SPAIN - BANKING SYSTEM WORRIES

Graham Summers, Chief Market Strategist at Phoenix Capital Research came up with with this interesting chart in his Gains Pains and Capital Newsletter on May 5, 2012.

Here are some more details of the Spanish Banking System in his Newsletter,

Spain is about to enter a full-scale Crisis.

 A few facts about Spain:

 *    Total Spanish banking loans are equal to 170% of Spanish GDP.

 *    Troubled loans at Spanish Banks just hit an 18-year high.

 *    Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February).

Overall, I remain wary of news that the situation over there is improving. Unlike its smaller neighbours like Greece, Spain is a large economy whose stability is important for the long term survival of the EURO.

Watch this space!

Indian Banking - Cases of Debt Recasts and NPAs

Here is a Newspaper Article on  "Rising cases of debt recasts & NPAs" by Abhijit Lele & Ranju Sarkar, from the Business Standard Newspaper in Mumbai.

Link:
Rising cases of debt recasts & NPAs ( check out the graphics pdf for charts and more info)
I've also attached adcanned copy of the article below

As some over leveraged companies work their way out of some rather sticky situations, it's another reminder to investors to check exactly how leveraged some of the companies they invest in really are.

High interest rates in India coupled with the reluctance of the inflation battling "Reserve Bank of India", the country's Central bank to lower interest rates; will mean that we could be in for some more restructuring of NPAs going forward.

GLOBAL BANKING - NO RECOVERY YET.

The ever articulate David Rosenberg has continuously maintained that the Great Recession of 2008, was no garden variety recession.

 According to him a combination of deleveraging, demographics and deflation  - the result of a post credit bubble collapse has meant that despite record stimulus packages and accounting rule changes and Central Bank Balance Sheet expansion; we are still a long way from an end to the crisis.

The Charts below clearly demonstrate how the stock prices of large multinational banks have fared during the post bubble bust scenario. 


As worries of the debt crisis in Europe continue unabated and market watchers are eagerly hoping for a QE3 to boost global equities; it's quite clear from the stock prices below that the crisis is far from over.

Canadian Banks dominate World's 10 Strongest Banks

Canadians Dominate World's 10 Strongest Banks

This is a Bloomberg link that makes for an interesting read.

For readers in Asia, we tend to be more familiar with the 'Too Big To Fail' American and European Banks. These include the likes of JP Morgan, Deutsche Bank, Bank of America etc.

However, prudent risk management, conservative lending policies and a strict regulatory policy have enabled Canadian Banks to grow even as Banks elsewhere struggled post 2008.



"CIBC (CM) was No. 3 in Bloomberg Markets’ second annual ranking of the world’s strongest banks, followed by three of its Canadian rivals: Toronto-Dominion Bank (TD) (No. 4), National Bank of Canada (NA) (No. 5) and Royal Bank of Canada (No. 6), the country’s largest lender. Bank of Nova Scotia ranked 18th, and Bank of Montreal was 22nd. "


The Canadian Dollar (CAD) too has been a currency that has outperformed over the last decade.
A stable Banking System and global investors searching for higher yielding currencies have contributed to the outperformance in the CAD.

STUDENT LOAN DEBT

Here’s what we do know about student loan debt: it’s roughly $1 trillion in size, greater than either auto or credit-card debt and second only to mortgage debt in the U.S.

Source: http://www.cnbc.com/id/47171658

Here are a few more links:

http://online.wsj.com/article/SB10001424052702303978104577364120264435092.html

http://www.reuters.com/article/2012/04/26/us-usa-colleges-debt-idUSBRE83O1JL20120426

http://www.bankruptcylawnetwork.com/is-student-loan-debt-the-next-debt-crisis-well-duh/

http://www.bloomberg.com/news/2012-04-26/how-college-students-can-work-off-their-1-trillion-debt.html

Well it's not getting a lot of coverage in the International Business Media (thanks to the Eurozone Debt Crisis perhaps), but  even CNBC has set up a page for it now.

http://www.cnbc.com/id/40682477/

Watch this space. A weak US job market  ( especially unemployed/underemployed graduates) will only add to the woes of US Student Loan Debt - Lenders!

INDIAN ECONOMY AND INDIAN EQUITIES - STORMY WEATHER UP AHEAD

The Bullish Bear Blog has always been a long term bull as far as the Indian Economy and Equity Markets are concerned.

However, the ongoing policy paralysis over the last couple of years, further compounded by the scams and corruption issues have started to make even ardent bulls like myself a bit nervous and uncertain of India's long term outlook.

Sectors  that need a quick resolution to underlying issues include

1. Power Sector -  Coal Linkage issues have left many newly built/under construction power plants stranded. Troubles with increased royalty on imported indonesian coal has resulted in UMPP plants like the Tata Power plant at Mundra operating well below full capacity.

2. Fossil Fuels  - 

Oil and Gas - Pipeline tarrif pricing, Gas price policies, Deregulation of prices of retail fuels such as Petrol, Diesel, Kerosene, and LPG

Coal Sector - Disputes over coal block allocations, pricing of coal and arm twisting of the Coal behemoth Coal India - to sign Fuel Supply Agreements with power producers has added to the ongoing chaos in the sector.

In the long run, markets will have to move towards a market oriented pricing scheme, as the current system of subsidising fuels and end user prices is neither sustainable or viable.

3. Fertilizer Policy - Lack of proper implementation of policies has resulted in soil imbalances as farmers step up Urea usage as a substitute for more expensive DAP (Phosphate based fertilizers)

3. Telecom Sector- 2G spectrum scam and now pricey 2G auction base prices have left both investors and operators uncertain about fresh investment in the sector.

In light of the above issues, I think Akash Prakash's article in the Business Standard Newspaper Mumbai - 27-04-2012 is an excellent read, and perfectly sums up the current predicament of the every prospective and invested Indian Equity Investor.

MUTUAL FUNDS IN INDIA - AUM -City wise contribution

Here is a good article on the Assets under Management (AUM) by Mutual Funds in India, giving a city-wise contribution. ( BUSINESS STANDARD NEWSPAPER, MUMBAI - 19/04/2012)

Clearly, there is a lot of growth potential  in this underpenetrated market.
So far, just Mumbai and New Delhi make significant contributions to the Assets under Management, with Mumbai contributing the major share.

Watch this space!

INDIA : DIRECT & INDIRECT TAXES

Here's an interesting article from the Economic Times (investor's Guide) from Monday 19 March 2012.

An interesting analysis of Direct and Indirect Taxes over the years.

INDIAN GDP ESTIMATES

Indian GDP growth estimates are moderating.

9% growth rates may not be realistic anymore, but  GDP growth rates in India are still far above those in the developed world.

SOVEREIGN WEALTH FUNDS AUM 31ST December 2011