{"id":18882,"date":"2019-07-12T14:25:50","date_gmt":"2019-07-12T18:25:50","guid":{"rendered":"https:\/\/www.pgmcapital.com\/?p=18882"},"modified":"2019-07-12T14:25:52","modified_gmt":"2019-07-12T18:25:52","slug":"why-investing-in-chinese-banks-might-be-lucrative-for-value-investors","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/why-investing-in-chinese-banks-might-be-lucrative-for-value-investors\/","title":{"rendered":"Why Investing in Chinese Banks might be Lucrative for Value Investors"},"content":{"rendered":"\n

Dear PGM Capital Blog readers,<\/p>\n\n\n\n

In this weekend’s blog edition we want to elaborate why investing in the Chinese Banks might be lucrative for value investors.<\/p>\n\n\n\n

INTRODUCTION:<\/h3>\n\n\n\n

International banks continue to grow their assets as the world economy expands. If no major economy falters, the expansion may continue. <\/p>\n\n\n\n

While there is some debate about whether China\u2019s economy is bigger than that of the United States, there is no questioning on which nation is home to the largest banks. <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

China’s “big four” state-owned commercial banks have consolidated their dominance among the world’s biggest banks: occupying the top four spots on the annual list by S&P Global Market Intelligence (published Thursday, April 11th of this year).<\/p>\n\n\n\n

As can be seen from below table, the list is led by Industrial & Commercial Bank of China (1398.HK), which retained its title as the world’s biggest bank. <\/p>\n\n\n\n

ICBC is the only lender that has amassed more than US$4 trillion in assets \u2014 or roughly the size of Citigroup (C) and Wells Fargo (WFC) combined.<\/p>\n\n\n\n

The next three biggest Chinese banks are each north of US$3 trillion: China Construction Bank (0939.HK), Agricultural Bank of China (1288.HK), and Bank of China (3988.HK).<\/p>\n\n\n\n

Top 10 World Biggest Banks:<\/strong><\/h5>\n\n\n\n
  1. Industrial & Commercial Bank of China (China, US$4,027.44 billion)<\/li>
  2. China Construction Bank (China, US$3,376.52 billion)<\/li>
  3. Agricultural Bank of China (China, US$3,287.35 billion)<\/li>
  4. Bank of China (China, US$3,092.21 billion)<\/li>
  5. Mitsubishi UFJ Financial Group (Japan, US$2,812.88 billion)<\/li>
  6. JPMorgan Chase & Co. (United States, US$2,622.53 billion)<\/li>
  7. HSBC Holdings (United Kingdom, US$2,558.12 billion)<\/li>
  8. Bank of America (United States, US$2,354.51 billion)<\/li>
  9. BNP Paribas (France, US$2,336.66 billion)<\/li>
  10. Cr\u00e9dit Agricole Group (France, US$2,123.61 billion<\/li><\/ol>\n\n\n\n

    PGM CAPITAL\u2019s ANALYSIS & COMMENTS:<\/h3>\n\n\n\n

    Despite the trade war and currency troubles, China’s “Big Four” banks have grown their total assets by 1% in 2018 to $13.8 trillion, S&P said.<\/p>\n\n\n\n

    Collectively, the four big Chinese banks have a combined asset value of US$13.784 trillion, or 1.07 percent more than the year before. The financial data provider noted that if not for the yuan’s 5 percent slide against the dollar in 2018, the annual increase would have been 6.84 percent.<\/p>\n\n\n\n

    American banks have only gotten bigger since the financial crisis, but they’ve still got some growing to do in order to catch up to their peers in China.<\/p>\n\n\n\n

    The above mentioned table shows that, just two US banks -JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) – crack the top 10 in S&P’s rankings of the world’s largest banks.<\/p>\n\n\n\n

    Below picture shows a building under construction in Liuzhou city, south China’s Guangxi Zhuang Autonomous Region, which soon will be the headquarters of the Liuzhou branch of the China Construction Bank.<\/p>\n\n\n\n

    \"\"<\/figure><\/div>\n\n\n\n

    The architecture of the building as well as its size, clearly shows the status of world’s second biggest bank.<\/p>\n\n\n\n

    Due to the looming trade war, the shares of the Chinese banks have all been hovering around their 52-week low, despite of their respective P\/E ratio of around 5 to 6 and dividend yield of approx. 6 percent.<\/p>\n\n\n\n

    Based on the above, we have a STRONG BUY<\/strong> rating for those 4 big Chinese Banks.<\/p>\n\n\n\n

    Disclosure:<\/h4>\n\n\n\n

    We own shares of all the big 4 Chinese Banks in our personal portfolio.<\/p>\n\n\n\n

    Last but not least, before taking any investment decision, always take your investment horizon and risk tolerance into consideration. Keep in mind that share prices do not move in a straight line. Past Performance Is Not Indicative Of Future Results.<\/p>\n\n\n\n

    Yours sincerely,<\/p>\n\n\n\n

    \"\"<\/a><\/figure>\n\n\n\n

    Eric Panneflek
    <\/p>\n","protected":false},"excerpt":{"rendered":"

    Dear PGM Capital Blog readers, In this weekend’s blog edition we want to elaborate why investing in the Chinese Banks might be lucrative for value investors. INTRODUCTION: International banks continue to grow their assets as the world economy expands. If no major economy falters, the expansion may continue. While there is some debate about whether China\u2019s[…]<\/a><\/p>\n","protected":false},"author":2,"featured_media":18905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51],"tags":[],"class_list":["post-18882","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pgm-capital-blog"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/18882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=18882"}],"version-history":[{"count":21,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/18882\/revisions"}],"predecessor-version":[{"id":18907,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/18882\/revisions\/18907"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media\/18905"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=18882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=18882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=18882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}