A Look at Asian Bank ADRs

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Asians are generally known to save a higher portion of their income.Many of the banks in Asia are very conservatively run profitable businesses.For example,the banks are not permitted to have high leverage ratios and sub-prime mortgages are unknown.

However due to globalization, most of the Asian banks suffered as well during the in this credit crunch.Some banks like India’s ICICI (IBN) had small exposure to sub-prime losses.Other banks played safe and did not venture deep into the derivatives territory to juice up their earnings. Hence in the long-run Asian banks are relatively safer and are good for investment.It must be pointed that there have been no bank failures in the region since the crisis began in late 2007.

Only a handful of Asian banks are listed in the US organized exchanges. The following is a listing of bank ADRs from Asia together with their current dividend yield:

1.HDFC Bank – HDB
Country: India
Current Dividend Yield:0.64%

2.ICICI Bank – IBN
Country: India
Current Dividend Yield: 1.75%

3. KB Fianancial – KB
Country: South Korea
Current Dividend Yield:N/A

4. Mitsubishi UFJ Financial – MTU
Country: Japan
Current Dividend Yield: N/A

5.Woori Finance – WF
Country: South Korea
Current Dividend Yield: N/A

Knowledge is Power: Dividends – Death by a Thousand Cuts Edition

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1.THE Big Four banks have morphed into a ‘Big Two’ and the corporate watchdog isn’t happy about their growing power.Big Four banks morph into ‘Big Two’

2.When JPMorgan Chase & Co. slashed its dividend 87% in February, from 38 cents to 5 cents per quarter, it marked one of the last dividend holdouts to crumble in the face of the financial crisis. “Extraordinary times must call for extraordinary measures,” CEO Jamie Dimon said in explaining the move. JPMorgan is among the few large banks to remain profitable. Even so, an extra $5 billion a year in capital should come in handy as it fights declining loan quality.To Cut or Not to Cut: the Dividend Dilemma

3. India’s state-run companies, including Oil & Natural Gas Corp., the largest energy explorer, and Bharat Heavy Electricals Ltd. may benefit from an election that saw Prime Minister Manmohan Singh’s party win the biggest voter mandate in two decades.India’s State-Run Companies May Benefit From Singh Victory: Chart of Day 

4. Recognizing the role financial engineers are playing in the current global stock-market rally will help investors identify just how they are being hoodwinked. Irresponsible comments from central bankers and government officials aside, it is the people who talk up their own books who merit the most ire Easy bets with other people’s money

5.Swollen loan losses, soaring writedowns and slumping profits – it’s enough to… Banks walk tightrope while hoping to cushion profit

Photo – Santiago Stock Exchange, Chile

Chart: Domestic Market Capitalization Change 2008-2009

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The following chart shows the domestic market capitalization of different markets from Jan 2008 thru April 2009 (click to expand):

april-domestic-market-cap.JPG

Source: World Federation of Exchanges – Focus May 2009 Report

The report contains other fascinating statistics on share trading values, domestic market capitalization of individual exchanges, equity investment flows, etc. For eg. – the market cap of Bovespa Index, Brazil has risen from $611B in January this year to $761 B in April. To access  the full report, click wfe_focus_may-2.pdf.

Top Ten Creditors to the USA

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Recently the Department of the Treasury/Federal Reserve Board updated the Major Foreign Holders of Treasury Securities data. The following are the top ten creditors to the USA as of March, 2009:

[TABLE=150]

Not surprisingly China is still the largest holder of US debt. The Chinese hold $767 B in March this year compared to $727 at the end of 2008. Contrary to media reports that the Chinese are dumping US debt and not buying any new treasury securities, China has not only been holding US debt but increased it slightly in 2009. In March 2008, they held $490B. China accounts for about 1/4th of the total $3.2T debt owed to foreign countries.

Japan is the second largest creditor to US following China with a total of $686B. Japan has always been a buyer of large amount of US debt.

The number three in the list is not a single country. For some unknown reason the Treasury and the Federal Reserve group the Caribbean islands that are basically off-share tax havens into one category. This group includes the Bahamas, Bermuda, Cayman Islands, Netherlands Antilles,Panama and British Virgin Islands. These islands channel huge amount of wealth into the US due to their tax shelter status. They are ahead of many countries such as the UK, Russia, etc with a total of $213B.

The fourth top creditor is again another group of countries together called as the Oil Exporters. This includes Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria. This group holds $192B. Middle east countries like Saudi Arabia, Qatar, Kuwait, UAE, etc. receive huge amounts of US dollars when we purchase their crude oil and then they turn around and reinvest them in the US in the form of treasuries and other vehicles. This process is called the petro-dollar recycling in which the US dollar just gets recycled and returns back to the US.

Russia has been a heavy buyer of treasuries since last year. From just $42B in March 2008, Russia currently holds a total of $138B in US debt.

Other notable countries that are big creditors to US include Singapore, Taiwan, Luxembourg and Hong Kong. Malaysia holds the smallest amount of treasuries with just $10B. Canada, a close trading partner of US has bought securities worth $11B only. On a year-over-year basis, the total US debt held by foreign countries has risen from $2.5T last March to $3.2 T this year.