how did china build its infrastructure ?

[WAR-rior]

I think he's trying to say that India's banking system is geared strongly toward equities and investment, essentially less restrictions than China and higher capital utilization because state own banks are limited by the government. In all he's trying to say that Indian banks are more profitable given the same amount of capital.


BUT with higher capital utilization, comes higher risk and that is just something China isn't interested in. At a time where China wants to protect itself from further shocks of financial disasters coming out of the US and now Europe. Higher risk is just not worth it for satisfying the share holders.

NOW THAT MAKES SENSE !

Other members are trying to post the comparative market capitalization and profits but that was never the argument. do u guyz think i wud even care to bring that as an argument.

My argument is as simple as it can get, TODAYS INVESTOR IS MORE ATTRACTED TOWARDS INDIAN AND HONG KONG MARKET..... (their index says the whole story whereas we all know where shanghai index is.)

i agree that with time, as market capitalization increases, risk will increase and hence it will be interesting to see how banking sector will pay its DIVIDENDS ! but as for now, an average investor will be coming to either INDIA or HONG KONG......

Hope the confusion is clear !

Thanks !

 

[Martian2]

As far as I know, the mainstream Western business press (e.g. Businessweek, Forbes, etc.) constantly report on the performance of China's banks and ICBC in particular. An Indian bank is almost never mentioned, because they are too small. However, you are free to believe whatever you like.

But consider this:

Paulson Says That Chinese Banks Were `Pillars of Strength' During Crisis - Bloomberg

"Paulson Says That Chinese Banks Were `Pillars of Strength' During Crisis
By Bloomberg News - Apr 9, 2010 9:17 PM ET

Chinese banks were “pillars of strength” during the financial crisis, former U.S. Treasury Secretary Henry Paulson said today at the Boao Forum for Asia being held in the southern province of Hainan.

“Those banks and the loans that those banks made, more than a trillion dollars worth, was a critical part of the Chinese government’s stimulus program,” Paulson said.

To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net"

ICBC, BOC Profits May Signal Strength in China’s Bank Industry - BusinessWeek

"ICBC, BOC Profits May Signal Strength in China’s Bank Industry
August 24, 2010, 12:26 PM EDT
By Bloomberg News

Aug. 25 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. may report profit growth of at least 15 percent tomorrow, helping bolster confidence in the country’s banks amid tighter government scrutiny of lending.

ICBC, the world’s largest bank by market value, may post a 29 percent increase in second-quarter income, according to the average estimate among 10 analysts surveyed by Bloomberg. Bank of China is expected to post profit growth of 15 percent for the period. Both lenders are based in Beijing.

Chinese bank shares have slipped this year as the industry regulator clamped down on loans to local-government financing vehicles and property speculators, and ordered them to move off- balance-sheet debts back onto their books. Construction Bank Corp. on Aug. 22 said those measures won’t have any meaningful impact on its earnings or finances.

“The market is trading banks down this year because of fears of local government loans, off-balance-sheet loans and property loans,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. Based on the outlook for banks’ earnings, “this is a tremendous story,” he said.

ICBC may post profit of 40.25 billion yuan ($5.9 billion) for the three months to June 30, based on subtracting first- quarter figures from analysts’ estimates for six-month earnings. Bank of China, the country’s third largest by assets, may have second-quarter net income of 26.1 billion yuan.

Stock, Bond Sales

JPMorgan Chase & Co., the biggest U.S. bank by market capitalization, posted profit of $4.8 billion for the second quarter. Citigroup Inc. earned $2.7 billion.

Shares of ICBC have dropped 13 percent in Hong Kong this year, trimming its market value to $212 billion. Bank of China has slipped 4.8 percent, matching the decline in the benchmark Hang Seng Index and valuing the company at $129 billion.

ICBC, Bank of China and Construction Bank have announced plans to raise a combined $30 billion selling shares and bonds convertible into stock as global regulators push for stronger capital buffers to avert another financial crisis.

Construction Bank Chairman Guo Shuqing said this week China won’t have a subprime loan crisis similar to that of the U.S., because home mortgages account for a relatively small share of gross domestic product.

Credit Suisse Group AG analysts Sanjay Jain and Anand Swaminathan said Aug. 20 they prefer Chinese banks over other financial companies in Asia because of “compelling” valuations and as they “expect some resolutions to the various risks that have plagued the stocks for some time.” They recommended investors add ICBC and Construction Bank shares.

