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.

Equity Bottom-Up

<ul>
<li>The sharp Japanese market correction has hit the banks hard, and heightened market volatility is likely to remain a feature, at least in the very near term</li>
<li>Nonetheless, the big five’s results in the first quarter to June-end paint a reassuring picture, and we see that BoJ is pausing on rate rises in these unsettled markets</li>
<li>Among the big five Japanese bank shares, we highlight Resona and Mizuho in particular for their strong gearing to higher interest rates; we are also positive on SMFG and Concordia</li>
</ul>


The sharp Japanese market correction has hit the banks hard, and heightened market volatility is likely to remain a feature, at least in the very near term
Nonetheless, the big five’s results in the first quarter to June-end paint a reassuring picture, and we see that BoJ is pausing on rate rises in these unsettled markets
Among the big five Japanese bank shares, we highlight Resona and Mizuho in particular for their strong gearing to higher interest rates; we are also positive on SMFG and Concordia


Japanese Big Five Banks – Opportunity in the Face of Market Turmoil; Focus on Resona and Mizuho

<ul>
<li>The Bank of Japan has raised its short-term interest rate to 0.25% from 0.1% ahead of the core of consensus expectations, and BoJ plans to pare back purchases of JGBs</li>
<li>We focus on those big-cap Japanese banks that are well geared into higher domestic rates through loan books and BoJ deposits, that also have lesser exposure to rising JGB yields</li>
<li>We stay broadly positive on Japanese bank shares, despite their performance; we add Chiba to the buy list of Resona, Mizuho, SMFG and Concordia, whilst keeping Kyoto as a sell</li>
</ul>


The Bank of Japan has raised its short-term interest rate to 0.25% from 0.1% ahead of the core of consensus expectations, and BoJ plans to pare back purchases of JGBs
We focus on those big-cap Japanese banks that are well geared into higher domestic rates through loan books and BoJ deposits, that also have lesser exposure to rising JGB yields
We stay broadly positive on Japanese bank shares, despite their performance; we add Chiba to the buy list of Resona, Mizuho, SMFG and Concordia, whilst keeping Kyoto as a sell


Japanese Big-Cap Banks – Rates Story Takes Centre Stage, Along with Banks’ JGB Exposure

<ul>
<li>The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? </li>
<li>Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March</li>
<li>We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances</li>
</ul>


The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? 
Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March
We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances


Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

<ul>
<li>The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy</li>
<li>Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy</li>
<li>Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia</li>
</ul>


The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy
Domestically, news reports suggest that the BoJ's 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy
Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia


Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

<ul>
<li>In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result</li>
<li>This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals</li>
<li>We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks</li>
</ul>


In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result
This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals
We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks


Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

Japan

Resona Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides financial services, including banking, trust operations, and credit card services. Resona Holdings also offers consulting services related to personal loans, asset management, and asset succession.

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Resona Holdings (8308 JP)

Japanese Big Five Banks – Opportunity in the Face of Market Turmoil; Focus on Resona and Mizuho

Japanese banks hit hard by market turmoil but first quarter data to June is reassuring; BoJ pausing on rate rises. Resona and Mizuho stand out for...

Victor Galliano

Japanese Big-Cap Banks – Rates Story Takes Centre Stage, Along with Banks’ JGB Exposure

Bank of Japan raises short-term interest rate to 0.25%, plans to reduce JGB purchases. We like Resona, Mizuho, SMFG, Concordia big-cap bank shares...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japanese Big Five Banks – Opportunity in the Face of Market Turmoil; Focus on Resona and Mizuho

​Japanese banks hit hard by market turmoil but first quarter data to June is reassuring; BoJ pausing on rate rises. Resona and Mizuho stand out for...

Victor Galliano

Japanese Big-Cap Banks – Rates Story Takes Centre Stage, Along with Banks’ JGB Exposure

​Bank of Japan raises short-term interest rate to 0.25%, plans to reduce JGB purchases. We like Resona, Mizuho, SMFG, Concordia big-cap bank shares...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

​Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Bigger Cap Banks – Exit from BoJ’s Negative Interest Rate Policy Gathers Steam

​BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...

Victor Galliano

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Japanese banks hit hard by market turmoil but first quarter data to June is reassuring; BoJ pausing on rate rises. Resona and Mizuho stand out for...

Bank of Japan raises short-term interest rate to 0.25%, plans to reduce JGB purchases. We like Resona, Mizuho, SMFG, Concordia big-cap bank shares...

Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

BoJ approaching the end its negative interest rate policy should act as a boost to Japanese bank shares, especially those geared into higher...