Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

<p>There is a great deal of maybe premature debate about "Value" suddenly trumping "Momentum" after years of underperformance. Similarly, there is a similar conversation about "Value" outperforming "Growth" for once after a torrid relative performance stretching years.</p><p>We are mindful that it is quite complex to actually separate what is actually "Value" from "Momentum" and "Growth".</p><p>And a swallow does not a summer make.</p><p>With regards Financials, and they are more of a "Value" component than "Momentum", there may be more outperformance ahead if this shift takes hold and matures.</p><p>We can decipher some recent technical trends in Asia Pacific that suggest "Value" (in some cases) is performing relatively well.</p><ul>
<li>Japanese banking stocks (value) are reaching overbought levels, including the Mega liquid players.</li>
<li>South Korean bank shares (value) have revived and in some cases look overbought.</li>
<li>Taiwanese banks with a heavy insurance business are overbought. The sector as a whole combines strong 12M Momentum with some relative value too.</li>
<li>Australian banks are generally performing well.</li>
</ul><p>Are the Japanese and South Korean technical moves a "value trap"? <a href="https://www.smartkarma.com/profiles/j-brian-waterhouse" target="_blank" rel="noopener" data-smartkarma-citation="accounts:1459">J. Brian Waterhouse</a> is a banking expert on Japan and his insight here would be invaluable. These may be markets that are cheap for a reason and <a href="https://www.smartkarma.com/profiles/douglas-kim" target="_blank" rel="noopener" data-smartkarma-citation="accounts:342">Douglas Kim</a> has intimated that South Korean financials may even be a "Value Trap".</p><div style="text-align: left;"></div><p>However, </p><ul>
<li>Malaysian bank shares appear oversold though they aren't especially cheap.</li>
<li>Bangladesh and Sri Lankan bank stocks are oversold.</li>
<li>Many Indonesian banks ("Growth"?) are no longer outperforming.</li>
<li>China/HK banks are neither oversold or undersold.</li>
</ul><div style="text-align: left;"></div><p>Despite the aforementioned overbought (or reassessed) markets such as Japan and South Korea, Asian banks are not performing as well as mainly US but also European bank shares (post Powell and Draghi) spurred by shares in Italy, Sweden, and some Turkey. Asian banks are however showing up better than MENA (Saudi Arabia has been hit hard) and Africa though LATAM is little different.</p>

There is a great deal of maybe premature debate about "Value" suddenly trumping "Momentum" after years of underperformance. Similarly, there is a similar conversation about "Value" outperforming "Growth" for once after a torrid relative performance stretching years.We are mindful that it is quite complex to actually separate what is actually "Value" from "Momentum" and "Growth".And a swallow does not a summer make.With regards Financials, and they are more of a "Value" component than "Momentum", there may be more outperformance ahead if this shift takes hold and matures.We can decipher some recent technical trends in Asia Pacific that suggest "Value" (in some cases) is performing relatively well.
Japanese banking stocks (value) are reaching overbought levels, including the Mega liquid players.
South Korean bank shares (value) have revived and in some cases look overbought.
Taiwanese banks with a heavy insurance business are overbought. The sector as a whole combines strong 12M Momentum with some relative value too.
Australian banks are generally performing well.
Are the Japanese and South Korean technical moves a "value trap"? J. Brian Waterhouse is a banking expert on Japan and his insight here would be invaluable. These may be markets that are cheap for a reason and Douglas Kim has intimated that South Korean financials may even be a "Value Trap".However, 
Malaysian bank shares appear oversold though they aren't especially cheap.
Bangladesh and Sri Lankan bank stocks are oversold.
Many Indonesian banks ("Growth"?) are no longer outperforming.
China/HK banks are neither oversold or undersold.
Despite the aforementioned overbought (or reassessed) markets such as Japan and South Korea, Asian banks are not performing as well as mainly US but also European bank shares (post Powell and Draghi) spurred by shares in Italy, Sweden, and some Turkey. Asian banks are however showing up better than MENA (Saudi Arabia has been hit hard) and Africa though LATAM is little different.

Value Versus Momentum: If the Shift Underway Holds, Bank Shares May Do Well.

China

Jiangsu Changshu Rural Commercial Bank Co., Ltd. operates as a commercial bank. The Company offers deposits, loans, domestic settlement, bill discounting, insurance agency, investment, wealth management, and other banking services. Jiangsu Changshu Rural Commercial Bank provides services for individuals and enterprises.

Jiangsu Changshu Rural Commerc (601128 CH)

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Value Versus Momentum: If the Shift Underway Holds, Bank Shares May Do Well.

There is a great deal of maybe premature debate about "Value" suddenly trumping "Momentum" after years of underperformance. Similarly, there is a...

Paul Hollingworth