Blog

Do you suffer from stiffened arteries? Don't blame coffee for it.

Do you suffer from stiffened arteries? Don't blame coffee for it.

New study suggests excessive coffee consumption does not cause arteries to stiffen, putting pressure on the heart

You can drink up to 25 cups of coffee a day without increasing the likelihood of having a heart attack or stroke

When drinking coffee, you will still have a bad breath, though...

Kateřina Staníková
July 14, 2019
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Will Fast Wage Growth Hurt Impressive Profitability of CEE Banks?

Will Fast Wage Growth Hurt Impressive Profitability of CEE Banks?

Wage growth across Central Europe has sped up to 5-10%, closing the gap again with Western peers.

Cheap and skilled labor has been one of the reasons CEE banks are so cost efficient and profitable.

Could fast growth in wages endangers superior profitability of CEE banking?

Jiří Staník
March 04, 2019
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Which Car Maker Makes the Most Money?

Which Car Maker Makes the Most Money?

Ferrari earned EUR 63,752 per car sold, five times more than Porsche. On the other hand, Volkswagen created the biggest operating profit in 2017 among car manufacturers.

Toyota was the most valuable automotive Company in the world in 2017 while Tesla remains a different species in the pond.

Jiří Staník
February 28, 2019
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It’s time to go ‘hunting’ in Turkey

It’s time to go ‘hunting’ in Turkey

Instead of tracing what has happened since the first visible incidence of ‘Gulenist movement’ (as named by the AKP) and the two elections that took place last year, we would like to focus on what we believe are the key objectives/positions taken by the main player(s?) of the ruling party. We believe it is clear to the market (hopefully by now) that Turkey is an ‘autocratic democracy’ (an oxymoron): the government is elected through a democratic process with an aim to rule as an autocracy.

Irrespective of the ‘office’ held, Mr. Recep Tayyip Erdogan (currently in the office of a neutral President) wants to rule the country despite holding a ceremonial post. The power in Turkey officially rests in the office of Prime Ministership which is occupied by the leader of the ruling party (currently, Mr. Binali Yildirim).

It is an open secret that President Erdogan is trying to engineer amendments in the constitution to ‘upstream’ power to the presidency and rule the country. His actions so far indicate his desire to control and manage outcomes as he sees fit. This is in line with his interference via commentary on interest rates, prosecutorial activities, and strategy towards PKK and Kurdish elements in Turkey, involvement in Syria, etc.

Kalim Aziz
August 24, 2016
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Greek Banking Gets Better

Greek Banking Gets Better

Contrary to common perception, based on real high frequency data and ‘changes’ that we observe, we believe 1) the economic outlook has changed for the better, 2) the legal infrastructure and reforms re financial sector, especially the NPL is in place, and 3) the banks are in advance stages of planning and implementing reduction of NPLs and restart core banking activities.

Kalim Aziz
July 28, 2016
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A view on the EU Referendum

Instead of updating on the ‘news of the day/week/month’ and or commenting on how/why and what of the outcome of the Brexit vote, we want to focus on three aspects: 1) how it affects UK and what we believe might happen, 2) what is the likely ‘response’ of EU to this event with respect to EU rather than UK, and, 3) Atmosphere.

Kalim Aziz
July 20, 2016
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Corporate Governance Through the Eyes of Dividends

For all non-financial companies/businesses that we look at, our primary focus is to get a real sense of a business’s ability to generate sustainably equity free-cash flow (‘E-fcf) given a view of macro-economic and competitive scenario. ‘E-fcf’ yield relative to the cost of ‘funds’ (debt) is one of the primary benchmark to sense the relative attractiveness of the investment under consideration.

To us, sustainability of dividend is of paramount importance, and we use our estimate of ‘e-fcf’ to assess sustainability of dividends: ‘e-fcf’ > dividends is the key. We are okay with the companies retaining some ‘e-fcf’ for ‘rainy-days’ or deleveraging for cyclical cushion. However, companies where we see dividends consistently above ‘E-fcf’ we believe are of poor quality and more akin to ‘equity-release’ rather than ‘equity-return’.

Kalim Aziz
May 18, 2016
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Greek Banking Sector – Thoughts & Views

Statistical adjustments caught-up with Greece as the ‘money tap’ started to run dry when the GFC unfolded and the financial institutions started to look at how they can shrink their balance sheets. The Greek government declared that it was running fiscal deficits closer to 10% vs. 3% (as per Maastricht criteria), and approached the EU to ask for a programme and help to put Greek back on sound financial footing. The first EU-IMF-ECB (popularly known as Troika) bailout programme was introduced with an austerity plan requiring expenditure and revenue measures. At the same time, ‘non-Greek’ banks were trying to pull-out from Greece, aggravating the impact of austerity measures (revenue side suffered) as corporate Greece was faced to liquidity squeeze.

