Investors Circle Around Chinese Banks

choi

Alex Frangos, 中国信贷扩张速度已超美国金融危机前.  Sept 9, 2013
http://cn.wsj.com/gb/20130909/chw095831.asp

, which is translated from

Alex Frangos, For China, Echoes of US Crisis; China's corporate and household credit has risen from 120% of GDP in 2008 to more than 170% today. Wall Street Journal, Sept 9, 2013.
http://online.wsj.com/article/SB ... 59053101499812.html

the first three paragraphs:

"Investors have made billions betting against economies in which debt is rising and home prices are soaring. They have had particular success targeting the banks that fund these booms.

"Right now, their target is China. Some compare China to the U.S. in 2007. Others cite Japan before the 1989 real-estate bust. China bulls acknowledge the risks but say the government has the money and expertise to defuse the problems.

"Until recently, the bears were winning the tug-of-war, pushing down the prices of Chinese banks until they were the cheapest of any major economy based on price-to-book value, a measure for how investors rate the quality of a bank's assets. But recently, the Chinese economy and markets have perked up. Chinese banks, reflected in the Hang Seng H Financial Index, have rallied 17% since July 3, even as they warned of rising bad debts and said they would likely have to raise capital.

My comment:
(a) The above piques my interest. Listed outside China (including Hong Kong), China's state banks are vulnerable to sharks. But I do not have stakes in them. So I do not care. Let's see.
(b) The report states, "Economists say quick jumps in debt—rather than absolute levels—are the determinants of future crises." This is new to me. Let's see.