Wuxi Rural Commercial Bank: In a Consolidating Space, Wuxi Rural Can Be a Winner

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

Argentina Financials / Thematic (Sector/Industry)

In addition to our PH Score™ and our VFM rankings (valuation, fundamentals, and momentum), we like to use a "3 year off, 1 year on" system.The aforementioned system is a Behavioral model which seeks to capture companies and banks which report above-average returns over the last 12 months after a 3-year period of underperformance. This is an instinctive approach to problem solving or self-discovery that employs a practical method that is sufficient for reaching an immediate, short-term goal or approximation. Heuristic methods, or mental short-cuts, can be used to speed up the process of finding a satisfactory solution, by easing the cognitive load of making a decision. It can be used for country or sector indices too and can be a valuable asset allocation tool.We use here "3 years off, 1 year on" for global banks. The conclusion is that the US market, wedded to reflationary and steepening YC logic, is far less off a "turnaround" narrative than Asia especially after many outsized gains (spurred too by short-covering) in Q420. In the US, there are many more banks in the bottom rather than the top decile. On the other hand, Asia is a classic "3 years off, 1 year on" space with a strong showing in the top decile globally.South Korea, backed by our VFM analysis, is a preferred market. Names such as KB Financial, JB Financial, and Hana Financial feature- backing up our VFM model where they make the top decile globally. In addition, PT Bank Pembangunan Daerah Jawa Barat dan Banten, is a classic "3 years off, 1 year on" opportunity. Other standouts include lenders from India, Sri Lanka, the Philippines (East West Banking and China Banking Corp. are especially interesting on VFM model too), Thailand, and China/Hong Kong. Indian and Thai bank shares, as well as Indonesia, had a strong Q420 in terms of returns, and are coming off a poor 3-year period in general - especially in the case of YES Bank, Central Bank of India, Punjab National Bank, Union Bank of India, Indian Bank, and South Indian Bank. Bank of Maharashtra and mini-lender Karnataka are worth keeping an eye out for: they feature in "3 years off, 1 year on" as well as on PH Score™ and VFM basis. Conversely, Taiwanese and Indonesian lenders dominate the bottom decile.Elsewhere, LATAM is far less interesting (as with VFM) while Europe is more balanced and Africa (especially Nigeria, though not Kenya) better still though liquidity here is an issue.We did not include the middle east in our analysis but will rectify this in the near future.

In addition to our PH Score™ and our VFM rankings (valuation, fundamentals, and momentum), we like to use a "3 year off, 1 year on" system.The aforementioned system is a Behavioral model which seeks to capture companies and banks which report above-average returns over the last 12 months after a 3-year period of underperformance. This is an instinctive approach to problem solving or self-discovery that employs a practical method that is sufficient for reaching an immediate, short-term goal or approximation. Heuristic methods, or mental short-cuts, can be used to speed up the process of finding a satisfactory solution, by easing the cognitive load of making a decision. It can be used for country or sector indices too and can be a valuable asset allocation tool.We use here "3 years off, 1 year on" for global banks. The conclusion is that the US market, wedded to reflationary and steepening YC logic, is far less off a "turnaround" narrative than Asia especially after many outsized gains (spurred too by short-covering) in Q420. In the US, there are many more banks in the bottom rather than the top decile. On the other hand, Asia is a classic "3 years off, 1 year on" space with a strong showing in the top decile globally.South Korea, backed by our VFM analysis, is a preferred market. Names such as KB Financial, JB Financial, and Hana Financial feature- backing up our VFM model where they make the top decile globally. In addition, PT Bank Pembangunan Daerah Jawa Barat dan Banten, is a classic "3 years off, 1 year on" opportunity. Other standouts include lenders from India, Sri Lanka, the Philippines (East West Banking and China Banking Corp. are especially interesting on VFM model too), Thailand, and China/Hong Kong. Indian and Thai bank shares, as well as Indonesia, had a strong Q420 in terms of returns, and are coming off a poor 3-year period in general - especially in the case of YES Bank, Central Bank of India, Punjab National Bank, Union Bank of India, Indian Bank, and South Indian Bank. Bank of Maharashtra and mini-lender Karnataka are worth keeping an eye out for: they feature in "3 years off, 1 year on" as well as on PH Score™ and VFM basis. Conversely, Taiwanese and Indonesian lenders dominate the bottom decile.Elsewhere, LATAM is far less interesting (as with VFM) while Europe is more balanced and Africa (especially Nigeria, though not Kenya) better still though liquidity here is an issue.We did not include the middle east in our analysis but will rectify this in the near future.

Asian Banks: Relatively Well Positioned for 2021