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

Equity Bottom-Up

<ul>
<li>HKEX reported a weak set of 4Q21 earnings results of HKD 2.7 bn, declining HKD 577 mn (17.7%) linked quarter, driven by the decline in cash ADT and higher costs; </li>
<li>Derivative activity remained flattish linked quarter with contract volume at 507 thousand – despite the successful launch of the MSCI China A50 Connect (HK A50); and </li>
<li>With HIBOR set to increase, HKEx is likely to become more reliant on lower quality investment income. </li>
</ul>


HKEX reported a weak set of 4Q21 earnings results of HKD 2.7 bn, declining HKD 577 mn (17.7%) linked quarter, driven by the decline in cash ADT and higher costs; 
Derivative activity remained flattish linked quarter with contract volume at 507 thousand – despite the successful launch of the MSCI China A50 Connect (HK A50); and 
With HIBOR set to increase, HKEx is likely to become more reliant on lower quality investment income. 


Hong Kong Exchanges & Clearing – Negative Jaws

<ul>
<li>
SGX and SPACs: Singapore Exchange (SGX.SP) [SGX] Consultation Paper on the Proposed Listing Framework for Special Purpose Acquisition Companies (SPACs);</li>
<li>
SEC Clamping Down: Creating a SPAC just became more difficult in the US, given the  level of disclosure, marketing practices, and liability issues surrounding SPACs;</li>
<li>
Not A Good Strategy: This is in addition to the SEC issuing accounting guidance for SPACs, and certainly throw a wrench into SGX’s SPAC plans.</li>
</ul>



SGX and SPACs: Singapore Exchange (SGX.SP) [SGX] Consultation Paper on the Proposed Listing Framework for Special Purpose Acquisition Companies (SPACs);

SEC Clamping Down: Creating a SPAC just became more difficult in the US, given the  level of disclosure, marketing practices, and liability issues surrounding SPACs;

Not A Good Strategy: This is in addition to the SEC issuing accounting guidance for SPACs, and certainly throw a wrench into SGX’s SPAC plans.


Singapore Exchange – Another SPAC Wrench

Alpha-Centric ESG Research

Kyle Rudden

In a recently published report (<a href="https://www.smartkarma.com/insights/cop26-u-n-climate-conference-to-address-mitigation-financing-and-carbon-pricing" target="_blank" data-smartkarma-citation="insights:59779" rel="noopener">COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing</a>) I mentioned how the COP26 international climate conference (31 October to 12 November) will have far-reaching implications for global capital markets and investing.That Insight was largely about the COP26 conference itself – background, objectives, three critical agenda items with trillions of dollars at stake, and that will influence global financial markets from today (headlines coming out of the conference) through the end of this century.That report was necessary context for this Insight and others that will follow; successively deeper dives into country-specific climate action plans, and investment themes and trading ideas around the COP26 conference and climate change in general. This is the first of those follow-up reports.Herein, I present a brief overview of investment themes and angles directly linked to the three key COP26 agenda items: 1) mitigation of global warming, 2) climate finance, and 3) the development of international carbon markets and pricing mechanisms. Themes and subthemes such as:<ul>
<li>
Climate Transition: "Green" utilities, renewable energy, cleantech, electric vehicles and other areas of smart mobility, green buildings, and related. The "buy solar, sell coal" kinds of stuff.</li>
<li>
Climate Financing: Financial sector stocks poised to benefit from climate change mitigation, reduced risk from portfolio debarbonisation, and new inflows into sustainable/ESG funds.</li>
<li>
Carbon Markets: Pure-play (or close thereto) carbon capture and storage/sequestration (CCS) stocks, plus a few financial sector overlaps (e.g., related to carbon markets, futures, etc.)</li>
</ul>

