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

*Weak Great Eastern Returns: Great Eastern (GE.SP) reported 1Q20 earnings of SGD 33.9 mn, declining 88% linked quarter from the SGD 287 mn posted in 4Q19. Earnings were materially weaker than what consensus had built in for Overseas Chinese Banking Corp. (OCBC.SP) – and pose a 14% consensus miss for OCBC. Higher volatility in reported Great Eastern earnings decreases confidence in forecasts. This level of earnings decline at Great Eastern also limit the OCBC’s ability to take provisions; and* Terrible Readacross to Regional Insurers: MTM losses would imply a negative readacross to AIA (1299.HK), Prudential (PRU.LN), ManuLife (MFC.CN), and of course the mainland Chinese insurers (who are somehow exempt from negative MTM on very toxic securities portfolios).

*Weak Great Eastern Returns: Great Eastern (GE.SP) reported 1Q20 earnings of SGD 33.9 mn, declining 88% linked quarter from the SGD 287 mn posted in 4Q19. Earnings were materially weaker than what consensus had built in for Overseas Chinese Banking Corp. (OCBC.SP) – and pose a 14% consensus miss for OCBC. Higher volatility in reported Great Eastern earnings decreases confidence in forecasts. This level of earnings decline at Great Eastern also limit the OCBC’s ability to take provisions; and* Terrible Readacross to Regional Insurers: MTM losses would imply a negative readacross to AIA (1299.HK), Prudential (PRU.LN), ManuLife (MFC.CN), and of course the mainland Chinese insurers (who are somehow exempt from negative MTM on very toxic securities portfolios).

OCBC – Nothing Great About Great Eastern

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.

<a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">Oversea Chinese Banking Corp. (OCBC SP)</a> has considerable exposure to Hong Kong, China and Macau. This can weigh on upcoming earnings. Closure of casinos in Macau can have a direct impact on its operations there, through OCBC Wing Hang Bank. Singapore is in recessionary conditions at the same time, while HK operations will likely see migration from stage 1 loans to stage 2 loans, and potentially into stage 3 loans. Weak oil prices are not only an issue for DBS, but also for OCBC.  This is due to oil and gas service sector exposure, primarily in Singapore. Even before these risks, OCBC saw credit metrics deteriorate dramatically during 3Q19.  The fact that OCBC Wing Hang Bank HK had high net loan growthfrom 2016 to 2018 is another concern entirely, with respect to unseasoned loans, and something we doubt is well understood.

Oversea Chinese Banking Corp. (OCBC SP) has considerable exposure to Hong Kong, China and Macau. This can weigh on upcoming earnings. Closure of casinos in Macau can have a direct impact on its operations there, through OCBC Wing Hang Bank. Singapore is in recessionary conditions at the same time, while HK operations will likely see migration from stage 1 loans to stage 2 loans, and potentially into stage 3 loans. Weak oil prices are not only an issue for DBS, but also for OCBC.  This is due to oil and gas service sector exposure, primarily in Singapore. Even before these risks, OCBC saw credit metrics deteriorate dramatically during 3Q19.  The fact that OCBC Wing Hang Bank HK had high net loan growthfrom 2016 to 2018 is another concern entirely, with respect to unseasoned loans, and something we doubt is well understood.

OCBC – Wing Hang Bank and Oil Price Risk

* New CEO More Like A Hail Mary For China China. It’s unclear as to how Mr. Lee can address the geographic and agents in force dilemma that AIA chronically faces.* Execution on-track in Tianjin and Hebei, its new provincial markets. Adding agents, however, has been more deliberate than anticipated. * AIA is also struggling to mitigate the impact from social unrest on its Hong Kong business, given that the local business is heavily mainland Chinese dependent.

* New CEO More Like A Hail Mary For China China. It’s unclear as to how Mr. Lee can address the geographic and agents in force dilemma that AIA chronically faces.* Execution on-track in Tianjin and Hebei, its new provincial markets. Adding agents, however, has been more deliberate than anticipated. * AIA is also struggling to mitigate the impact from social unrest on its Hong Kong business, given that the local business is heavily mainland Chinese dependent.

AIA  - New CEO to Focus on China As Hong Kong Slows

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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Singapore’s Insurance Trio Averages 9% YTD Return

* Unresolved Accounting Questions: A recently changed FYE to December coupled with a failure to disclose several months of data disallow reasonable QOQ comparisons. We also question the assumptions that are used to calculate VONB margins - which are somehow at record levels during a more challenging interest rate environment. Both factors – along with deferred acquisition cost (DAC) accounting  at AIA - suggest that the new CEO is pushing the envelope in a slow growth environment (especially in…

* Unresolved Accounting Questions: A recently changed FYE to December coupled with a failure to disclose several months of data disallow reasonable QOQ comparisons. We also question the assumptions that are used to calculate VONB margins - which are somehow at record levels during a more challenging interest rate environment. Both factors – along with deferred acquisition cost (DAC) accounting  at AIA - suggest that the new CEO is pushing the envelope in a slow growth environment (especially in…

AIA – Change in FYE Leads to Additional Growth Questions

Singapore

Great Eastern Holdings Limited operates in the life insurance business. The Company provides fund management services including retirement plans and endowments as well as life and health insurance, personal accident insurance, and general insurance

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Great Eastern Holdings (GE SP)

OCBC – Nothing Great About Great Eastern

*Weak Great Eastern Returns: Great Eastern (GE.SP) reported 1Q20 earnings of SGD 33.9 mn, declining 88% linked quarter from the SGD 287 mn posted...

Thomas J. Monaco

OCBC – Wing Hang Bank and Oil Price Risk

Oversea Chinese Banking Corp. (OCBC SP) has considerable exposure to Hong Kong, China and Macau. This can weigh on upcoming earnings. Closure of...

Daniel Tabbush

AIA - New CEO to Focus on China As Hong Kong Slows

* New CEO More Like A Hail Mary For China China. It’s unclear as to how Mr. Lee can address the geographic and agents in force dilemma that AIA...

Thomas J. Monaco

Singapore’s Insurance Trio Averages 9% YTD Return

Singapore Exchange Ltd (SGX)

AIA – Change in FYE Leads to Additional Growth Questions

* Unresolved Accounting Questions: A recently changed FYE to December coupled with a failure to disclose several months of data disallow reasonable...

Thomas J. Monaco

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