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

Thematic (Sector/Industry)

<ul>
<li>The effect of the COVID pandemic saw an unprecedented level of sector rotation among EM active portfolios in 2020.</li>
<li>Banking stocks were hit the hardest, with Semiconductor, Internet Retail and Interactive Media industry groups the beneficiaries.</li>
<li>Banking exposure is at its lowest levels in over a decade, EM active investors at highest ever weights in Tech related Consumer Discretionary and Communication Services stocks.</li>
<li>Improving outlook for banking stocks, vaccine hopes, plus potential regulation in the Tech sector point to a potential unwind.  </li>
<li>'Beaten Up' banking stocks include <a href="https://www.smartkarma.com/entities/itau-unibanco-holding-sa-9d47d196-e503-471b-a84e-ca4401033062" target="_blank" data-smartkarma-citation="entities:24550:1" rel="noopener">Itau Unibanco Holding Sa (ITUB4 BZ)</a> , <a href="https://www.smartkarma.com/entities/kasikornbank-pcl" target="_blank" data-smartkarma-citation="entities:293:1" rel="noopener">Kasikornbank PCL (KBANK TB)</a> and <a href="https://www.smartkarma.com/entities/standard-bank-group-ltd" target="_blank" data-smartkarma-citation="entities:24988:1" rel="noopener">Standard Bank (SBK SJ)</a> </li>
<li>Fully owned Tech related stocks include <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> , <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> and <a href="https://www.smartkarma.com/entities/mercadolibre-inc" target="_blank" data-smartkarma-citation="entities:27954:1" rel="noopener">MercadoLibre Inc (MELI US)</a> </li>
</ul>


The effect of the COVID pandemic saw an unprecedented level of sector rotation among EM active portfolios in 2020.
Banking stocks were hit the hardest, with Semiconductor, Internet Retail and Interactive Media industry groups the beneficiaries.
Banking exposure is at its lowest levels in over a decade, EM active investors at highest ever weights in Tech related Consumer Discretionary and Communication Services stocks.
Improving outlook for banking stocks, vaccine hopes, plus potential regulation in the Tech sector point to a potential unwind.  
'Beaten Up' banking stocks include Itau Unibanco Holding Sa (ITUB4 BZ) , Kasikornbank PCL (KBANK TB) and Standard Bank (SBK SJ) 
Fully owned Tech related stocks include Meituan (3690 HK) , JD.com Inc (ADR) (JD US) and MercadoLibre Inc (MELI US) 


GEM Fund Positioning Update:  The COVID Unwind.

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.

Equity Bottom-Up

It was only a matter of time. Many banks are seeing the same theme: reduced credit costs supporting profit. Indonesia’s <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> is unique, in that it had more ROA to claw back. This is now coming through in the quarterly numbers, and this should continue, rather than be the end of it. There are further positive implications for dividends, especially with high capital, limited lending and better credit metrics.

It was only a matter of time. Many banks are seeing the same theme: reduced credit costs supporting profit. Indonesia’s Bank Central Asia (BBCA IJ) is unique, in that it had more ROA to claw back. This is now coming through in the quarterly numbers, and this should continue, rather than be the end of it. There are further positive implications for dividends, especially with high capital, limited lending and better credit metrics. 

This is not something that we are hearing about from all banks, or even a small percentage. But it is something that we must prepare for, a return to normal business levels. Norway’s <a href="https://www.smartkarma.com/entities/dnb-asa" target="_blank" data-smartkarma-citation="entities:22227:1" rel="noopener">DNB ASA (DNB NO)</a> describes its customer activity and business levels as normal, just a few days ago. As we have indicated in much of our research, this should not be too great a surprise, as the current crisis is self-inflicted by governments enacting insane policies. As we re-open, the pace of recovery is reflecting this.

This is not something that we are hearing about from all banks, or even a small percentage. But it is something that we must prepare for, a return to normal business levels. Norway’s DNB ASA (DNB NO) describes its customer activity and business levels as normal, just a few days ago. As we have indicated in much of our research, this should not be too great a surprise, as the current crisis is self-inflicted by governments enacting insane policies. As we re-open, the pace of recovery is reflecting this.

