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

Commonwealth Bank of Australia / Equity Capital Markets

<p>Following ANZ's US$1.8bn capital raising a week ago, CBA announced its US$3.7bn capital raising via rights issue. Shareholders will be entitled to 1 share for each existing 23 shares owned.&nbsp;</p><p>We placed the deal in our Smartkarma Placement Framework and rated the deal at borderline to participate.&nbsp;</p><p>However given the fact&nbsp;that both ANZ and CBA have fallen substantially in tandem since ANZ's announcement of placement, the deals offers substantial discount both to its market price and on a relative basis vs. ANZ. Therefore we think the lower end looks attractive and at that level we would&nbsp;participate.</p>

Following ANZ's US$1.8bn capital raising a week ago, CBA announced its US$3.7bn capital raising via rights issue. Shareholders will be entitled to 1 share for each existing 23 shares owned.&nbsp;We placed the deal in our Smartkarma Placement Framework and rated the deal at borderline to participate.&nbsp;However given the fact&nbsp;that both ANZ and CBA have fallen substantially in tandem since ANZ's announcement of placement, the deals offers substantial discount both to its market price and on a relative basis vs. ANZ. Therefore we think the lower end looks attractive and at that level we would&nbsp;participate.

CBA follows ANZ to beef up capital, substantial discount at lower end

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><em><strong>&lsquo;Pay no attention to that man behind the curtain&rsquo;</strong>&nbsp;</em><em>- Wizard of Oz</em></p><p>The nature and scale of Beijing&rsquo;s reaction to the bursting of the China equity bubble should dispel two of the three myths which supposedly justified the bull market, namely that the administration was in firm control of events and that it was intent on implementing a programme of liberal reforms towards the economy and financial markets.</p><p>The one remaining myth, which is still being propagated by the China bulls, is that despite the continuing growth slowdown, the underlying state of the Chinese economy is sound. Mark is currently undertaking a study of the financial characteristics of the Chinese corporate sector, which we intend to publish in early September. For this piece I am taking some of his preliminary findings to <strong>illustrate the fault lines, which exist through the Chinese economy and which continue to underpin our bearish view towards the Chinese economy and equity market.</strong></p>

&lsquo;Pay no attention to that man behind the curtain&rsquo;&nbsp;- Wizard of OzThe nature and scale of Beijing&rsquo;s reaction to the bursting of the China equity bubble should dispel two of the three myths which supposedly justified the bull market, namely that the administration was in firm control of events and that it was intent on implementing a programme of liberal reforms towards the economy and financial markets.The one remaining myth, which is still being propagated by the China bulls, is that despite the continuing growth slowdown, the underlying state of the Chinese economy is sound. Mark is currently undertaking a study of the financial characteristics of the Chinese corporate sector, which we intend to publish in early September. For this piece I am taking some of his preliminary findings to illustrate the fault lines, which exist through the Chinese economy and which continue to underpin our bearish view towards the Chinese economy and equity market.

CHINA: Reform & Omnipotence Myths Dispelled

<div><div><div>Let me begin by revisiting the road map for the bear market in EM equities which I first outlined in my role as EM equity strategist for Deutsche Bank towards the end of 2010 and the start of 2011, at a time when the consensus outlook for EM economies and equities was almost unanimously bullish.</div><div>&nbsp;</div><div>I made a number of tentative predictions and recommendations, which were generally greeted with a combination of indifference and skepticism and on occasion outright hostility among most, though not quite all of the bank&rsquo;s clients.</div><div>&nbsp;</div></div></div><div><div><strong>It seems that we may now be entering the final stage of EM relative underperformance, in line with our expectations in our initiation last year where we posited the relative trade was 2/3rds through.</strong></div></div>

Let me begin by revisiting the road map for the bear market in EM equities which I first outlined in my role as EM equity strategist for Deutsche Bank towards the end of 2010 and the start of 2011, at a time when the consensus outlook for EM economies and equities was almost unanimously bullish.&nbsp;I made a number of tentative predictions and recommendations, which were generally greeted with a combination of indifference and skepticism and on occasion outright hostility among most, though not quite all of the bank&rsquo;s clients.&nbsp;It seems that we may now be entering the final stage of EM relative underperformance, in line with our expectations in our initiation last year where we posited the relative trade was 2/3rds through.

