Alpha-Centric ESG Research

Kyle Rudden

Announcements keep on coming from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the <a href="https://www.smartkarma.com/entities/sgx-nikkei-esg-reit-index-futures" target="_blank" data-smartkarma-citation="entities:33480:1" rel="noopener">SGX Nikkei ESG-REIT Index Futures (JRTA INDEX)</a> contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

Announcements keep on coming from Singapore Exchange (SGX SP) and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the SGX Nikkei ESG-REIT Index Futures (JRTA INDEX) contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

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

*Analysts’ Day Reveals More Scrambling: Singapore Exchange (SGX.SG) [SGX] held an Analysts’ Day on June 11, 2021, where Acquisitions; Equities; FICC; and ESG were discussed. We were left with the impression that management is scrambling to offset revenue losses which appear to have been taking place in nearly every aspect of its business; and*This Kind Of Hope Is Not A Strategy: Hoping for near-term revenue strength from higher equity market volatility which helps SGX's derivatives business volumes, and a further delay in HKEX's launch of MSCI China A index futures are not sustainable long-term strategies. SGX needs a long-term plan, which should include the government recognizing that this national champion might actually have to be sold.

*Analysts’ Day Reveals More Scrambling: Singapore Exchange (SGX.SG) [SGX] held an Analysts’ Day on June 11, 2021, where Acquisitions; Equities; FICC; and ESG were discussed. We were left with the impression that management is scrambling to offset revenue losses which appear to have been taking place in nearly every aspect of its business; and*This Kind Of Hope Is Not A Strategy: Hoping for near-term revenue strength from higher equity market volatility which helps SGX's derivatives business volumes, and a further delay in HKEX's launch of MSCI China A index futures are not sustainable long-term strategies. SGX needs a long-term plan, which should include the government recognizing that this national champion might actually have to be sold.

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Philippine Stock Exchange / Equity Bottom-Up

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The <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> just released a strong set of 1Q2021 results, with revenue growth of +31.7% and pre-tax profit growth of +121.1%. The exchange saw its net income rise by +199% YoY and EPS by +195% YoY. The better numbers were driven by higher market volumes and particularly from retail investors and a pick-up in IPO activity and placements.
We expect continued momentum behind volumes driven by retail together with more IPO activity in 2Q2021, with the completion of the US$1bn <a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" data-smartkarma-citation="entities:32188:1" rel="noopener">Monde Nissin Corp (0191881D PM)</a> IPO to come together with <a href="https://www.smartkarma.com/entities/del-monte-philippines-inc" target="_blank" data-smartkarma-citation="entities:26988:1" rel="noopener">Del Monte Philippines (1575316D PM)</a>, National Grid Corporation (NCGP), and REITs from <a href="https://www.smartkarma.com/entities/megaworld-corp" target="_blank" data-smartkarma-citation="entities:8746:1" rel="noopener">Megaworld Corp (MEG PM)</a>, <a href="https://www.smartkarma.com/entities/robinsons-land-corp" target="_blank" data-smartkarma-citation="entities:8831:1" rel="noopener">Robinsons Land Co (RLC PM),</a> and <a href="https://www.smartkarma.com/entities/vista-land-lifescapes-inc" target="_blank" data-smartkarma-citation="entities:18262:1" rel="noopener">Vista Land &amp; Lifescapes (VLL PM)</a>. 
<a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> is trading at a discount to regional exchanges on 18.6x FY21E PER, which trades on an average forward PER of 27.7x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus significantly higher profile IPOs in FY2021. 
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The Philippine Stock Exchange (PSE PM) just released a strong set of 1Q2021 results, with revenue growth of +31.7% and pre-tax profit growth of +121.1%. The exchange saw its net income rise by +199% YoY and EPS by +195% YoY. The better numbers were driven by higher market volumes and particularly from retail investors and a pick-up in IPO activity and placements.
We expect continued momentum behind volumes driven by retail together with more IPO activity in 2Q2021, with the completion of the US$1bn Monde Nissin Corp (0191881D PM) IPO to come together with Del Monte Philippines (1575316D PM), National Grid Corporation (NCGP), and REITs from Megaworld Corp (MEG PM), Robinsons Land Co (RLC PM), and Vista Land &amp; Lifescapes (VLL PM). 
Philippine Stock Exchange (PSE PM) is trading at a discount to regional exchanges on 18.6x FY21E PER, which trades on an average forward PER of 27.7x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus significantly higher profile IPOs in FY2021. 