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Brett King's bestseller Bank 4.0 highlights many important trends that could overturn conventional banking. In this review, we look at how some of them threaten Thai banks and how the banks adapt to these emerging changes. Here are some of the most important highlights:<ul>
<li>
Models that start from scratch. The First Principle highlights fintech business models that eliminate the need of certain facets such as physical branches, while conventional banks here have a tougher time downsizing to cope up with the trend.</li>
<li>
Rising regulatory costs and investments could end up crippling the Thai banks and putting them at a disadvantage to fintechs, but part of this burden will be up to the regulators themselves. Banking is labor-intensive, and there's a lot of good-paying jobs at risk if they make the wrong move.</li>
<li>
Encroachment by telcos. With banking expected to resemble technology platforms in the future, telecom operators who control such infrastructure could end up eating a big part of the banking business. Some very profitable services today such as wealth management will be more vulnerable than others.</li>
</ul>

Brett King's bestseller Bank 4.0 highlights many important trends that could overturn conventional banking. In this review, we look at how some of them threaten Thai banks and how the banks adapt to these emerging changes. Here are some of the most important highlights:

Models that start from scratch. The First Principle highlights fintech business models that eliminate the need of certain facets such as physical branches, while conventional banks here have a tougher time downsizing to cope up with the trend.

Rising regulatory costs and investments could end up crippling the Thai banks and putting them at a disadvantage to fintechs, but part of this burden will be up to the regulators themselves. Banking is labor-intensive, and there's a lot of good-paying jobs at risk if they make the wrong move.

Encroachment by telcos. With banking expected to resemble technology platforms in the future, telecom operators who control such infrastructure could end up eating a big part of the banking business. Some very profitable services today such as wealth management will be more vulnerable than others.


Nine Reasons Why Thai Banks Should Be Worry About in the Future

Most Thai banks saw a sizeable contraction in credit costs during the quarter. This is something that should generally be expected in Thailand and elsewhere, where the dire days of March and April are far behind us. What too stands out is the incredible variance across banks, which we believe is mostly due to provision expenses already incurred during the first half of the year. This is not all backwards looking: with the country’s first foreign tourists arriving since shutdown, credit metrics should continue to improve.

Most Thai banks saw a sizeable contraction in credit costs during the quarter. This is something that should generally be expected in Thailand and elsewhere, where the dire days of March and April are far behind us. What too stands out is the incredible variance across banks, which we believe is mostly due to provision expenses already incurred during the first half of the year. This is not all backwards looking: with the country’s first foreign tourists arriving since shutdown, credit metrics should continue to improve.

Thailand

Kasikornbank Public Company Limited provides commercial banking services including personal and commercial banking, international trade, as well as investment banking services, to its customers throughout Thailand.  The Bank has foreign branches in Los Angeles, Hong Kong, Cayman Islands, and Shenzhen; and representative offices in Shanghai, Beijing, and Kunmin.

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Kasikornbank (KBANK-R TB)

GEM Fund Positioning Update: The COVID Unwind.

How did Emerging Market managers react to the COVID-19 pandemic? Unprecedented rotation out of Bank stocks and in to Tech. How are managers now...

Steven Holden

BCA – Profit Returns

It was only a matter of time. Many banks are seeing the same theme: reduced credit costs supporting profit. Indonesia’s Bank Central Asia is...

Daniel Tabbush

DNB ASA – Business Is Back to Normal

Norway's DNB is indicating a return to normalcy in business; we may expect similar commentary from more banks in coming months

Daniel Tabbush

Nine Reasons Why Thai Banks Should Be Worry About in the Future

Brett King's bestseller sheds spotlight on one of the world's largest sector anywhere. Is the business model dead? Do regulators get it? Are you...

Athaporn Arayasantiparb, CFA

KBANK – Provision Expense Collapse

The range of 3Q20 credit cost change among Thai banks is vast, from -57% to +41% QoQ, with the two similar banks, Kasikornbank PCL (KBANK TB) and...

Daniel Tabbush

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