ICBC, Construction Bank and Bank of China trade at an average 1.9 times estimated end-2010 book value and about 10 times expected full-year earnings, according to data compiled by Bloomberg. The Hang Seng trades at 13.4 times forecast earnings.

“A low P/E reflects the market’s lack of conviction in future earnings growth,” JPMorgan analysts led by Samuel Chen wrote in a note this month. They predicted earnings growth of at least 20 percent over the next two years on expansion in assets, wider loan margins and “solid fee income growth.”

--Luo Jun. Editors: Philip Lagerkranser, Russell Ward

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net"

 

[Martian2]

NOW THAT MAKES SENSE !

Other members are trying to post the comparative market capitalization and profits but that was never the argument. do u guyz think i wud even care to bring that as an argument.

My argument is as simple as it can get, TODAYS INVESTOR IS MORE ATTRACTED TOWARDS INDIAN AND HONG KONG MARKET..... (their index says the whole story whereas we all know where shanghai index is.)

i agree that with time, as market capitalization increases, risk will increase and hence it will be interesting to see how banking sector will pay its DIVIDENDS ! but as for now, an average investor will be coming to either INDIA or HONG KONG......

Hope the confusion is clear !

Thanks !

You can make a subjective claim that investors are more attracted to the Indian market. That is virtually impossible to disprove. "Attracted" can mean almost anything.

However, it is incorrect to claim that India has a more "powerful...banking and finance" sector than China. Those are your words. No one will believe that claim.

"Power" in the banking and finance sector can be easily measured by annual profits or market capitalization. Indeed, that is why the banking sector created the charts that I posted to compare the world's largest twenty banks. Instead, you decided to ignore the widely-accepted standards and made up your own. That is just weird.

 

[CardSharp]

well dude, its about the HOLISTIC PERFORMANCE. my point was only specific to investments which is where i used it 1st in earliest post.

ur argument comes on the basis of indian banks in top 10-15 banks of the world.......mind u, its only coz of your booming construction sector. but what bout risk portfolios, trust of investors, etc etc...

CHINESE BANKS ARE THE BIGGEST DEFAULTERS OF LOANS ! now what does that means to an investor's confidence?

as per your logic, tell me how many rich people do china have in top 20 ?

Then compare it with indian riches.....

THEN IT WILL MEAN INDIAN PEOPLE ARE MORE RICH !

All this means is there is more inequality in India (since China sure as hell isn't poorer) and that governments serves rich people's interest by letting banks carry a higher portfolio risk. A higher portfolio risk means higher profits in the good times and a risk of losing regular customer's money in a crisis.

 

[below_freezing]

well dude, its about the HOLISTIC PERFORMANCE. my point was only specific to investments which is where i used it 1st in earliest post.

ur argument comes on the basis of indian banks in top 10-15 banks of the world.......mind u, its only coz of your booming construction sector. but what bout risk portfolios, trust of investors, etc etc...

CHINESE BANKS ARE THE BIGGEST DEFAULTERS OF LOANS ! now what does that means to an investor's confidence?

as per your logic, tell me how many rich people do china have in top 20 ?

Then compare it with indian riches.....

THEN IT WILL MEAN INDIAN PEOPLE ARE MORE RICH !

banks don't default. we have nonperforming loans, more than the rest. that's fine though, since the overall volume of loans is so high and the nonperforming loans can be subsidized by the government. from a straight banking viewpoint, nonperforming loans are terrible, but ICBC and CCB aren't straight banks. they're government offices that happen to own a bank. a nonperforming loan is the equivalent of a stimulus.

 

[WAR-rior]

As far as I know, the mainstream Western business press (e.g. Businessweek, Forbes, etc.) constantly report on the performance of China's banks and ICBC in particular. An Indian bank is almost never mentioned, because they are too small. However, you are free to believe whatever you like.

But consider this:

Paulson Says That Chinese Banks Were `Pillars of Strength' During Crisis - Bloomberg

"Paulson Says That Chinese Banks Were `Pillars of Strength' During Crisis
By Bloomberg News - Apr 9, 2010 9:17 PM ET

Chinese banks were “pillars of strength” during the financial crisis, former U.S. Treasury Secretary Henry Paulson said today at the Boao Forum for Asia being held in the southern province of Hainan.

“Those banks and the loans that those banks made, more than a trillion dollars worth, was a critical part of the Chinese government’s stimulus program,” Paulson said.

