Mark Mobius made an interesting comment about IPOs in this interview.
Typically more IPOs means more supply. Eventually the supply created overtakes demand and stocks go down.
Mobius is quoted as saying "We've never seen this kind of liquidity before. IPOs like that of the Bank of China are very good for the markets because they absorb the flows of money coming in."
I take this to mean he thinks emerging markets, as a theme, has a long way to go. I'm sure someone will comment that he is talking his book. Perhaps that is true but I think the theme has long term legs. Of course no matter how giddy you might be make sure you don't own more than you can handle.
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2 comments:
Btw, Roger, I checked with some sources in China about the number you quoted in "fun fact about Chinese banks". According to the official number from Bank of China, E&Y estimated $900 billion unperforming loans would represent about 45% of all outstanding loans from mainland banks. Of course official number from China usually is not very reliable. But still the $900 billion number is very questionable.
Anyway, I think people should not be scared away from investing in China. If you do invest, some successful funds such as those managed by Mobius should be your first choice.
I wouldn't be surprised if the total amount of bad loans was greater than > $900 Billion.
The chinese government has used state affiliated banks to help prop-up state affiliated enterprises. Combine that with the generally wild west enviroment and a ton of green money flowing in. You have the makings of debt bubble worse than japan right there.
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