In a recently published report (COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing) I mentioned how the COP26 international climate conference (31 October to 12 November) will have far-reaching implications for global capital markets and investing.That Insight was largely about the COP26 conference itself – background, objectives, three critical agenda items with trillions of dollars at stake, and that will influence global financial markets from today (headlines coming out of the conference) through the end of this century.That report was necessary context for this Insight and others that will follow; successively deeper dives into country-specific climate action plans, and investment themes and trading ideas around the COP26 conference and climate change in general. This is the first of those follow-up reports.Herein, I present a brief overview of investment themes and angles directly linked to the three key COP26 agenda items: 1) mitigation of global warming, 2) climate finance, and 3) the development of international carbon markets and pricing mechanisms. Themes and subthemes such as:

Climate Transition: "Green" utilities, renewable energy, cleantech, electric vehicles and other areas of smart mobility, green buildings, and related. The "buy solar, sell coal" kinds of stuff.

Climate Financing: Financial sector stocks poised to benefit from climate change mitigation, reduced risk from portfolio debarbonisation, and new inflows into sustainable/ESG funds.

Carbon Markets: Pure-play (or close thereto) carbon capture and storage/sequestration (CCS) stocks, plus a few financial sector overlaps (e.g., related to carbon markets, futures, etc.)


COP26: An Overview of Investment Themes and Catalysts Related to COP26 Conference

*Strong Revenue, Controlled Costs: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] reported a strong set of 3Q21 earnings at HKD 3.3 bn, improving HKD 481 mn (17.4%) linked quarter. Results were highlighted by HKEx’ marginally positive operating jaws, as recurring revenue improved HKD 550 mn (12.1%) while overall operating expenses declined nominally (under 0.1%) to HKD 1.5 mn over the period; and*A50, A New Avenue Of Growth: On October 18, 2021, HKEx successfully launched the MSCI China A50 Connect (HK A50), which is predicated on the new MSCI A50 Index. HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering.

*Strong Revenue, Controlled Costs: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx] reported a strong set of 3Q21 earnings at HKD 3.3 bn, improving HKD 481 mn (17.4%) linked quarter. Results were highlighted by HKEx’ marginally positive operating jaws, as recurring revenue improved HKD 550 mn (12.1%) while overall operating expenses declined nominally (under 0.1%) to HKD 1.5 mn over the period; and*A50, A New Avenue Of Growth: On October 18, 2021, HKEx successfully launched the MSCI China A50 Connect (HK A50), which is predicated on the new MSCI A50 Index. HKEx has a very broad range of liquid Hong Kong-China linked products, with the new A50 contract being linked to the northbound Stock Connect – on top of a better fee offering. 

Hong Kong Exchanges & Clearing – Solid Result Even Prior To A50

China and US Equity Analyst

Roger Xie

Cross Asset Strategy

<ul>
<li>Crypto trading volume has rebounded shocking 70% in October from the level in 3Q21, fueled by the first-ever regulatory approval of bitcoin future ETF and the rise of bitcoin price. Download data software Apptopia also suggested renewed interest for broad range of cryptocurrency trade app, such as <a href="https://www.smartkarma.com/entities/coinbase-global-inc" target="_blank" data-smartkarma-citation="entities:32227:1" rel="noopener">Coinbase (COIN US)</a> and <a href="https://www.smartkarma.com/entities/robinhood-markets-inc" target="_blank" data-smartkarma-citation="entities:33532:1" rel="noopener">Robinhood Markets (HOOD US)</a>. Those engagement metrics DAU and MAU have also reflected the greater interest.</li>
<li>Bitcoin price has been volatile this year. It briefly peaked at $64000 in April. Then China started to clamp down on crypto mining and transaction activities, bitcoin price was down by half from the peak in May. However, blockchain technology, by its nature, has been proven to be flexible to expand the network and relocate the computing nodes as supply/demand changes. We have observed the mining and computing power has been shifted from China to other places in the world. </li>
<li>The much-awaited bitcoin-linked ETF has received green light from US market watchdog Securities and Exchange Commission (SEC) recently. The listed funds from Proshares and Valkyrie offer investor exposure not to crypto itself but to bitcoin future. SEC has signaled that it would prefer ETFs that track bitcoin future due to easy regulation. But investors believe the ETF holding bitcoin directly will received SEC approval in next step. </li>
</ul>


