Emerging Markets Cross-Asset Strategist, Emvest Partners

Guillaume Coutant

Emerging Markets Cross-Asset Strategist

Technical Analysis

Russian stocks have been consolidating since the beginning of 2017, thus lagging other emerging countries by 23% on a relative basis.Oil has experienced erratic moves despite production cuts agreements, other commodities suffered from a slowing Chinese demand, and geopolitical turmoil in the Middle East put the country in a delicate position and feed investors concerns.However, Russian banks have been quite resilient, benefiting from the financial sector recovery as a whole and improved price to…

Russian stocks have been consolidating since the beginning of 2017, thus lagging other emerging countries by 23% on a relative basis.Oil has experienced erratic moves despite production cuts agreements, other commodities suffered from a slowing Chinese demand, and geopolitical turmoil in the Middle East put the country in a delicate position and feed investors concerns.However, Russian banks have been quite resilient, benefiting from the financial sector recovery as a whole and improved price to…

Lukoil & Sberbank : Two Russian Stocks, Two Different Stories

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 prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF</li>
<li>The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials</li>
<li>Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list</li>
</ul>


The prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF
The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials
Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list


EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>PT Bank Central Asia has ownership among GEM active funds has hit record highs.</li>
<li>Aggressive Growth managers account for 14 of the largest 20 positions in the stock, led by Virtus EM Growth (4.16%) and Mirae EM Great Consumer (4.07%).</li>
<li>It is the 12th most widely held stock globally and the 4th most widely held stock in the Financials sector.  Competition lies in Sberbank, CCB and Ping An Insurance.</li>
</ul>


PT Bank Central Asia has ownership among GEM active funds has hit record highs.
Aggressive Growth managers account for 14 of the largest 20 positions in the stock, led by Virtus EM Growth (4.16%) and Mirae EM Great Consumer (4.07%).
It is the 12th most widely held stock globally and the 4th most widely held stock in the Financials sector.  Competition lies in Sberbank, CCB and Ping An Insurance.


Bank Central Asia: GEM Funds Hit Max Exposure

<ul>
<li>Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations</li>
<li>Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX</li>
<li>In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers</li>
</ul>


Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations
Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX
In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers


2022 High Conviction Ideas in FinTech & Financials

Equity Capital Markets

<ul>
<li>Nubank’s shares are above the issue price post-IPO, with investors buying into the digital banking opportunity in Brazil as well as Mexico and Colombia</li>
<li>The bulls argue that the growth potential is not yet reflected in valuations; it has very low costs, and its positive returns will follow from greater loan and product penetration</li>
<li>Nubanks’s valuation is very stretched; good customer penetration does not yet equal deep product penetration which drives revenue growth, and new markets – Mexico and Colombia – will pressure costs</li>
</ul>


Nubank’s shares are above the issue price post-IPO, with investors buying into the digital banking opportunity in Brazil as well as Mexico and Colombia
The bulls argue that the growth potential is not yet reflected in valuations; it has very low costs, and its positive returns will follow from greater loan and product penetration
Nubanks’s valuation is very stretched; good customer penetration does not yet equal deep product penetration which drives revenue growth, and new markets – Mexico and Colombia – will pressure costs


Nubank (NU US) – IPO Done, Now Comes the Hard Part

Russia

Sberbank of Russia PJSC attracts deposits and offers commercial banking services. The Bank offers time deposits, corporate banking, securities brokerage, credit, foreign exchange services, and sponsors credit cards.

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Sberbank of Russia PJSC (SBER LI)

Lukoil & Sberbank : Two Russian Stocks, Two Different Stories

Russian stocks have been consolidating since the beginning of 2017, thus lagging other emerging countries by 23% on a relative basis.Oil has...

Guillaume Coutant

EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective

Potential Russian shares exclusion from indices is real, with Asian EMs set to gain big, but do not disregard LatAm; our preferred financials are...

Victor Galliano

Bank Central Asia: GEM Funds Hit Max Exposure

Ownership in PT Bank Central Asia has hit record highs. Of the 246 active GEM funds in our analysis, 46.3% own BBCA and 40.24% are overweight the...

Steven Holden

2022 High Conviction Ideas in FinTech & Financials

Our 2022 high conviction ideas include buys on Sberbank, Banco do Brasil and HDFC Bank, as well as BBVA, Banco BPM, B3, SGX, Mastercard and...

Victor Galliano

Nubank (NU US) – IPO Done, Now Comes the Hard Part

More than other digital banks, Nubank suffers from a disconnect between size of customer base & loan & deposit balances; also, we estimate that...

Victor Galliano

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