Alpha-Centric ESG Research

Kyle Rudden

Last week, <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> made a momentous <a href="https://www.sgx.com/media-centre/20201215-sgx-strengthens-commitment-sustainability-s20-million-plan" target="_blank" rel="noopener">announcement</a> in the sphere of Asian sustainable/ESG finance and investing. <a href="https://first.sgx.com" target="_blank" rel="noopener">SGX FIRST</a> is its new multi-partner sustainability initiative. The acronym, FIRST, is for "Future in Reshaping Sustainability Together," but it says so much more.SGX FIRST, puts SGX first, in the ranks of Asia's most sustainable stock exchanges.This is different. SGX FIRST is a well-conceived, high-level, strategic sustainability initiative on an entirely different plane than the many "platform" launches of late. It is indeed part platform, but to view it as only that misses its essence entirely. SGX FIRST stands out in three interrelated ways:<ol>
<li>
Intelligent: Unlike "me-too" ESG portals, SGX FIRST is an integrated strategic plan leveraging existing strengths, products, and relationships. It's making progress, not even a week out.</li>
<li>
Impactful: Intelligent design and synergies-galore should translate into real impact; the ability for SGX FIRST to foster and shape sustainable capital markets in Singapore, and APAC.</li>
<li>
Profitable: Yet to be seen, but likely. This is the stuff of virtuous cycles, from establishing ESG domain authority to licensing fees and other incomes. Altruistic capitalism, but capitalism.</li>
</ol>In this game of ESG "platforms," SGX is playing chess, whilst others chew on checkers.In light of pandemic-induced hard times for SGX, this may be what the doctor ordered.

Last week, Singapore Exchange (SGX SP) made a momentous announcement in the sphere of Asian sustainable/ESG finance and investing. SGX FIRST is its new multi-partner sustainability initiative. The acronym, FIRST, is for "Future in Reshaping Sustainability Together," but it says so much more.SGX FIRST, puts SGX first, in the ranks of Asia's most sustainable stock exchanges.This is different. SGX FIRST is a well-conceived, high-level, strategic sustainability initiative on an entirely different plane than the many "platform" launches of late. It is indeed part platform, but to view it as only that misses its essence entirely. SGX FIRST stands out in three interrelated ways:

Intelligent: Unlike "me-too" ESG portals, SGX FIRST is an integrated strategic plan leveraging existing strengths, products, and relationships. It's making progress, not even a week out.

Impactful: Intelligent design and synergies-galore should translate into real impact; the ability for SGX FIRST to foster and shape sustainable capital markets in Singapore, and APAC.

Profitable: Yet to be seen, but likely. This is the stuff of virtuous cycles, from establishing ESG domain authority to licensing fees and other incomes. Altruistic capitalism, but capitalism.
In this game of ESG "platforms," SGX is playing chess, whilst others chew on checkers.In light of pandemic-induced hard times for SGX, this may be what the doctor ordered.

SGX FIRST Puts SGX First in the Ranks of Asia's Most Sustainable Stock Exchanges

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

*November Market Stats Generally Positive: The Singapore Exchange (SGX.SP) [SGX] released its market statistics for November 2020. Unsurprisingly, the progress of the COVID-19 vaccine fuelled volume gains across the entire spectrum of SGX products; and*Taiwan Pressures: SGX ceased trading of MSCI Taiwan futures contracts on October 30, 2020 as these contracts moved to Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx]. Notional value traded market share of SGX - while usually volatile - has begun gradually declining to 90.4% in November from 92.4% in October. This will have significant implications over how much market share and fee pressure will be placed on SGX's lucrative A50 contract.

*November Market Stats Generally Positive: The Singapore Exchange (SGX.SP) [SGX] released its market statistics for November 2020. Unsurprisingly, the progress of the COVID-19 vaccine fuelled volume gains across the entire spectrum of SGX products; and*Taiwan Pressures: SGX ceased trading of MSCI Taiwan futures contracts on October 30, 2020 as these contracts moved to Hong Kong Exchanges &amp; Clearing (388.HK) [HKEx]. Notional value traded market share of SGX - while usually volatile - has begun gradually declining to 90.4% in November from 92.4% in October. This will have significant implications over how much market share and fee pressure will be placed on SGX's lucrative A50 contract.  

