACs. We do not believe that SPACs are the panacea which will resolve HKEX’s weakened revenue stream.

Thomas J. Monaco