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

*Crackdown Begins: The State Administration for Market Regulations (SAMR) or better know as mainland China’s antitrust regulator fined China Literature (772.HK), Tencent Holdings (700.HK) [Tencent] subsidiary CNY 500,000 for failing to gain certain acquisition or buyout approvals – thereby violating the country’s anti-monopoly laws; and *Small Fine, But Implications Large: The current Tencent fine is relatively small compared to the size of the company, however, it does serve as a wake-up call to halt M&amp;A activity without the requisite regulatory sign off. SAMR is also looking into a recent deal between Huya (HUYA.US) and Douyu (DOYU.US) where Tencent would have 68% of voting shares in the combined entity.

*Crackdown Begins: The State Administration for Market Regulations (SAMR) or better know as mainland China’s antitrust regulator fined China Literature (772.HK), Tencent Holdings (700.HK) [Tencent] subsidiary CNY 500,000 for failing to gain certain acquisition or buyout approvals – thereby violating the country’s anti-monopoly laws; and *Small Fine, But Implications Large: The current Tencent fine is relatively small compared to the size of the company, however, it does serve as a wake-up call to halt M&amp;A activity without the requisite regulatory sign off. SAMR is also looking into a recent deal between Huya (HUYA.US) and Douyu (DOYU.US) where Tencent would have 68% of voting shares in the combined entity.

Tencent Holdings – Slap On The Wrist For Now

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

Thematic (Sector/Industry)

The tech break up is not happening soon but the regulators have been more vocal and active in penalizing the Big Tech companies. In the US, <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> was sued over monopoly concern and the EU has issued Digital Services Act that aims to create better chances for smaller developers to compete in the Apple and Google ecosystem. In China, the regulator has also been more stringent on the Big Tech, starting with the cancelation of <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> IPO and now potentially to ask <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> to divest some of their investments. 
The smaller tech companies in China also have issues that their revenue growth rate has started to slow down considerably, therefore, reducing the potential to reach break-even unless they do a massive cost-cutting exercise. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/178/884/original/image_39996483941608095760408.png?1608095759" class="editor-image img-responsive" data-smartkarma-image-id="178884"></figure>
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source: Capital IQ
</div>
<div class="content-highlight">
If the Big Tech backer such as Tencent and Alibaba are told to reduce their holdings in the above shares, while the investees also do not much cash lying around in the balance sheet and trading at expensive valuation, there are two outcome possible - either a further capital raising that will send the shares multiples down or investors to start rotating into other sectors that also will send share price down. 
</div>

The tech break up is not happening soon but the regulators have been more vocal and active in penalizing the Big Tech companies. In the US, Facebook Inc A (FB US) was sued over monopoly concern and the EU has issued Digital Services Act that aims to create better chances for smaller developers to compete in the Apple and Google ecosystem. In China, the regulator has also been more stringent on the Big Tech, starting with the cancelation of Ant Group (6688 HK) IPO and now potentially to ask Tencent Holdings (700 HK) and Alibaba Group (9988 HK) to divest some of their investments. 
The smaller tech companies in China also have issues that their revenue growth rate has started to slow down considerably, therefore, reducing the potential to reach break-even unless they do a massive cost-cutting exercise. 


source: Capital IQ


If the Big Tech backer such as Tencent and Alibaba are told to reduce their holdings in the above shares, while the investees also do not much cash lying around in the balance sheet and trading at expensive valuation, there are two outcome possible - either a further capital raising that will send the shares multiples down or investors to start rotating into other sectors that also will send share price down. 


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

iQiyi aims to raise around US$1.7bn from a convertible bond and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the balance coming from the convertible bond offering. Its been a rough year for the stock with a short-seller targeting the company and operations lagging as well.We have covered the company's performance previously in:<ul>
<li><a href="https://www.smartkarma.com/insights/iqiyi-some-flaws-in-the-wolfpack-s-short-seller-report" target="_blank" rel="noopener">IQIYI: Some Flaws in the Wolfpack’s Short Seller Report</a></li>
<li><a href="https://www.smartkarma.com/insights/iqiyi-iq-why-chinese-netflix-dismissing-employees-during-home-staying-a-content-angle" target="_blank" rel="noopener">IQiyi (IQ): Why “Chinese Netflix” Dismissing Employees During Home Staying? A Content Angle</a></li>
<li><a href="https://www.smartkarma.com/insights/iqiyi-iq-an-empty-tv-box" target="_blank" rel="noopener">IQiyi (IQ): An Empty TV Box</a></li>
</ul>

iQiyi aims to raise around US$1.7bn from a convertible bond and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the balance coming from the convertible bond offering. Its been a rough year for the stock with a short-seller targeting the company and operations lagging as well.We have covered the company's performance previously in:
IQIYI: Some Flaws in the Wolfpack’s Short Seller Report
IQiyi (IQ): Why “Chinese Netflix” Dismissing Employees During Home Staying? A Content Angle
IQiyi (IQ): An Empty TV Box


IQiyi Placement - An Ex-Growth Netflix - Needs a Deep Deep Discount

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> call for a pullback after hitting our 620 rally objective is nearing our first buy support level near 550/40 with trendline support just coming under pressure.Sell volumes picked up over the last two sessions on down days. Downside pressure stems from the price and RSI break below pattern supports as the MACD pressures trendline.C wave pullback and buy target falls between the 540 and 505 physical support levels.

Tencent Holdings (700 HK) call for a pullback after hitting our 620 rally objective is nearing our first buy support level near 550/40 with trendline support just coming under pressure.Sell volumes picked up over the last two sessions on down days. Downside pressure stems from the price and RSI break below pattern supports as the MACD pressures trendline.C wave pullback and buy target falls between the 540 and 505 physical support levels.

