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>Weaker Result Across Almost All Geographic Segments - Led By Negative Jaws;    </li>
<li>Credit Modestly Weaker, Although Reserve Coverage Remains Strong. Watch For Credit Turn; and </li>
<li>Progress On Asian Consumer Exits, But Sea Change In View On Mexico.   </li>
</ul>


Weaker Result Across Almost All Geographic Segments - Led By Negative Jaws;    
Credit Modestly Weaker, Although Reserve Coverage Remains Strong. Watch For Credit Turn; and 
Progress On Asian Consumer Exits, But Sea Change In View On Mexico.   


Citigroup – Many Moving Parts and Confused Mexican Exit

China Merchants Bank H / Equity Bottom-Up

<ul>
<li>
Competitor Call Reveals Numerous Additional Risks Which Will Weigh On Results. </li>
<li>No Clarity On Go Forward Core Bottom-Line, Especially Gains and Loss Provisions. </li>
<li>Reserve to NPLs Looks Overstated, as WMP and Securities Are Included In Loan Reserves. </li>
</ul>



Competitor Call Reveals Numerous Additional Risks Which Will Weigh On Results. 
No Clarity On Go Forward Core Bottom-Line, Especially Gains and Loss Provisions. 
Reserve to NPLs Looks Overstated, as WMP and Securities Are Included In Loan Reserves. 


China Merchants Bank – Accelerating Risk

<ul>
<li>
Bad To Worse:Under mainland China’s real estate development law, the government has the right to repossess idle land sold to any developer without compensation;</li>
<li>
Demolition Man: Danzhou City is now in on the act, forcing China Evergrande Group (3333.HK) [Evergrande] to demolish 39 buildings for various violations; and</li>
<li>
Banks To Eat This As Well: Without any compensation to Evergrande, mainland Chinese banks no doubt will finally be writing down their exposure on Evergrande's now non-existent buildings.</li>
</ul>



Bad To Worse:Under mainland China’s real estate development law, the government has the right to repossess idle land sold to any developer without compensation;

Demolition Man: Danzhou City is now in on the act, forcing China Evergrande Group (3333.HK) [Evergrande] to demolish 39 buildings for various violations; and

Banks To Eat This As Well: Without any compensation to Evergrande, mainland Chinese banks no doubt will finally be writing down their exposure on Evergrande's now non-existent buildings.


<ul>
<li>
 Sea Sale: Tencent sold 14.5 mn shares in Sea, raising approximately USD 3 bn in cash – reducing Tencent’s position in Sea from 21.3% to 18.7%;   </li>
<li>
 Not A Surprise: Given mainland China’s crackdown on the country’s largest internet companies, Tencent’s disposal of Sea shares is not a surprise; and  </li>
<li>
 Other Stake Sales To Follow: Further divestitures of major stakes are likely if Tencent wishes to remain on the right side of mainland China’s Communist Party.    </li>
</ul>



 Sea Sale: Tencent sold 14.5 mn shares in Sea, raising approximately USD 3 bn in cash – reducing Tencent’s position in Sea from 21.3% to 18.7%;   

 Not A Surprise: Given mainland China’s crackdown on the country’s largest internet companies, Tencent’s disposal of Sea shares is not a surprise; and  

 Other Stake Sales To Follow: Further divestitures of major stakes are likely if Tencent wishes to remain on the right side of mainland China’s Communist Party.    


Tencent Holdings – From Sea To Shining Sea

<ul>
<li>
Special Dividend: On December 23, 2021, Tencent Holdings (700.HK) [Tencent] announced that it is planning to distribute USD 16.3 bn in JD.com (JD.US) [JD] Class A shares; </li>
<li>
Not A Surprise:Given mainland China’s crackdown on the country’s largest internet companies, Tencent’s disposal of JD shares is not a surprise; and</li>
<li>
Other Stake Sales To Follow: Further divestitures of major stakes are likely if Tencent wishes to remain on the right side of mainland China’s Communist Party.  </li>
</ul>



Special Dividend: On December 23, 2021, Tencent Holdings (700.HK) [Tencent] announced that it is planning to distribute USD 16.3 bn in JD.com (JD.US) [JD] Class A shares; 

Not A Surprise:Given mainland China’s crackdown on the country’s largest internet companies, Tencent’s disposal of JD shares is not a surprise; and

Other Stake Sales To Follow: Further divestitures of major stakes are likely if Tencent wishes to remain on the right side of mainland China’s Communist Party.  


Hong Kong

CSOP FTSE China A50 ETF is an exchange-traded fund incorporated in Hong Kong. The Fund seeks to track the performance of the FTSE China A50 Index. The Fund invests most of its total assets in the equities of member companies of the FTSE China A50 Index. This is a RQFII fund.

CSOP FTSE China A50 (HKD) (2822 HK)

Citigroup – Many Moving Parts and Confused Mexican Exit

CITI: Weaker results across almost all geographic segments. Credit is modesty weaker but coverage is strong. Progress on Asian consumer exits, but...

Thomas J. Monaco

China Merchants Bank – Accelerating Risk

CHINA MERCHANTS BANK: A discussion over the use of gains and a drop in loss provisions during 3Q21 would have been a better use of time. CMB’s core...

Thomas J. Monaco

China Evergrande Group – Razing Cain

EVERGRANDE: Danzhou City is forcing Evergrande to demolish 39 buildings for various violations. Mainland Chinese banks no doubt will write down...

Thomas J. Monaco

Tencent Holdings – From Sea To Shining Sea

TENCENT: Tencent sold 14.5 mn shares in Sea, raising USD 3 bn and reducing its position from 21.3% to 18.7%, Other stake sales will follow.

Thomas J. Monaco

Tencent Holdings – Bottom Ticking

TENCENT: Tencent announced that it is planning to distribute USD 16.3 bn in JD shares. Given mainland China’s crackdown on Tencent, the disposal is...

Thomas J. Monaco