Singapore Exchange – Strains Seen For TW Futures

In <a href="https://www.smartkarma.com/insights/delisting-deceitful-chinese-companies-act-not-a-slam-dunk-and-has-more-bark-than-bite-if-it-passes" target="_blank" data-smartkarma-citation="insights:40025" rel="noopener">"Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes</a>, I made three "predictions." First, the U.S. House of Representatives would not get around to voting on the "delisting act" before the end of the Congressional session. Second, if the House does vote, it would likely pass the bill. Third, if the bill passes, it would have more bark than bite.As a bloke called Meat Loaf once sung, "two out of three ain't bad."On Wednesday, the House voted and passed Senate Bill 945, titled the "Holding Foreign Companies Accountable Act." That the House managed to vote amidst the dual chaos of a raging pandemic and an unhinged President – so close to adjourning this 116th Congress – is a surprise. That it voted to pass S945 is not at all surprising, however, given widespread bi-partisan support for the bill.The real epiphany comes from additional details provided during House testimony just prior to the vote. Not many, but those details that were disclosed (plus the tone in which they were articulated) shed light on how S945 will be implemented and enforced by the SEC, and why foreign issuers and investors should duly-cautious but not overly-concerned. And why this "delisting bill" is ...... more bark than bite.This Insight presents an updated analysis of S945 (general and China/Hong Kong-specific aspects), shares new details provided by Representative Brad Sherman, offers an opinion on the SEC's likely approach to writing and enforcing S945 rules, analyses China/Hong Kong stocks most at risk under S945, and stocks affected by the France/Belgium angle (similar to China/Hong Kong).

In "Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes, I made three "predictions." First, the U.S. House of Representatives would not get around to voting on the "delisting act" before the end of the Congressional session. Second, if the House does vote, it would likely pass the bill. Third, if the bill passes, it would have more bark than bite.As a bloke called Meat Loaf once sung, "two out of three ain't bad."On Wednesday, the House voted and passed Senate Bill 945, titled the "Holding Foreign Companies Accountable Act." That the House managed to vote amidst the dual chaos of a raging pandemic and an unhinged President – so close to adjourning this 116th Congress – is a surprise. That it voted to pass S945 is not at all surprising, however, given widespread bi-partisan support for the bill.The real epiphany comes from additional details provided during House testimony just prior to the vote. Not many, but those details that were disclosed (plus the tone in which they were articulated) shed light on how S945 will be implemented and enforced by the SEC, and why foreign issuers and investors should duly-cautious but not overly-concerned. And why this "delisting bill" is ...... more bark than bite.This Insight presents an updated analysis of S945 (general and China/Hong Kong-specific aspects), shares new details provided by Representative Brad Sherman, offers an opinion on the SEC's likely approach to writing and enforcing S945 rules, analyses China/Hong Kong stocks most at risk under S945, and stocks affected by the France/Belgium angle (similar to China/Hong Kong).

House Passes "Delisting Act" Giving SEC 90 Days to Write Its Rules (And Yes, More Bark Than Bite)

*Joint Announcement For Stock Connect Expansion: Just when we thought that Hong Kong Exchanges &amp; Clearing (388.HK) [KKEx] had no other rabbits to pull out of its hat in 2020, the HKEx, Shanghai Stock Exchange (SSE), and Shenzhen Stock Exchange (SZSE) jointly announced further scope for Stock Connect expansion in early 2021 on November 27, 2020 regarding the STAR Market and biotech companies;  *Solid Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 3Q20 earnings of HKD 3.3 bn, improving HKD 376 mn (12.7%) linked quarter. Results were even more impressive when we exclude investment income (declined HKD 206 mn or 23.2% linked quarter) – increasing HKD 582 mn (28.0%) to HKD 2.7 bn; and*Peak Value: So much value has been derived on hope for the shares of HKEx, which included that on: southbound connect, futures markets,  structural reforms, and the change in CEO. As such, we have witnessed HKEx’s 2020 share performance of 44.4% that has resulted in a global exchange leading valuation of 10.4x P/BV.

