Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (67442)	10/21/2010 3:56:02 PM
From: elmatador	Respond to of 217835

called financial sector to speed up expansion overseas in a strong sign that Beijing is considering allowing banks to resume offshore mergers and acquisitions. Yes! Bring tis money! Spread it copiously and com gusto! Chinese bank chief urges push overseas By Jamil Anderlini in Beijing Published: October 21 2010 19:23 \| Last updated: October 21 2010 19:23 The chairman of one of China’s biggest state lenders has called on the country’s financial sector to speed up its expansion overseas in a strong sign that Beijing is considering allowing banks to resume offshore mergers and acquisitions. Xiao Gang, of the Bank of China, said in an essay published on Thursday that the post-financial crisis environment provided excellent opportunities for expansion, calling this an “inevitable trend”. “The financial institutions devastated by the global crisis still need time to recover,” Mr Xiao wrote. “[Chinese] banks that have the ability should hasten their pace in ‘going abroad’ and increase their international competitiveness.” Renewed interest in acquiring overseas institutions would mark a sharp policy change in Beijing, which virtually banned offshore mergers and acquisitions by Chinese financial groups as the crisis broke. The ban followed a flurry of activity in late 2007 when Chinese state companies and investors made ill-fated investments in western counterparts, including ABN Amro, Fortis, Citibank, Blackstone and Morgan Stanley. Mr Xiao said the banks’ offshore expansion should include acquisitions, while continuing the emphasis on organic growth to follow Chinese corporate customers into overseas markets. “China’s banking sector first formulated its international expansion strategy years ago but this process was slowed down after the financial crisis broke out,” said Guo Tianyong, director of the Chinese banking research centre at Central University of Finance and Economics. “The outbound expansion of the banks is inevitable.” Chinese lenders such as Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China are the largest in the world in terms of market capitalisation and have the biggest profits. With backing from the Chinese government – their biggest shareholder – they are expected to play a more important role in global finance, especially as large Chinese state corporations – their biggest customers – continue to seek new markets. But Beijing has told banks to avoid trying to break into western markets through big, politically sensitive deals and concentrate on developing regions. Mr Xiao echoed this line, saying banks should focus expansion on fast-growing emerging markets such as south-east Asia, the Middle East, South America, eastern Europe and Africa, where “cultural acceptance is stronger” and the banks could enjoy a competitive advantage. Separately, BoC vice-president Yue Yi was quoted by a local newspaper saying his bank planned to acquire lenders in countries in the Association of South-east Asian Nations, whose members include Indonesia, Vietnam and Malaysia. Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. Print articleEmail articleClip this articleOrder reprints

To: KyrosL who wrote (67442)	10/21/2010 6:34:33 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217835

you can see that the understanding actually is that all should be poor so that team usa can be rich such is the true state of the world the journey to teotwawki shall be very interesting may well be biblical in the mean time, just in in-tray, per GREED n fear · The near term prospect for stocks clearly hinges on whether the Fed positively surprises risk seekers at its 2-3 November FOMC meeting. This will in part depend on market action in the interim, most particularly foreign exchange market action. GREED & fear’s guess is that the risk is that the Fed announcement disappoints by being at least somewhat incremental in nature. · The practical conclusion for investors is that it now makes sense to start to take some tactical profits, or at least put a hedge on long-term equity positions. The more commodity prices surge as a consequence of QE discounting, the bigger the threat that trend poses to the profit margins of companies in the West. · Still GREED & fear would stress that any correction in Asia on the back of weakness in Wall Street is just a bull market correction since the very fact of a correction in equities will only increase the likelihood of a more aggressive form of QE given the Fed’s desire is to raise asset prices. · GREED & fear views the timing of this week’s impressively surprising rate hike in China as more political than economic. Sure, inflation has picked up and Beijing wants to signal concern. Still in the Chinese command economy interest rates are much less a tool of monetary tightening than loan quotas. · With Washington becoming ever more vocal about the need for renminbi revaluation, China has clearly decided to make the argument two ways. So with QE2 seemingly on the immediate horizon, expect China to become ever more openly critical about the next wave of quanto. America will be accused, legitimately, of threatening to destabilise Asian economies and of failing to address its structural problems. · The irony is that the latest Chinese interest rate hike could be bullish for the local stock market if it is perceived as the end of China’s current tightening cycle. As for the reason why the A-share market surged in the past two weeks, GREED & fear’s guess here is that the psychology may have changed among those with capital to deploy. · GREED & fear’s view is that the H share policy stocks will tend to follow their A share counterparts with a lag. Relative-return investors are advised to have a reasonable overweight in China to reduce the risk of a catch-up trade in the MSCI China Index this quarter. · GREED & fear will add a further 2ppts to the China overweight by shaving the overweights in India and Indonesia by 1ppt each. But GREED & fear is not going to make a major overweight bet on China since the view here is that this would only be justified in the context of a full-scale easing which is clearly not happening. · The potential for a further rally in the China policy stocks is clearly a consequence of the schizophrenic nature of the Chinese market where the seemingly policy constrained SOEs have been trading at significant discounts to the perceived high growth private sector stocks. Still the view here is that long-term outperformance will be achieved by owning the right private sector stocks. · GREED & fear would admit that more actions are coming sooner or later by Asian policymakers to try and discourage capital inflows and the like if the trend remains against the US dollar. Still GREED & fear thinks it is way too premature to worry about capital controls and the like in the real sense of that term. Rather incremental moves will only be made after the further gains in currencies and asset values. · Such a policy context will not end the Asian bull story. Rather it will only slow down and thereby extend the path to an asset bubble. GREED & fear’s view is that it is way too premature to worry about an asset bubble in Asia. · True, Asian policymakers can crush asset bubble risk by raising interest rates aggressively and letting their currencies float. But it is unlikely in the extreme that Asian markets will be hit by such proactive tightening. In a world where US interest rates remain at zero, all sell-offs in Asian and emerging markets are buying opportunities. While asset prices in Asia are, in due course, going to become really expensive. · Singapore’s proposed property measures this week are another example of the pressures facing Asian governments. It remains the case that emerging ASEAN markets remain the least likely to come up with measures to control assets prices. GREED & fear’s view is that Thailand is the Asian market least likely to implement such controls. · There are still not the necessary sticks to force fiscal compliance in Euroland which means such compliance will not happen. GREED & fear continues to believe that the sovereign debt exposure of European banks to PIGS debt remains a systemic risk that has the potential to cause a renewed liquidity panic and resulting unwind of dollar funded risk trades. · Recent weeks have seen the emergence of a new systemic risk concern the US mortgage foreclosure crisis. This can only further postpone any hope of a US housing recovery though foreclosures will clearly decline in the short term. Please consider the environment before printing this email. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.