Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&amp;P/ASX family of indices in September.</li>
<li>There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a>. </li>
<li>The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.</li>
</ul>


With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&amp;P/ASX family of indices in September.
There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&amp;P/ASX 200 (AS51 INDEX). 
The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.


S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to September

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

<ul>
<li>AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions</li>
<li>AUD610m of returned capital in past 12 months will see AUD140m added by October</li>
<li>AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages</li>
</ul>


AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions
AUD610m of returned capital in past 12 months will see AUD140m added by October
AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages


AMP - Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Australia & New Zealand Bankin / Event-Driven

<ul>
<li>This morning, ACCC <a href="https://www.accc.gov.au/media-release/accc-seeks-further-views-on-anzs-proposed-acquisition-of-suncorp-bank" target="_blank" rel="noopener">announced</a> that it had released a "<a href="https://www.accc.gov.au/system/files/public-registers/documents/Statement%20of%20preliminary%20views%20-%2004.04.23%20-%20PR%20-%20MA1000023%20ANZ%20Suncorp.pdf" target="_blank" rel="noopener">Statement of Preliminary Views</a>" on the ANZ/Suncorp deal and sought further views. </li>
<li>For now, the ACCC questions "the nature, likelihood, and extend of claimed public benefits" including synergies or claims regarding investment in Queensland. </li>
<li>Based on my reading of the document, this view is likely to carry over through the final decision due mid-June 2023. That means there's likely a trade here. </li>
</ul>


This morning, ACCC announced that it had released a "Statement of Preliminary Views" on the ANZ/Suncorp deal and sought further views. 
For now, the ACCC questions "the nature, likelihood, and extend of claimed public benefits" including synergies or claims regarding investment in Queensland. 
Based on my reading of the document, this view is likely to carry over through the final decision due mid-June 2023. That means there's likely a trade here. 


ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

Thematic (Sector/Industry)

<ul>
<li>Australia domestic credit growth is now at -2.2% YoY in January 2024, the worst figure since August 2021. </li>
<li>There are negative implications for the delta of net interest income for Australia's banks as loan growth moves negative.</li>
<li>Risk of rising credit costs is higher, not only from worsening insolvencies with corporates, but also with rising mortgage bad loans. </li>
</ul>


Australia domestic credit growth is now at -2.2% YoY in January 2024, the worst figure since August 2021. 
There are negative implications for the delta of net interest income for Australia's banks as loan growth moves negative.
Risk of rising credit costs is higher, not only from worsening insolvencies with corporates, but also with rising mortgage bad loans. 


Australia Banks - Negative Loan Growth Reaches August 2021 Levels

Commonwealth Bank of Australia / Equity Bottom-Up

<ul>
<li>It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop</li>
<li>CBA's past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently</li>
<li>Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL</li>
</ul>


It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
CBA's past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL


CBA - Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

Australia

Insurance Australia Group Limited (IAG) is an Australian-based international general insurance group with operations in Australia, New Zealand, and Asia. The Group provides a range of personal and commercial insurance products, primarily motor vehicle and home insurance.

QBE Insurance Group Limited is an insurance company which underwrites most forms of commercial and industrial insurance policies, as well as individual policies. QBE also manages Lloyds syndicates and provides investment management services. The Company provides its services both domestically and internationally.

Medibank Private Limited offers private health care coverage for hospital and ancillary services. The Company offers a range of health insurance products such as health, travel, pet, and life coverage to overseas students and visitors. Medibank serves customers throughout Australia.

Steadfast Group Ltd is a provider of services to broker businesses across Australia, New Zealand and Singapore. The Company has equity interests in insurance broker businesses, underwriting agencies and other complementary businesses.

AUB Group Limited provides financial services. The Company offers equity-based risk management, insurance broking, and specialist underwriting agencies, as well as focuses on risk solutions for clients and strengthening our partners risk advisory capabilities.

NIB Holdings Ltd. offers health insurance products.  Depending on the specific product, the Company covers ambulance costs; and reimburses for costs not covered by Medicare including dental, optical, physiotherapy and natural therapies; and some hospitalization costs.

PSC Insurance Group Limited provides insurance brokerage services. The Company offers services such as risk management, workers compensation, business protection, worth insurance, claims settlements. PSC Insurance Group conducts its business globally.

Latitude Group Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides personal, commercial, and business insurance products and services, as well as offers loans and credit card solutions. Latitude Group Holdings serves individuals, governments, municipalities, and businesses.

Generation Development Group Limited operates as an investment company. The Company provides tax effective investment solutions and development capital to financial sector businesses. Generation Development Group serves customers in Australia.

