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

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher. Moving capital targets, weaker UK credit, a poorly structured US business,  and higher operational costs from Brexit give us cause for pause as well.* Is a US Deal Imminent Now?: HSBC’s US business operating profit metrics may actually be the absolute worst of any American bank. If nothing is materially done with the US operation in the immediate term…

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher. Moving capital targets, weaker UK credit, a poorly structured US business,  and higher operational costs from Brexit give us cause for pause as well.* Is a US Deal Imminent Now?: HSBC’s US business operating profit metrics may actually be the absolute worst of any American bank. If nothing is materially done with the US operation in the immediate term…

Thematic (Sector/Industry)

* Regulator spread letter and LDR changes could prompt aggressive NIM/spread compression at the Bangladeshi banks.  * Higher capital requirements and USD 7.7 bn of NPLs could prompt further EPS reductions and capital raises. <h2>Summary </h2>Bangladesh Bank (the central bank) chronically tries to encourage its commercial banks to narrow their net lending spreads below 5.0%. 2018 is no different. Bangladesh Bank has instructed eight private banks to reduce their interest rate spread to less than 5.0%…

* Regulator spread letter and LDR changes could prompt aggressive NIM/spread compression at the Bangladeshi banks.  * Higher capital requirements and USD 7.7 bn of NPLs could prompt further EPS reductions and capital raises. Summary Bangladesh Bank (the central bank) chronically tries to encourage its commercial banks to narrow their net lending spreads below 5.0%. 2018 is no different. Bangladesh Bank has instructed eight private banks to reduce their interest rate spread to less than 5.0%…

Bangladesh Banks – Harder Line Being Taken

Asia Commercial Bank/Vietnam / Equity Bottom-Up

* Fully-loaded problem loan figures are a major concern, as is the size of  Level 3 asset and net open short F/X position. Loan loss reserves need a significant shoring up, and there is no doubt, in our view, that some form of major re-capitalization/balance sheet restructure at Asia Commercial Bank (ACB.VN) is on its way.* Not only does Standard Chartered plc (2888.HK/STAN.LN) push the aggressive accounting envelope with its consolidated subsidiaries, but it does so with minority- owned…

* Fully-loaded problem loan figures are a major concern, as is the size of  Level 3 asset and net open short F/X position. Loan loss reserves need a significant shoring up, and there is no doubt, in our view, that some form of major re-capitalization/balance sheet restructure at Asia Commercial Bank (ACB.VN) is on its way.* Not only does Standard Chartered plc (2888.HK/STAN.LN) push the aggressive accounting envelope with its consolidated subsidiaries, but it does so with minority- owned…

Specialist in Indian Banking and Economic Research

Hemindra Hazari

Anil Ambani, chairman, <a href="https://www.smartkarma.com/entities/5197" target="_blank" data-smartkarma-citation="entities:5197:1">Reliance Communications Ltd (RCOM IN)</a>, sounded optimistic at a press conference on December 26, 2017, stating that the company will exit the Strategic Debt Restructuring (SDR) with a zero write-off to lenders, as the company plans to monetize its wireless operations by January-March 2018 and settle its dues. The truth, however, is that banks are preparing to classify the company as a non-performing asset (NPA) if their dues are not paid by December 31. The banking sector has a funded exposure of around Rs 380 bn to the company, and will have to provide 10% (5% already provided at the time of SDR) of their exposure for the quarter ended December if it is classified as NPA.

Anil Ambani, chairman, Reliance Communications Ltd (RCOM IN), sounded optimistic at a press conference on December 26, 2017, stating that the company will exit the Strategic Debt Restructuring (SDR) with a zero write-off to lenders, as the company plans to monetize its wireless operations by January-March 2018 and settle its dues. The truth, however, is that banks are preparing to classify the company as a non-performing asset (NPA) if their dues are not paid by December 31. The banking sector has a funded exposure of around Rs 380 bn to the company, and will have to provide 10% (5% already provided at the time of SDR) of their exposure for the quarter ended December if it is classified as NPA.

Mysterious Saviour for Reliance Communications?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync.  We see the bullish advance in equities continuing well into 2018, a continuation of a long-term trend. However, the Sectors that propel this trend may be different.In our December International Strategy, we explore these and the following themes in further detail: <ul><li>Overweight Japan. </li><li>Cyclicals continue to lead, defensive continues to lag. </li><li>Actionable Sector/Group themes:<ol><li>Global banks are breaking out/bullishly inflecting. </li><li>Energy is bottoming – still a non-consensus view. </li><li>Pullback opportunity in metals &amp; mining.</li></ol></li></ul>

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync.  We see the bullish advance in equities continuing well into 2018, a continuation of a long-term trend. However, the Sectors that propel this trend may be different.In our December International Strategy, we explore these and the following themes in further detail: Overweight Japan. Cyclicals continue to lead, defensive continues to lag. Actionable Sector/Group themes:Global banks are breaking out/bullishly inflecting. Energy is bottoming – still a non-consensus view. Pullback opportunity in metals &amp; mining.

International Equity Strategy: Bullish Big Picture

Hong Kong

Standard Chartered plc is an international banking group operating principally in Asia, Africa, and the Middle East.  The Company offers its products and services in the personal, consumer, corporate, institutional and treasury areas.

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Standard Chartered (2888 HK)

HSBC Holdings Plc – Swing & A Miss

* Weak 4Q17 Results Guidance: 4Q17 pre-tax results missed Street forecasts by 8%. Revenues were 1% light of consensus while costs were 3% higher....

Thomas J. Monaco

Bangladesh Banks – Harder Line Being Taken

* Regulator spread letter and LDR changes could prompt aggressive NIM/spread compression at the Bangladeshi banks. * Higher capital requirements...

Thomas J. Monaco

Asia Commercial Bank – Too Much Credit

* Fully-loaded problem loan figures are a major concern, as is the size of Level 3 asset and net open short F/X position. Loan loss reserves need...

Thomas J. Monaco

Mysterious Saviour for Reliance Communications?

Anil Ambani, chairman, Reliance Communications Ltd (RCOM IN), sounded optimistic at a press conference on December 26, 2017, stating that the...

Hemindra Hazari

International Equity Strategy: Bullish Big Picture

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync. We see the bullish...

Vermilion Research

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