To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net"

ICBC, BOC Profits May Signal Strength in China’s Bank Industry - BusinessWeek

"ICBC, BOC Profits May Signal Strength in China’s Bank Industry
August 24, 2010, 12:26 PM EDT
By Bloomberg News

Aug. 25 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. may report profit growth of at least 15 percent tomorrow, helping bolster confidence in the country’s banks amid tighter government scrutiny of lending.

ICBC, the world’s largest bank by market value, may post a 29 percent increase in second-quarter income, according to the average estimate among 10 analysts surveyed by Bloomberg. Bank of China is expected to post profit growth of 15 percent for the period. Both lenders are based in Beijing.

Chinese bank shares have slipped this year as the industry regulator clamped down on loans to local-government financing vehicles and property speculators, and ordered them to move off- balance-sheet debts back onto their books. Construction Bank Corp. on Aug. 22 said those measures won’t have any meaningful impact on its earnings or finances.

“The market is trading banks down this year because of fears of local government loans, off-balance-sheet loans and property loans,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. Based on the outlook for banks’ earnings, “this is a tremendous story,” he said.

ICBC may post profit of 40.25 billion yuan ($5.9 billion) for the three months to June 30, based on subtracting first- quarter figures from analysts’ estimates for six-month earnings. Bank of China, the country’s third largest by assets, may have second-quarter net income of 26.1 billion yuan.

Stock, Bond Sales

JPMorgan Chase & Co., the biggest U.S. bank by market capitalization, posted profit of $4.8 billion for the second quarter. Citigroup Inc. earned $2.7 billion.

Shares of ICBC have dropped 13 percent in Hong Kong this year, trimming its market value to $212 billion. Bank of China has slipped 4.8 percent, matching the decline in the benchmark Hang Seng Index and valuing the company at $129 billion.

ICBC, Bank of China and Construction Bank have announced plans to raise a combined $30 billion selling shares and bonds convertible into stock as global regulators push for stronger capital buffers to avert another financial crisis.

Construction Bank Chairman Guo Shuqing said this week China won’t have a subprime loan crisis similar to that of the U.S., because home mortgages account for a relatively small share of gross domestic product.

Credit Suisse Group AG analysts Sanjay Jain and Anand Swaminathan said Aug. 20 they prefer Chinese banks over other financial companies in Asia because of “compelling” valuations and as they “expect some resolutions to the various risks that have plagued the stocks for some time.” They recommended investors add ICBC and Construction Bank shares.

ICBC, Construction Bank and Bank of China trade at an average 1.9 times estimated end-2010 book value and about 10 times expected full-year earnings, according to data compiled by Bloomberg. The Hang Seng trades at 13.4 times forecast earnings.

“A low P/E reflects the market’s lack of conviction in future earnings growth,” JPMorgan analysts led by Samuel Chen wrote in a note this month. They predicted earnings growth of at least 20 percent over the next two years on expansion in assets, wider loan margins and “solid fee income growth.”

--Luo Jun. Editors: Philip Lagerkranser, Russell Ward

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net"

well frankly u dont need to show me facts bout ICBC, Boc and CB.
DOnt u think i might be knowing nout them !

my question to u is.....why is shanghai index not fairing ?

why is investment in china thru hang seng and not shanghai composite ?

now i might be missing some knowledge here...if u have some insight plz contribute !

 

[CardSharp]

banks don't default. we have nonperforming loans, more than the rest. that's fine though, since the overall volume of loans is so high and the nonperforming loans can be subsidized by the government. from a straight banking viewpoint, nonperforming loans are terrible, but ICBC and CCB aren't straight banks. they're government offices that happen to own a bank. a nonperforming loan is the equivalent of a stimulus.

None performing loans were a problem in the 90's not really now since the SOE are being more profitable (thanks to Zhu who let the bad ones die, however painful that may have been)

 

[WAR-rior]

You can make a subjective claim that investors are more attracted to the Indian market. That is virtually impossible to disprove. "Attracted" can mean almost anything.

However, it is incorrect to claim that India has a more "powerful...banking and finance" sector than China. Those are your words. No one will believe that claim.

"Power" in the banking and finance sector can be easily measured by annual profits or market capitalization. Indeed, that is why the banking sector created the charts that I posted to compare the world's largest twenty banks. Instead, you decided to ignore the widely-accepted standards and made up your own. That is just weird.

well thats acceptable.....but my papers were influenced by research by christian roland.

u can please go to my previous post and see the parameters i ahve used......HOPE U CAN POINT OUT THE FLAWS IN THOSE PARAMETERS !