Crypto trading volume has rebounded shocking 70% in October from the level in 3Q21, fueled by the first-ever regulatory approval of bitcoin future ETF and the rise of bitcoin price. Download data software Apptopia also suggested renewed interest for broad range of cryptocurrency trade app, such as Coinbase (COIN US) and Robinhood Markets (HOOD US). Those engagement metrics DAU and MAU have also reflected the greater interest.
Bitcoin price has been volatile this year. It briefly peaked at $64000 in April. Then China started to clamp down on crypto mining and transaction activities, bitcoin price was down by half from the peak in May. However, blockchain technology, by its nature, has been proven to be flexible to expand the network and relocate the computing nodes as supply/demand changes. We have observed the mining and computing power has been shifted from China to other places in the world. 
The much-awaited bitcoin-linked ETF has received green light from US market watchdog Securities and Exchange Commission (SEC) recently. The listed funds from Proshares and Valkyrie offer investor exposure not to crypto itself but to bitcoin future. SEC has signaled that it would prefer ETFs that track bitcoin future due to easy regulation. But investors believe the ETF holding bitcoin directly will received SEC approval in next step. 


Crypto: Trading Activities Rebound as Investors Rush for Inflation Hedging

United States

CME Group Inc. operates a derivatives exchange that trades futures contracts and options on futures, interest rates, stock indexes, foreign exchange and commodities.  The Exchange brings together buyers and sellers of derivatives products on its trading floors, electronic trading platform, and through privately negotiated transactions that it clears.

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Cme Group Inc (CME US)

Hong Kong Exchanges & Clearing – Negative Jaws

HKEX: HKEX reported a fairly weak set of 4Q21 results, declining 17.7% QOQ, and driven by the overall decline in cash ADT and higher overall costs.

Thomas J. Monaco

Singapore Exchange – Another SPAC Wrench

SGX: SGX wants to do SPACs, which just became more difficult in the US given likley increased requirements. This should throw certainly throw a...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – Solid Result Even Prior To A50

HKEX: HKEx reported a strong QOQ 3Q21 earnings growth of 17.4%, and highlighted by marginally positive operating jaws, as recurring revenue...

Thomas J. Monaco

Crypto: Trading Activities Rebound as Investors Rush for Inflation Hedging

The much-awaited bitcoin-linked ETF BITO and BTF have received green light from SEC recently. But investors believe the ETF holding bitcoin...

Roger Xie

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hong Kong Exchanges & Clearing – Negative Jaws

HKEX: HKEX reported a fairly weak set of 4Q21 results, declining 17.7% QOQ, and driven by the overall decline in cash ADT and higher overall costs.

Thomas J. Monaco

Singapore Exchange – Another SPAC Wrench

SGX: SGX wants to do SPACs, which just became more difficult in the US given likley increased requirements. This should throw certainly throw a...

Thomas J. Monaco

COP26: An Overview of Investment Themes and Catalysts Related to COP26 Conference

COP26, the climate conference happening now, will impact global capital markets. Perhaps over the next two weeks, depending on headlines, but...

Kyle Rudden

Hong Kong Exchanges & Clearing – Solid Result Even Prior To A50

HKEX: HKEx reported a strong QOQ 3Q21 earnings growth of 17.4%, and highlighted by marginally positive operating jaws, as recurring revenue...

Thomas J. Monaco

Crypto: Trading Activities Rebound as Investors Rush for Inflation Hedging

The much-awaited bitcoin-linked ETF BITO and BTF have received green light from SEC recently. But investors believe the ETF holding bitcoin...

Roger Xie