No wonder the Wall Street Journal printed an article headlined ‘China is the Real Sick Man of Asia’ with the strapline ‘Its financial markets may be even more dangerous than its wildlife markets.’ The nub of the article: ‘Given the accumulated costs of decades of state-driven lending, massive malfeasance by local officials in cahoots with local banks, a towering property bubble, and vast industrial overcapacity, China is as ripe as a country can be for a massive economic correction. Even a small initial shock could lead to a massive bonfire of the vanities as all the false values, inflated expectations and misallocated assets implode.’ China expelled three WSJ journalists for that report. … [Read more...] about Moneycontrol Pro Weekender: The sick man of Asia
Did expectations of farm loan waivers lead to a rise in loan defaults by farmers? The Reserve Bank of India's Financial Stability Report says that gross non-performing assets in agricultural bank loans went up from around 5 percent of advances to the sector in March 2017 to 8.4 percent by September 2018. That's a rather steep deterioration. The stressed assets ratio in agriculture now stands at 8.6 percent. … [Read more...] about 100-Word Take | Loan waivers come at a time when bad loans in the agriculture sector are rising
For non-PCA public sector banks, their share of operational risk capital is 43.3%, also lower than their share of frauds which is 53%. In sharp contrast, private sector banks and foreign banks account for 28.9% and 8.9% respectively of total operational risk capital, well above their share of frauds. … [Read more...] about Quick Take | With so many frauds in PCA banks, why take the risk of allowing them to lend?
The report, however, has as its baseline a current account deficit of 2.1 percent of GDP in the second half of FY19, but that deficit increases to 3.4 percent of GDP in the first half of FY20, in the baseline scenario. What’s more, this is expected to happen despite a projected improvement in the merchandise exports to GDP ratio from 12.5 percent in the second half of FY19 to 12.7 percent in the first half of FY20. The report doesn’t say why the RBI foresees such a sharp rise in the current account deficit. Perhaps they fear a rise in crude oil prices or more imports as economic growth improves and investment demand rises. … [Read more...] about Quick Take | Decoding FSR fine print: RBI unlikely to change policy rate till first half of FY20
Disclosure: Narnolia Financial Advisors/Analyst (s) does/do not have any holding in the stocks discussed but these stocks may have been recommended to clients in the past. Clients of Narnolia Financial Advisors Ltd. may be holding aforesaid stocks. The stocks recommended are based on our analysis which is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. … [Read more...] about ‘Nifty has a strong base around 12,000, but downside seen in Bank index’