Thanks !

 

[Martian2]

well frankly u dont need to show me facts bout ICBC, Boc and CB.
DOnt u think i might be knowing nout them !

my question to u is.....why is shanghai index not fairing ?

why is investment in china thru hang seng and not shanghai composite ?

now i might be missing some knowledge here...if u have some insight plz contribute !

You are now making a different claim. The Indian Sensex may outperform the Shanghai Index or the Hang Seng. However, I would point out that the Taipei Exchange may have outperformed all three. However, I would not make the claim that Taiwan has a more "powerful banking and finance" sector than China or India.

Anyway, I think that I've said more than I wanted on this topic. I'm out.

 

[CardSharp]

My argument is as simple as it can get, TODAYS INVESTOR IS MORE ATTRACTED TOWARDS INDIAN MARKET..... (their index says the whole story whereas we all know where shanghai index is.)

Also this is just not true. There's a lot more factors that influence where people invest. You have to keep in mind most of the money isn't going into investment in banks, there are loads of ways to invest and people are mainly attracted to profits and growth, both of which China has in spades.

and it's true while India has accelerated its growth to 8-9% this is the first year that it's done so, and while China has maintained this rate of growth for the past 30 years. If you think about investor confidence, think who they are going to be more confident about.


(also can someone bring up the numbers for FDI as a comparison?)

 

[below_freezing]

None performing loans were a problem in the 90's not really now since the SOE are being more profitable (thanks to Zhu who let the bad ones die, however painful that may have been)

sometimes you can't be profitable. State Grid is taking a 6% loss every year while it's giving away free electricity to rural villages. if it was a private company no way in hell will they do this but then the villagers won't get electricity and will be stuck in the feudal age.

 

[Abhishek_]

and it's true while India has accelerated its growth to 8-9% this is the first year that it's done so,

just adding a snippet to dispel the mis-info.
year--Growth rate
2005--9.0
2006--9.7
2007--9.1

so not exactly the first time. carry on the discussion, its quite interesting

 

[Martian2]

Also this is just not true. There's a lot more factors that influence where people invest. You have to keep in mind most of the money isn't going into investment in banks, there are loads of ways to invest and people are mainly attracted to profits and growth, both of which China has in spades.

and it's true while India has accelerated its growth to 8-9% this is the first year that it's done so, and while China has maintained this rate of growth for the past 30 years. If you think about investor confidence, think who they are going to be more confident about.


(also can someone bring up the numbers for FDI as a comparison?)

I can do that for you. China had $90-95 billion in FDI last year. India had $34.6 billion.

gulfnews : FDI in China climbs for 12th month
"Aug 18, 2010 ... FDI in China climbs for 12th month ... China was the second-largest recipient of FDI last year, attracting $95 billion, behind the US with ..."

Shanghai Daily | ???? -- English Window to China News
"Nov 6, 2010 ... FOREIGN direct investment in China may rise to US$100 billion this year from US$90 billion last year, a senior official said at a forum in ..."

http://www.businessworld.in/bw/2010_07_22_FDI_To_India_Fell_By_58_Bn_In_2009.html

"FDI To India Fell By $5.8 Bn In 2009
22 Jul 2010
M. Rajendran

Foreign Direct Investment into India fell by $5.8 billion in 2009, despite India entering the list of top 10 global FDI destinations.

FDI flows to South Asia experienced their sharpest decline since 2001. India attracted $34.6 billion in FDI during 2009 as against $40.4 billion in 2008. India moved up to the 9th position in attracting FDI in 2009 from 13th in 2008."

 

[CardSharp]

sometimes you can't be profitable. State Grid is taking a 6% loss every year while it's giving away free electricity to rural villages. if it was a private company no way in hell will they do this but then the villagers won't get electricity and will be stuck in the feudal age.

That's my point. Keeping NPL on the balance sheet allows China a certain bit of tactical flexibility, whereas a western bank would dump the loan faster than a crazy girlfriend, China can take the long view and wait for some of these loans that are having deeper and secondary market effects.

 

[CardSharp]

just adding a snippet to dispel the mis-info.
year--Growth rate
2005--9.0
2006--9.7
2007--9.1

so not exactly the first time. carry on the discussion, its quite interesting

duly noted the last numbers I checked didn't extend into very recent years. All I remember was it bouncing around the 5% mark in the early 2000's.

Still my point stands, higher investor confidence in China and an increasingly bullish business community on China. Soros, Buffet, and of course Rogers as always.