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

*Creation of New Beijing Exchange: The establishment of a new Beijing Exchange will support small-to-medium sized enterprises (SME) exchange listings. The Beijing Exchange will only manage the highest-quality SMEs, with investment being made very accessible to small retail investors (minimum CNY 1 mn in liquid assets) – virtually ensuring success of the new Beijing Exchange; and
*HKEx Continues To Be Hollowed Out: Coupled with mainland China’s establishment of a new stock exchange to attract overseas-listed firms, mainland China continues to reinforce the notion that Shanghai will become the pre-eminent global financial center in Asia - limiting Hong Kong Exchanges &amp; Clearing’s (388.HK) [HKEx] ability to attract up and coming mainland Chinese IPOs over longer-term. In other words, if HKEx's mainland China story goes away so should HKEX’s exorbitant valuation.

*Creation of New Beijing Exchange: The establishment of a new Beijing Exchange will support small-to-medium sized enterprises (SME) exchange listings. The Beijing Exchange will only manage the highest-quality SMEs, with investment being made very accessible to small retail investors (minimum CNY 1 mn in liquid assets) – virtually ensuring success of the new Beijing Exchange; and
*HKEx Continues To Be Hollowed Out: Coupled with mainland China’s establishment of a new stock exchange to attract overseas-listed firms, mainland China continues to reinforce the notion that Shanghai will become the pre-eminent global financial center in Asia - limiting Hong Kong Exchanges &amp; Clearing’s (388.HK) [HKEx] ability to attract up and coming mainland Chinese IPOs over longer-term. In other words, if HKEx's mainland China story goes away so should HKEX’s exorbitant valuation.

Hong Kong Exchanges & Clearing – China Plays Long Game With HKEx

*Challenging Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 2Q21 weak earnings of HKD 2.8 bn, declining HKD 1.1 bn (27.9%) linked quarter. Results were even worse when we exclude investment income (declined HKD 73 mn or 15.7% linked quarter) – decreasing HKD 997 mn (29.5%) to HKD 2.4 bn. Results were highlighted by HKEX’ marginally negative operating jaws, as recurring revenue declined HKD 1.9 bn (29.7%) while operating expenses increased HKD 8 mn (0.7%) over the period. HKEX’ 2Q21 witnessed weak revenues almost across the board; and*Risks Are Increasing: In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase, mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center; and the Sino-ification of HKEX trading as tension mount between the US and mainland China.

*Challenging Quarter: Hong Kong Exchanges &amp; Clearing (388.HK) [HKEX] reported 2Q21 weak earnings of HKD 2.8 bn, declining HKD 1.1 bn (27.9%) linked quarter. Results were even worse when we exclude investment income (declined HKD 73 mn or 15.7% linked quarter) – decreasing HKD 997 mn (29.5%) to HKD 2.4 bn. Results were highlighted by HKEX’ marginally negative operating jaws, as recurring revenue declined HKD 1.9 bn (29.7%) while operating expenses increased HKD 8 mn (0.7%) over the period. HKEX’ 2Q21 witnessed weak revenues almost across the board; and*Risks Are Increasing: In addition to an extended valuation when ADT has begun to turn and having a new CEO with no exchange experiences, HKEX needs to contend with the government’s examination of a stamp duty increase, mainland China’s contemplation of a new stock exchange to attract overseas-listed firms (including Hong Kong) which will bolster Shanghai’s status as a global financial center; and the Sino-ification of HKEX trading as tension mount between the US and mainland China.

