Sunday, July 11, 2010

Yuan to talk banks, dude?...

It wasn't that long ago the top ten banks were dominated by US institutions, but look at the change.


More interesting is the highlighted bank- the Agricultural Bank of China - just had its IPO and guess who bought into it?
The deal attracted more than the usual amount of attention—in part because of ongoing palpitations in global markets, in part because Chinese share prices in particular have collapsed in recent months, and in part because the listing coincides with fierce debate about the health of China’s banking system. Agricultural Bank itself is notable for both its gargantuan size (320m customers) and its giant past loan losses. Optimists see it as a superb macro play on China, pessimists as a Chinese version of Fannie Mae and Freddie Mac, America’s nominally private, and deeply flawed, housing-finance firms.
Pricing was a matter of guesswork until the last moment. Outside China, big investors seemed anxious to buy in. “Cornerstone” investors included sovereign-wealth funds (Qatar and Kuwait), banks (Standard Chartered, Rabobank, Singapore’s United Overseas Bank), a global agricultural giant, Archer Daniels Midland, and the now usual smattering of tycoons (Hong Kong’s Li Ka-shing and Australia’s Kerry Stokes). Inside China, internet polls suggested retail investors were less keen. These differing perspectives may explain a rare outcome for dual-listed shares: the bank’s stock was valued more highly (by around 5%) in Hong Kong than Shanghai. [Same]
Now currency fluctuations strongly change these rankings, of course, but still it's an impressive rise for Chinese finance.  As a frind of mine who was just assigned to China for a by his seed company pointed out, that's where the growth will be - not fighting for a 1% market share swing every year here.

As ag suppliers focus more on China, it will be curious to watch how US farmers react. I remember the mild consternation when you couldn't buy a combine because so many were shipping out to Russia, etc.  What would be really paradigm-shifting would be if China got the hot new GMO traits earlier since the regulatory process is faster and less driven by public acceptance.

1 comment:

Anonymous said...

Oh my, has agriculture lost that much clout? There seems to be so little out of Government (state or nationally) that is viewed as positive for production agriculture. If a Republic is designed to provide for the will of the people, than we have either lost our influence, the republic is not doing its job or both. We have been a small part of the population for a very long time but has our political clout dropped that low? It does seem as agriculture has become more specialized, our voice as an industry has declined. The loss of influence seemingly creates the paranoia (may be reality); “Any new government action will result in more damage (to us) than any possible social benefit to others.” This is the minority’s rebel cry. Has it really come to that point?