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

Agricultural Bank Of China / Equity Bottom-Up

* Well-Orchestrated Capital Raise Coupled With More Regulatory Forbearance: Agricultural Bank of China (1288.HK) [ABC] announced plans on raising USD 15.8 bn in fresh equity concurrent with the China Bank Regulatory Commission’s (CBRC) new guidelines for commercial banks to expand their use of perpetual capital bonds, tier-2 capital with conversion features, convertible bonds, and total loss-absorption capacity (TLAC) instruments.* In Mainland China, You Can Never Have Enough Capital: By our…

* Well-Orchestrated Capital Raise Coupled With More Regulatory Forbearance: Agricultural Bank of China (1288.HK) [ABC] announced plans on raising USD 15.8 bn in fresh equity concurrent with the China Bank Regulatory Commission’s (CBRC) new guidelines for commercial banks to expand their use of perpetual capital bonds, tier-2 capital with conversion features, convertible bonds, and total loss-absorption capacity (TLAC) instruments.* In Mainland China, You Can Never Have Enough Capital: By our…

Agricultural Bank of China - Capital Overhang Persists

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

Year-on-year growth in first-year premium sold in January was negative for listed Chinese insurers, given the implementation of document 134 which prohibited providing cash survival benefits within the first five years and the use of universal or unit-linked products as a supplement to an underlying insurance policy. Given such an impact, we saw increasing divergence among major insurers depending on their product offerings. Driven by strong growth in renewable premiums, January premium growth…

Year-on-year growth in first-year premium sold in January was negative for listed Chinese insurers, given the implementation of document 134 which prohibited providing cash survival benefits within the first five years and the use of universal or unit-linked products as a supplement to an underlying insurance policy. Given such an impact, we saw increasing divergence among major insurers depending on their product offerings. Driven by strong growth in renewable premiums, January premium growth…

January Life Insurance Sales Were Negatively Impacted by Document 134

* Questionable Reduction in Reserve Coverage: Just as the wheels are about to fall off the bus, the China Bank Regulatory Commission (CBRC) - in their infinite wisdom – decided to allow Chinese banks to reduce the minimum NPL coverage ratio from 150% to 120%, and the minimum LLR cover of total loans from 2.5% to 1.5%.* Knee Jerk Reaction Is Silly – At Least For the 2nd Tier Banks:The 2nd tier banks carry the risk of substantially higher capital requirements and inadequate provisions as these…

* Questionable Reduction in Reserve Coverage: Just as the wheels are about to fall off the bus, the China Bank Regulatory Commission (CBRC) - in their infinite wisdom – decided to allow Chinese banks to reduce the minimum NPL coverage ratio from 150% to 120%, and the minimum LLR cover of total loans from 2.5% to 1.5%.* Knee Jerk Reaction Is Silly – At Least For the 2nd Tier Banks:The 2nd tier banks carry the risk of substantially higher capital requirements and inadequate provisions as these…

China Banks – Can You Say Capital Forbearance?

* Risk Increasing Within Tier 2 Banks:  The 2nd tier banks is looking increasingly vulnerable. Tighter asset management regulations are being implemented in March 2018 which should force the sector to abandon their high level of illiquid assets and promote “real” NAV-type products. This risk has now morphed into a size where confidence in the financial system could erode quickly. * Watch Your Insurers: Mainland Chinese insurers have 50%-60% of their investment portfolios exposed to the weakest…

* Risk Increasing Within Tier 2 Banks:  The 2nd tier banks is looking increasingly vulnerable. Tighter asset management regulations are being implemented in March 2018 which should force the sector to abandon their high level of illiquid assets and promote “real” NAV-type products. This risk has now morphed into a size where confidence in the financial system could erode quickly. * Watch Your Insurers: Mainland Chinese insurers have 50%-60% of their investment portfolios exposed to the weakest…

China Financials – The Accident About to Happen

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Macroeconomics

<ul>
<li> Simultaneous deleveraging in China and protectionism/fiscal expansion in the US would shift the longstanding correlation between US inflation and Chinese growth expectations.</li>
<li>Aggregate debt growth in China exceeded nominal GDP growth by 1.3ppts in 2017 so deleveraging has not yet begun, but looks imminent as regulatory pressure intensifies.</li>
<li>The takeover of Anbang reflects a increasingly comprehensive attempt to remove opaque funding channels and implicit government guarantees that have distorted…</li>
</ul>


 Simultaneous deleveraging in China and protectionism/fiscal expansion in the US would shift the longstanding correlation between US inflation and Chinese growth expectations.
Aggregate debt growth in China exceeded nominal GDP growth by 1.3ppts in 2017 so deleveraging has not yet begun, but looks imminent as regulatory pressure intensifies.
The takeover of Anbang reflects a increasingly comprehensive attempt to remove opaque funding channels and implicit government guarantees that have distorted…


Xi and Trump Policy Priorities Imply US Inflation to Diverge From Chinese Growth

China

Ping An Insurance (Group) Company of China Limited provides products and services through its five ecosystems in financial services, healthcare, auto services, real estate services and Smart City solutions. The Group's insurance business writes property, casualty, and life insurance products.

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Ping An Insurance Group of (601318 CH)

Agricultural Bank of China - Capital Overhang Persists

* Well-Orchestrated Capital Raise Coupled With More Regulatory Forbearance: Agricultural Bank of China (1288.HK) [ABC] announced plans on raising...

Thomas J. Monaco

January Life Insurance Sales Were Negatively Impacted by Document 134

Year-on-year growth in first-year premium sold in January was negative for listed Chinese insurers, given the implementation of document 134 which...

Morningstar, Inc.

China Banks – Can You Say Capital Forbearance?

* Questionable Reduction in Reserve Coverage: Just as the wheels are about to fall off the bus, the China Bank Regulatory Commission (CBRC) - in...

Thomas J. Monaco

China Financials – The Accident About to Happen

* Risk Increasing Within Tier 2 Banks: The 2nd tier banks is looking increasingly vulnerable. Tighter asset management regulations are being...

Thomas J. Monaco

Xi and Trump Policy Priorities Imply US Inflation to Diverge From Chinese Growth

Simultaneous deleveraging in China and protectionism/fiscal expansion in the US would shift the longstanding correlation between US inflation and...

Sean Maher

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