Lenahuat wrote on 29 Nov in the Financial Industry wrote:Least we all forget this : Many global banks will have to raise their capital to meet new Basel requirements by end 2010.
From Bloomberg a few days ago:
http://www.bloomberg.com/apps/news?pid= ... Z18gbjYM3I
Hi Aspellian
Now to answer your post about the SSE and HSI.
From Jan 2010, I had negative sentiments towards the Chinese banks and property counters, all heavyweights in the SSE.
The reasons were 2 folds:-
(a) increasing demand for Chinese banks to raise their capital ratios as above. The Chinese have pretty notorious NPLs.
(b) as the Chinese government pumped excessive yuan to counter the global financial crisis, I knew the Chinese will re-allocate from equities to properties. The Chinese property tycoons adopt high profiles and so draw much envy. In a way it was self-serving as it fueled demand for their properties. Moreover, leakages because of corruption would be serious. Far too many provincial govts depend on land sales to pad their budgets and officials their private pockets.
Regarding my negative sentiments towards the property counters (heavyweights in the SSE), I've been posting my thoughts about runaway property prices challenging the stability of the Chinese Communist Party. I have no doubt that the heavy sledgehammer will come down on property speculation. IMHO some 50 of the purchases in the Tier 1 cities are speculative. I once watched a ifeng documentary that bespeaks of how the property sector affects some 56 upstream and downstream industries
How long would this weakness in the SSE last?
Well, pretty long. I think the CCP knew that they had been making too many U-turns to tame the property market, invariably due to the great uncertainty of the global financial crisis. Now that the worst is behind them, they will execute their resolve firmly. Secondly, it's easy to liquidate equites to enter properties. But more difficult to exit properties.
I'll give you my 2 cents' worth abt the future relationship of SSE and HSI in another post some days later.
There you have my 2 cents worth of my view on SSE.
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