Tuesday, May 19, 2009

Some Headings from Shanghai Daily yesterday - and US banks...

When I took my flight from Hong Kong to Shanghai yesterday, I found some headlines on Shanghai daily quite interesting.

Examples like Shanghai ship hub requires more financial facilities for survival and competition against Singapore during this ice age and steel industries had a total capacity of 660million tonnes with 160million tonnes extra than 2008 total actual output (which also includes the inventory at the dealers). They are very much related to the upper and middle stream of the supply chain, and can usually reflect the future sales on retail - the very end of the supply chain.

From the current status, nothing particularly exciting has released.

Over-capacity has been putting a heavy burden not only on the producers but also on the banks/financial institutions that are supporting them. It can drain the blood of the bank. It also means the money printing measures cannot reach the target.

Yet afterall, funds, banks, and financial institutions still need to make profit for their own bread and butter. They will be more eagered to pick money from others' pockets. This is the recent rebound and the aftermath.

3 banks in US, Goldman Sachs, JP Morgan and Morgan Stanley, are rumored to return a total of 25billion of the TARP. It seems like after eliminating their rivals, like the late Bear Stern and Merril Lynch, and the still existing BOA, Citi, AE, Furgo, etc, these 3 started to feel secure on their leadership and now tested water.

In case they really started the action, it will grant them some branding advantages and can further rob the customers away from their competitors. The other banks may in turn suffer from further clients withdrawal and brain drain.

If the action does not take place, it will not damage too much on those 3 banks - afterall, it is only a rumor.

The US government's aim is also a crucial factor. It will target on restructuring the banking industry, and it will need good "students" to follow. These 3 banks, after survival, may become "good models" to the other banks, assuming they accept (or even participate on the making of) the new codes and regulations on banking.

Consequently US banking industry may stablize for a while - provided that black swans will not fly out from property market again. Which possibly will.


Felix Kan said...

The next Black Swan... credit card?

海豚 said...

David brother,

Do you know the coming 'Posion Assets Buying Scheme' (sorry I can't recall the extact wordings) including the Alt-A and ARM mortgage ? What is your professional opion on this matter ?

Many many thanks.