Kalim Aziz
April 01, 2016
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Sberbank - investment’ thought process (in a Socratic dialogue format)

Instead of repeating the mantra of why investing in this region has a measurably attractive reward to risk profile, valuations are attractive, the underlying economic outlook has more potential to surprise on the upside etc., we would like to take the opportunity here to demonstrate through an example or ‘investment’ thought process (in a Socratic dialogue format).

 

Kalim Aziz
March 01, 2016
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The Polish CHF Mortgage Saga

The Polish CHF Mortgage Saga

For better or for worse, the issue of CHF mortgages is blown out of proportion and has become a tri-party football match between the banks, the borrowers and the regulator.

Kalim Aziz
December 17, 2015
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The Value of a Diamond Soul

The Value of a Diamond Soul

There are two Diamond News In November 2015.

  • A Hong-Kong billionaire bought the world's most expensive diamond for his 7-year-old daughter, Josephine. The 'Blue Moon' diamond was sold for a whopping $48.4 million, making it the world's most expensive diamond.
  • The world's second-largest gem quality diamond has been discovered in Botswana. The 1,111-carat stone was recovered from its Karowe mine and has not been named yet. However, ”Sergio", a black carbonado diamond found in Brazil in 1893 still remains the largest by weight.

Kateřina Staníková
November 24, 2015
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Czechs Hold 80% of Their Financial Assets in Bank Accounts

Czechs Hold 80% of Their Financial Assets in Bank Accounts

  • Czechs hold 80% of their financial assets in bank accounts, the highest figure in Europe
  • Two thirds of these bank deposits are sight deposits, i.e. yielding no money
  • Real estate investment remains the only common alternative.

Jiří Staník
November 21, 2015
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Time To Apply A Negative Interest Rate On Czech Savers?

Time To Apply A Negative Interest Rate On Czech Savers?

Deutsche Skatbank, in the eastern state of Thuringia, plans to apply a negative rate of interest to current account deposits with balances over EUR 500,000. The bank presumably hopes to nudge savers into other longer-term, less liquid or higher-return investments and make some money by selling these.

Jiří Staník
November 18, 2015
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Czechs Own Almost 80% of Their Homes

Czechs Own Almost 80% of Their Homes

  • Volume of mortgage loans has increased more than fourfold since 2014
  • Residential mortgages represent more than a third of total bank loans now
  • Some 18% of households had a mortgage at the end of 2014

Jiří Staník
November 18, 2015
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Aegean Airlines: Analysts underestimate benefit of Jet Fuel Price Drop!

Aegean Airlines: Analysts underestimate benefit of Jet Fuel Price Drop!

  • Decline in Jet Fuel prices and timely hedging for 2015 and 2016 suggest that the consensus earnings estimates is shy by EUR 30 mil
  • Company's fleet and destination expansion and tourists arrivals year to date signal strong revenue momentum in 2015
  • Aegean Airlines represent one of the cheapest growing airlines in the world

Kalim Aziz
May 07, 2015
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Made of Steel In Russia

Made of Steel In Russia

  • Sharp decline (akin to 2008/9 in % terms) in Steel prices in the last 6 months was driven more by input cost than demand dynamics
  • Decline in Steel price in the recent past has ‘eaten’ in Value-Added margin available to Steel companies to cover costs other than inputs. However, rouble devaluation has taken the brunt of decline in Steel prices, and has allowed the Russian Steel makers to protect a large part of Value-Added margin.
  • In the current, input cost environment, MMK offers the most attractive return as an ‘unintegrated player’ followed by NLMK which is also exceptional value for money. Severstal’s attractiveness is muted compared to these two names, but can be considered better value in the global context.

Kalim Aziz
April 23, 2015
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A Crude Attempt to Understand Marginal Barrels Coming Out of the US

A Crude Attempt to Understand Marginal Barrels Coming Out of the US

  • The market is flooded with research notes downgrading the oil price week after week
  • Data from Bakken Shale suggest year on year flat production break-even for the US shale is US$ 65-70 per barrel
  • We believe the oil price will recover to around US$ 68 to keep shale production flat and self-fund the E&P segment within the next 12-18 months

Kalim Aziz
March 30, 2015
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Eurasia - Drilling Three Reasons To Get in

Eurasia - Drilling Three Reasons To Get in

  • Eurasia Drilling is the largest driller in the Russia with roughly 1/4th market share of meters drilled
  • The Company is currently under the process of being bid and delisted @ US$ 22 per GDR
  • At current price of US$ 16.5-17.0 per share, it is decently valued in absolute terms as well as in terms of its history

Kalim Aziz
February 27, 2015
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