Insights: Subsector

Financials: Does COVID-19 Represent a Growth Scare, Credit Event or Crisis?

Since we launched our first ETF in January 2016, there have been four significant macro corrections in four years. None of those large and painful corrections represented a crisis, insofar as the declines did not represent a threat to the solvency of the financial sector, either from a lack of liquidity or the destruction of capital. Rather, they were related to the market rapidly (and, in…

One Chart: When/Where the Canadian Banks Spent US$32 bln on U.S. Banks

All Canadian bank investors know that expansion into the U.S. personal and commercial (“P&C”) banking sector remains the focal point of capital deployment for the Canadian banks. In fact, US banking has been – by far – the largest destination of capital deployment since 2004 (when TD Bank acquired a majority stake in Banknorth), with the Canadian banks having spent a huge US$30 bln. The chart…

One Chart: U.S. Bank M&A Doubles in 2019 (and Why We Expect More)

In the 10+ years since the global financial crisis, deal values in U.S. bank M&A have been slow to reach pre-crisis levels. This is notable since in the nearly 25 years preceding the financial crisis bank M&A was an important theme (particularly between 1995 to 2007) as the chart below highlights. However, in 2019, we saw the first meaningful pick-up, with deal values rising to $59…

Canadian Banks: One Chart Showing Higher Volatility Since New PCL Accounting Took Effect

In April we wrote an Insight in which we explained why we believed the volatility of Canadian bank stocks was likely to rise[1]. Specifically, we cited two reasons: (i) rising acquisition risk, and (ii) implementation of the new provision accounting (IFRS 9). Since the first reporting season (February 2018) following the introduction of this new provision accounting, it does appear that the monthly volatility for the…

U.S. Bank M&A: Another Accretive MOE, Another Positive Market Reaction

On Monday, this year’s third (sizable) U.S. bank merger-of-equals (“MOE”) was announced, continuing a trend we expected following similar transactions early in 2019. We have previously written that after a multi-year period of muted merger activity that U.S. bank consolidation – particularly among mid-cap banks – was poised to accelerate. We have cited this theme as impacting the U.S. mid-cap financials sector generally and the banking…

What U.S. Investment Bankers and Banks are Saying about M&A

At Hamilton ETFs, the prospects for M&A is one the supporting factors for our investment thesis for the U.S. mid-cap banks, in which both the Hamilton Global Bank ETF (ticker: HBG) and Hamilton U.S. Mid-Cap Financials ETF (USD) (ticker: HFMU.U) are heavily-weighted[1]. Recent meetings in New York, Dallas and Washington, DC provided us with an opportunity to hear nuanced comments and feedback on the state of…

Cdn/Aust’n Financials: Fraternal Twins w/ Low Correlations & Near Identical Risk Rewards

The Australian financial sector is among the highest quality and strongest in the world. It is also very similar to the Canadian financial sector. Arguably, there are no two financial sectors globally that more closely resemble each other than Canada and Australia. A desire to provide Canadians with exposure to this great sector is why we launched the Hamilton Australian Financials Yield ETF (HFA), which has…

Scotia’s Pacific Alliance and Five Takeaways on Global Growth

Last week, Bank of Nova Scotia reported its Q3 results and its International Banking division generated solid double-digit earnings growth, supported by a strong economic backdrop and acquisitions. Within this segment is the Bank’s operations in the Pacific Alliance, the Latin American trade bloc that includes Peru, Chile, Columbia, and Mexico. This very large emerging markets platform has over $100 bln in loans, generates earnings of…

European Banks in Charts: Credit Normalization vs. Margins

The European banking sector includes some of the world’s largest banks, making its health and profitability very important to the global markets. Given the sustained weakness in the sector (the STOXX Europe 600 Banks has fallen ~30% since the beginning of 2018), we thought it would be helpful to review key balance sheet and income statement trends – in 14 charts – since the European sovereign…

Global Exchanges, E-Brokers and Fin-Tech: Secular and Structural Growth Drivers Abound

We had the opportunity to meet the management of over a dozen global exchanges, e-brokers and fin-tech firms at a recent conference in New York. Global exchanges and e-brokers have benefitted from multiple secular, regulatory and cyclical tailwinds in recent years, which have resulted in strong growth trajectory and robust stock returns. The Hamilton Capital Global Financials Yield ETF (HFY) [1] has ~4% exposure to exchanges and e-brokers,…

Notes from Nashville: Titans of Growth

We recently travelled to Nashville to meet with a small group of Tennessee-based banks, all of which operate in the state capital, and half of which are holdings in the Hamilton Capital Global Bank ETF (ticker: HBG) and the Hamilton Capital U.S. Mid-Cap Financials ETF (USD) (ticker: HFMU.U). We also had an opportunity to speak with the Nashville Area Chamber of Commerce. It was a great…

U.S. Banks: The Sun’s still shining on Mid-Caps

New York City in May means a lot of traffic, but also beautiful weather and a chance to catch up with a collection of mid-cap banks from across the U.S. in one trip. In all, we sat down with 8 executive teams, primarily from banks operating in the U.S. Sunbelt (i.e., from California to Florida), including 7 owned by the Hamilton Capital U.S. Mid-Cap Financials ETF…

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