• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Chinese Banks land on the US Shore…

Following in the footsteps of Bank of China and ICBC, state-owned China Construction Bank (CCB) announced today that it will open its first US branch office in New York that will be primarily focused on commercial lending, trade finance, and foreign exchange. ICBC, China’s largest commercial lender, opened its first US branch in New York City in October while Bank of China, the most international of China’s banks, already has three US branches.

CCB, one of China’s “Big Four” state-owned banks, ranks second with 8.25 trillion Yuan (1.2 trillion USD) of total assets, behind Industrial and Commercial Bank of China (ICBC) and ahead of Bank of China and Agricultural Bank of China. The bank has approximately 13,629 domestic branches in addition to offices in Africa, Europe and elsewhere in Asia.

Former Bear Stearns exec, Ace Greenberg, commented yesterday that “its over” for Wall Street as we knew it. Nine and twelve months ago, I took plenty of heat for my “Hank The Market Tank” and “Investment Banking Inc.” calls. I wasn’t trying to be funny. I was being realistic. Now that this comic tragedy is playing at a theatre near you, it’s more palatable to talk to your friends about it at this year’s holiday parties.

It is natural next step for the new Chinese Capitalist banks to take advantage of their being liquid long cash and build a presence in the USA. We should be thankful for their arrival. We need new bosses in The New Reality. I am sure they are licking their chops borrowing at 0.00% for 3-month US Treasuries, then lending long higher – that’s what proactively prepared capitalists do.

We remain long China via the FXI and EWH etfs.

Keith McCullough
Chief Investment Officer

Matthew Hedrick
Analyst