ASX Ltd is a demutualized company which operates Australia's primary national stock exchange and equity derivatives market. The ASX operates markets for equities, derivatives, fixed-interest securities and capital-raising for unlisted companies using advanced computer systems for both trading and settlement.

New China Life Insurance Company Limited provides life insurance in local and foreign currencies, acts as an insurance agent, provides checks, claims and insurance consulting. The Company's main products include life insurance, accident insurance, health insurance products and services.

The People's Insurance Company (Group) of China Limited, through its subsidiaries, offers a range of property and casualty insurance products. The Company also offers asset management services for a variety of customers throughout China.

Samsung Life Insurance Co., Ltd. provides insurance services. The Company offers life and health insurance services. Samsung Life Insurance serves customers in South Korea.

Samsung Fire & Marine Insurance Co., Ltd. provides insurance services. The Company offers auto, fire, marine, casualty, health, leisure, and retirement products and services. Samsung Fire & Marine Insurance serves customers in South Korea.

Samsung Fire & Marine Insurance (000810 KS)

Erie Indemnity Company is the management company for the Erie Insurance Exchange. The Company is also involved in the property and casualty insurance business through its wholly-owned subsidiaries and through its management of Flagship City Insurance Company. Erie Indemnity sells auto, home, life and business insurance in the United States.

Everest Re Group, Ltd. provides reinsurance to property and casualty insurers in the United States and international markets.  The Company also provides property and casualty insurance to policyholders in the United States and Canada.  In addition, Everest Re offers excess and surplus lines insurance in the United States.

Loews Corporation is a diversified holding company.  The Company, through its subsidiaries, is involved in a variety of businesses including commercial property-casualty insurance, offshore drilling, natural gas exploration and production, operation of natural gas pipeline systems, and the operation of hotels and resorts.

CNA Financial Corporation operates as an insurance holding company. The Company, through its subsidiaries, provides commercial property and casualty coverages such as risk management, information services, warranty, and claims administration. CNA Financial serves clients throughout the United States.

RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business primarily consists of catastrophe reinsurance, specialty reinsurance, and individual risk business.

Reinsurance Group of America, Incorporated provides reinsurance services. The Company offers life and health related reinsurance products and financial solutions. Reinsurance Group of America serves customers globally.

Suncorp Group Ltd. offers retail and business banking, life and general insurance, superannuation and funds management services.  The Company's services include personal banking and loans, personal insurance products, credit cards, pension savings accounts, term deposits, property development finance, commercial lending, investments and lease financing.

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Suncorp (SUN AU)

S&P/ASX Index Rebalance Preview: Potential Changes from Now to September

There could be 28 changes for the ASX indices in September with a lot to trade for passive trackers. The adds have outperformed the deletes by a...

Brian Freitas

AMP - Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

AMP is now launching an online bank, and this is a real concern. A the same time, its margin pressure at its AMP Bank is not strong, new guidance...

Daniel Tabbush

ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

The ACCC has come out pretty clearly against the ANZ/SunCorp Bank deal, and seems to prefer a deal where SunCorp Bank would be merged with another...

Travis Lundy

Australia Banks - Negative Loan Growth Reaches August 2021 Levels

Australia's domestic loan growth has just turned negative 2.2% in January 2024, the worst showing since August 2021, with negative implications for...

Daniel Tabbush

CBA - Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

CBA shows sharply high past due loans that are not impaired, alongside worsening insolvencies in Australia. There are implications for its...

Daniel Tabbush

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52-week Range

Market Cap (USDm)

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Dividend (Yield)

S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to September

There could be 28 changes for the ASX indices in September with a lot to trade for passive trackers. The adds have outperformed the deletes by a...

Brian Freitas

AMP - Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

AMP is now launching an online bank, and this is a real concern. A the same time, its margin pressure at its AMP Bank is not strong, new guidance...

Daniel Tabbush

ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

The ACCC has come out pretty clearly against the ANZ/SunCorp Bank deal, and seems to prefer a deal where SunCorp Bank would be merged with another...

Travis Lundy

Australia Banks - Negative Loan Growth Reaches August 2021 Levels

Australia's domestic loan growth has just turned negative 2.2% in January 2024, the worst showing since August 2021, with negative implications for...

Daniel Tabbush

CBA - Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

CBA shows sharply high past due loans that are not impaired, alongside worsening insolvencies in Australia. There are implications for its...

Daniel Tabbush

S&P/ASX Index Rebalance Preview: Potential Changes from Now to September