China, Emerging Markets

Ryan Soh 苏祥发

Thematic (Sector/Industry)

A full translation of an article measuring the progress of deleveraging from a People's Bank of China mouthpiece website at the end of last month yields interesting results for those otherwise used to relying on intermediaries for partial summaries and interpretations.The article summarises the initial results obtained from deleveraging, acknowledges the unbalanced structure of enterprise debt, sees deleveraging as an opportunity for reform of state-owned enterprises, and contemplates the creation of a debt-to-equity swap market by 'qualified implementation agencies'. The full translation is included as an attachment.

A full translation of an article measuring the progress of deleveraging from a People's Bank of China mouthpiece website at the end of last month yields interesting results for those otherwise used to relying on intermediaries for partial summaries and interpretations.The article summarises the initial results obtained from deleveraging, acknowledges the unbalanced structure of enterprise debt, sees deleveraging as an opportunity for reform of state-owned enterprises, and contemplates the creation of a debt-to-equity swap market by 'qualified implementation agencies'. The full translation is included as an attachment.  

Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

LR Research

Macroeconomics

We can all agree that the banking sector is central to modern economies.  Balance sheets at Financial institutions may not be universally understood but they are open to scrutiny under IFRS or local GAAP.  There are some significant changes coming to IFRS for banks as the  International Accounting Standards Board moves ahead with its (misguided?) attempt to apply a market value to all assets.  IFRS9 is another step in this direction for financial institutions ( covered by <a href="https://www.smartkarma.com/profiles/12" target="_blank" data-smartkarma-citation="accounts:12">Daniel Tabbush</a> here…

We can all agree that the banking sector is central to modern economies.  Balance sheets at Financial institutions may not be universally understood but they are open to scrutiny under IFRS or local GAAP.  There are some significant changes coming to IFRS for banks as the  International Accounting Standards Board moves ahead with its (misguided?) attempt to apply a market value to all assets.  IFRS9 is another step in this direction for financial institutions ( covered by Daniel Tabbush here…

Off-Balance Sheet: China and Beyond - When to Worry

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

HNA has grown so Huge it has become a National interest, in our judgment. Its Aggressive acquisitions backed by rising leverage have raised execution as well as refinancing risks. The group's reliance on shadow banking to reach its global aspiration leads us to question the management's long-term strategy.  Questionable corporate governance makes it difficult to measure the company's willingness to pay. Though we believe HNA's importance to the Chinese economy could mean an implicit support from the central government or government-owned banks, near-term refinancing risk toward August 2019 pose asymmetric downside risk and we are UNDERWEIGHT on the SANYPH and HONAIR complexes as well as GRCHAR 19s.

HNA has grown so Huge it has become a National interest, in our judgment. Its Aggressive acquisitions backed by rising leverage have raised execution as well as refinancing risks. The group's reliance on shadow banking to reach its global aspiration leads us to question the management's long-term strategy.  Questionable corporate governance makes it difficult to measure the company's willingness to pay. Though we believe HNA's importance to the Chinese economy could mean an implicit support from the central government or government-owned banks, near-term refinancing risk toward August 2019 pose asymmetric downside risk and we are UNDERWEIGHT on the SANYPH and HONAIR complexes as well as GRCHAR 19s.

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Other asset growth is surging at China’s banks. It is a line item often associated with assets of limited liquidity, impossible to value, or not easy to fit into a more benign classifications. In the Asian Financial Crisis this was an area of interest: this account included interest in suspense, which was linked to delinquent loans.  Even on a good day, China’s granular data is not wholly clear, so data here is murky. Save to say, that with these so-called other assets now account for more than…

Other asset growth is surging at China’s banks. It is a line item often associated with assets of limited liquidity, impossible to value, or not easy to fit into a more benign classifications. In the Asian Financial Crisis this was an area of interest: this account included interest in suspense, which was linked to delinquent loans.  Even on a good day, China’s granular data is not wholly clear, so data here is murky. Save to say, that with these so-called other assets now account for more than…

Other Assets May Conceal Bad Loans: China

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent. There remains considerable concern with ‘overdue loans’ and the distribution of NPLs, while China corporate financials remain frail. Aside from this, we must recognize that banks' credit costs as a proportion of loans does suggest a nasty and prolonged NPL cycle. Perhaps this is why banks’ market capitalisation as a percentage of assets continues to…

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent. There remains considerable concern with ‘overdue loans’ and the distribution of NPLs, while China corporate financials remain frail. Aside from this, we must recognize that banks' credit costs as a proportion of loans does suggest a nasty and prolonged NPL cycle. Perhaps this is why banks’ market capitalisation as a percentage of assets continues to…

China

Industrial and Commercial Bank of China Limited provides banking services. The Company offers deposits, loans, fund underwriting, foreign currency settlement, and other services. Industrial and Commercial Bank of China provides its services to individuals, enterprises, and other clients.

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ICBC (H) (1398 HK)

Deleveraging in China: A Translation

A full translation of an article measuring the progress of deleveraging from a People's Bank of China mouthpiece website at the end of last month...

Ryan Soh 苏祥发

Off-Balance Sheet: China and Beyond - When to Worry

We can all agree that the banking sector is central to modern economies. Balance sheets at Financial institutions may not be universally...

Mark Artherton

HNA: Huge,National, & Aggressive

HNA has grown so Huge it has become a National interest, in our judgment. Its Aggressive acquisitions backed by rising leverage have raised...

Bondcritic

Other Assets May Conceal Bad Loans: China

Other asset growth is surging at China’s banks. It is a line item often associated with assets of limited liquidity, impossible to value, or not...

Daniel Tabbush

China Banks: We Must Not Be Complacent

While non-performing loan (NPL) ratios have not blown out for China’s banks nor has profit imploded, we would caution against becoming complacent....

Daniel Tabbush

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