Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over roughly 4 years and implemented in its current state for over 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over roughly 4 years and implemented in its current state for over 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.


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>EMEA Financials are the largest Regional Sector underweight in global EM, with just 11.6% of managers positioned ahead of the MSCI EM index.</li>
<li>Moderate but uneven recovery underway, with buying in Greece, Saudi, Kuwait and Poland Financials.</li>
<li>Despite being the sector's predominant country holding, South African Financials are experiencing a halt in growth; nonetheless, FirstRand and Standard Bank continue to be key holdings.</li>
</ul>


EMEA Financials are the largest Regional Sector underweight in global EM, with just 11.6% of managers positioned ahead of the MSCI EM index.
Moderate but uneven recovery underway, with buying in Greece, Saudi, Kuwait and Poland Financials.
Despite being the sector's predominant country holding, South African Financials are experiencing a halt in growth; nonetheless, FirstRand and Standard Bank continue to be key holdings.


Cross Asset Strategy

<ul>
<li>EM Fund managers continue to add to MENA allocations, yet underweights have increased to near record levels.</li>
<li>Saudi Arabia has been the driver of the recent allocation spike, with the average GEM fund allocation now at 1%</li>
<li>Fund activity over the last 6-months has favoured Qatar National Bank and Saudi Tadawul Group, with both seeing the percentage of funds invested increase.</li>
</ul>


EM Fund managers continue to add to MENA allocations, yet underweights have increased to near record levels.
Saudi Arabia has been the driver of the recent allocation spike, with the average GEM fund allocation now at 1%
Fund activity over the last 6-months has favoured Qatar National Bank and Saudi Tadawul Group, with both seeing the percentage of funds invested increase.


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

Bank Negara Indonesia Persero / Equity Bottom-Up

<ul>
<li>BNI posted a poor set of 4Q21 results, given the generally ignored continued credit deterioration; </li>
<li>Results were heavily reliant on a negative 10.0% tax rate for 4Q21, which goes away in 2022; and </li>
<li>BNI recently announced a "me too" deal to acquire a 63.9% stake in Bank Mayora at 2x book, at a time when BNI’s own house is a dumpster fire. </li>
</ul>


BNI posted a poor set of 4Q21 results, given the generally ignored continued credit deterioration; 
Results were heavily reliant on a negative 10.0% tax rate for 4Q21, which goes away in 2022; and 
BNI recently announced a "me too" deal to acquire a 63.9% stake in Bank Mayora at 2x book, at a time when BNI’s own house is a dumpster fire. 


Bank Negara Indonesia – What on Earth Is Management Thinking?

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 3Q21 results of IDR 8.7 tn, improving IDR 1.3 tn (17.9%) on a linked quarter basis. BCA’s positive operating performance was highlighted by a loss provision cut of 66.5%, a slightly reduced tax rate, and a modest decline in costs; and*Credit Challenges Abating: By our calculation, we find that 3Q21 net new NPLs amounted to IDR 942 bn for an annualized rate of increase of 27.2%, and comparing very favorably to the 92.4% rate in 2Q21. Despite the significant deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be.

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 3Q21 results of IDR 8.7 tn, improving IDR 1.3 tn (17.9%) on a linked quarter basis. BCA’s positive operating performance was highlighted by a loss provision cut of 66.5%, a slightly reduced tax rate, and a modest decline in costs; and*Credit Challenges Abating: By our calculation, we find that 3Q21 net new NPLs amounted to IDR 942 bn for an annualized rate of increase of 27.2%, and comparing very favorably to the 92.4% rate in 2Q21. Despite the significant deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be.

Bank Central Asia – Substantial Credit Delta Improvement

Qatar

Qatar National Bank attracts deposits and offers retail and corporate banking services.  The Bank offers credit, cash management, investment management, private banking, long term finance and short-term working capital, and sponsors credit cards.  Qatar National Bank serves primarily small and medium-sized businesses, government entities, and individuals.

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Qatar National Bank QPSC (QNBK QD)

Screening for GEMs: March 2024

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

EMEA Financials: Uneven Recovery

EMEA Financials are the largest Regional Sector underweight in global EM. Moderate but uneven recovery underway, with buying in Greece, Saudi,...

Steven Holden

M.E.N.A Momentum

The MENA region has strong momentum in two distinct areas. As investment levels rise to record levels, so too does the net underweight versus the...

Steven Holden

Bank Negara Indonesia – What on Earth Is Management Thinking?

BANK NEGARA INDONESIA: BNI posted a poor set of 4Q21 results, and heavily dependent on a negative 10.0% tax rate. BNI recently announced deal comes...

Thomas J. Monaco

Bank Central Asia – Substantial Credit Delta Improvement

BANK CENTRAL ASIA : BCA reported a 3Q21 QOQ results increase of 17.9%, driven by justifiable credit leverage. 3Q21 net new NPLs decelerated from...

Thomas J. Monaco

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