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.

Thematic (Sector/Industry)

<ul>
<li>The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal</li>
<li>AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed</li>
<li>The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise</li>
</ul>


The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal
AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed
The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.</li>
<li>We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.</li>
<li>The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.</li>
</ul>


With the MSCI ACWI (ACWI-US) approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here, and we believe caution is warranted.
We want to remain overweight Europe and the UK, but we prefer to buy only on pullbacks.
The Hang Seng and MSCI China (MCHI-US) are both getting rejected at their important resistances discussed last week, and we would expect to see a basing process develop below resistance.


Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>There are people who'll take profit in <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I (3382 JP)</a> because of path dependency til year-end. It will drag out a while: buy the dips, trim on pops.</li>
<li>Just like in <a href="https://www.smartkarma.com/entities/lufax-holding-ltd-b751749a-8feb-4b4d-85a7-d99ac0308fe7" target="_blank" data-smartkarma-citation="entities:40067:1" rel="noopener">Lufax Holding (6623 HK)</a>'s special dividend, expect Ping An to boost its holding in <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology (1833 HK)</a> via the stealthy scrip dividend option. </li>
<li>The landscape for <a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks &amp; System Integr (1973 JP)</a> has FULLY changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable.  </li>
</ul>


There are people who'll take profit in Seven &amp; I (3382 JP) because of path dependency til year-end. It will drag out a while: buy the dips, trim on pops.
Just like in Lufax Holding (6623 HK)'s special dividend, expect Ping An to boost its holding in Ping An Healthcare and Technology (1833 HK) via the stealthy scrip dividend option. 
The landscape for Nec Networks &amp; System Integr (1973 JP) has FULLY changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable.  


Last Week in Event SPACE: Seven & I, PA Gooddoctor, Nec Networks, Genscript/Legend, ASM PT, Hanwha

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Banca Monte dei Paschi di Sien / Event-Driven

<ul>
<li>The Italian government sold a 15% stake in <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-sien" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Sien (BMPS IM)</a>, reducing its holding to 11.7%, signaling potential acquisition interest.</li>
<li>
<a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1" rel="noopener">Banco BPM SpA (BAMI IM)</a> and <a href="https://www.smartkarma.com/entities/anima-holding-spa" target="_blank" data-smartkarma-citation="entities:21153:1" rel="noopener">Anima Holding (ANIM IM)</a>’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.</li>
<li>BMPS's improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.</li>
</ul>


The Italian government sold a 15% stake in Banca Monte dei Paschi di Sien (BMPS IM), reducing its holding to 11.7%, signaling potential acquisition interest.

Banco BPM SpA (BAMI IM) and Anima Holding (ANIM IM)’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.
BMPS's improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.


Monte Dei Paschi Poised for Strategic Merger Opportunity

Equity Bottom-Up

Banca Monte dei Paschi di Sien / Equity Bottom-Up

<ul>
<li>The Italian Treasury sold an additional 12.5% stake in <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-sien" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Sien (BMPS IM)</a>, raising €650 million as part of re-privatization efforts following the 2021 failed attempt.</li>
<li>The Treasury's divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. </li>
<li>Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.</li>
</ul>


The Italian Treasury sold an additional 12.5% stake in Banca Monte dei Paschi di Sien (BMPS IM), raising €650 million as part of re-privatization efforts following the 2021 failed attempt.
The Treasury's divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. 
Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.


Italy

Banco BPM S.p.A. operates as a bank. The Bank offers private and corporate banking, loans, e-banking, investment, and other related services. Banco BPM serves customers in Italy.

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Banco BPM SpA (BAMI IM)

AT1 Bonds; Life After Credit Suisse

The CS AT1 write-off due to UBS's acquisition is an unconventional action on bondholders versus shareholders, implying a rising banks' cost of...

Victor Galliano

Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

With the MSCI $ACWI approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here and believe caution is...

Vermilion Research

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Nec Networks, Genscript/Legend, ASM PT, Hanwha

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Monte Dei Paschi Poised for Strategic Merger Opportunity

Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

Jesus Rodriguez Aguilar

Reborn from Ashes and Possible Target

Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

AT1 Bonds; Life After Credit Suisse

The CS AT1 write-off due to UBS's acquisition is an unconventional action on bondholders versus shareholders, implying a rising banks' cost of...

Victor Galliano

Caution Warranted; ACWI-US At $93 Resistance; Buys in Communications, Staples, Materials, Financials

With the MSCI $ACWI approaching the top-end of our expected 2023 trading range at $93, we see limited upside from here and believe caution is...

Vermilion Research

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Nec Networks, Genscript/Legend, ASM PT, Hanwha

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Monte Dei Paschi Poised for Strategic Merger Opportunity

​Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

Jesus Rodriguez Aguilar

Reborn from Ashes and Possible Target

​Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...

Jesus Rodriguez Aguilar

Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...