Silver Point

Thomas J. Monaco

Independent Insight Provider

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

Thematic (Sector/Industry)

<p><strong><em>*D-SIB Standards Released:</em></strong> The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and</p><p><strong><em>* Aggressive Capital Raises Expected: </em></strong>In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value. </p>

*D-SIB Standards Released: The People’s Bank of China (PBOC) and China Bank and Insurance Regulatory Commission (CBIRC) on December 3, 2020 released finalized standards for the country’s domestic systemically important banks (D-SIBs), and indicated that tighter regulations will be announced shortly; and* Aggressive Capital Raises Expected: In our view, the forthcoming regulations are likely to focus on: additional paid-in capital; leverage ratios; risk concentrations; corporate governance; disclosure levels; and mechanism to prevent systemic risk; and internal controls. The idea is to finally strengthen mainland Chinese bank balance sheets and improve their loss absorption capacity. Problem for equity raises is that P/BV must be over 1.0x for the raise and many of the potential D-SIBs are trading below book value. 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<div>
<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
</div>
<div>
<p>A recent addition is the possible status of H/A-share companies in the monitor which are subject to the Trump Executive Order on Chinese Military Companies. They are separated into three types (Possible Direct Qualifying Entity, Possible Indirect Qualifying Entity, and 20+%-owned by Qualifying Entity). They are color-coded as below.</p>
</div>
<section>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/784/original/image?1606541170" class="editor-image img-responsive" data-smartkarma-image-id="174784"></figure>
</section>
<div>
<p>For more on the list of names, please see <a href="https://www.smartkarma.com/insights/trump-s-executive-order-on-chinese-military-companies" target="_blank" data-smartkarma-citation="insights:45259" rel="noopener">Trump's Executive Order on Chinese Military Companies</a>. </p>
</div>
<hr>
<div class="content-highlight">
<p>This past week saw mixed movement in H/A spreads but on average they were narrower.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/829/original/Screenshot%202020-11-28%20at%206.25.16%20PM.png?1606559131" class="editor-image img-responsive" data-smartkarma-image-id="174829"></figure>
<p></p>
</section>
<p>Average performance of the 39 recommendations (long 27, short 12) from last week was for a profit of 0.67% per trade.</p>
<p>There are 43 recommendations for the upcoming week.</p>
</div>
<hr>
<div>
<p>The first sector discussed is <strong>Consumer</strong>, where liquid H/A spreads narrowed on average 0.6% this past week after narrowing 2.7% the week before. Spreads are now tighter by 2.1% on average over a four-week period. Four of six liquid Hs outperformed their As.</p>
<p>Southbound accounts were large-ish net buyers on the week. There were three net buys and three net sells but the net buying ended up being all <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, again. <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> saw significant net selling. </p>
</div>
<div>
<div>
<div class="content-highlight">
<p>Last week I recommended staying long the H vs A on <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and that spread gained 1.6% for the week (after gaining 4.7% the week before when it was also recommended). This past week I put out the Weekly late on Monday (after 2pm), when BYD in Hong Kong had gained 3.7% vs the As on the day, and so recommended implementing a short BYD (1211 HK) H vs A share trade and from that point or even from the end of the day or the next, the Hs actually underperformed the As by 0.4%. </p>
<p>See below the fold for this week's recommendations.</p>
</div>
</div>
</div>
<section class="figure">
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/809/original/Screenshot%202020-11-28%20at%205.32.56%20PM.png?1606556000" class="editor-image img-responsive" data-smartkarma-image-id="174809"></figure>
</section>
<p></p>
</section>
<section class="figure"></section>
<section>
<section class="figure">For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</section>
</section>


The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...



H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. 



A recent addition is the possible status of H/A-share companies in the monitor which are subject to the Trump Executive Order on Chinese Military Companies. They are separated into three types (Possible Direct Qualifying Entity, Possible Indirect Qualifying Entity, and 20+%-owned by Qualifying Entity). They are color-coded as below.





For more on the list of names, please see Trump's Executive Order on Chinese Military Companies. 



This past week saw mixed movement in H/A spreads but on average they were narrower.




Average performance of the 39 recommendations (long 27, short 12) from last week was for a profit of 0.67% per trade.
There are 43 recommendations for the upcoming week.



The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 0.6% this past week after narrowing 2.7% the week before. Spreads are now tighter by 2.1% on average over a four-week period. Four of six liquid Hs outperformed their As.
Southbound accounts were large-ish net buyers on the week. There were three net buys and three net sells but the net buying ended up being all BYD (1211 HK), again. Guangzhou Automobile Group (2238 HK) saw significant net selling. 




