| Watch out for South Korea (opinion) |
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| Written by Wilfred Ling | ||||||
| Wednesday, 15 October 2008 | ||||||
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According to Bloomberg report HERE, the Korea won has slide 12% in a single day and that S&P is considering downgrading certain Korean banks. In my opinion, South Korea will be the first Asia country to receive the full blown effect of the financial crisis. My opinion is based on this chart here:
Among all the Asia countries, South Korea has the highest loan to deposit ratio. In fact, their banks are highly leverage. The banks are loaning nearly 140% that of their deposits. This is in constrast with Hong Kong which has the lowest loan to deposit ratio of approximately 60%. Thus, South Korea is in deep s***. Of course this is my opinion only and I am not 101% sure that trouble will come to them for if I am 101% sure that trouble will come to them, I would leverage 1000% and short the Korean market. On a side note, Singapore's loan to deposit ratio isn't that healthy either. It is 80%. This is the 3rd highest among Asian countries. Disclosure: I do not own any Korean stocks in long or short position directly. However, I do own Korean stocks indirecty through funds.
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