ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Too much debt permeates the country's economy, local governments and businesses. As I travel across the country, I mostly hear about local governments and businesses that are absorbed with managing solvency by resorting to ever fancier borrowing tricks. Many, if not most, local governments are borrowing to pay the interest on their debts. Businesses often cook up new projects to borrow more so they can manage their existing debt stock.

Debt and overcapacity form a vicious spiral. The latter diminishes cash flow for debt-laden projects. As local governments and businesses borrow more in the name of new projects to pay interest on existing debt, they exacerbate the overcapacity situation. China must stop the debt-capacity spiral. Continuing it provides no way out.

Banks Shouldn't Cover up NPLs


http://english.caixin.com/2014-06-03/100685451.html

http://english.caixin.com/2014-06-03/100685451.html?p2

http://investideas.net/forum/viewtopic.p...7&start=60

An interesting and related article, so I post it here.

Overall the ratios are, Singapore 6x, China 7.5x, and India 8.1x. I didn't see too much difference between them.

Singapore GDP ranks 3rd, China GDP is 93, and India is 133, base on IMF, with wikipedia info below

http://en.wikipedia.org/wiki/List_of_cou...per_capita

Singapore joins China in danger zone as debt worsens, GMT says

Singapore companies’ indebtedness has swelled to the most in Asia after China and India as the city- state’s economic growth slows, according to GMT Research.

Leverage among the Southeast Asian nation’s corporates is following counterparts in the two larger economies to a level considered a “danger threshold,” Gillem Tulloch, founder of the Hong Kong-based researcher, said in an interview yesterday. Debt rose to six times the amount of operating cash flow in 2013 for non-financial Singaporean companies, from 5.1 times in 2012, a report by GMT Research shows.

“It’s a bit surprising that Singaporean companies seem to have leveraged up significantly over the past few years,” said Tulloch, 43, a former analyst at CLSA Asia-Pacific Markets. “There’s been a slight loss of discipline, or it could be that the growth has not come in as expected.”

Singapore’s government said last month its export-led economy will experience “modest” expansion in 2014 amid a labor-market crunch. It’s likely that growth is headed for a slowdown, since it can’t be sustained without more stimulus or reckless bank lending, GMT Research said.

The leverage ratio in China rose to 7.5 times from 6.8 times last year, while the measure in India grew to 8.1 times from 7 times, the May 28 report showed.
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http://www.theedgesingapore.com/the-dail...-says.html#