Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>This week, earnings results for the megabanks risk being a “sell on the news” event.</li>
<li>Analysts have been raising earnings estimates over the past 2 months.</li>
<li>Longer term story intact with most dynamics trending in their favour.</li>
</ul>


This week, earnings results for the megabanks risk being a “sell on the news” event.
Analysts have been raising earnings estimates over the past 2 months.
Longer term story intact with most dynamics trending in their favour.


Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

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.

<ul>
<li>We must recognize the wide variance in credit growth rates across Asian countries</li>
<li>There are critical implications for differences in net interest income growth and profit</li>
<li>Credit metrics also tend to move in tandem with loan growth rates, as does GDP growth</li>
</ul>


We must recognize the wide variance in credit growth rates across Asian countries
There are critical implications for differences in net interest income growth and profit
Credit metrics also tend to move in tandem with loan growth rates, as does GDP growth


Asian Banks - Wide Variance in Credit Growth, and in Delta of Growth Rates in Recent Months

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>JGB 10Y bond yields have slipped from their July high, but are well above historic lows; the outlook, in our view, is still for BoJ monetary tightening before year-end 2024</li>
<li>We see a constructive outlook with recovering domestic loan growth, available funding as well as sector evidence of higher lending rates; also, largely well controlled unrealized losses on bond portfolios</li>
<li>We keep Resona and Mizuho as our top picks for their strong gearing to higher interest rates and attractive valuations in this Japanese bank group, along with Chiba and Concordia</li>
</ul>


JGB 10Y bond yields have slipped from their July high, but are well above historic lows; the outlook, in our view, is still for BoJ monetary tightening before year-end 2024
We see a constructive outlook with recovering domestic loan growth, available funding as well as sector evidence of higher lending rates; also, largely well controlled unrealized losses on bond portfolios
We keep Resona and Mizuho as our top picks for their strong gearing to higher interest rates and attractive valuations in this Japanese bank group, along with Chiba and Concordia


Japanese Bigger Cap Banks – BoJ’s Pause Does Not De-Rail Our Expectations for Higher Interest Rates

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>A group of shareholders aims to raise around US$330m via selling around 3.6% of <a href="https://www.smartkarma.com/entities/yamaha-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:7411:1" rel="noopener">Yamaha Motor (7272 JP).</a>
</li>
<li>This will be another cross-shareholding unwind and hence, won’t be a huge surprise, although the stock hasn’t been doing particularly well lately.</li>
<li>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>


A group of shareholders aims to raise around US$330m via selling around 3.6% of Yamaha Motor (7272 JP).

This will be another cross-shareholding unwind and hence, won’t be a huge surprise, although the stock hasn’t been doing particularly well lately.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


Yamaha Motors Placement - A Relatively Small Cross-Shareholding Unwind

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 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).</li>
<li>The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.</li>
</ul>


There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.


JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

Japan

Sumitomo Mitsui Financial Group, Inc. is a holding company established by Sumitomo Mitsui Banking Corporation.  Sumitomo Mitsui Card Co., SMBC Leasing Co., and The Japanese Research Institute, Ltd. joined the Group in Feb., 2003. The Company manages financial operations for its subsidiaries.  The Group provides commercial banking and a variety of financial services.

Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Sumitomo Mitsui Financial Group (Sponsored Adr)

Price Gauge
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Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

Rikki Malik

Asian Banks - Wide Variance in Credit Growth, and in Delta of Growth Rates in Recent Months

There is a wide variance of domestic loan growth rates in Asian countries, one must be highly selective. There are implications for growth of net...

Daniel Tabbush

Japanese Bigger Cap Banks – BoJ’s Pause Does Not De-Rail Our Expectations for Higher Interest Rates

JGB yields have eased a bit, but BoJ still set to tighten rates. Outlook for loan growth, higher lending rates supports buys on Resona, Mizuho,...

Victor Galliano

Yamaha Motors Placement - A Relatively Small Cross-Shareholding Unwind

A group of shareholders aims to raise around US$330m via selling around 3.6% of Yamaha Motor (7272 JP). In this note, we talk about the deal dynamics.

Sumeet Singh

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

​Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

Rikki Malik

Asian Banks - Wide Variance in Credit Growth, and in Delta of Growth Rates in Recent Months

There is a wide variance of domestic loan growth rates in Asian countries, one must be highly selective. There are implications for growth of net...

Daniel Tabbush

Japanese Bigger Cap Banks – BoJ’s Pause Does Not De-Rail Our Expectations for Higher Interest Rates

​JGB yields have eased a bit, but BoJ still set to tighten rates. Outlook for loan growth, higher lending rates supports buys on Resona, Mizuho,...

Victor Galliano

Yamaha Motors Placement - A Relatively Small Cross-Shareholding Unwind

A group of shareholders aims to raise around US$330m via selling around 3.6% of Yamaha Motor (7272 JP). In this note, we talk about the deal dynamics.

Sumeet Singh

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

There are 44 adds/41 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn)....

Brian Freitas

Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

JGB yields have eased a bit, but BoJ still set to tighten rates. Outlook for loan growth, higher lending rates supports buys on Resona, Mizuho,...