Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

Bank Of Zhengzhou / Equity Capital Markets

Bank of Zhengzhou is the last and the smallest of the three city commercial banks going for IPO towards the year end. Its key shareholder social security fund (NSSF) is said to sell shares worth US$656m - 717m. The debut of the earlier two banks ( <a href="https://www.smartkarma.com/entities/21011" target="_blank" data-smartkarma-citation="entities:21011">Bank Of Qingdao Co Ltd</a> , <a href="https://www.smartkarma.com/entities/21014" target="_blank" data-smartkarma-citation="entities:21014">Bank Of Jinzhou Co Ltd</a>) hasn't been so stellar. <a href="https://www.smartkarma.com/profiles/12" target="_blank" data-smartkarma-citation="accounts:12">Daniel Tabbush</a>, Asia Bank specialist and fellow Smartkarma contributor,  has given us valuable inputs on the company's fundamentals to augment our analysis.  <h2>IPO Overview</h2><figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/004/567/original/IPO%20Overview.JPG?1449806650" class="editor-image img-responsive" data-smartkarma-image-id="4567"></figure><h2>Our</h2>…

Bank of Zhengzhou is the last and the smallest of the three city commercial banks going for IPO towards the year end. Its key shareholder social security fund (NSSF) is said to sell shares worth US$656m - 717m. The debut of the earlier two banks ( Bank Of Qingdao Co Ltd , Bank Of Jinzhou Co Ltd) hasn't been so stellar. Daniel Tabbush, Asia Bank specialist and fellow Smartkarma contributor,  has given us valuable inputs on the company's fundamentals to augment our analysis.  IPO OverviewOur…

Bank of Zhengzhou IPO: Be Prepared for Mounting NPLs

Following the launch of Bank of Qingdao's IPO, Bank of Jinzhou, a Northeast China based city commercial bank, is raising US$800-900m now.  <ul><li>Daniel Tabbush has talked about its alerting Special Mentioned Loan in an earlier insight: <a href="http://www.smartkarma.com/insights/special-mention-loans-are-4-7x-npls-which-can-thwart-bank-of-jinzhou-s-ipo-5136b09f-2c79-49d9-97a4-3d007ff996c0" target="_blank" data-smartkarma-citation="insights:1910">Special Mention Loans Are 4.7x NPLs, Which Can Thwart Bank of Jinzhou’s IPO</a> .</li><li>In this insight, we will compare Bank of Jinzhou against its city commercial bank peers, as we have done for <a href="https://www.smartkarma.com/entities/21011" target="_blank" data-smartkarma-citation="entities:21011">Bank of Qingdao Co Ltd</a>. Operation-wise, we don't see strong competitive advantage of Bank of Jinzhou.</li><li>Our Smartkarma IPO framework rates the deal below the borderline for participation.</li><li>While Northeast China is struggling for economic transformation, would you be bottom fishing? </li></ul>More below the fold...

Following the launch of Bank of Qingdao's IPO, Bank of Jinzhou, a Northeast China based city commercial bank, is raising US$800-900m now.  Daniel Tabbush has talked about its alerting Special Mentioned Loan in an earlier insight: Special Mention Loans Are 4.7x NPLs, Which Can Thwart Bank of Jinzhou’s IPO .In this insight, we will compare Bank of Jinzhou against its city commercial bank peers, as we have done for Bank of Qingdao Co Ltd. Operation-wise, we don't see strong competitive advantage of Bank of Jinzhou.Our Smartkarma IPO framework rates the deal below the borderline for participation.While Northeast China is struggling for economic transformation, would you be bottom fishing? More below the fold...

Bank of Jinzhou IPO: Will It Outperform the Struggling Northeast China?

