The World of Banking is Becoming Ever More Polarized

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

Australia Financials / Thematic (Sector/Industry)

The financial crisis left a deafening echo in investors' ears.The ingredients of any financial bubble are well known: Easy credit availability, poor regulatory oversight, and bloated financial institutions all combine to create recessions and financial crises. Instead of rehashing past failures, we have developed our own Financial Depth Index, which relies on an innovative approaches to identifying countries and banking systems that face a high level of risk stemming from lopsided financial development. We also single out countries and systems where corporate and household debtors have reached a tipping point in their financial obligations.Beyond the sheer size of the credit in a specific economy, we urge investors to slice and dice the components of financial depth, as their correlation with economic growth and crises varies widely. For example, investors have focused on the generic credit/GDP measurement as a crisis indicator, but we believe the debt service ratio of households and corporations is more important. This indicator reliably detects the tipping point when an excessive debt burden will trigger cutbacks in consumption and investments, forcing an economy into a recession.Our analysis demonstrates that China and Brazil are on the verge of potential recessions and financial crises. We prefer exposure to Australia, Mexico, and the United States, which do not have excessive levels of credit or financial depth.Analysts: Sebastien Pigeon, Stephen Ellis, Tim Puls &amp; Michael Wu

The financial crisis left a deafening echo in investors' ears.The ingredients of any financial bubble are well known: Easy credit availability, poor regulatory oversight, and bloated financial institutions all combine to create recessions and financial crises. Instead of rehashing past failures, we have developed our own Financial Depth Index, which relies on an innovative approaches to identifying countries and banking systems that face a high level of risk stemming from lopsided financial development. We also single out countries and systems where corporate and household debtors have reached a tipping point in their financial obligations.Beyond the sheer size of the credit in a specific economy, we urge investors to slice and dice the components of financial depth, as their correlation with economic growth and crises varies widely. For example, investors have focused on the generic credit/GDP measurement as a crisis indicator, but we believe the debt service ratio of households and corporations is more important. This indicator reliably detects the tipping point when an excessive debt burden will trigger cutbacks in consumption and investments, forcing an economy into a recession.Our analysis demonstrates that China and Brazil are on the verge of potential recessions and financial crises. We prefer exposure to Australia, Mexico, and the United States, which do not have excessive levels of credit or financial depth.Analysts: Sebastien Pigeon, Stephen Ellis, Tim Puls &amp; Michael Wu

Sumitomo Mitsui Financial Group (8316 JP)

Mitsubishi UFJ Financial (MUFG) (8306 JP)

Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Sumitomo Mitsui Financial Group (Sponsored Adr)

Shanghai Pudong Development Bank Co. (600000 CH)

Mitsubishi UFJ Financial (MUFG) ADR (MUFG US)

China Pacific Insurance (Group) Co., (601601 CH)

Financial Services Observer. A Polarized World: Credit Bubbles in Emerging and Developed Economies