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.

Equity Bottom-Up

<ul>
<li><strong>There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. </strong></li>
<li><strong>This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  </strong></li>
</ul><div class="content-highlight"><p><em>The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.</em>   </p></div><h2>Ping An</h2>…


There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. 
This is also talk that the government will allow banks to package NPLs in the form of securities and sell them.  
The fact that these stories are coming out now, suggests that Beijing is incredibly worried about NPL formation, bank health and the state of economy.  And it should be, but these measures do not solve the asset quality problem, for want of scale for one thing.   Ping An…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

<p>Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.</p><p>Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.</p><p><em>Analyst: Iris Tan, CFA</em></p><p> </p>

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA 

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

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.
​
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

<p class="p1"><span class="s1">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 "<strong>sudden stop</strong>" continue to grow.</span></p>

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

<p>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.  </p><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

<ul><li><strong>Bank of Jinzhou can&rsquo;t find cornerstone investors for its IPO.&nbsp; </strong></li><li>More succinctly, it found one &ndash; according to the <em>Wall Street Journal</em>.&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

China

Bank of Qingdao Co., Limited operates as a commercial bank. The Company provides public deposits, loans, domestic settlements, foreign exchanges, discounting bills, financial bonds, government bonds, and other products.

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Bank of Qingdao (3866 HK)

China Is Frantic About NPLs

There is talk that the regulator in China will allow banks to swap NPLs for equity stakes in the debtor companies. This is also talk that the...

Daniel Tabbush

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks. Bill-financing frauds seen at both the...

Morningstar, Inc.

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

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

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