*Joint Announcement For Stock Connect Expansion: Just when we thought that Hong Kong Exchanges &amp; Clearing (388.HK) [KKEx] had no other rabbits to pull out of its hat in 2020, the HKEx, Shanghai Stock Exchange (SSE), and Shenzhen Stock Exchange (SZSE) jointly announced further scope for Stock Connect expansion in early 2021 on November 27, 2020 regarding the STAR Market and biotech companies;  *Solid Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 3Q20 earnings of HKD 3.3 bn, improving HKD 376 mn (12.7%) linked quarter. Results were even more impressive when we exclude investment income (declined HKD 206 mn or 23.2% linked quarter) – increasing HKD 582 mn (28.0%) to HKD 2.7 bn; and*Peak Value: So much value has been derived on hope for the shares of HKEx, which included that on: southbound connect, futures markets,  structural reforms, and the change in CEO. As such, we have witnessed HKEx’s 2020 share performance of 44.4% that has resulted in a global exchange leading valuation of 10.4x P/BV. 

Hong Kong Exchanges & Clearing – Making Another Connection

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Thematic (Sector/Industry)

Necessity is the mother of financial innovation. The non-traditional listings of <a href="https://www.smartkarma.com/entities/spotify-technology-sa" target="_blank" data-smartkarma-citation="entities:26772:1" rel="noopener">Spotify Technology SA (SPOT US)</a>, <a href="https://www.smartkarma.com/entities/slack-technologies-inc" target="_blank" data-smartkarma-citation="entities:27904:1" rel="noopener">Slack Technologies Inc (WORK US)</a> and <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies Inc (PLTR US)</a> exhibit an increasing trend toward direct listings, in place of traditional IPOs incorporating lock-up agreements and dysfunctional pricing and allocation process.
This week Airbnb announced plans to go public next year joining the ranks of companies like Spotify and Slack that have used a direct listing to go public.
Is this IPO shortcut route appropriate for all companies? What are the pros and cons? And closer to home, which exchanges are open these virtual IPOs?
In this insight, I address the questions above, discuss various discussions with exchanges in the Asia-Pac regions, and also analyse alternative IPO routes such as special purpose acquisition company (SPACs).
<div class="content-highlight">
<h2>What's Original?</h2>
This insight explores the process, benefits, and track record to date of direct listings in equity markets, through to the current developments in Asia.
</div>

Necessity is the mother of financial innovation. The non-traditional listings of Spotify Technology SA (SPOT US), Slack Technologies Inc (WORK US) and Palantir Technologies Inc (PLTR US) exhibit an increasing trend toward direct listings, in place of traditional IPOs incorporating lock-up agreements and dysfunctional pricing and allocation process.
This week Airbnb announced plans to go public next year joining the ranks of companies like Spotify and Slack that have used a direct listing to go public.
Is this IPO shortcut route appropriate for all companies? What are the pros and cons? And closer to home, which exchanges are open these virtual IPOs?
In this insight, I address the questions above, discuss various discussions with exchanges in the Asia-Pac regions, and also analyse alternative IPO routes such as special purpose acquisition company (SPACs).

What's Original?
This insight explores the process, benefits, and track record to date of direct listings in equity markets, through to the current developments in Asia.


Virtual IPOs/Direct Listings: Uninhibited Price Discovery

Hong Kong

Hong Kong Exchanges & Clearing Limited owns and operates the stock exchange, futures exchange, and their related clearing houses in Hong Kong.  The Company provides the trading platforms for a range of cash and derivatives products and the facilities for processing trades.

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HKEX (388 HK)

SGX FIRST Puts SGX First in the Ranks of Asia's Most Sustainable Stock Exchanges

"What's in a name? "asked Shakespeare. Quite a lot, when the name "SGX FIRST." FIRST is an acronym, but it also makes a bold statement; that SGX is...

Kyle Rudden

Singapore Exchange – Strains Seen For TW Futures

SINGAPORE EXCHANGE: November Stats Look Good Generally Across The Board; However, Taiwan Futures Slippage Could Impact A50.

Thomas J. Monaco

House Passes "Delisting Act" Giving SEC 90 Days to Write Its Rules (And Yes, More Bark Than Bite)

The U.S. House of Representatives passed Senate Bill 945, the "Holding Foreign Companies Accountable Act." New details support the notion that S945...

Kyle Rudden

Hong Kong Exchanges & Clearing – Making Another Connection

HONG KONG EXCHANGES & CLEARING: The Three Exchanges Have Added To The Stock Connect With STAR Market and Biotech Additions

Thomas J. Monaco

Virtual IPOs/Direct Listings: Uninhibited Price Discovery

There’s no cookie-cutter approach that should be employed for every company seeking to go public. But late-stage, venture-backed technology...

David Blennerhassett

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