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>Bank of Jinzhou can&rsquo;t find cornerstone investors for its IPO.&nbsp; </li><li>More succinctly, it found one &ndash; according to the Wall Street Journal.&nbsp;</li><li>Of 56 banks in China, including both listed and unlisted, this bank is in the top 15% for special mention loans. We are not sure if this is one reason, for the standoffish response to its IPO, but to us, it is sensible. It suggests that the bank&rsquo;s 0.99% NPL ratio as at 4Q14 is understated dramatically.</li><li>With special mention loans to total loans at 4.65%, there is clear risk that monies raised from any IPO are immediately expensed to cover bad loans.</li><li>This is typically not want investors wish for. &nbsp;</li><li>In the case of the other&nbsp;China bank IPO, Bank of Qingdao, it has about half the level of special mention loans, and has had far more success with cornerstone investors.&nbsp;</li></ul>

Bank of Jinzhou can&rsquo;t find cornerstone investors for its IPO.&nbsp; More succinctly, it found one &ndash; according to the Wall Street Journal.&nbsp;Of 56 banks in China, including both listed and unlisted, this bank is in the top 15% for special mention loans. We are not sure if this is one reason, for the standoffish response to its IPO, but to us, it is sensible. It suggests that the bank&rsquo;s 0.99% NPL ratio as at 4Q14 is understated dramatically.With special mention loans to total loans at 4.65%, there is clear risk that monies raised from any IPO are immediately expensed to cover bad loans.This is typically not want investors wish for. &nbsp;In the case of the other&nbsp;China bank IPO, Bank of Qingdao, it has about half the level of special mention loans, and has had far more success with cornerstone investors.&nbsp;

Special Mention Loans Are 4.7x NPLs, Which Can Thwart Bank of Jinzhou's IPO

Thematic (Sector/Industry)

<ul><li>Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL).</li><li>These categories are substandard, doubtful and loss.</li><li>The first category of loans is called pass, while the second is called special mention.</li><li>It is this latter category that is of interest to us here. These loans are late, but not impaired. They are not timely with payment, but not NPL.</li><li>These loans therefore have a high propensity to roll or migrate into the NPL loan category.</li><li>This is important as for some banks these loans are high compared with total NPLs. For some banks these loans are 2x or 3x higher than NPLs!</li><li>Also NPLs require far higher provisions than pass or special mention loans, and increasingly so, as they deteriorate from one category to another.</li></ul>Full report below the fold....

Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL).These categories are substandard, doubtful and loss.The first category of loans is called pass, while the second is called special mention.It is this latter category that is of interest to us here. These loans are late, but not impaired. They are not timely with payment, but not NPL.These loans therefore have a high propensity to roll or migrate into the NPL loan category.This is important as for some banks these loans are high compared with total NPLs. For some banks these loans are 2x or 3x higher than NPLs!Also NPLs require far higher provisions than pass or special mention loans, and increasingly so, as they deteriorate from one category to another.Full report below the fold....

China

Bank of Jinzhou Co., Ltd. operates as a commercial bank. The Company offers deposits, loans, settlement, remittance, wealth management, investment, and other services. Bank of Jinzhou provides services for enterprises and individuals.

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Bank Of Jinzhou (416 HK)

A "Sudden Stop" For China in 2016?

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main...

John-Paul Smith

Bank of Zhengzhou IPO: Be Prepared for Mounting NPLs

Bank of Zhengzhou is the last and the smallest of the three city commercial banks going for IPO towards the year end. Its key shareholder social...

Ke Yan, CFA, FRM

Bank of Jinzhou IPO: Will It Outperform the Struggling Northeast China?

Following the launch of Bank of Qingdao's IPO, Bank of Jinzhou, a Northeast China based city commercial bank, is raising US$800-900m now. Daniel...

Ke Yan, CFA, FRM

Special Mention Loans Are 4.7x NPLs, Which Can Thwart Bank of Jinzhou's IPO

Bank of Jinzhou can’t find cornerstone investors for its IPO. More succinctly, it found one – according to the Wall Street Journal. Of 56 banks...

Daniel Tabbush

"Special Mention Loans" across Asia

Banks in Asia tend have five loan categories, where the last three combined are termed non-performing (NPL). These categories are substandard,...

Daniel Tabbush

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