Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>China, India, Saudi Arabia, and Taiwan remain key underweights.  Recovery in Malaysia, Thailand, Turkey, and South Africa, correction in Indonesia and Mexico. Developed Markets the largest overweight for EM investors.</li>
<li>Discretionary, Staples, and Industrials the key overweights, Materials and Energy the underweights. Rotation out of Tech moves positioning from overweight to underweight for the first time since 2019.</li>
<li>Ownership climbs for Meituan and SK Hynix, Baidu and Yum China see sharp declines. Downtrends persist in Vale, Telkom Indonesia.  Recovery in SK Telekom, Garanti Bank, highs in Emaar Properties. </li>
</ul>


China, India, Saudi Arabia, and Taiwan remain key underweights.  Recovery in Malaysia, Thailand, Turkey, and South Africa, correction in Indonesia and Mexico. Developed Markets the largest overweight for EM investors.
Discretionary, Staples, and Industrials the key overweights, Materials and Energy the underweights. Rotation out of Tech moves positioning from overweight to underweight for the first time since 2019.
Ownership climbs for Meituan and SK Hynix, Baidu and Yum China see sharp declines. Downtrends persist in Vale, Telkom Indonesia.  Recovery in SK Telekom, Garanti Bank, highs in Emaar Properties. 


European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Turkiye Garanti Bankasi As / Event-Driven

<ul>
<li>Until last week, BBVA had already secured a 71.1% stake in Garanti. The deadline to accept BBVA's takeover bid ends on 18 May. Settlement will take place on 19 May.</li>
<li>Gross spread is 0.2%. Recently, the offer price has acted as a support for the share price, which may drop if BBVA doesn't reach the squeeze-out threshold. Tender.
</li>
<li>The squeeze-out threshold is 98% (95% for delisting). My understanding is that the squeeze-out price is arithmetic average of the daily VWAP in the 30 days before threshold disclosure. </li>
</ul>


Until last week, BBVA had already secured a 71.1% stake in Garanti. The deadline to accept BBVA's takeover bid ends on 18 May. Settlement will take place on 19 May.
Gross spread is 0.2%. Recently, the offer price has acted as a support for the share price, which may drop if BBVA doesn't reach the squeeze-out threshold. Tender.

The squeeze-out threshold is 98% (95% for delisting). My understanding is that the squeeze-out price is arithmetic average of the daily VWAP in the 30 days before threshold disclosure. 


Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Banco Bilbao Vizcaya Argentari / Equity Bottom-Up

<ul>
<li>Mexico continues to be the key contributor to BBVA group, with the offer for Garanti minorities set to increase BBVA’s share of higher risk higher reward returns from emerging markets</li>
<li>The revised offer to Garanti minorities is still 10%+ cheaper in Euro terms than at the time of its 4Q21 announcement, with a modest hit of 34bps to CET1 ratio</li>
<li>We see BBVA as an attractive value play in select emerging markets and Spain, with its well-established digital offerings as a driver for sustained premium returns and premium capital distribution</li>
</ul>


Mexico continues to be the key contributor to BBVA group, with the offer for Garanti minorities set to increase BBVA’s share of higher risk higher reward returns from emerging markets
The revised offer to Garanti minorities is still 10%+ cheaper in Euro terms than at the time of its 4Q21 announcement, with a modest hit of 34bps to CET1 ratio
We see BBVA as an attractive value play in select emerging markets and Spain, with its well-established digital offerings as a driver for sustained premium returns and premium capital distribution


BBVA – Mexico Is the Motor for Further Capital Distribution

<ul>
<li>BBVA sweetness the offer price for Garanti by 23% due to very low acceptances so far (the share price of Garanti has increased by 64% over the last six months).</li>
<li>The increased offer price should placate disgruntled shareholders, while at the same time saving BBVA €264 million (c. 12% less than originally forecasted) due to Turkish lira depreciation.</li>
<li>Gross spread is 0.2%, and the annualized return is 3.05% (assuming settlement on 19 May). Long GARAN IT.</li>
</ul>


BBVA sweetness the offer price for Garanti by 23% due to very low acceptances so far (the share price of Garanti has increased by 64% over the last six months).
The increased offer price should placate disgruntled shareholders, while at the same time saving BBVA €264 million (c. 12% less than originally forecasted) due to Turkish lira depreciation.
Gross spread is 0.2%, and the annualized return is 3.05% (assuming settlement on 19 May). Long GARAN IT.


BBVA/Garanti: Looking to Secure Acceptances with a 23% Increase

<ul>
<li>The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.</li>
<li>BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.</li>
<li>The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.</li>
</ul>


The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.
BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.
The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.


BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Turkey

Turkiye Garanti Bankasi A.S. attracts deposits and offers retail and commercial banking services.  The Group offers lease financing, insurance, asset management, securities brokerage, automobile and mortgage loans, credit cards, and other financial services.  Turkiye Garanti Bankasi operates in Turkey, the Netherlands, Germany, Romania, Russia, Luxembourg, Malta, and Bahrain.

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Turkiye Garanti Bankasi As (GARAN TI)

Active GEM Funds: Positioning Chart Pack

In this chart pack, we highlight the key country, sector and stock exposures among active Emerging Markets equity funds.

Steven Holden

BBVA/Garanti: End of Offer Period

Prior to the end of the extended offer period (18 May), BBVA has already secured a 71% stake. With the share price supported by the offer (and risk...

Jesus Rodriguez Aguilar

BBVA – Mexico Is the Motor for Further Capital Distribution

BBVA's premium returns engine is Mexico, supported by improving Spanish returns and the growth potential of Turkey, where it is buying the...

Victor Galliano

BBVA/Garanti: Looking to Secure Acceptances with a 23% Increase

BBVA sweetens its bid for Garanti to secure acceptances. If and when BBVA crosses the 50% threshold, it will be able to buy shares in the market...

Jesus Rodriguez Aguilar

BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Due to the Turkish lira depreciation BBVA could get a sweet deal, but minority shareholders have said they won't tender without an increase in the...

Jesus Rodriguez Aguilar

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52-week Range

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