Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Macroeconomics

<div class="content-highlight">The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.</div>As noted by Yongding Yu and Ting Lu in a <a href="http://onlinelibrary.wiley.com/doi/10.1111/cwe.12141/epdf" target="_blank">recent paper</a>(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…

The government should set up a new national pension fund to save the economy.  Securitising future pension payments may be the answer to the growing corporate debt problem.As noted by Yongding Yu and Ting Lu in a recent paper(pdf), China's corporate debt issue will continue to grow unless their is ultra loose monetary policy (4% inflation and 4% rates) or much lower growth (Chart 1), in the absence of either they forecast Chinese EBITDA will trend to zero in 2030.  Given that China appears to be…

How a Debt to Equity Swap Plan in China Could Work

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

Jiayuan International / Equity Capital Markets

Jiayuan International (Jiayuan) plans to raise US$85-145m through an issuance of primary shares in its IPO. The company offers no unique exposure as such, as there are a plethora of China real estate developers listed in Hong Kong to choose from. Moreover the founders entire real estate business isn't being injected in the listco, for reasons that remain far from clear. Pricing at the lower end seems digestible but a negative score on our framework and unconvincing explanations for segregation of private assets inclines us to avoid the deal.

Jiayuan International (Jiayuan) plans to raise US$85-145m through an issuance of primary shares in its IPO. The company offers no unique exposure as such, as there are a plethora of China real estate developers listed in Hong Kong to choose from. Moreover the founders entire real estate business isn't being injected in the listco, for reasons that remain far from clear. Pricing at the lower end seems digestible but a negative score on our framework and unconvincing explanations for segregation of private assets inclines us to avoid the deal.

Jiayuan International IPO - Private Real Estate Is 2x the Size of Business Being Listed

Merger Arbitrage, Relative Value, Event-Driven

Per Gullberg, CFA, FRM, CAIA

Event-Driven

The drama surrounding Kaisa Group (1638 HK; Kaisa) has taken a new turn, with Sunac China (1918 HK; Sunac) &nbsp;<a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0206/LTN20150206688.pdf" target="_blank">announcing&nbsp;</a>a conditional agreement for acquisition of Kaisa shares currently held by the Kwok Family Trust, which may trigger a mandatory offer at HKD 1.80/share (less stamp duty). This development follows a recent&nbsp;<a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0201/LTN20150201053.pdf" target="_blank">announcement </a>that Kaisa would dispose of equity interests and shareholder's loans in certain project companies to Sunac. &nbsp;We stress that the helping hand is not unconditional, and that Kaisa is not out of the woods yet.&nbsp;

The drama surrounding Kaisa Group (1638 HK; Kaisa) has taken a new turn, with Sunac China (1918 HK; Sunac) &nbsp;announcing&nbsp;a conditional agreement for acquisition of Kaisa shares currently held by the Kwok Family Trust, which may trigger a mandatory offer at HKD 1.80/share (less stamp duty). This development follows a recent&nbsp;announcement that Kaisa would dispose of equity interests and shareholder's loans in certain project companies to Sunac. &nbsp;We stress that the helping hand is not unconditional, and that Kaisa is not out of the woods yet.&nbsp;

Sunac's helping hand is not unconditional

Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Thematic (Sector/Industry)

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on offshore bonds) and on Jan 12 got a waiver on a HK$400 million loan from HSBC.&nbsp; The notes dropped 40 percent last month as some of Kaisa’s Shenzhen projects were blocked and executives including founder Kwok Ying Shing quit. They continued to fall in January, reaching 29.9 cents on the dollar on Jan. 7. Its $800 million of 8.875 percent 2018 bonds also plunged.

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on offshore bonds) and on Jan 12 got a waiver on a HK$400 million loan from HSBC.&nbsp; The notes dropped 40 percent last month as some of Kaisa’s Shenzhen projects were blocked and executives including founder Kwok Ying Shing quit. They continued to fall in January, reaching 29.9 cents on the dollar on Jan. 7. Its $800 million of 8.875 percent 2018 bonds also plunged.

China Property / Debt - when Kaisa broke our Trust

China

Sunac China Holdings Limited is a real estate development company.

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Sunac China Holdings (1918 HK)

How a Debt to Equity Swap Plan in China Could Work

The government should set up a new national pension fund to save the economy. Securitising future pension payments may be the answer to the...

Mark Artherton

Jiayuan International IPO - Private Real Estate Is 2x the Size of Business Being Listed

Jiayuan International (Jiayuan) plans to raise US$85-145m through an issuance of primary shares in its IPO. The company offers no unique exposure...

Sumeet Singh

Sunac's helping hand is not unconditional

The drama surrounding Kaisa Group (1638 HK; Kaisa) has taken a new turn, with Sunac China (1918 HK; Sunac) announcing a conditional agreement for...

Per Gullberg, CFA, FRM, CAIA

China Property / Debt - when Kaisa broke our Trust

Kaisa failed to make an interest payment due Jan 8 on $500 million of 10.25% dollar bonds (the first Chinese property company to default on...

David Millhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)