Philippine Stock Exchange (PSE PM) - Solid Foundations for Future Growth

*Wealth Management Connect: Wealth Management (WM) Connect should allow the residents of Hong Kong and the Greater Bay Area (GBA) to purchase WM products in each other's markets. The launch of a GBA financial connection has been the key turning point to convert HKEx from a conduit of capital flows to mainland China to a marketplace for transactions which connect mainland China and global liquidity; and
Consultation Paper Released: On May 6, 2021, mainland China’s financial regulatory authorities released a consultation paper on WM Connect. This should be another avenue to bring additional mainland Chinese liquidity through HKEX. Benefits to HKEX in the beginning will be limited given the initial quotas on residents and limitations on products.

*Wealth Management Connect: Wealth Management (WM) Connect should allow the residents of Hong Kong and the Greater Bay Area (GBA) to purchase WM products in each other's markets. The launch of a GBA financial connection has been the key turning point to convert HKEx from a conduit of capital flows to mainland China to a marketplace for transactions which connect mainland China and global liquidity; and
Consultation Paper Released: On May 6, 2021, mainland China’s financial regulatory authorities released a consultation paper on WM Connect. This should be another avenue to bring additional mainland Chinese liquidity through HKEX. Benefits to HKEX in the beginning will be limited given the initial quotas on residents and limitations on products.

Hong Kong Exchange & Clearing – Making The Connection

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Despite pressures on the Philippines from strict lockdowns and continuing issues with rising cases of COVID-19, <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange Inc (PSE PM)</a> looks increasingly attractive with a powerful combination of rising volumes and a significant pipeline of IPOs in 2021. 
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The exchange has also been a direct beneficiary of COVID-19 as it has encouraged the influx of greater numbers of retail investors, which has boosted market volumes significantly. 
The <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange Inc (PSE PM)</a> currently only has 272 listed companies, which looks quite a low number but is in the process of encouraging more smaller companies to list. 
The rapid increase in IPOs should be positive for margins given the high listing fees that the listing of new shares attracts. We have just seen the approval pass for the US$1bn <a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" data-smartkarma-citation="entities:32188:1" rel="noopener">Monde Nissin Corp (0191881D PM)</a> IPO, which will focus attention on the overall market.
<a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> has outlined a number of new initiatives to increase liquidity and the number of new listings.
The company is also looking to increasingly digitize its business by upgrading its clearing and settlement system and shortening settlement to T+2. 
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<a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> is trading at a discount to regional exchanges on 17.1x FY21E PER, which trades on an average forward PER of 29x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus more IPOs in FY2021.
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Despite pressures on the Philippines from strict lockdowns and continuing issues with rising cases of COVID-19, Philippine Stock Exchange Inc (PSE PM) looks increasingly attractive with a powerful combination of rising volumes and a significant pipeline of IPOs in 2021. 

The exchange has also been a direct beneficiary of COVID-19 as it has encouraged the influx of greater numbers of retail investors, which has boosted market volumes significantly. 
The Philippine Stock Exchange Inc (PSE PM) currently only has 272 listed companies, which looks quite a low number but is in the process of encouraging more smaller companies to list. 
The rapid increase in IPOs should be positive for margins given the high listing fees that the listing of new shares attracts. We have just seen the approval pass for the US$1bn Monde Nissin Corp (0191881D PM) IPO, which will focus attention on the overall market.
Philippine Stock Exchange (PSE PM) has outlined a number of new initiatives to increase liquidity and the number of new listings.
The company is also looking to increasingly digitize its business by upgrading its clearing and settlement system and shortening settlement to T+2. 

Philippine Stock Exchange (PSE PM) is trading at a discount to regional exchanges on 17.1x FY21E PER, which trades on an average forward PER of 29x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus more IPOs in FY2021.


Philippine Stock Exchange Inc (PSE PM) - Overlooked and On the Up

Singapore

Singapore Exchange Limited owns and operates Singapore's Securities and derivatives exchange and their related clearing houses.  The Company also provides ancillary securities processing and information technology services to participants in the financial sector.

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SGX (SGX SP)

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Singapore Exchange just launched the SGX Nikkei ESG-REIT Index futures contract. A multi-win for SGX, but it also serves as a reminder of how...

Kyle Rudden

Singapore Exchange – Peripatetic

SINGAPORE EXCHANGE: SGX held an Analysts’ Day which discussed various aspects of its business. Management appears to be scrambling to offset...

Thomas J. Monaco

Philippine Stock Exchange (PSE PM) - Solid Foundations for Future Growth

The Philippine Stock Exchange released a strong set of results for 1Q2021 but we see more to come with higher volumes and more IPO activity...

Angus Mackintosh

Hong Kong Exchange & Clearing – Making The Connection

HONG KONG EXCHANGES & CLEARING: Mainland China’s financial regulatory authorities released a consultation paper on WM Connect, an avenue to bring...

Thomas J. Monaco

Philippine Stock Exchange Inc (PSE PM) - Overlooked and On the Up

The Philippine Stock Exchange (PSE PM) is probably the most overlooked listed stock exchange in Asia, with the catalyst of higher volumes driven by...

Angus Mackintosh

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