http://www.bloomberg.com/news/2011-06-01/china-lending-binge-hangover-looms-in-2013-as-wen-spurs-low-income-housing.html
“Already banks are dealing with two years worth of questionable lending and now you are going to load this on top?” asked Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management. Bad debt is “just inevitable. The question is the dimension. Is it catastrophic or is it just harmful?”
Equity analysts remain bullish: Among the 24 that have rated China Construction Bank Corp. (939)’s Hong Kong-listed shares since April, not one recommends selling the stock, while 20 rank it buy, long-term buy, outperform, accumulate or overweight, according to data compiled by Bloomberg. None of the 27 analysts who have rated Industrial & Commercial Bank of China (601398) Ltd. since April advise selling.
The optimism reflects the perception that bad debts in the banking sector are unlikely to materialize for a few years, according to Charlene Chu, senior director, financial institutions at Fitch Ratings in Beijing.
China’s last banking crisis was in the late 1990s, when years of state-directed credit left lenders saddled with bad loans. The government spent more than $650 billion over a decade in bailouts.
“Five or six years ago people were saying that one of the great glories of the U.S. real estate market is that now all of these people who couldn’t afford to buy houses could buy houses,” said Pettis. “That didn’t work out so well.”
“Already banks are dealing with two years worth of questionable lending and now you are going to load this on top?” asked Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management. Bad debt is “just inevitable. The question is the dimension. Is it catastrophic or is it just harmful?”
Equity analysts remain bullish: Among the 24 that have rated China Construction Bank Corp. (939)’s Hong Kong-listed shares since April, not one recommends selling the stock, while 20 rank it buy, long-term buy, outperform, accumulate or overweight, according to data compiled by Bloomberg. None of the 27 analysts who have rated Industrial & Commercial Bank of China (601398) Ltd. since April advise selling.
The optimism reflects the perception that bad debts in the banking sector are unlikely to materialize for a few years, according to Charlene Chu, senior director, financial institutions at Fitch Ratings in Beijing.
China’s last banking crisis was in the late 1990s, when years of state-directed credit left lenders saddled with bad loans. The government spent more than $650 billion over a decade in bailouts.
“Five or six years ago people were saying that one of the great glories of the U.S. real estate market is that now all of these people who couldn’t afford to buy houses could buy houses,” said Pettis. “That didn’t work out so well.”
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