Hong Kong Exchanges & Clearing – Glitter Is Gone

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

External broker reports(aggregated public sources)

HSIE Results Daily Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of continued funding cost tailwinds resulting in sequentially stronger NIMs even as loans shrank 2.8% QoQ. Annualised slippages were up at 2.8% (FY21: 2.4%) as collections were affected during Apr-May21 on account of the second wave (as witnessed by peers), with most of the stress emerging from secured retail portfolio. KMB maintained its stock of COVID provisions and the loan loss coverage at ~65%.<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

HSIE Results Daily Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of continued funding cost tailwinds resulting in sequentially stronger NIMs even as loans shrank 2.8% QoQ. Annualised slippages were up at 2.8% (FY21: 2.4%) as collections were affected during Apr-May21 on account of the second wave (as witnessed by peers), with most of the stress emerging from secured retail portfolio. KMB maintained its stock of COVID provisions and the loan loss coverage at ~65%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Kotak Mahindra Bank, Axis Bank and More

Multi Commodity Exchange India / Equity Bottom-Up

NSE and BSE volumes were soft in April-21 but picked up strongly in May and June-21. BSE maintained its cash/derivative market share in 1QFY22, which stood at 7.1/6.5% -20/+20bps QoQ. StAR MF and INX continue to register strong growth. BSE is expected to report 2.5% QoQ growth in revenue and an EBITDA margin of 29% (-127 bps QoQ). We increase our core target multiple to 15x vs 10x earlier, which is still at a ~50% discount to peers. Our target price of INR 1,075 is based on 15x core June-23 PAT + net cash + CDSL stake.<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

NSE and BSE volumes were soft in April-21 but picked up strongly in May and June-21. BSE maintained its cash/derivative market share in 1QFY22, which stood at 7.1/6.5% -20/+20bps QoQ. StAR MF and INX continue to register strong growth. BSE is expected to report 2.5% QoQ growth in revenue and an EBITDA margin of 29% (-127 bps QoQ). We increase our core target multiple to 15x vs 10x earlier, which is still at a ~50% discount to peers. Our target price of INR 1,075 is based on 15x core June-23 PAT + net cash + CDSL stake.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Exchanges, Staffing and Internet (1QFY22E Results Preview): Mixed bag

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

4QFY21 saw further normalization in bullion volumes, largely driven by 11%/15% sequential decline in gold/silver volumes. This was partially offset by a 56% sequential increase in crude volumes on the reversal of the higher margin requirements imposed earlier. Overall ADT dipped 3% QoQ, leading to 4% sequential decline in revenue. The impact on volumes during the quarter was the result of the second phase of implementation of new margin rules (50% of peak margin requirement) from 1st March.<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

4QFY21 saw further normalization in bullion volumes, largely driven by 11%/15% sequential decline in gold/silver volumes. This was partially offset by a 56% sequential increase in crude volumes on the reversal of the higher margin requirements imposed earlier. Overall ADT dipped 3% QoQ, leading to 4% sequential decline in revenue. The impact on volumes during the quarter was the result of the second phase of implementation of new margin rules (50% of peak margin requirement) from 1st March.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Near-term blip; long-term opportunities intact

India

Multi Commodity Exchange of India Limited is an independent and de-mutualized exchange.  The Exchange has permanent recognition from the Government of India for facilitating online trading, clearing, and settlement operations for commodity futures markets across the country.

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Multi Commodity Exchange India (MCX IN)

Hong Kong Exchanges & Clearing – China Plays Long Game With HKEx

HKEX: The establishment of a new Beijing Exchange will support SME exchange listings. Coupled with establishment of a new exchange, HKEx continues...

Thomas J. Monaco

Hong Kong Exchanges & Clearing – Glitter Is Gone

HONG KONG EXCHANGES: HKEX reported 2Q21 weak earnings, declining 27.9%. Results were highlighted by HKEX’ marginally negative operating jaws. HKEX’...

Thomas J. Monaco

HSIE Results Daily: Kotak Mahindra Bank, Axis Bank and More

HSIE Results Daily Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of...

HDFC Securities

Exchanges, Staffing and Internet (1QFY22E Results Preview): Mixed bag

NSE and BSE volumes were soft in April-21 but picked up strongly in May and June-21. BSE maintained its cash/derivative market share in 1QFY22,...

HDFC Securities

Near-term blip; long-term opportunities intact

4QFY21 saw further normalization in bullion volumes, largely driven by 11%/15% sequential decline in gold/silver volumes. This was partially offset...

Motilal Oswal

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