Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023</li>
<li>Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank</li>
<li>Our key sells are ICICI Bank from India and digital bank Jago from Indonesia</li>
</ul>


Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023
Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank
Our key sells are ICICI Bank from India and digital bank Jago from Indonesia


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We remain near-term bullish since our 4/22/25 Compass when we discussed SPX 5110-5120 as a bounce spot and a level to trade [long] against.</li>
<li>Possible that major lows are in at 4800-4820 SPX and $402-$412 on the Nasdaq 100 (QQQ), as discussed in 4/10/25 Int'l Compass. For now we want to remain near-term bullish</li>
<li>200-Day MAs on ACWI-US and SPX are spots where they <em>could</em> roll over. This is just a lean; if we see no reason to sell at those levels, we won't.</li>
</ul>


We remain near-term bullish since our 4/22/25 Compass when we discussed SPX 5110-5120 as a bounce spot and a level to trade [long] against.
Possible that major lows are in at 4800-4820 SPX and $402-$412 on the Nasdaq 100 (QQQ), as discussed in 4/10/25 Int'l Compass. For now we want to remain near-term bullish
200-Day MAs on ACWI-US and SPX are spots where they could roll over. This is just a lean; if we see no reason to sell at those levels, we won't.


Invest As If the Lows Are In; EURO STOXX 50 and TOPIX Reclaim Key Levels

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

Cross Asset Strategy

<ul>
<li>Rotation is underway in the EM Financial sector, with selling in Brazil Financials funding rotation in to Greece, UAE and Argentinian financials.</li>
<li>Brazil Financials remain an overweight for the majority of EM funds, but conviction is falling, with selling in key names Banco Bradesco and Banco BTG Pactual.</li>
<li>Itau Unibanco Holding remains the flagship holding, owned by 43.7% of funds, though remains well below its 2010 ownership peak.</li>
</ul>


Rotation is underway in the EM Financial sector, with selling in Brazil Financials funding rotation in to Greece, UAE and Argentinian financials.
Brazil Financials remain an overweight for the majority of EM funds, but conviction is falling, with selling in key names Banco Bradesco and Banco BTG Pactual.
Itau Unibanco Holding remains the flagship holding, owned by 43.7% of funds, though remains well below its 2010 ownership peak.


Brazil Financials: Losing Ground Amid Global Financials Rotation

Equity Bottom-Up

<ul>
<li>We stay negative on Nubank, even after the recent share correction; our rationale is tough competition, especially in Mexico, and worsening credit quality to remain a key risk in Brazil</li>
<li>We believe that the fundamental outlook for Bradesco should improve further, supported by its strong insurance operations; conservatively, we estimate insurance could account for two thirds of group value</li>
<li>Our neutral on Banco do Brasil is due largely to heightened political risk; holding company Itausa is the best indirect vehicle through which to gain equity exposure in Banco Itaú</li>
</ul>


We stay negative on Nubank, even after the recent share correction; our rationale is tough competition, especially in Mexico, and worsening credit quality to remain a key risk in Brazil
We believe that the fundamental outlook for Bradesco should improve further, supported by its strong insurance operations; conservatively, we estimate insurance could account for two thirds of group value
Our neutral on Banco do Brasil is due largely to heightened political risk; holding company Itausa is the best indirect vehicle through which to gain equity exposure in Banco Itaú


Brazil Banks – Buy Bradesco for Value and Improving Returns, Nubank Is Stretched on Valuations

<ul>
<li>We take a more nuanced view on Nubank; the stock has corrected 16%+ from its high and, despite 28% YoY loan book growth, it has organically generated capital in 3Q24</li>
<li>Although Nubank is a digital bank success story, increased competition, especially from other fintechs, and a further deterioration in credit quality remain key business challenges going forward</li>
<li>Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain sellers of Nubank; we stay positive on Bradesco</li>
</ul>


We take a more nuanced view on Nubank; the stock has corrected 16%+ from its high and, despite 28% YoY loan book growth, it has organically generated capital in 3Q24
Although Nubank is a digital bank success story, increased competition, especially from other fintechs, and a further deterioration in credit quality remain key business challenges going forward
Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain sellers of Nubank; we stay positive on Bradesco


Nubank (NU US) – Gravity’s Pull and Key Business Factors

Brazil

Itau Unibanco Holding S.A. attracts deposits and offer retail, commercial, corporate, and private banking services. The Bank offers consumer loans, financial management, insurance, pension plans, treasury services, mortgage loans, lease financing, securities brokerage, and foreign exchange services.

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Itau Unibanco Holding (ITUB4 BZ)

GEM Banks; Conviction Calls for 2023

Our core buys are Bank Mandiri, Hana Financial, China Construction Bank and BanColombia; we also have special mention for Banco Itau and Nubank;...

Victor Galliano

Invest As If the Lows Are In; EURO STOXX 50 and TOPIX Reclaim Key Levels

Invest As If the Lows Are In; EURO $STOXX 50 and $TOPIX Reclaim Key Levels; Still near-term bullish since our 4/22/25 Compass report. Possible...

Vermilion Research

Brazil Financials: Losing Ground Amid Global Financials Rotation

Rotation in EM financial sector sees selling in Brazil funding rotation into Greece, UAE, and Argentina financials, with Itau Unibanco Holding as...

Steven Holden

Brazil Banks – Buy Bradesco for Value and Improving Returns, Nubank Is Stretched on Valuations

Negative on Nubank due to tough competition and credit risks, bullish on Bradesco with its strong insurance arm, neutral on Banco do Brasil due to...

Victor Galliano

Nubank (NU US) – Gravity’s Pull and Key Business Factors

Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain negative...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

GEM Banks; Conviction Calls for 2023

Our core buys are Bank Mandiri, Hana Financial, China Construction Bank and BanColombia; we also have special mention for Banco Itau and Nubank;...

Victor Galliano

Invest As If the Lows Are In; EURO STOXX 50 and TOPIX Reclaim Key Levels

Invest As If the Lows Are In; EURO $STOXX 50 and $TOPIX Reclaim Key Levels; Still near-term bullish since our 4/22/25 Compass report. Possible...

Vermilion Research

Brazil Financials: Losing Ground Amid Global Financials Rotation

​Rotation in EM financial sector sees selling in Brazil funding rotation into Greece, UAE, and Argentina financials, with Itau Unibanco Holding as...

Steven Holden

Brazil Banks – Buy Bradesco for Value and Improving Returns, Nubank Is Stretched on Valuations

​Negative on Nubank due to tough competition and credit risks, bullish on Bradesco with its strong insurance arm, neutral on Banco do Brasil due to...

Victor Galliano

Nubank (NU US) – Gravity’s Pull and Key Business Factors

​Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain negative...

Victor Galliano

Rotation in EM financial sector sees selling in Brazil funding rotation into Greece, UAE, and Argentina financials, with Itau Unibanco Holding as...

Negative on Nubank due to tough competition and credit risks, bullish on Bradesco with its strong insurance arm, neutral on Banco do Brasil due to...

Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain negative...