Last week I recommended staying long the H vs A on Great Wall Motor (2333 HK) and that spread gained 1.6% for the week (after gaining 4.7% the week before when it was also recommended). This past week I put out the Weekly late on Monday (after 2pm), when BYD in Hong Kong had gained 3.7% vs the As on the day, and so recommended implementing a short BYD (1211 HK) H vs A share trade and from that point or even from the end of the day or the next, the Hs actually underperformed the As by 0.4%. 
See below the fold for this week's recommendations.











For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​​A: Share Spread Monitor as of 27 Nov 2020

<div>
<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
<p>On average, </p>
<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  </p>
<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> where the net selling activity amounted to 15.5% and 22% of volume respectively. </p>
<p>Hisense remains at the overbought end of the 52-week range. <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> are now at 52-week wides. </p>
<div class="content-highlight">
<p>Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.</p>
</div>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/062/original/Screenshot%202020-10-24%20at%202.45.56%20PM.png?1603521970" class="editor-image img-responsive" data-smartkarma-image-id="167062"></figure>
</section>
<p></p>
<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>
</div>


The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...



H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. 

On average, 
The first sector is Consumer, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of Hisense Home Appliances Group Co., Ltd. H (921 HK), this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  
Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both Tsingtao Brewery Co Ltd H (168 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) where the net selling activity amounted to 15.5% and 22% of volume respectively. 
Hisense remains at the overbought end of the 52-week range. Great Wall Motor (2333 HK) and Guangzhou Automobile Group (2238 HK) are now at 52-week wides. 

Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.





For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

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.

<p>There is little evidence of any major economic shutdown in China during early this year. There is also little evidence of the period when China re-opened its economy only to find most all other economies were closed. It was arguably an especially difficult period for China and its banks. Where many banks have now reported their results, it becomes clearer that the numbers hardly reflect crisis - temporary or otherwise. This though is not what really matters; rather it is the implication for profit delta during 2H20.</p>

There is little evidence of any major economic shutdown in China during early this year. There is also little evidence of the period when China re-opened its economy only to find most all other economies were closed. It was arguably an especially difficult period for China and its banks. Where many banks have now reported their results, it becomes clearer that the numbers hardly reflect crisis - temporary or otherwise. This though is not what really matters; rather it is the implication for profit delta during 2H20.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

China Bohai Bank   / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/china-bohai-bank" target="_blank" data-smartkarma-citation="entities:29034:1" rel="noopener">China Bohai Bank (9668 HK)</a> is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, as its promoter and founder. Bohai will commence trading on Thursday, 16 July. Bohai priced its IPO at HK$4.80 per share, towards the bottom end of the indicative price range of HK$4.75-4.98 per share. Bohai raised net proceeds of HK$13,470.6 million ($1.7 billion).</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-bohai-bank-ipo-initiation-the-bucks-stop-here" target="_blank" rel="noopener">our initiation note</a>, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). Despite the improving sentiment towards Chinese online game companies (based on the recent multiple expansion), we continue to believe that Bohai is fully valued at the IPO price.</p></div></div></div>

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, Standard Chartered (STAN LN), as its promoter and founder. Bohai will commence trading on Thursday, 16 July. Bohai priced its IPO at HK$4.80 per share, towards the bottom end of the indicative price range of HK$4.75-4.98 per share. Bohai raised net proceeds of HK$13,470.6 million ($1.7 billion).In our initiation note, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). Despite the improving sentiment towards Chinese online game companies (based on the recent multiple expansion), we continue to believe that Bohai is fully valued at the IPO price.

China

Ping An Bank Co Ltd provides a full range of commercial banking services including RMB and foreign currency deposit, loan, international and domestic settlement, discount, currency trading, letter of credit, bank guarantee, and other related services.

Shanghai Pudong Development Bank Co., Ltd. provides banking services. The Company provides loans, deposits, accounts settlement, foreign exchange, and other services. Shanghai Pudong Development Bank provides its services to individuals, companies, and other groups.

Shanghai Pudong Development Bank Co. (600000 CH)

Bank of Ningbo Company Ltd is a full service commercial bank. The Bank provides personal and small business loans, trade financing, and retail banking services as well as personal savings and checking accounts. Bank of Ningbo is located in China.

China Minsheng Banking Corp., Ltd. operates in commercial banking businesses. The Bank provides deposit, loan, settlement, discount, financial bond issuance, government bond underwriting and trading, letter of credit, bank guarantee, and other related financial services.

China CITIC Bank Corporation Limited provides banking services. The Company offers deposits, loans, domestic settlement,  currency trading, bank guarantee, and other services. China CITIC Bank provides its services to individuals, enterprises, and other clients.

Bank of Jiangsu Co., Ltd. operates as a commercial bank. The Company offers deposits, loans, gross settlement, investment, wealth management, bill discounting, online banking, and other banking services. Bank of Jiangsu also conducts internet finance businesses.

