FSMOne SG - Research Highlights

2021-10-28 03:30:16 Is Evergrande’s offshore coupon payment truly good news for its bondholders? https://bit.ly/3vL5YJv

If you are looking for an investment grade opportunity with decent yields, consider this new issue from Mapletree Logistic Trust: https://bit.ly/3vIHnoR Open / Comment

2021-10-27 03:38:10 Fund Idea

As the "transitory inflation" narrative peters out, what's next for fixed income?

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• 3Q saw Treasury Yields shoot up as the Fed announced its tapering plans and supply chain disruptions triggered significant inflationary pressure.

• As a result, Global Bonds fell -0.37%, while US High Yields were the key beneficiary, rising 0.91%.

• On aggregate, fixed income funds on our platform fell by -1.51%, largely due to the Evergrande induced selloff in the Asian High Yield sector, which lost -6.11%.

• With inflation and rising rates looming, duration management remains key, and we have highlighted three funds for investors to consider.

: Read the full article here Open / Comment

2021-10-26 03:30:39 In this week’s Bond Market Monitor, the Asia High Yield Bond Index gained 2.10% thanks to a slight recovery in Chinese property bonds, and other updates: https://bit.ly/2XGPUMm

Rising prices may not be all that negative, especially for agribusinesses. As Olam reaps profits from high food prices, here are some bonds yield-seeking investors can consider: https://bit.ly/3B9dmQ1 Open / Comment

2021-10-25 12:46:48 Just as markets were anticipating a default, Evergrande narrowly averted the crisis with its last-minute payments. Our HK Analyst, Jackson Chan, shared his views on the developer in this Reuters report: https://reut.rs/2Zdb8BL Open / Comment

2021-10-25 05:02:07 Stock Idea

Here’s one of our top quality picks to unlock opportunities in the Chinese real estate sector

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• China Resources Land (CR Land) is among the top 10 property developers in China, and one of the few who have met the Three Red Lines.

• We believe that refinancing risk is unlikely to become a concern for CR Land. Moreover, it could take advantage of the cooling land market to replenish its land bank at reasonable prices.

• CR Land’s land bank focus on tier-1 and tier-2 cities underpins the resiliency of its development business. We estimate that its current land bank is sufficient for the company’s development needs in the next four years.

• Aside from its development business, CR Land generates significant rental income from investment properties. Rental income is expected to double by 2025, providing room for a sustainable growth in dividends.

• We value CR Land at a target price of HKD 46.5, representing an upside potential of 43% as of 21 October 2021. While waiting for share price to re-rate, CR Land also offers investors with a forward dividend yield of 5.4%.

: Read the full article here
: China Resources Land (HKEX:1109) Open / Comment

2021-10-22 12:51:01 Stock Idea

Food delivery giant Meituan slapped with CNY 3.4 billion fine as China ends anti-monopoly probe

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• On 8 October 2021, Meituan received a fine of CNY 3.4 billion for violating China’s anti-monopoly law, putting an end to the government’s anti-monopoly investigation that began in April.

• The fine, which is equivalent to about 3% of the company’s domestic revenue, was much lower than expected, and well below the maximum of 10% allowed under Chinese law.

• New guidelines should not have a significant impact on operations. Merchant and user acquisition are expected to be robust as Meituan continues to expand its service offerings.

• The sell-off in Meituan’s shares has left valuations more attractive than before, and could serve as an attractive entry opportunity for those who are able to stomach the volatility.

• Our target price for Meituan is HKD 414, which translates to an upside potential of about 45%.

: Read the full article here
: Meituan (HKEX:3690) Open / Comment

2021-10-22 03:30:46 ETF Idea

Will the Evergrande debt crisis threaten China’s Big Four banks?

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• Evergrande is likely to undergo restructuring and creditors of Evergrande can expect to take massive haircuts on their principals.

• We expect the Big Four banks to record increases in loan loss provisions and non-performing loans, but we believe the impact of a real estate market downturn is bearable given their low exposure to real estate developers.

• The Big Four banks have about 70% of their total loans secured with collateral, pledges and guarantees, which will help to cushion against any further defaults.

• From a longer-term perspective, property loan growth is expected to slow down but we believe that the slack left behind by property-related loans could be picked up by several other sectors.

• Investor sentiment is likely to remain depressed in the near term. While we acknowledge that valuations may fall even further, we see more upside potential than downside risks for the Big Four banks, especially since they are trading at an average PB ratio of just 0.4X.

: Read the full article here
: ChinaAMC Hong Kong Banks ETF (HKEX:3143), Global X MSCI China Financials ETF (NYSE:CHIX) Open / Comment

2021-10-21 12:46:50 In this week’s Bond Market Monitor, MAS tightened monetary policy while the Fed is likely to taper their asset purchases soon, and other updates: https://bit.ly/3FZHwZw

Winner of “Top Ten Developers Award” in the BCI Asia Awards for 2020 and 2021, GuocoLand introduces a new 5Y bond that looks relatively attractive: https://bit.ly/3jw4iyX Open / Comment

2021-10-21 03:35:42 Macro Research

3Q21 Market Report Card – Interesting Opportunities from Asia to Europe

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• Global markets (MSCI ACWI Index) were flat in 3Q21 (+0.04% in SGD terms). Our top 3 performers (in SGD terms) were India (+14.2%), Russia (+10.2%), and Indonesia (+8.2%).

• India: We are neutral on India. While we think that its outlook remains robust, we think that investors have priced in an overly bullish scenario, resulting in very stretched valuations.

• Russia: We are positive on Russia, due to its large composition of oil and gas (O&G) companies in the index. We think energy prices will remain supportive of Russian equities in the months to come, and the attractive dividends will add on to the already positive price upside forecasted.

• Indonesia: We are also bullish on Indonesia, as we think that the reopening of the economy should be a big boon to Indonesian equities. With the second wave of COVID-19 behind us, we are optimistic on domestic consumption, which should support domestic equities going ahead.

: Read the full article here Open / Comment

2021-10-20 12:42:55 Despite recent sell-off and fears, investors can still take advantage of opportunities in the Chinese real estate bond market. Here's our latest thoughts on the sector: https://bit.ly/3j57JMt Open / Comment