A Roadmap of the EM Bear Market and Three Myths about the China Bull Market

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.

Thematic (Sector/Industry)

<p>For many years now, there has been a perception that the banks of Australia and Canada are similar. This stems from the resource-rich nature of each country.</p><p>It may also arise from the exceptional long-term credit ratings for both countries: AAA on Fitch and Aaa on Moodys. &nbsp;Of course this was brought to the fore with the onset of the Global Financial Crisis (GFC) in 2008 and followed by many downgrades.&nbsp;</p><p>Another basis for this may be the fact that the top four banks in each country account for a high 66% (Canada) to 76% (Australia) of total bank system assets. To us though, there remain critical differences that favour Australia, and their banks. First and foremost is public debt to GDP.</p><p>More below the fold....&nbsp;</p>

For many years now, there has been a perception that the banks of Australia and Canada are similar. This stems from the resource-rich nature of each country.It may also arise from the exceptional long-term credit ratings for both countries: AAA on Fitch and Aaa on Moodys. &nbsp;Of course this was brought to the fore with the onset of the Global Financial Crisis (GFC) in 2008 and followed by many downgrades.&nbsp;Another basis for this may be the fact that the top four banks in each country account for a high 66% (Canada) to 76% (Australia) of total bank system assets. To us though, there remain critical differences that favour Australia, and their banks. First and foremost is public debt to GDP.More below the fold....&nbsp;

Australia's Bank's Fare Well vs. Those in Canada

<p>Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.</p><p>BIS statistics show that Germany, US, and UK as having the most exposure to Greece, at US$56bn &ndash; of which just over half is Germany.</p><p>The issue is not contained to mark downs on Greek exposure, which many would have us believe.</p><p>Risk models immediately change. Banks must incorporate a higher probability of default (PD) for their sovereign exposures in general, and in particular, those in ailing European countries.</p><p>Foreign borrowings of France, Italy and Spain combined are 50x the level of Greece. And this is where banks will have to focus their estimates of increased risk following a Greece default.</p><p>More below the fold.</p><p>&nbsp;</p>

Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.BIS statistics show that Germany, US, and UK as having the most exposure to Greece, at US$56bn &ndash; of which just over half is Germany.The issue is not contained to mark downs on Greek exposure, which many would have us believe.Risk models immediately change. Banks must incorporate a higher probability of default (PD) for their sovereign exposures in general, and in particular, those in ailing European countries.Foreign borrowings of France, Italy and Spain combined are 50x the level of Greece. And this is where banks will have to focus their estimates of increased risk following a Greece default.More below the fold.&nbsp;

Unintended Consequences of a Greek Default

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)

CBA follows ANZ to beef up capital, substantial discount at lower end

Following ANZ's US$1.8bn capital raising a week ago, CBA announced its US$3.7bn capital raising via rights issue. Shareholders will be entitled to...

Ke Yan, CFA, FRM

CHINA: Reform & Omnipotence Myths Dispelled

‘Pay no attention to that man behind the curtain’ - Wizard of OzThe nature and scale of Beijing’s reaction to the bursting of the China equity...

John-Paul Smith

A Roadmap of the EM Bear Market and Three Myths about the China Bull Market

Let me begin by revisiting the road map for the bear market in EM equities which I first outlined in my role as EM equity strategist for Deutsche...

John-Paul Smith

Australia's Bank's Fare Well vs. Those in Canada

For many years now, there has been a perception that the banks of Australia and Canada are similar. This stems from the resource-rich nature of...

Daniel Tabbush

Unintended Consequences of a Greek Default

Credit spreads for Deutsche Bank and BNP are rising vertically. This is mostly in anticipation of a Greek default.BIS statistics show that Germany,...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

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Dividend (Yield)