Tencent Overshoot Risk Below Original Buy Target

Alpha-Centric ESG Research

Kyle Rudden

Oh, the inhumanity of Monopolium Inquisitorum, leviathans made to stand before the judgement of inquisitorial courts. Repent and reform, or burn in everlasting… fine, maybe just shed a few worldly possessions, WhatsApp would be a good start, and stop coveting thy neighbors' data so much.Big technology companies (aka "Big Tech") are the subject of ever-expanding antitrust inquisitions by regulators and courts around the world. In the U.S., informal inquiries into prominent members of FAANG by the U.S. Congress turned into formal antitrust suits, first Alphabet then Facebook.Yesterday, the U.S. Federal Trade Commission (FTC) announced yet another inquiry, this one into the data collection practices of social media companies. It mentioned nine companies by name, a few of which are "new" to this conversation (ByteDance, Tencent-investee Discord, and Snap).This Insight looks at one particular ESG angle to this antitrust stuff. Specifically, the potential for antitrust investigations – not the outcomes, but the process – to trigger ESG ratings downgrades and, in turn, constituency changes to major ESG indices. Summary points, for the cover page:<ul>
<li>Antitrust investigations will inevitably result in additional ESG ratings downgrades, and since most ESG indices are constructed using those ratings, constituency changes are likely.</li>
<li>Index changes might not happen until annual reviews a few months from now, but they are not tied to eventual antitrust outcomes (e.g., breakups) that could be years away, or not at all.</li>
<li>Presently, Facebook and Alphabet are the only U.S. stocks that stand out vis-à-vis the potential for antitrust-driven changes to ESG ratings and/or ESG indices (more so for Facebook).</li>
<li>Let's be honest, we are not talking about Tesla being added to the S&amp;P 500. Even for larger ESG indices, index-linked AUM is comparatively small vis-à-vis broader market indices.</li>
<li>However, one thing keeps it interesting. ESG indices are bloated with Big Tech, many of which are right behind Facebook and Alphabet on the antitrust plank walk.</li>
</ul>Herein, I explain my thought process – antitrust, to ESG ratings downgrades, to ESG index changes – then cover Facebook and Alphabet in some detail (albeit limited by constraints). There is less to say about the other U.S. "antitrust stocks" at the moment, but that may change. More importantly, I am looking into something similar, but related to Asian stocks. So, more to come.

Oh, the inhumanity of Monopolium Inquisitorum, leviathans made to stand before the judgement of inquisitorial courts. Repent and reform, or burn in everlasting… fine, maybe just shed a few worldly possessions, WhatsApp would be a good start, and stop coveting thy neighbors' data so much.Big technology companies (aka "Big Tech") are the subject of ever-expanding antitrust inquisitions by regulators and courts around the world. In the U.S., informal inquiries into prominent members of FAANG by the U.S. Congress turned into formal antitrust suits, first Alphabet then Facebook.Yesterday, the U.S. Federal Trade Commission (FTC) announced yet another inquiry, this one into the data collection practices of social media companies. It mentioned nine companies by name, a few of which are "new" to this conversation (ByteDance, Tencent-investee Discord, and Snap).This Insight looks at one particular ESG angle to this antitrust stuff. Specifically, the potential for antitrust investigations – not the outcomes, but the process – to trigger ESG ratings downgrades and, in turn, constituency changes to major ESG indices. Summary points, for the cover page:
Antitrust investigations will inevitably result in additional ESG ratings downgrades, and since most ESG indices are constructed using those ratings, constituency changes are likely.
Index changes might not happen until annual reviews a few months from now, but they are not tied to eventual antitrust outcomes (e.g., breakups) that could be years away, or not at all.
Presently, Facebook and Alphabet are the only U.S. stocks that stand out vis-à-vis the potential for antitrust-driven changes to ESG ratings and/or ESG indices (more so for Facebook).
Let's be honest, we are not talking about Tesla being added to the S&amp;P 500. Even for larger ESG indices, index-linked AUM is comparatively small vis-à-vis broader market indices.
However, one thing keeps it interesting. ESG indices are bloated with Big Tech, many of which are right behind Facebook and Alphabet on the antitrust plank walk.
Herein, I explain my thought process – antitrust, to ESG ratings downgrades, to ESG index changes – then cover Facebook and Alphabet in some detail (albeit limited by constraints). There is less to say about the other U.S. "antitrust stocks" at the moment, but that may change. More importantly, I am looking into something similar, but related to Asian stocks. So, more to come.

Big Tech Antitrust Scrutiny Could Mean ESG Ratings Downgrades, Constituency Changes for ESG Indices

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent (700 HK)

Tencent Holdings – Slap On The Wrist For Now

TENCENT HOLDINGS: SAMR fined Tencent's subsidiary CNY 500,000 for failing to gain certain acquisition or buyout approvals. The fine is small but...

Thomas J. Monaco

Tech Sell-Off - Progress

Although the US and China are at so to say war, it is not too impossible that the Chinese and the US regulator will work together in order to curb...

Henry Soediarko

IQiyi Placement - An Ex-Growth Netflix - Needs a Deep Deep Discount

iQiyi aims to raise around US$1.7bn from a CB and primary follow-on offering. The ADS offering is expected to raise around US$900m, with the...

Sumeet Singh

Tencent Overshoot Risk Below Original Buy Target

Tencent Holdings (700 HK) call for a pullback after hitting our 620 rally objective is nearing our first buy support level near 550/40 with...

Thomas Schroeder

Big Tech Antitrust Scrutiny Could Mean ESG Ratings Downgrades, Constituency Changes for ESG Indices

Antitrust broaches several highly-material ESG issues. Growing antitrust scrutiny of "Big Tech" could lead to ESG rating downgrades, and in turn,...

Kyle Rudden

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