ICBC : Industrial and Commercial Bank of China (1398)

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(26-03-2014, 01:31 PM)Wildreamz Wrote: Yuebao and similar financial products was created mid 2013 during the Chinese liquidity crunch, when interbank rates were abnormally high.

Lately, the Chinese interbank rates has been stable, reducing Yue Bao's financial products' annualized return from 6.74% during Lunar New Year to around 5.56% as of 19th March 2014.

http://www.reuters.com/article/2014/03/2...BV20140320

The trend is expected to continue given the growing size of Yue Bao (lack of new avenue to invest) and the lower interbank rates (reversion to mean). Some analyst predict that return would stablize at around 3-4%.

http://www.businessspectator.com.au/arti...-awakening

Sure, financial product will erode some of the profitability of China Banks in general, but given their small size (less than 1-2% of the financial sector), and their bleak outlook (IMHO), what should be the reasonable estimate of their long term impact?

At 3-4%, would you invest in financial product or with the Big 4 banks in China offering similar rates of return?

I agree with these views.

In addition, just want to share the latest news:
(Reuters) - China's central bank is considering regulations that would significantly limit the use of third-party payment systems, including the payment arms of Alibaba Holding Group and Tencent Holdings Ltd.

The People's Bank of China released draft rules last week to major banks for consultation, state media reported on Monday. The measures would ban the payment companies from handling offline transactions.

They would also heavily limit spending by individuals using third-party payment platforms and transfers from bank accounts to accounts managed by third-party companies. The draft rules restrict single purchases using third-party payment accounts to 5,000 yuan ($810), with a monthly limit of 10,000 yuan.

true "We have reported our opinions to, and are in close communication with, the PBOC," said a spokesperson with Alipay, Alibaba's payment platform. "Given that the document is now under consultation, we are not able to comment further."

Alibaba said on Sunday it had picked the United States for a long-awaited initial public offering, ending months of speculation about where it would float and dealing a blow to the Hong Kong stock exchange.

China's online and mobile payment transactions have been growing at a frenetic pace. The online payment market last year increased by 42 percent to 7.4 trillion yuan ($1.2 trillion) in transactions, according to Beijing-based consultancy iresearch.

That has fueled a clash between the financial sector and internet companies, as online firms push into banking and ramp up their own financial services, offering online payment options and wealth management products.

Last week, China's central bank suspended the use of payments made by scanning a type of bar code with mobile devices, halting the rollout of new virtual credit cards by Tencent and Alibaba.

Both companies announced they would launch cards, which can use QR bar codes scanned by smartphones to process payments, in partnership with China CITIC Bank Corp

The draft rules also would restrict one-time money transfers through individual third-party payment accounts to 1,000 yuan, with a cap place on the cumulative annual transfer of 10,000 yuan, hitting the ability for users to move their money into wealth management products offered by Tencent and Alibaba.

In February, Alipay said it handled 900 billion yuan in mobile payment transactions from more than 100 million users last year, completing more mobile payments than U.S.-based PayPal and Square Inc combined.

A central banker who helped draft the new proposals told Caixin Media that the new rules were intended to limit the operating scope of third-party payment companies to online shopping, while prohibiting offline payments.

($1 = 6.1502 Chinese yuan)

(Reporting by Matthew Miller and Paul Carsten; Editing by John Stonestreet)
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(20-03-2014, 04:43 PM)Behappyalways Wrote: you can watch this video.....online banking will break the stranglehold on deposits and increase their cost.....and one thing to take note is their return on assets are low............watch video at 11.55.



http://valuebuddies.com/thread-4809-post...l#pid77604

(20-03-2014, 02:35 PM)funman168 Wrote: U guys hv any concern abt the competition from online banking from tencent?

It's clear from the latest chinese policies that they dont want internet companies getting into managing people's money.
At a time when the 4 big banks are reducing their exposure to these WMP, the internet companies are jostling to offer Yuer bao and related products.
I dont think the banks will be greatly affected by these internet companies, rather I think investors in the internet companies who think there's a new revenue stream that is substantial coming from this, will likely be disappointed
<vested 300 lots>
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Yu'ebao etc money market funds exploit one of the loopholes in the banking industry, which is that there is no penalty for early withdrawal. If the banks are going to charge for early withdrawal, the yield on such institutional deposits would be much lower. Without early withdrawal without penalty, there will be huge emphasis on the asset-liability matching requirement for Yu'ebao.
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Is Yuebao something like our money market fund?
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Yue bao can technically invest in anything, but most of the fund is currently invested in money market funds.
That's how they can provide a stable return while allowing withdrawals almost anytime
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I hv been thinking of accumulating this counter for long term(5-10yrs).

Positives
- cheap valuation
- strong institution support
- 6% dividend

Negative
- china banking sector opening up, increase competition
- unknown shadow banking impact

Plan to vest s$100-200k in it.
Any advice from the buddies out there? Thanks
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Chinese financial system is getting better and better, not worse and worse. There will be hiccup along the way, but the major large banks will get stronger and stronger. With a longer time frame, there is no way not making money from the large banks in China.

If you are looking at 10 years or longer, buy all the way down. ICBC is not going to disappear because some financial crisis.

Have Citi or Bank of America disappeared because of the last financial crisis? No. ICBC has even stronger support and more important to the overall economy of China.

The media headline might lead you to think that China is going back to stone age, but that will never happen.
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Put your $$$ in a Singapore bank rather than buy bank......Big GrinBig Grin

There is an article from The Edge by head of financial research of CLSA in Hong Kong. A good read....

Earnings growth and valuations look attractive because the numbers are not what they really are, " argues Cheng.....


(03-04-2014, 04:40 PM)funman168 Wrote: I hv been thinking of accumulating this counter for long term(5-10yrs).

Positives
- cheap valuation
- strong institution support
- 6% dividend

Negative
- china banking sector opening up, increase competition
- unknown shadow banking impact

Plan to vest s$100-200k in it.
Any advice from the buddies out there? Thanks
You can find more of my postings in http://investideas.net/forum/
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I agree with you Freedom. Vested a while ago.
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Thanks all for ur opinion
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