Bank of Nanjing Co., Ltd. operates commercial banking businesses. The Company offers deposits, loans, settlement, discounting, financial bond issuance, government bond underwriting, bank guarantee, and other related financial services. Bank of Nanjing provides services for enterprises and individuals.

Bank of Beijing Company Ltd. attracts deposits and offers commercial banking services.  The Bank offers short-, medium- and long-term loans, insurance, foreign exchange, international settlement, government bonds, and other products and services.

Huaxia Bank Co. Ltd. operates banking businesses. The Company offers deposits, loans, settlement, bill discounting, currency trading, bank guarantee, wealth management, and other banking services. Huaxia Bank provides services for enterprises and individuals.

Bank of Shanghai Co., Ltd. offers banking services. The Company provides deposits, loans, foreign exchange, fund management, and other services. Bank of Shanghai provides its services to individuals, enterprises, and other clients.

Hang Seng Bank Limited and its subsidiaries provide banking and related financial services.

Fifth Third Bancorp is a diversified financial services company that operates banking centers in the Midwestern and Southeastern regions of the United States. The Company's principal businesses include retail banking, commercial banking, investment advisory, and data processing.

Standard Chartered PLC is an international banking group operating principally in Asia, Africa, and the Middle East. The Company offers its products and services in the personal, consumer, corporate, institutional and treasury areas.

BOC Hong Kong (Holdings) Limited provides a comprehensive range of financial products and services to retail and corporate customers.  Its products include retail banking, corporate banking, and treasury services.  The Company operates its branches in Hong Kong and China.

CTBC Financial Holding Company Ltd. is a holding company.  Through its subsidiaries, the Company provides a variety of banking and financial services, including deposit, loan, guarantee, international banking, trust banking, credit card, investment banking, safety deposit box, and Internet banking services.

Malayan Banking Berhad operates as a bank. The Company provides financial services such as insurance, asset management, stock broking, nominee services, venture capital, leasing, and Internet banking. Malayan Banking Berhad serves customers in South East Asia.

KB Financial Group Inc. (the "Company"), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfer with the former shareholders of its subsidiaries including Kookmin Bank in order to provide management services and financing to associated companies. The headquarters are located at Seoul, Korea

Japan Post Bank Co. Ltd. provides general banking services. The Company offers deposits, savings, loans, currency exchange transactions, investment trusts, national bonds, and other related banking services to individuals and businesses. Japan Post Bank also provides other financial services such as insurance agency and financing service.

First Citizens BancShares, Inc. is the holding company for First-Citizens Bank & Trust Company and Ironstone Bank.  First-Citizens serves North Carolina, Virginia, and West Virginia.  Ironstone operates in Georgia, North Carolina, and Florida.

Mega Financial Holding Co., Ltd. is a holding company.  Through its subsidiaries, the Company accepts deposits, issues financial debentures, provides medium and long term loans to enterprises, as well as provides brokerage, dealer and insurance services.

Mega Financial Holding Co., Ltd (2886 TT)

China Everbright Bank Company Limited provides banking services. The Company offers deposits, loans, domestic settlement, currency trading, and other services. China Everbright Bank provides its services to individuals, enterprises, and other clients.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Everbright Bank Co A (601818 CH)

China Banks – About Time

CHINA BANKS: PBOC and CBIRC Released Finalized D-SIB Standards and Indicated Tighter Regulations. Aggressive Capital Raises Are Expected.

Thomas J. Monaco

China Banks – Muted Profit Delta

The profile for provision expenses and profits at China's banks during 1H20 is wholly different to many others globally.

Daniel Tabbush

China Bohai Bank IPO: Trading Debut

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Banks – About Time

CHINA BANKS: PBOC and CBIRC Released Finalized D-SIB Standards and Indicated Tighter Regulations. Aggressive Capital Raises Are Expected.

Thomas J. Monaco

Quiddity Weekly H/​​A: Share Spread Monitor as of 27 Nov 2020

The weekly H/A Share Monitor and Trade Recommendations. Spreads narrower on the week. Last week's 39 trade recommendations gained 0.67% on average....

Travis Lundy

Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Quiddity H/A Spread Monitor for the week ending 23 October 2020. Spreads widened in Consumer, narrowed in every other sector. Southbound were...

Travis Lundy

China Banks – Muted Profit Delta

The profile for provision expenses and profits at China's banks during 1H20 is wholly different to many others globally.

Daniel Tabbush

China Bohai Bank IPO: Trading Debut

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

Quiddity Weekly H/A: Share Spread Monitor as of 27 Nov 2020

Quiddity Weekly H/A: Share Spread Monitor 23 Oct 2020