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

*Major US Merchant Deal: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch's (APT.AU) [Afterpay] recently announced that it is further expanding its Buy Now, Pay Later (BNPL) model to several major high profile US merchants in order to boost sales and margins. Afterpay is now allowing all US users to shop at 13 retailers by October 2021 - ahead of the holiday shopping season; and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past ten months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways.

*Major US Merchant Deal: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch's (APT.AU) [Afterpay] recently announced that it is further expanding its Buy Now, Pay Later (BNPL) model to several major high profile US merchants in order to boost sales and margins. Afterpay is now allowing all US users to shop at 13 retailers by October 2021 - ahead of the holiday shopping season; and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past ten months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways. 

Tencent Holdings – Digging In Their Heals

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Australian Financial stocks are a lightly held.  Just 17% of the global funds in our analysis hold a position, with managers running a net underweight for the last decade.  They remain the 5th largest country/sector underweight globally.However the decline has started to reverse.  Buying in stocks such as <a href="https://www.smartkarma.com/entities/australia-and-new-zealand-banking-group-anz" target="_blank" data-smartkarma-citation="entities:443:1" rel="noopener">Australia and New Zealand Banking Group (ANZ) (ANZ AU)</a> and <a href="https://www.smartkarma.com/entities/zip-co-ltd-3708706d-4978-4e29-acbc-d9702b971da9" target="_blank" data-smartkarma-citation="entities:29126:1" rel="noopener">Zip Co Ltd (Z1P AU)</a> has placed active fund ownership on an upward trajectory for the first time in 5-years.Compared to Financials positioning in other countries, Australian Financials are lightly held, especially compared to US and India Financials which saw a strong resurgence post COVID.  If we add in to the mix the relatively large underweight and the fact that there is a Value rotation underway, it wouldn't be out of the question to expect Australian Financials to capture further inflows.

Australian Financial stocks are a lightly held.  Just 17% of the global funds in our analysis hold a position, with managers running a net underweight for the last decade.  They remain the 5th largest country/sector underweight globally.However the decline has started to reverse.  Buying in stocks such as Australia and New Zealand Banking Group (ANZ) (ANZ AU) and Zip Co Ltd (Z1P AU) has placed active fund ownership on an upward trajectory for the first time in 5-years.Compared to Financials positioning in other countries, Australian Financials are lightly held, especially compared to US and India Financials which saw a strong resurgence post COVID.  If we add in to the mix the relatively large underweight and the fact that there is a Value rotation underway, it wouldn't be out of the question to expect Australian Financials to capture further inflows.

Australian Financials:  Big Underweight (Finally) Finding Some Love?

National Australia Bank / Equity Bottom-Up

*AML/CTF Violations: National Australia Bank (NAB.AU) [NAB] announced that it was informed by the Australian Transaction Reports and Analysis Centre (AUSTRAC) that it had identified “potential serious and on-going non-compliance” with NAB's compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act 2006, and the AML/CFT Rules 2007; and*Fundamental Challenges Too: AML/CTF is not NAB’s only challenge. NAB's 1H21 NIM declined another 3 bp HOH to 1.74%, and will remain challenged from this low rate environment, competitive pressures, and higher mortgage concentrations well into FY 2022. In addition, NAB’s loans 90+ days past due loans increased over 30% HOH due to challenges from Australian mortgage customers exiting loan deferrals.

*AML/CTF Violations: National Australia Bank (NAB.AU) [NAB] announced that it was informed by the Australian Transaction Reports and Analysis Centre (AUSTRAC) that it had identified “potential serious and on-going non-compliance” with NAB's compliance with the Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Act 2006, and the AML/CFT Rules 2007; and*Fundamental Challenges Too: AML/CTF is not NAB’s only challenge. NAB's 1H21 NIM declined another 3 bp HOH to 1.74%, and will remain challenged from this low rate environment, competitive pressures, and higher mortgage concentrations well into FY 2022. In addition, NAB’s loans 90+ days past due loans increased over 30% HOH due to challenges from Australian mortgage customers exiting loan deferrals.

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.

Of Australia’s largest banks, there are few that reveal improving core net interest income. Macquarie is unique in this respect and further enters the current period of inflation, recovery with far higher assets.

Of Australia’s largest banks, there are few that reveal improving core net interest income. Macquarie is unique in this respect and further enters the current period of inflation, recovery with far higher assets. 

Macquarie – Don’t You Forget About Me

*Reserve Bank of Australia’s No Action On BNPL:The Reserve Bank of Australia (RBA) released a Retail Payments Review on May 28, 2021 discussing among other items the Buy Now Pay Later (BNPL) model. Specifically, the RBA reviewed whether the BNPL model should continue with its ‘no surcharge rules’ whereby merchants are precluded from passing along BNPL fees to its customers. The RBA concluded that it will not require the BNPL sector to change its ‘no surcharge rules’; and  *Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past nine months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways.

*Reserve Bank of Australia’s No Action On BNPL:The Reserve Bank of Australia (RBA) released a Retail Payments Review on May 28, 2021 discussing among other items the Buy Now Pay Later (BNPL) model. Specifically, the RBA reviewed whether the BNPL model should continue with its ‘no surcharge rules’ whereby merchants are precluded from passing along BNPL fees to its customers. The RBA concluded that it will not require the BNPL sector to change its ‘no surcharge rules’; and  *Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past nine months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways. 

Australia

Commonwealth Bank of Australia provides banking, life insurance, and related services for individuals, small businesses and medium sized commercial enterprises. The Bank provides corporate and general banking, international financing, institutional banking and stock broking and funds management such as superannuation product.

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Commonwealth Bank of Australia (CBA AU)

Tencent Holdings – Digging In Their Heals

TENCENT HOLDINGS: Tencent' s Afterpay recently announced a further expansion of its BNPL model to several major US merchants in order to boost...

Thomas J. Monaco

Australian Financials: Big Underweight (Finally) Finding Some Love?

Australian Financial stocks are the 5th largest country/sector underweight globally. But is their decade long decline starting to reverse?

Steven Holden

National Australia Bank - Nabbed

NATIONAL AUSTRALIA BANK: NAB was informed by AUSTRAC that it had identified “potential serious and on-going non-compliance” with NAB's compliance...

Thomas J. Monaco

Macquarie – Don’t You Forget About Me

There are few banks that reveal improving core net interest income. Macquarie is unique in this respect and further enters the current period of...

Daniel Tabbush

Tencent Holdings – Shot, Score!!

TENCENT HOLDINGS: The RBA released a Retail Payments Review discussing among other items the BNPL model. The RBA concluded that it will not require...

Thomas J. Monaco

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